Opinion of the European Central Bank of 29 August 2014 on authenticity and fitness checking and recirculation of euro banknotes and coins (CON/2014/65)
Date: 2014-08-29
Institutions: European Central Bank
Subjects: Lithuania, counterfeiting, euro, money, national law

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 29 August 2014 

on authenticity and fitness checking and recirculation of euro banknotes and coins 

(CON/2014/65) 

Introduction and legal basis 

On  5  August  2014,  the  European  Central  Bank  (ECB)  received  a  request  from  Lietuvos  bankas  for  an 

opinion on a draft resolution setting out procedures for authenticity and fitness checking and recirculation 

of euro banknotes and coins (hereinafter the ‘draft resolution’). 

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/EC1, as the draft resolution relates to currency matters, means of payment and Lietuvos 

bankas. In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European 

Central Bank, the Governing Council has adopted this opinion. 

1.  

Purpose of the draft resolution 

1.1  The  main  objective  of  the  draft  resolution  is  to  implement  the  requirements  of  Regulation  (EC) 

No 1338/20012, Regulation (EU) No 1210/20103, and Decision ECB/2010/144. 

1.2  The  draft  resolution  lays  down  an  authorisation  regime  whereby  the  cash  services  department  of 

Lietuvos  bankas  (hereinafter  the  ‘Cash  Service’)  will  have  administrative  discretion  to  grant  or 

deny  cash  handling  service  providers  (hereinafter  ‘cash  handlers’)  the  right  to  verify  the 

authenticity and fitness of euro banknotes and coins prior to their recirculation. If a cash handler is 

granted such a right, it will be included in the public register of cash handlers which is published on 

Lietuvos bankas’s website. 

1.3  The draft resolution also sets out requirements for cash handlers permitted to check the authenticity 

and fitness of euro banknotes and coins and establishes procedures for monitoring the activities of 

cash  handlers.  Cash  handlers  will  be  obliged  to  report  data  concerning:  (a)  the  machines  used  in 

cash handling activities; and (b) the volume of euro banknotes and coins processed, sorted as unfit, 

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Council Decision 98/415/EC of  29 June 1998 on the consultation of the European Central Bank by national authorities 
regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42). 
Council Regulation (EC) No 1338/2001 of 28 June 2001 laying down measures necessary for the protection of the euro 
against counterfeiting (OJ L 181, 4.7.2001, p. 6). 
Regulation  (EU)  No 1210/2010  of  the  European  Parliament  and  of  the  Council  of  15  December  2010  concerning 
authentication of euro coins and handling of euro coins unfit for circulation (OJ L 339, 22.12.2010, p. 1). 
Decision  ECB/2010/14  of  16  September  2010  on  the  authenticity  and  fitness  checking  and  recirculation  of  euro 
banknotes (OJ L 267, 9.10.2010, p. 1). 

 
 
 
 
 
                                                 
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handed over as suspected counterfeit, recirculated and distributed via customer operated machines 

or cash dispensers. 

2. 

General observations 

2.1  The  draft resolution imposes  obligations  on cash  handlers  and  seeks to safeguard  the  integrity of 

euro banknotes and coins as a means of payment. The ECB generally welcomes the draft resolution 

and  is  confident  that  its  provisions  will  support  the  protection  of  euro  banknotes  and  coins  in 

circulation and thereby maintain the general public’s confidence in euro banknotes and coins. 

2.2  The ECB considers it essential that any draft legislation should uphold the principle of the primacy 

and  direct  application  of  Union  law  on  the  authentication  of  euro  banknotes  and  coins  and  the 

handling of euro banknotes and coins unfit for circulation. For consistency’s sake, the ECB favours 

the  use  in  national  legislation  of  direct  references  to  Regulation  (EC)  No 1338/2001,  Regulation 

(EU) No 1210/2010 and Decision ECB/2010/14 or, alternatively, reproduction of their provisions 
without any alterations or additions5. 

