Proposal for a Council Regulation amending Regulation (EC) No 1338/2001 laying down measures necessary for the protection of the euro against counterfeiting
Date: 2007-09-17
Institutions: European Commission
Subjects: economic offence, euro, fight against crime, fraud, industrial counterfeiting, money, paper money

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 17.9.2007 
COM(2007) 525 final 

2007/0192 (CNS) 

Proposal for a 

COUNCIL REGULATION 

amending Regulation (EC) No 1338/2001 laying down measures necessary for the 
protection of the euro against counterfeiting 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

General context 

Council Regulation (EC) No 1338/2001 of 28 June 20011 lays down measures necessary for 
the protection of euro against counterfeiting. The detection and identification of counterfeits is 
an  essential  part  of  this,  and  the  regulation  therefore  requires  in  Article  6  that  credit 
institutions  and  any  other  related  institutions  withdraw  from  circulation  all  euro  notes  and 
coins received by them which they know or have sufficient reason to believe to be counterfeit 
and hand them over to the competent national authorities.  

Such  an  obligation  relates  to  the  due  diligence  of  credit  and  other  relevant  institutions  to 
ensure the authenticity of euro notes and coins that they put back into circulation or the actual 
detection  of  counterfeits.  While  the  initial  Commission  proposal  for  Regulation  1338/2001 
included  the  obligation  for  these  institutions  to  check  for  counterfeits  this  was  not  finally 
adopted  mainly  due  to  the  lack  of  agreed  uniform  and  effective  methods  for  large  scale 
authentication of euro notes and coins or for the detection of counterfeits.  

Following research in the methods for authenticating euro notes and coins, the ECB issued an 
advisory  framework  for  the  detection  of  counterfeit  notes2  and  the  Commission  adopted  a 
Recommendation for authentication of euro coins3. Consequently, state of the art proceedings 
are  now  available  for  the  credit  and  other  related  institutions  to  detect  counterfeits  by 
processing the notes and coins received by them before they put them back into circulation. 
Discussions  amongst  national  experts,  as  well  as  the  European  institutions  and  bodies  have 
underlined the importance of introducing legislation requiring the verification of authenticity 
of circulating euro notes and coins. 

These  checks  are  carried  out  by  means  of  appropriately  adjusted  sorting  machines.  The 
adjustment  of  the  machines  is  conducted  using  samples  containing  both  genuine  and 
counterfeit notes or coins. It is therefore necessary to ensure that the appropriate quantities of 
counterfeit notes and coins are available at the places where testing is conducted, to enable the 
adjustment  of  these  machines.  For  this  purpose  it  is  necessary  to  authorise  the  transport  of 
counterfeit notes and coins amongst competent national authorities as well as EU institutions 
and bodies.  

Articles  4  and  5  of  Regulation  1338/2001  oblige  national  centres  for  analysis  of  counterfeit 
notes  and  coins  to  send  examples  of  counterfeits  to  the  ECB  and  the  Commission 
respectively.  

However,  the  transport  of  counterfeits  for  the  purpose  of  adjustment  of  equipment  is  not  at 
present authorised at EU level. The transport of counterfeit notes and coins even if not in due 
course punishable in the absence of an intention to defraud, constitutes the objective element 
of the offence and would thus still invite the initiation of criminal investigations. To facilitate 
national  legal  proceedings,  the  transport  of  counterfeits  for  the  purpose  of  adjustment  of 

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J L 181, 4.7.2001, p. 6 
Available on www.ecb.int 
OJ L 184, 15.7.2005, p.60 

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equipment  should  therefore  be  specifically  permitted.  Other  EU  institutions  and  bodies  also 
acknowledge  the  necessity  for  permitting  transport  for  such  reasons  and,  the  ECB,  in 
particular, has issued a Recommendation for that purpose4. 

