Opinion of the European Central Bank of 6 December 2010 on authenticity, fitness checking and recirculation of euro banknotes and on sanctions for the failure to protect euro banknotes and coins against counterfeiting (CON/2010/87)
Date: 2010-12-06
Institutions: European Central Bank
Subjects: Greece, counterfeiting, euro, fine, money, national law

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 6 December 2010 

on authenticity, fitness checking and recirculation of euro banknotes and on sanctions for the 

failure to protect euro banknotes and coins against counterfeiting 

(CON/2010/87) 

Introduction and legal basis 

On  26  October  2010,  the  European  Central  Bank  (ECB)  received  a  request  from  the  Bank  of  Greece 

(BoG)  for  an  opinion  on  a  draft  BoG  Monetary  Policy  Council  act  on  the  authenticity  and  fitness 

checking and recirculation of euro banknotes and on the imposition of sanctions for failure to withdraw 

from circulation counterfeit euro notes (hereinafter the ‘draft MPC act’) and on a draft BoG Governor’s 

act on the imposition of sanctions on credit institutions and bureaux de change that fail to withdraw from 

circulation counterfeit euro coins (hereinafter the ‘draft Governor’s act’; the draft MPC act and the draft 

Governor’s act are hereinafter jointly referred to as the ‘draft acts’). 

The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 

Functioning  of  the  European  Union  and  the  first,  second  and  third  indents  of  Article 2(1)  of  Council 

Decision 98/415/EC  of  29 June 1998  on  the  consultation  of  the  ECB  by  national  authorities  regarding 
draft legislative provisions1, as the draft acts concern currency matters, means of payment and the Bank of 

Greece. In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the ECB, the 

Governing Council has adopted this opinion. 

1.  

Purpose of the draft acts 

1.1  The draft acts will align national law with Article 6 of Council Regulation (EC) No 1338/2001 of 
28 June 2001 laying down measures necessary for the protection of the euro against counterfeiting2. 

They  establish  a  sanctions  regime  for  failure  to  discharge  the  obligations  under  Article  6(2)  of 

Regulation  (EC)  No  1338/2001.  In  addition,  the  draft  MPC  act  complements  Decision 

ECB/2010/14 of 16 September 2010 on the authenticity and fitness checking and recirculation of 
euro  banknotes3.  National  authorities  are  not  formally  obliged  to  consult  the  ECB  on  the 

implementation  of  the  Member  States’  obligation  to  take  the  necessary  measures  to  ensure  that 

1  
2  
3  

OJ L 189, 3.7.1998, p. 42.  
OJ L 181, 4.7.2001, p. 6. 
OJ L 267, 9.10.2010, p. 1. 

 
 
 
 
                                                 
breaches of Article 6(1) of Regulation (EC) 1338/2001 are subject to effective, proportionate and 

deterrent sanctions. However, the ECB considers it necessary to harmonise throughout the Union 

the national measures implementing the abovementioned obligation to the extent possible, subject 

to national peculiarities. Thus, the present opinion includes some observations on this point.  

1.2  The draft MPC act amongst others: (i) aligns national law with Article 6(1) of Regulation (EC) No 

1338/2001 and Decision ECB/2010/14 by imposing on cash handlers, which are defined in Article 

2  of  the  Decision  ECB/2010/14  by  reference  to  the  institutions  listed  in  Article  6  of  Regulation 

(EC)  No  1338/2001,  the  obligation  to  comply  with  the  euro  banknote  authenticity  and  fitness 

checking  and  recirculation  procedures  defined  by  the  ECB  and  to  withdraw  from  circulation  all 

euro  banknotes  received  by  them  which  they  know  or  have  sufficient  reason  to  believe  to  be 

counterfeit; (ii) regulates certain issues that the Decision ECB/2010/14 leaves to the discretion of 

the  national  central  banks  (NCBs);  (iii)  provides  that  in  the  event  of  non-compliance  with  its 

provisions  and  with  Decision  ECB/2010/14  the  BoG’s  Governor  or  bodies  authorised  by  the 

Governor  will  impose  a  fine  ranging  from  EUR  10  000  to  EUR  200  000,  and  in  the  event  of 

repeated  non-compliance,  up  to  EUR  300  000,  according  to  the  findings  of  the  inspections 

conducted by the competent authorities; (iv) provides that the BoG will prohibit the recirculation of 

euro banknotes that are affected by non-compliance by a cash handler with Decision ECB/2010/14 

and with the draft MPC act where such non-compliance is detected during an on-site inspection, for 

as long as it has not been remedied. 

1.3  The draft Governor’s act (i) imposes on credit institutions and bureaux de change the obligation to 

withdraw  from  circulation  all  euro  coins  received  by  them  which  they  know  or  have  sufficient 

reason to believe to be counterfeit and (ii) provides that a decision of the BoG Banking and Credit 

Committee will impose on non-compliance with the abovementioned obligation a fine in favour of 

the Greek State, in the same range provided under the draft MPC act. 

1.4  The draft acts will enter into force on 1 January 2011. 

2. 

General observations 

2.1  The draft acts will lay down measures on the authenticity and fitness checking and recirculation of 

euro  banknotes  and  coins,  in  line  with Article  6  of  Regulation  (EC)  No  1338/2001  and  Decision 

ECB/2010/14. In this respect, the ECB welcomes the draft acts. 

