Communication from the Commission to the European Parliament pursuant to the second subparagraph of Article 251 (2) of the EC Treaty concerning the common position of the Council on the adoption of a regulation of the European Parliament and the Council on controls of cash entering or leaving the Community
Date: 2005-02-18
Institutions: European Commission
Subjects: area of freedom, security and justice, customs cooperation, customs formalities, drafting of EU law, free movement of capital, money laundering, single market

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 18.2.2005 
COM(2005) 58 final 

2002/0132 (COD) 

COMMUNICATION FROM THE COMMISSION  
TO THE EUROPEAN PARLIAMENT 

pursuant to the second subparagraph of Article 251 (2) of the EC Treaty 

concerning the 

common position of the Council on the adoption of a regulation of the European 
Parliament and the Council on controls of cash entering or leaving the Community 

EN 

   EN 

 
 
 
  
 
 
2002/0132 (COD) 

COMMUNICATION FROM THE COMMISSION  
TO THE EUROPEAN PARLIAMENT 

pursuant to the second subparagraph of Article 251 (2) of the EC Treaty 

concerning the 

common position of the Council on the adoption of a regulation of the European 
Parliament and the Council on controls of cash entering or leaving the Community 

1- 

BACKGROUND 

Date of transmission of the proposal to the EP and the Council 
(document COM(2002) 328 final – 2002/0132 COD): 

25 June 2002 

Date of the opinion of the European Parliament, first reading: 

15 May 2003 

Date  of  transmission  of  the  amended  proposal  (COM(2003)371 
final – 2002/0132 COD) 

1 July 2003 

Date of adoption of common position: 

17 February 2005 

2- 

AIM OF THE COMMISSION PROPOSAL 

The  main  objective  of  the  Commission  proposal  is  to  supplement  Directive 
91/308/EEC, which establishes a system of supervision and information on monetary 
transactions by financial and credit institutions. For this reason the proposal aims to 
introduce a harmonised control and information procedure for large-scale movements 
of  cash  in  or  out  of  the  Community  and  empowers  the  national  authorities  to  take 
appropriate administrative actions, including the obligation to pronounce penalties. 

The provisions of the proposals would therefore help to prevent money laundering or 
financing terrorism. 

3- 

COMMENTS ON THE COMMON POSITION 

3.1 

GENERAL REMARKS 

The Commission welcomes the Council's endorsement of the main principles of the 
Commission proposal.  

EN 

2 

   EN 

 
 
 
3.2 

CONSIDERATION  OF  THE  AMENDMENTS  PROPOSED  BY  PARLIAMENT  AT  FIRST 
READING 

In  its  common  position  the  Council  took  on  board  a  number  of  the  Parliament's 
amendments including the following key amendments: 

Amendment 2 concerning the addition of Article 95 to the legal base 

Amendment 13 extending the range of "cheques" covered by the proposal 

Amendment 15 clarifying the roles of the respective competent authorities 

The Council did not take on board all the other amendments including the following:  

Amendment 1, 20, 21 and 23: to ensure a better and more uniform application of the 
cash  control  procedures,  the  Council  and  the  Commission  are  in  favour  of  a 
regulation instead of a directive, as proposed by the EP. 

Amendment 3, 4 to 8, 12, 14 and 18: in order to ensure legal security and especially 
to  have  equal  treatment  of  persons  entering  or  leaving  the  Community  with  large 
sums of cash, the Council and the Commission prefer a single mandatory approach; 
rather  than  the  EP  amendments  which  offers  Member  States  the  possibility  to  use 
either a mandatory declaration or a system based on disclosure upon request of the 
competent authorities. 

Amendment 16: Council and Commission are not in favour of a transmission of data 
obtained  through  the  declaration  procedure  or  during  control  activities  to  a  central 
database which is co-managed by the Member States and EUROPOL. The Customs 
Information  Systems  (CIS)  as  foreseen  in  title  V  and  VI  of  Regulation  515/97 
(mutual assistance) constitute an equivalent instrument to that proposed by the EP. 

3.3 

NEW PROVISIONS INTRODUCED BY THE COUNCIL 

The Council amended several provisions. The main amendments are as follows: 

In  addition  to  the  initial  legal  base  of  the  act  -  Article  135  of  the  Treaty  (customs 
cooperation) - the Council also required Article 95 (harmonisation of internal market 
provisions) to make it clear that the envisaged uniform measures for controls at the 
external Community borders contribute also to the functioning of the internal market. 
The  addition  of  Article  95  was  also  requested  from  the  EP  in  its  first  reading.  The 
Commission can accept this. 

The geographical scope is amended to bring it into line with the geographical scope 
of Directive 91/308/EEC. The Commission can accept this. 

To  ensure  effective  controls  with  minimum  bureaucracy,  the  declaration  is 
mandatory but may be made in written, oral or electronic form. The Council shared 
Parliament's concerns over the risks of a heavy bureaucracy associated with a general 
requirement to present a written declaration, but preferred a single system based on a 
mandatory  declaration  requirement  (with  the  burden  for  administrations  and 
declarants  being  reduced  via  flexibility  as  to  the  form  in  which  the  declaration  is 

EN 

3 

   EN 

 
required). The Commission supports a mandatory declaration system and can accept 
this amendment.  

As  far  as  penalties  for  failure  to  declare  are  concerned,  the  relevant  rule  has  been 
brought in line with the standard text used in other legal acts (effective, proportionate 
and dissuasive character of penalties). The Commission supports this. 

There is no fixed time limit for the power to detain cash in case of failure to declare. 
The power to detain and the detention period for cash are based on an administrative 
decision under national law. The Commission can accept this. 

The  Commission  is  called  upon  to  present  an  evaluation  report  to  the  EP  and  the 
Council four years after the entry into force of the regulation. This corresponds to a 
similar  request  made  by  Parliament  in  its  Amendment  22.  The  Commission  can 
accept this. 

The threshold for making a declaration was lowered from € 15 000 to € 10 000. This 
differs  from  the  original  proposal  of  the  Commission,  which  was  identical  to  the 
threshold  in  Directive  91/308/EEC.  However  Council  considered  that  a  lower 
threshold is justified because cross border cash movements are easier to make than 
money transfers via financial institutions and because of the risk of lesser amounts of 
cash  being  used  specifically  for  funding  terrorist  activities.  The  Commission  can 
accept this. 

In order to be able to fight money laundering and terrorist financing most effectively 
it  is  indicated  that  Member  States  may,  in  accordance  with  the  Treaty,  continue  to 
apply national intra community cash controls. The Commission can accept this. 

4. 

CONCLUSION 

The  Commission  considers  that  the  common  position  constitutes  an  acceptable 
compromise even if not all of the amendments of the EP have been taken on board. 

The Commission is nevertheless convinced that the views of Council and Parliament 
are  sufficiently  close  to  suggest  an  agreed  position  is  attainable  in  the  near  future, 
especially given the interest of all sides to improve controls to stop the flow of funds 
to terrorists and criminal organisations.  

5. 

COUNCIL STATEMENT FOR THE MINUTES 

The  general  statement,  on  the  use  of  the  word  "penalties"  in  Community  legal 
instruments, makes it clear that "penalties" is used in the text in the neutral sense to 
cover  also  administrative,  financial  and  other  types  of  sanctions.  The  Commission 
can accept this. 

EN 

4 

   EN