At  the  time  of  adoption  of  Regulation  1338/2001,  the  European  Technical  and  Scientific 
Centre  (ETSC)  was  carrying  out  its  tasks  on  a  temporary  basis  at  the  French  Mint  with 
administrative  support  and  management  provided  by  the  Commission  but  operating 
independently  from  the  Commission.  The  ETSC  was  subsequently  permanently  established 
within  the  Commission,  by  Council  Decision  2003/861/CE5  and  Commission  Decision 
2005/37/EC6.  As  a  result  it  is  no  longer  necessary  to  provide  that  the  ETSC  communicates 
data to the Commission. 

Council  Regulation  (EC)  No  1339/2001  of  28  June  20017  extends  the  effects  of  Regulation 
1338/2001 to those Member States which have not adopted the euro as their single currency. 
Article  1  of  Regulation  1339/2001  refers  to  the  dynamic  relation  created  between  the  two 
Regulations. As a legal consequence, the amendments proposed below, affecting Regulation 
1338/2001, shall also automatically apply to non euro Member States.  

Proposed amendments 

In the light of the above considerations it is proposed to amend: 

1.  Articles  4(2)  and  5(2)  to  permit  the  transport  of  counterfeit  notes  and  coins  amongst  the 
competent national authorities, as defined in Article 2 (b) of Regulation 1338/2001, as well as 
EU institutions and bodies. 

2. Article 5(4) to delete the reference to the Commission contained in the third sentence. 

3. Article 6 to insert an explicit obligation for credit and other relevant institutions to check 
the  authenticity  of  euro  notes  and  coins  which  they  have  received  and  put  back  into 
circulation,  in  line  with  the  procedures  defined  by  the  ECB  and  the  Commission  for  euro 
notes  and  coins  respectively.  Time  is  provided  to  allow  these  institutions  to  adapt  their 
internal proceedings and upgrade their equipments.  

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OJ C 257, 25.20.2006, p.16 
OJ L 325, 12.12.2003, p.44 
OJ L 19, 21.1.2005, p.73 
OJ L 181, 4.7.2001, p. 11 

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2007/0192 (CNS) 

Proposal for a 

COUNCIL REGULATION 

amending Regulation (EC) No 1338/2001 laying down measures necessary for the 
protection of the euro against counterfeiting 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty establishing the European Community, and in particular the third 
sentence of Article 123(4) thereof, 

Having regard to the proposal from the Commission8, 

Having regard to the opinion of the European Parliament9, 

Having regard to the opinion of the European Central Bank10, 

Whereas: 

(1) 

(2) 

(3) 

Council  Regulation  (EC)  No  1338/200111  requires  credit  institutions  and  any  other 
related institutions to withdraw from circulation all euro notes and coins received by 
them which they know or have sufficient reason to believe to be counterfeit and hand 
them over to the competent national authorities. 

It is important to ensure that circulating euro notes and coins are authentic. Procedures 
are  now  available  which  enable  credit  institutions  and  other  related  institutions  to 
check  the  authenticity  of  the  euro  notes and coins they receive before they  put them 
back into circulation. In order to comply with the obligation to check for authenticity 
and to implement those procedures, these institutions need time to adapt their internal 
functioning. 

Appropriate adjustment of equipment is a prerequisite for checking the authenticity of 
euro  notes  and  coins.  In  order  to  adjust  the  equipment  used  for  the  checks  for 
authenticity it is essential that the necessary quantities of counterfeit notes and coins 
are  available  at  the  places  where  testing  is  conducted.  It  is,  therefore,  important  to 
permit the transport of counterfeits amongst competent national authorities as well as 
institutions and bodies of the European Union.  

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OJ C , , p. . 
OJ C , , p. . 
OJ C , , p. . 
OJ L 181, 4.7.2001, p. 6 

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(4) 

(5) 

The  European  Technical  and  Scientific  Centre  (ETSC)  is  now  formally  established 
within  the  Commission  by  Council  Decision  2003/861/CE12  and  Commission 
Decision 2005/37/EC13. Therefore, the provision stating that the ETSC communicates 
data to the Commission is no longer necessary. 