2.3  Finally, 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  breaches  of  Article 

6(1)  of  Regulation  (EC)  No  1338/2001  are  subject  to  effective,  proportionate  and  deterrent 

sanctions.  Notwithstanding  this,  the  ECB  believes  it  is  beneficial  to  harmonise  the  national 

measures implementing that obligation throughout the Union to the greatest extent possible, subject 
to specific national requirements6. 

3. 

Concepts and definitions used in the draft resolution 

3.1  The  concepts  and  definitions  used  in  the  draft  resolution  should  be  fully  consistent  with  existing 

Union  legislation.  The  definition  of  ‘legal  persons’  set  out  in  the  Lithuanian  language  version  of 
Article  4(7)(3)  of  the  draft  resolution7  is  narrower  than  the  definition  of  ‘economic  agents’  in 

Article 6(1) of Regulation (EC) No 1338/2001 and therefore is not in line with that Regulation. The 

draft resolution should be amended accordingly. 

3.2  The  description  of  entities  eligible  to  be  included  in  the  public  register  of  cash  handlers8  further 

limits  the  scope  of  Article  6(1)  of  Regulation  (EC)  No 1338/2001  by  providing  that  only  legal 

persons  whose  core  business  activity  is  related  to  authenticity  and  fitness  checking  and 

recirculation of euro banknotes and coins are eligible to be included in the public register of cash 

handlers.  The  ECB  notes  that  the  processing  and  distribution  to  the  public  of  banknotes  via 

automated teller machines (cash dispensers) may be a secondary activity – and not core business –

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See  paragraph  2.2  of  Opinion  CON/2013/65.  All  ECB  opinions  are  published  on  the  ECB’s  website  at 
www.ecb.europa.eu.  
See paragraph 2.4 of Opinion CON/2011/105 and paragraph 2.3 of Opinion CON/2013/65. 
See Article 4(7)(3) and other relevant provisions of the draft resolution. 
Contained in the application form for inclusion in the public register of cash handlers (Annex 1 to the draft resolution). 

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of  some  entities  falling  within  the  definition  of  ‘economic  agents’  in  Article  6(1)  of  Regulation 

(EC) No 1338/2001; the draft resolution should therefore be amended accordingly. 

4. 

Authorisation, the public register of cash handlers and powers of the Cash Service 

4.1  Only cash handlers that are included in the public register have to carry out authenticity and fitness 

checking of euro banknotes and coins. The ECB understands that this public register may facilitate 

the monitoring and control of cash handlers’ activities in this area in Lithuania, foster transparency 

and increase consumer awareness of the rights and obligations of cash handlers. The authorisation 

regime  under  the  draft resolution limits  the  scope  of the obligation  on cash  handlers to  carry  out 

authenticity  and  fitness  checking  to  those  that  have  submitted  an  application  to  Lietuvos  bankas, 

have been authorised by it for this purpose and have been included in the public register. The ECB 

notes  that  the  authorisation  regime  deviates from  Regulation  (EC)  No 1338/2001,  which  requires 

all  cash  handlers,  irrespective  of  the  need  for  registration,  to  perform  authenticity  and  fitness 

checking  of  euro  banknotes  and  coins  prior  to  recirculation,  and  the  draft  resolution  should  be 

amended accordingly.  

4.2  The  draft  resolution  also  exempts  certain  cash  handlers  from  the  authorisation  regime  and  the 
reporting requirements9. Under certain conditions set out in Decision ECB/2010/1410, an NCB may 

exclude certain cash handlers from some reporting requirements. However, as noted above, Union 

acts,  including  ECB  legal  acts,  require  all  cash  handlers  to  perform  authenticity  and  fitness 

checking of euro banknotes and coins prior to their recirculation. The exemption of certain entities 
from  the  authorisation  regime  ‘due  to  the  specific  character  of  their  activities’11  and  the  ‘limited 

cash  handling  operations  they  carry  out’  is  therefore  not  in  line  with  Regulation  (EC) 

No 1338/2001 and Decision ECB/2010/14 to the extent that the cash handlers will not be subject to 

the obligation to carry out authenticity and fitness checking of euro banknotes and coins. The draft 

resolution should be amended accordingly. 

