COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT Accompanying the document Proposal for a Regulation of the European Parliament and of the Council on controls on cash entering or leaving the Union and repealing Regulation (EC) No 1889/2005
Date: 2016-12-21
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: customs cooperation, customs formalities, customs inspection, disclosure of information, exchange of information, fight against crime, money laundering, terrorism

EN 

   EN 

   EUROPEAN COMMISSION  Brussels, 21.12.2016  SWD(2016) 470 final   COMMISSION STAFF WORKING DOCUMENT  IMPACT ASSESSMENT  Accompanying the document Proposal for a Regulation of the European Parliament and of the Council on controls on cash entering or leaving the Union and repealing Regulation (EC) No 1889/2005 {COM(2016) 825 final} {SWD(2016) 471 final}  
 
 
Table of Contents 

1. 

Introduction and background ............................................................................................. 4 

1.1 

Genesis of the Cash Control Regulation .................................................................................. 4 

1.2       Description of key terminology and the overall legal framework in the area of AML/TF ....... 4 

1.3 

International context ............................................................................................................... 6 

1.4  

The objectives and main provisions of the CCR ....................................................................... 6 

1.5       Quantitative data ..................................................................................................................... 9 

1.6       Evaluation of the Cash Control Regulation .............................................................................. 9 

1.7      Effectiveness of the Cash Control Regulation ......................................................................... 10 

1.8      Consultation of stakeholders .................................................................................................. 12 

2. 

Problem definitions and the drivers of the problems .................................................... 12 

2.1 

Problem 1:   Imperfect coverage of cross -border cash movements ..................... 15 

2.2 

2.3 

Problem 2:  Difficulties regarding the exchange of information between competent 
authorities .............................................................................................................................. 17 

Problem 3:  Impossibility for competent authorities to temporarily detain sub-threshold 
amounts ................................................................................................................................. 22 

2.4 

Problem 4:  Imperfect definition of 'cash' ............................................................................. 24 

2.5      Problem 5:  Divergent penalties ............................................................................................. 26 

2.6 

Problem 6:  Different implementation levels among Member States .................................. 28 

2.7       Problem 7:  Divergent national measures to raise awareness .............................................. 29 

3. 

EU right to act and subsidiarity ........................................................................................ 30 

3.1 

Legal basis in primary law ...................................................................................................... 30 

3.2  

Subsidiarity ............................................................................................................................. 31 

4. 

5. 

Objectives of the proposal ................................................................................................ 32 

Policy options ..................................................................................................................... 33 

5.1       Problem 1: Imperfect coverage of cross-border cash movements ....................................... 33 

5.2 

Difficulties regarding the exchange of information between competent authorities .......... 34 

5.3  

Problem 3: Impossibility for competent authorities to temporarily detain sub-threshold 
amounts ................................................................................................................................. 35 

5.4 

5.5 

5.6 

5.7 

Problem 4: Imperfect definition of 'Cash' .............................................................................. 35 

Problem 5: Divergent  'penalties' ........................................................................................... 36 

Problem 6: Different implementation levels among Member States ................................... 36 

Problem 7:   Divergent national measures to raise awareness ............................................. 37 

2 

 
 
 
 
6. 

Impacts and option comparison ....................................................................................... 37 

6.1      Problem 1:    Imperfect coverage of cross-border cash movements ...................................... 38 

6.2 

6.3 

Problem 2: Difficulties regarding the exchange of information between competent 
authorities .............................................................................................................................. 42 

Problem 3:  Impossibility for competent authorities to temporarily detain sub-threshold 
amounts ................................................................................................................................. 45 

6.4  

Problem 4:  Imperfect definition of 'cash' ............................................................................. 47 

6.5 

6.6 

6.7 

Problem 5: Divergent 'penalties' ............................................................................................ 51 

Problem 6: Different implementation levels among Member States ................................... 53 

Problem 7:   Divergent national measures to raise awareness ............................................. 54 

6.8      Summary of preferred options ............................................................................................... 56 

7. 

8. 