This Regulation applies to non participating Member States  by  virtue of Article 1 of 
Council  Regulation  (EC)  No  1339/2001  of  28  June  2001  extending  the  effects  of 
Regulation  (EC)  No  1338/2001  to  those  Member  States  which  have  not  adopted  the 
euro as their single currency.  

(6) 

Regulation (EC) No 1338/2001 should therefore be amended accordingly, 

HAS ADOPTED THIS REGULATION: 

Article 1 

Amendments 

Regulation (EC) No 1338/2001 is amended as follows: 

1. 

Article 4 is amended as follows: 

(a) the title is replaced by the following: 

"Obligation to transmit counterfeit notes"; 

(b) at the end of paragraph 2 the following sentence is added : 

‘For the purpose of facilitating the control for authenticity of circulating euro notes, 
the transport of counterfeit notes amongst the competent national authorities as well 
as the institutions and bodies of the European Union shall be permitted.’ 

2. 

Article 5 is amended as follows: 

(a) the title is replaced by the following: 

"Obligation to transmit counterfeit coins"; 

(b) at the end of paragraph 2 the following sentence is added : 

‘For  the  purpose  of  facilitating  the  control  for  authenticity  of  circulating  coins,  the 
transport of counterfeit coins amongst the competent national authorities as  well as 
the institutions and bodies of the European Union shall be permitted.’ 

(c) paragraph 4 is replaced by the following: 

The  European  Technical  and  Scientific  Centre  (ETSC)  shall  analyse  and  classify 
every new type of counterfeit euro coin. To that end, the ETSC shall have access to 

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OJ L 325, 12.12.2003, p. 44 
OJ L 19, 21.1.2005, p. 73 

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the technical and statistical data stored at the European Central Bank on counterfeit 
euro coins. The ETSC shall communicate the relevant final results of its analysis to 
the competent national authorities and, according to its areas of responsibility to the 
European Central Bank. The European Central Bank shall communicate those results 
to Europol, in accordance with the agreement referred to in Article 3(3).  

3. 

Article 6 is amended as follows: 

(a) paragraph 1 is replaced by the following: 

‘1.  Credit  institutions,  and  any  other  institutions  engaged  in  the  sorting  and 
distribution  to  the  public  of  notes  and  coins  as  a  professional  activity,  including 
establishments  whose  activity  consists  in  exchanging  notes  and  coins  of  different 
currencies, such as bureaux de change, shall be obliged to ensure that euro notes and 
coins which they have received and which they intend to put back into circulation are 
checked  for  authenticity  and  counterfeits  are  detected.  This  verification  shall  be 
carried out in line with procedures to be defined by the European Central Bank and 
the Commission for euro notes and coins respectively.  

The  institutions  referred  to  in  the  first  subparagraph  shall  be  obliged  to  withdraw 
from circulation all euro notes and coins received by them which they know or have 
sufficient reason to believe to be counterfeit. They shall immediately hand them over 
to the competent national authorities.’  

(b) at the end of paragraph 3 the following subparagraph is added: 

‘By  way  of  derogation  from  the  first  subparagraph  of  paragraph  3,  the  laws, 
regulations  and  administrative  provisions  for  applying  the  first  subparagraph  of 
paragraph 1 of this Article shall be adopted by 31 December 2009 at the latest. They 
shall forthwith inform the Commission and the European Central Bank thereof.’ 

Article 2 

Applicability 

This  Regulation  shall  have  effect  in  the  participating  Member  States  as  defined  in  the  first 
indent of Article 1 of Council Regulation (EC) No 974/9814. 

Article 3 

Entry into force 

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

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OJ L 139, 11.5.1998, p. 1 

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Done at Brussels,  

For the Council 
The President 

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