2.2  With regard to the draft MPC act, the ECB considers that the provisions regulating issues that the 

Decision ECB/2010/14 leaves to the discretion of the national central banks will contribute to the 

adequate implementation of this Decision in the Greek legal order. Regarding paragraph 1 of the 

draft MPC act, the ECB is of the opinion that it should specify more clearly that cash handlers not 

checking  euro  banknotes  for  authenticity  and  fitness  will  not  be  allowed  to  recirculate  these 

banknotes  and  may  only  put  in  circulation  euro  banknotes  that  they have  received  either  directly 

from  an  NCB  or  from  another  cash  handler,  such  as  a  credit  institution  or  a  cash-in-transit 

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company,  that  has  checked  the  euro  banknotes  for  authenticity  and  fitness  according  to  the 

procedures laid down in Decision ECB/2010/14. 

2.3  The  draft  Governor’s  act  will  apply  the  withdrawal  obligation  under  Article  6(1)  of  Regulation 

(EC)  No  1338/2001  to  euro  coins,  requiring  only  credit  institutions  and  bureaux  de  change  to 

comply with this obligation. Under Article 128 of the Treaty, the ECB has the exclusive right to 

authorise the issue of euro banknotes within the Union, whereas euro coins are issued by euro area 

Member States subject to the ECB’s approval of the volume. Consequently, the ECB’s regulatory 

competence  concerns  only  euro  banknotes.  Thus,  the  ECB  supports  a  clear  and  consistent 

separation between national rules for euro banknotes and coins. The ECB further understands that 

the reason for limiting the scope of the draft Governor’s act to credit institutions and bureaux de 

change relates to the fact that, in the field of euro coins, the BoG has competence only as regards 

the institutions it supervises, i.e. credit institutions and bureaux de change. Nevertheless, in respect 

of  euro  coins  the  ECB  notes  that  a  Regulation  of  the  European  Parliament  and  of  the  Council 

concerning  authentication  of  euro  coins  and  handling  of  euro  coins  unfit  for  circulation  was 

adopted on 29 November 2010 and will apply from 1 January 2012 to all institutions referred to in 

Article 6(1) of Regulation (EC) No 1338/2001. 

3. 

Specific observations 

Sanctions regime 

3.1  The  ECB  welcomes  the  establishment  of  a  deterrent  sanctions  regime,  composed  of  enforcement 

measures  and  financial  sanctions,  applicable  to  non-compliance  by  cash  handlers  with  their 

obligations  under  Decision  ECB/2010/14  and  the  draft  MPC  act,  as  such  non-compliance  may 

compromise  the  adequate  protection  of  euro  banknotes  from  counterfeiting  in  the  Greek  legal 

order.  In  addition  to  enforcement  measures  such  as  the  prohibition  imposed  on  a  non-compliant 

cash  handler  from  recirculating  euro  banknotes,  the  fact  that  the  BoG  may  also  apply  financial 

sanctions in the context of the exercise of the regulatory powers provided by its Statute allows the 

effective  and  consistent  application  of  administrative  sanctions  against  non-compliant  cash 

handlers, without prejudice to potential penal sanctions imposed by the competent authorities. 

3.2  With regard to the types and range of sanctions provided by the draft MPC act, the ECB notes that 

particular importance should be attached to the proportionality between the obligation that the cash 

handler  has  not  complied  with  and  the  sanction  imposed  on  it.  In  particular,  with  regard  to  the 

second subparagraph of paragraph 6 of the draft MPC act, according to which the BoG will prohibit 

the  recirculation  of  euro  banknotes  that  are  affected  by  non-compliance  by  a  cash  handler  with 

Decision ECB/2010/14 and of the draft MPC act when such non-compliance is detected during an 

on-site inspection, the ECB stresses that, considering the variety of non-compliances that  may be 

detected  during  an  inspection,  it  may  be  disproportionate  to  prohibit  the  recirculation  of  euro 

banknotes in cases where the non-compliance is minor. 

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3.3  The principle of proportionality is also relevant to the level of the financial sanction imposed on a 

non-compliant  cash  handler.  The  ECB  considers  positive  that  the  level  of  the  fines  imposed  for 

non-compliance with Decision ECB/2010/14 and the draft MPC act will depend on the findings of 

the inspections as referred to in paragraph 6 of the draft MPC act.  

3.4  The  ECB  believes  that  the  sanctioning  regimes  available  in  the  Member  States  that  have  aligned 

their  law  with  Regulation  (EC)  No  1338/2001  in  conjunction  with  Decision  ECB/2010/14  could 

merit  some  harmonisation  insofar  as  the  ECB  procedures  laid  down  in  the  Decision  are  equally 

applicable  to  all  cash  handlers  located  in  the  euro  area.  In  this  respect,  the  ECB  considers  it 

important for national authorities to contribute to the establishment of a level playing field among 

cash handlers falling within the scope of Regulation (EC) 1338/2001, without prejudice to (i) the 

particularities of the cash cycle and the organisation of cash handlers at national level, and (ii) the 

consistency of the levels of financial sanctions available in their legal orders. 

This opinion will be published on the ECB’s website.  

Done at Frankfurt am Main, 6 December 2010. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

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