Preferred options and cohesion ....................................................................................... 59 

Monitoring and evaluation ................................................................................................ 60 

8.1     Monitoring arrangements ....................................................................................................... 60 

8.2     Evaluation ................................................................................................................................ 61 

List of annexes to the Impact Assessment report ......................................................................... 62 

Annex 1. 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 .................................. 63 

Annex 2. Evaluation of Regulation (EC) No 1889/2005 on controls of cash entering or leaving 

the Community .................................................................................................................................. 68 

Annex  3. Report on the outcome of the Public Consultation on the review of Regulation (EC) 

Nr. 1889/2005 on controls of cash entering or leaving the Community .................................... 122 

Annex  4. Procedural information .................................................................................................. 137 

Annex  5. Who is affected by the initiative and how .................................................................... 140 

Annex  6. Fundamental rights and exchange of information ...................................................... 141 

3 

 
 
 
 
 
 
 
 
 
 
 
1. 

Introduction and background 

1.1  Genesis of the Cash Control Regulation 

Prior to the introduction of the Cash Control Regulation, the issue of cross-border cash movements in 
the EU Member States was first examined by Operation "Moneypenny".  

Moneypenny was an operation which took place from September 1999 to February 2000 between the 
customs authorities of the –at the time 15- Member States of the European Union.  It monitored cash 
movements  across  the  EU's  internal  and  external  borders  in  excess  of  EUR  10  000.  It  examined 
whether  the  scale  of  such  movements  indicated  a  threat  that  the  controls  applied  by  financial 
institutions to prevent money laundering could be circumvented by cross-border movements of cash.  

Although  the  final  report  did  not  distinguish  between  intra  and  extra-EU  cash  movements    and 
included only limited input from 9 Member States that did not apply specific controls on cash at their 
borders  it  nevertheless  revealed  cross-border  cash-movements  of  1.35  billion  Euro  and  substantial 
differences in controls applied by the Member States. 

In June 2002 the Commission presented to the Council its "Proposal for a Regulation of the European 
Parliament  and  the  Council  on  the  prevention  of  money  laundering  by  means  of  customs  co-
operation". 

the  Anti-Money  Laundering  Directive  (AMLD)1  should  be 
The  Commission  proposed 
complemented by a Regulation introducing controls on large sums of cash crossing the EU's external 
border. For the controls to be effective, a system would also be needed whereby the Member States 
could exchange information on suspicious movements with each other and the Commission.  

that 

The  Cash  Control  Regulation2  entered  into  force  on  15  December  2005  and  is  applicable  since  15 
June 2007. It provides for an EU-wide approach to controlling cash movements into or out of the EU. It 
was  a  decisive  step  in  the  EU  policy  aimed  at  the  strengthening  of  measures  to  prevent  money 
laundering, terrorist financing and other illegal activities.  

1.2 Description of key terminology and the overall legal framework in the 
area of AML/TF 

Money  laundering3  concerns  activities  related  to  assets  which  have  a  criminal  or  illicit  origin. 
Criminals engaged in money laundering will therefore attempt to conceal or disguise the true nature, 
source or ownership of the assets in question and transform them into seemingly legitimate proceeds. 
If  dirty  money  is  allowed  to  flow  through  the  financial  system,  the  stability  and  reputation  of  the 

1 Council Directive 91/308/EEC of 10 June 1991 on prevention of the use of the financial system for the purpose of money 
laundering.  Later  As  of  May  20,  2015,  Directive  (EU)  2015/849  of  the  European  Parliament  and  of  the 
Council  of  20  May  2015  on  the  prevention  of  the  use  of  the  financial  system  for  the  purposes  of  money 
laundering or terrorist financing, amending Regulation (EU) No 648/2012 of the European Parliament and 
of  the  Council,  and  repealing  Directive  2005/60/EC  of  the  European  Parliament  and  of  the  Council  and 
Commission  Directive  2006/70/EC,  ('4th  Anti-Money  Laundering  Directive')  was  adopted.    It  is  currently 
being transposed into national legislation by Member States, who have until June 26th, 2017 to implement its 
provisions. Hereinafter referred to as AMLD.    

2 http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:32005R1889  

3  &  4  Definition as used  in  the  Impact  Assessment  accompanying  the Proposal  for  a Directive  of  the  European 
Parliament and of the Council on the prevention of the use of the financial system for the purpose of money 
laundering,  including  terrorist  financing,  pp.  8-9,  to  be  consulted  at:    http://eur-lex.europa.eu/legal-
content/EN/TXT/PDF/?uri=CELEX:52013SC0021&from=EN  

4 

 
 
 
 
 
 
                                                            
financial sector can be seriously jeopardised - which in turn could undermine the integrity of the single 
market. 

