Regulation (EC) No 1889/2005 of the European Parliament and of the Council of  26 October 2005  on controls of cash entering or leaving the Community
Date: 2005-10-26
Institutions: Council of the European Union, European Parliament
Subjects: customs formalities, customs inspection, disclosure of information, money laundering

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REGULATION (EC) No 1889/2005 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

of 26 October 2005

on controls of cash entering or leaving the Community

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE
EUROPEAN UNION,

with the existing provisions of
controls on movements of cash within the Community.

the Treaty, national

Having regard to the Treaty establishing the European Com-
munity, and in particular Articles 95 and 135 thereof,

Having regard to the proposal from the Commission (1),

consulting

After
Committee,

the

European

Economic

and

Social

Acting in accordance with the procedure referred to in
Article 251 of the Treaty (2),

Whereas:

(1)

(2)

(3)

and

balanced

sustainable

One of the Community's tasks is to promote harmo-
nious,
of
economic activities throughout the Community by estab-
lishing a common market and an economic and mone-
tary union. To that end the internal market comprises an
area without internal frontiers in which the free move-
ment of goods, persons, services and capital is ensured.

development

are detrimental

The introduction of the proceeds of illegal activities into
the financial system and their investment after laun-
dering
to sound and sustainable
economic development. Accordingly, Council Directive
91/308/EEC of 10 June 1991 on prevention of the use
of the financial system for the purpose of money laun-
dering (3)
introduced a Community mechanism to
prevent money laundering by monitoring transactions
through credit and financial
institutions and certain
types of professions. As there is a risk that the applica-
tion of that mechanism will lead to an increase in cash
movements for illicit purposes, Directive 91/308/EEC
should be supplemented by a control system on cash
entering or leaving the Community.

At present such control systems are applied by only a
legislation.
few Member States, acting under national
The disparities in legislation are detrimental
to the
proper functioning of the internal market. The basic
elements should therefore be harmonised at Community
level to ensure an equivalent level of control on move-
ments of cash crossing the borders of the Community.
Such harmonisation should not, however, affect
the
in accordance
possibility for Member States to apply,

(4)

(5)

(6)

Account should also be taken of complementary activ-
ities carried out in other international fora, in particular
those of
the Financial Action Task Force on Money
Laundering (FATF), which was established by the G7
Summit held in Paris in 1989. Special Recommendation
IX of 22 October 2004 of the FATF calls on govern-
ments to take measures to detect physical cash move-
ments, including a declaration system or other disclosure
obligation.

Accordingly, cash carried by any natural person entering
or leaving the Community should be subject to the prin-
ciple of obligatory declaration. This principle would
enable the customs authorities to gather information on
such cash movements and, where appropriate, transmit
that information to other authorities. Customs authori-
ties are present at the borders of the Community, where
controls are most effective, and some have already built
up practical experience in the matter. Use should be
made of Council Regulation (EC) No 515/97 of 13 March
1997 on mutual assistance between the administrative
authorities of
the Member States and cooperation
between the latter and the Commission to ensure the
correct application of the law on customs and agri-
cultural matters (4). This mutual assistance should ensure
both the correct application of cash controls and the
transmission of information that might help to achieve
the objectives of Directive 91/308/EEC.

In view of its preventive purpose and deterrent char-
acter, the obligation to declare should be fulfilled upon
entering or leaving the Community. However, in order
to focus the authorities' action on significant movements
of cash, only those movements of EUR 10 000 or more
should be subject to such an obligation. Also, it should
be specified that the obligation to declare applies to the
natural person carrying the cash, regardless of whether
that person is the owner.

(1) OJ C 227 E, 24.9.2002, p. 574.
(2) Opinion of the European Parliament of 15 May 2003 (OJ C 67 E,
17.3.2004, p. 259), Council Common Position of 17 February
2005 (OJ C 144 E, 14.6.2005, p. 1), Position of the European
Parliament of 8 June 2005 and Council Decision of 12 July 2005.
(3) OJ L 166, 28.6.1991, p. 77. Directive as amended by Directive
2001/97/EC of the European Parliament and of the Council (OJ
L 344, 28.12.2001, p. 76).