4.3.   The ECB also notes that the power of the Cash Service to  decide which cash handlers should be 

included  in  the  public  register  is  of  a  discretionary  nature.  It  should  be  ensured  that  the  Cash 

Service has the full range of necessary discretionary powers under Lithuanian law. 

5. 

Handover and delivery of euro banknotes and coins 

5.1  The  draft  resolution  provides  that  cash  handlers  shall  hand  over  to  the  national  competent 

authorities  immediately,  but  in  any  event  within  a  maximum  of  20  working  days,  not  only  euro 

banknotes  and  coins  suspected  to  be  counterfeit,  but  also  euro  banknotes  and  coins  unfit  for 
circulation12. The ECB recommends that the consulting authority assess the proportionality of such 

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Article 44 of the draft resolution. 
Paragraphs 3.8 and 3.13 of Annex IV to Decision ECB/2010/14. 
Article 44 of the draft resolution. 
Article 35(1) of the draft resolution. 

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a short period for handover to Lietuvos bankas of euro banknotes and coins unfit for circulation, as 

it may unnecessarily increase the administrative burden and costs for cash handlers affected. 

5.2  Article 27 of the draft resolution provides that euro banknotes delivered directly to a cash handler 

by Lietuvos bankas do not require authenticity and fitness checks prior to recirculation. Article 3(4) 

of Decision ECB/2010/14 extends this exemption to euro banknotes that any national central bank 

has delivered directly to a cash handler. The draft provision thus limits the scope of the equivalent 
provisions of Decision ECB/2010/14 and the draft resolution should be amended accordingly13. 

6. 

Sanctions and reporting 

6.1  The ECB reiterates the importance of effective, proportionate and deterrent sanctions for breaches 

of the rules on the authenticity and fitness checking and recirculation of euro banknotes and coins. 

6.2  Under  the  draft  resolution,  when  non-compliance  by  a  cash  handler  with  relevant  Union  acts, 

including  ECB  legal  acts,  or  the  provisions  of  the  draft  resolution  is  detected,  the  Cash  Service 

may, among other things, prohibit a cash handler from recirculating euro banknote denominations 
of the series concerned until such non-compliance is rectified14. The ECB highlights that when the 
Cash Service prohibits recirculation in such a situation, it does so on behalf of the ECB15. 

6.3  The  ECB  understands  that  Lithuanian  legislation  provides  for  administrative  penalties  (fines)  for 

failing  to  withdraw  counterfeit  euro  banknotes  and  coins  from  circulation  and  for  failing  to  take 
measures to detect counterfeit euro banknotes and coins16. Authorised employees and managers of 

cash  handlers  are  personally  liable  for  these  penalties  (fines).  This  regime  does  not  fully  reflect 

Regulation (EC) No 1338/2001 and Decision ECB/2010/14 as regards the range of sanctions that 

may  be  imposed  for  failing  to  carry  out  authenticity  and  fitness  checking  of  euro  banknotes  and 

coins prior to recirculation. In addition, the ECB notes that national legislation does not provide for 

the imposition of administrative penalties (fines) on legal entities.  

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Paragraph 3.3 of Opinion CON/2010/90. 
Articles 13(2), 19 and 41 of the draft resolution. 
Article 10(3) of Decision ECB/2010/14. 
Article 173(21) of the Lithuanian Code of Administrative Offences. 

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6.4  As regards the data reporting deadlines set by Article 36 of the draft resolution, which are 31 July 

and  31 January  of  each  year,  the  ECB  recommends  extending  the  reporting  deadlines  to  end-

August and end-February in line with Article 3.9 of Annex IV to Decision ECB/2010/14.  

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

Done at Frankfurt am Main, 29 August 2014. 

[signed] 

The President of the ECB 

Mario DRAGHI 

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