Terrorist  financing4    concerns  the  provision  or  collection  of  funds  to  carry  out  any  of  the  offences 
defined in Council Framework Decision 2002/475/JHA on combating terrorism. Terrorist activities can 
be  funded  through  legitimate  as  well  as  criminal  activities  and  terrorist  organisations  engage  in 
revenue-generating activities which in themselves may be, or at least appear to be, legitimate. There 
is a clear risk to the integrity, proper functioning, reputation and stability of the financial system, and 
with potentially devastating consequences for the broader society. 

The  EU  considers  the  anti-money  laundering/combating  the  financing  of  terrorism  (AML/CFT) 
framework as crucial for ensuring the successful functioning of the single market and safeguarding the 
security of citizens.  

The  fight  against  money  laundering  and  the  financing  of  terrorism  happens  at  various  levels.    On  a 
supranational  level,  the  Financial  Action  Task  Force  (henceforth:  'FATF')  in  which  the  Union  is 
represented  through  the  Commission,  establishes  recommendations  for  jurisdictions  and  describes 
how to best tackle money laundering and terrorist financing.  These recommendations are not directly 
applicable legal instruments but do carry weight:  the FATF members perform mutual evaluations  to 
determine  compliance  which  are  closely  scrutinized  and  have  great  reputational  impact.    On  FATF-
level, Recommendation 32 specifically treats the issue of cross-border cash movements. 

Various  legal  instruments  have  been  adopted  to  ensure  an  effective  anti-money  laundering  and 
combating terrorist financing framework at EU level. The most relevant ones are: 

– The Fourth AML Directive5, which covers most of the FATF Recommendations; 

–  Regulation  (EC)  No  1781/2006  of  15  November  2006  on  information  on  the  payer  accompanying 
transfers of funds6, which implements FATF SR VII on wire transfers; 

– Directive 2007/64/EC of 13 December 2007 on payment services in the internal market7 (Payment 
Services  Directive)  which,  in  combination  with  the  AMLD,  implements  FATF  SR  VI  on  alternative 
remittance; 

–  Regulation  (EC)  No  2580/2001  of  27  December  20018  on  specific  restrictive  measures  directed 
against certain persons and entities with a view to combating terrorism which, together with Regulation 
(EC)  No  881/2002  of  27  May  20029  implementing  UN  Al  Qai'da  and  Taliban  sanctions,  implements 
part of FATF SR III on freezing terrorist assets. 

Broadly describing the interaction between the various instruments, it could be said that as regards the 
fight against money laundering and terrorist finance, the Anti Money Laundering Directive lays down a 
framework of rules to be implemented as regards the functioning of the formal financial sector whereas 
the  CCR  lays  down  a  framework  of  rules  which  is  complementary  and  protects  the  Union  against 
cross-external border transfers of cash money by money launderers and terrorist financiers who could 
opt for this mode of transport in order to circumvent the controls on the formal financial system. 

5 OJ L 141, 05.06.2015, p. 73. 

6 OJ L 345, 8.12.2006, p. 1. 

7 OJ L 319, 5.12.2007, p. 1. 

8 OJ L 344, 28.12.2001, p. 70. 

9 OJ L 139, 29.5.2002, p. 9. 

5 

 
 
 
                                                            
 
The  Cash  Control  Regulation  was  adopted  for  this  purpose  and  seeks  to  reconcile  the  fundamental 
principle  of  free  movement  of  goods,  persons,  services  and  capital  with  the  prevention  of  money 
laundering and terrorist financing in the context of the single market. 

Complementary  to  the  legislation  specifically  adopted  to  target  anti  money  laundering  and  terrorist 
financing the Community Customs Code and/or national legislation generally apply for the movements 
of cash in post and freight at the Member States' borders. This means that, in most Member States, 
cash has to be declared on a customs declaration form for a particular parcel, container etc.  

However, the information required on the customs declaration form is significantly less comprehensive 
than  the  data  required  on  the  EU-CDF  and  does  not  include  the  desired  level  of  detail  required  for 
AML/CTF purposes (e.g. owner of cash, provenance and intended use of cash).  

1.3 

International context 

The  Financial  Action  Task  Force  (FATF)10  is  an  inter-governmental  body  set  up  by  the  G7  Summit 
held in Paris in 1989 in response to mounting concern over money laundering.   