(7)

Use should be made of a common standard for the
information to be provided. This will enable competent
authorities to exchange information more easily.

(4) OJ L 82, 22.3.1997, p. 1. Regulation as amended by Regulation

(EC) No 807/2003 (OJ L 122, 16.5.2003, p. 36).

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(8)

(9)

It is desirable to establish the definitions needed for a
uniform interpretation of this Regulation.

of Fundamental Rights of the European Union, in par-
ticular in Article 8 thereof,

Information gathered under
this Regulation by the
competent authorities should be passed on to the autho-
rities referred to in Article 6(1) of Directive 91/308/EEC.

HAVE ADOPTED THIS REGULATION:

(10) Directive 95/46/EC of the European Parliament and of
the Council of 24 October 1995 on the protection of
individuals with regard to the processing of personal
data and on the free movement of such data (1) and
Regulation (EC) No 45/2001 of the European Parliament
and of the Council of 18 December 2000 on the protec-
tion of
individuals with regard to the processing of
personal data by the Community institutions and bodies
and on the free movement of such data (2) apply to the
processing of personal data by the competent authorities
of the Member States pursuant to this Regulation.

(11) Where there are indications that the sums of cash are
related to any illegal activity, associated with the move-
ment of cash, as referred to in Directive 91/308/EEC,
this Regulation by the
information gathered under
competent authorities may be passed on to competent
authorities
to the
Commission. Similarly, provision should be made for
certain information to be transmitted whenever there are
indications of cash movements involving sums lower
than the threshold laid down in this Regulation.

in other Member States and/or

Article 1

Objective

1.
This Regulation complements the provisions of Directive
91/308/EEC concerning transactions through financial and
institutions and certain professions by laying down
credit
harmonised rules for the control, by the competent authorities,
of cash entering or leaving the Community.

This Regulation shall be without prejudice to national
2.
measures to control cash movements within the Community,
where such measures are taken in accordance with Article 58
of the Treaty.

Article 2

Definitions

For the purposes of this Regulation:

(12)

(13)

(14)

Competent authorities should be vested with the powers
needed to exercise effective control on movements of
cash.

1.

‘competent authorities’ means the customs authorities of the
Member States or any other authorities empowered by
Member States to apply this Regulation;

2.

‘cash’ means:

The powers of
the competent authorities should be
supplemented by an obligation on the Member States to
lay down penalties. However, penalties
should be
imposed only for failure to make a declaration in accord-
ance with this Regulation.

Since the objective of this Regulation cannot be suffi-
ciently achieved by the Member States and can therefore,
by reason of the transnational scale of money laundering
in the internal market, be better achieved at Community
level, the Community may adopt measures, in accord-
ance with the principle of subsidiarity as set out in
Article 5 of the Treaty. In accordance with the principle
of proportionality, as set out in that Article, this Regu-
lation does not go beyond what is necessary in order to
achieve that objective.

(a) bearer-negotiable

instruments

including monetary
instruments in bearer form such as travellers cheques,
negotiable instruments (including cheques, promissory
notes and money orders) that are either in bearer form,
endorsed without restriction, made out to a fictitious
title thereto
payee, or otherwise in such form that
passes upon delivery and incomplete
instruments
(including cheques, promissory notes and money orders)
signed, but with the payee's name omitted;

(b) currency (banknotes and coins that are in circulation as

a medium of exchange).

Article 3

Obligation to declare

(15)

This Regulation respects the fundamental rights and
observes the principles recognised in Article 6(2) of the
Treaty on European Union and reflected in the Charter

(1) OJ L 281, 23.11.1995, p. 31. Directive as amended by Regulation

(EC) No 1882/2003 (OJ L 284, 31.10.2003, p. 1).

(2) OJ L 8, 12.1.2001, p. 1.

1.
Any natural person entering or leaving the Community
and carrying cash of a value of EUR 10 000 or more shall
declare that sum to the competent authorities of the Member
State through which he is entering or leaving the Community
in accordance with this Regulation. The obligation to declare
shall not have been fulfilled if the information provided is
incorrect or incomplete.

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The declaration referred to in paragraph 1 shall contain

2.
details of:

(a) the declarant, including full name, date and place of birth

by the competent authorities of the Member State referred to in
Article 3(1) and be made available to the authorities referred to
in Article 6(1) of Directive 91/308/EEC of that Member State.

and nationality;

(b) the owner of the cash;

(c) the intended recipient of the cash;

(d) the amount and nature of the cash;

(e) the provenance and intended use of the cash;

(f) the transport route;

(g) the means of transport.

3.
Information shall be provided in writing, orally or electro-
nically, to be determined by the Member State referred to in
paragraph 1. However, where the declarant so requests, he
shall be entitled to provide the information in writing. Where a
written declaration has been lodged, an endorsed copy shall be
delivered to the declarant upon request.

Article 6

Exchange of information

1. Where there are indications that the sums of cash are
related to any illegal activity associated with the movement of
cash, as referred to in Directive 91/308/EEC, the information
obtained through the declaration provided for in Article 3 or
the controls provided for in Article 4 may be transmitted to
competent authorities in other Member States.

Regulation (EC) No 515/97 shall apply mutatis mutandis.

2. Where there are indications that the sums of cash involve
the proceeds of fraud or any other illegal activity adversely
affecting the financial interests of the Community, the informa-
tion shall also be transmitted to the Commission.

Article 4

Powers of the competent authorities

Article 7

1.
In order to check compliance with the obligation to
declare laid down in Article 3, officials of the competent autho-
rities shall be empowered, in accordance with the conditions
laid down under national legislation, to carry out controls on
natural persons, their baggage and their means of transport.

In the event of failure to comply with the obligation to
2.
declare laid down in Article 3, cash may be detained by admin-
istrative decision in accordance with the conditions laid down
under national legislation.

Article 5

Recording and processing of information

1.
The information obtained under Article 3 and/or Article 4
shall be recorded and processed by the competent authorities
of the Member State referred to in Article 3(1) and shall be
made available to the authorities referred to in Article 6(1) of
Directive 91/308/EEC of that Member State.

2. Where it appears from the controls provided for in
Article 4 that a natural person is entering or leaving the Com-
munity with sums of cash lower than the threshold fixed in
Article 3 and where there are indications of illegal activities
associated with the movement of cash, as referred to in Direc-
tive 91/308/EEC, that information, the full name, date and
place of birth and nationality of that person and details of the
means of transport used may also be recorded and processed

Exchange of information with third countries

to the consent of

In the framework of mutual administrative assistance, the infor-
mation obtained under this Regulation may be communicated
by Member States or by the Commission to a third country,
the competent authorities which
subject
obtained the information pursuant to Article 3 and/or Article 4
and to compliance with the relevant national and Community
provisions on the transfer of personal data to third countries.
Member States shall notify the Commission of such exchanges
of information where particularly relevant for the implementa-
tion of this Regulation.

Article 8

Duty of professional secrecy

All
information which is by nature confidential or which is
provided on a confidential basis shall be covered by the duty of
professional secrecy. It shall not be disclosed by the competent
authorities without the express permission of the person or
authority providing it. The communication of
information
shall, however, be permitted where the competent authorities
are obliged to do so pursuant to the provisions in force, parti-
cularly in connection with legal proceedings. Any disclosure or
communication of
fully comply with
information shall
prevailing data protection provisions,
in particular Directive
95/46/EC and Regulation (EC) No 45/2001.

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Article 9

Penalties

Article 10

Evaluation

The Commission shall submit to the European Parliament and
the Council a report on the application of this Regulation four
years after its entry into force.

1.
Each Member State shall introduce penalties to apply in
the event of failure to comply with the obligation to declare
laid down in Article 3. Such penalties shall be effective, propor-
tionate and dissuasive.

Article 11

Entry into force

By 15 June 2007, Member States

shall notify the
2.
Commission of the penalties applicable in the event of failure
to comply with the obligation to declare laid down in Article 3.

This Regulation shall enter into force on the twentieth day
following that of its publication in the Official Journal of the
European Union.

It shall apply from 15 June 2007.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Strasbourg, 26 October 2005.

For the European Parliament

The President

J. BORRELL FONTELLES

For the Council

The President

D. ALEXANDER