The  FATF  has  primary  responsibility  for  developing  and  promoting  global  policy  standards,  both  at 
national and international level, to prevent money laundering and combat terrorist financing. It tries to 
generate  the necessary  political  will  to bring about legislative  and  regulatory  reforms  in  these  areas, 
and for this purpose it has adopted 40 recommendations. 

It  is  important  to  note  that  the  recommendation  concerning  cash  couriers  was  developed  during  the 
same  time  period  when  the  Commission  was  drafting  and  proposing  the  Cash  Control  Regulation 
('CCR'  or  "the  Regulation").    Initially  the  FATF  labelled  this  norm  'Special  Recommendation  IX',  the 
current Regulation lays down measures which at the time were consistent with this recommendation.   

In the course of time and after adoption on EU-level of the CCR, FATF Special Recommendation IX 
was  complemented  with  an  interpretative  note  and  was  finally  renamed  'Recommendation  32'.    For 
reasons of consistency and readability this document will always refer to 'Recommendation 32', even 
when referring to a point in time where the renaming had not yet taken place.  

The European Commission is a member of the FATF and is therefore committed to implementing its 
recommendations. 

15 EU Member States are also full members of the FATF in their own right, while the countries that 
joined the EU from 2004 onwards are represented in the  Committee of Experts on the Evaluation of 
Anti-Money Laundering Measures (MONEYVAL), FATF's affiliated regional body.   

Starting  with  its  own  members,  the  FATF  monitors  countries'  progress  in  implementing  AML/CFT 
policies by rating their compliance with its recommendations and measuring the effectiveness of their 
AML/CFT  systems  via  a  mutual  evaluations  procedure  and  by  reviewing  anti  money  laundering  and 
combatting terrorist financing techniques and relevant counter-measures.  

1.4   The objectives and main provisions of the CCR 

The original objectives of the Cash Control Regulation, as described in the text of the Regulation are 
presented in the diagram below. 

10 Information about the FAFT, its recommendations and all related documents is available on the public web- pages of the 

FATF: http://www.fatf-gafi.org  

6 

 
 
 
 
 
 
                                                            
Figure 1. Original objectives of the Cash Controls Regulation 

C
I
F
I
C
E
P
S

Prevent 
facilitation of 
money 
laundering and 
terrorist 
financing by 
cash 
movements 
to/from the EU 

L
A
R
E
N
E
G

Promote 
a 
harmonious, 
balanced  and 
sustainable 
development 
of  economic 
activities 
throughout 
the 
market  

internal 

L
A
N
O
I
T
A
R
E
P
O

Implement an 
effective and 
equivalent level of 
control on 
movements of 
cash crossing the 
borders of the 
Union 

Complement the 
control system on 
the prevention of 
money laundering 
through obliged 
entities under the 
AML/CFT directive 

The provisions designed to meet these objectives were codified in the Cash Control Regulation in line 
with the requirements of the FATF's Recommendation 32 on cash couriers, with the view of aligning 
EU practices with the highest global AML/CFT standards. An outline of those provisions is reproduced 
below,  more  detailed  information  can  be  obtained  in  the  2015  evaluation  report  in  Annex  2  of  this 
impact assessment.   

Definition of cash  

The  definition  of  cash  in  the  Cash  Control  Regulation  matches  the  definition  used  by  the  FATF  for 
Recommendation 32 on cash couriers and includes: 

  Currency, i.e. banknotes and coins that are in circulation as a medium of exchange. 

  Bearer-negotiable instruments (BNI) 

As  the  Cash  Control  Regulation  mirrors  the  definition  of  'cash'  used  in  the  supra-national  standard 
(FATF recommendation 32), gold, precious metals or stones, electronic cash cards and casino chips 
are not included in the definition of cash.    

The obligation to declare 

The Cash  Control Regulation  establishes  a  uniform EU  approach  towards cash  controls  based  on  a 
mandatory declaration system.  

If a natural person entering or leaving the EU (including transiting) transports cash of a value of EUR 
10 000 or more, he/she must declare these funds.  

The  EUR  10  000  threshold  is  considered  high  enough  not  to  burden  the  majority  of  travellers  and 
traders with disproportionate administrative formalities.  

7 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
However,  when  there  are  indications  of  illegal  activities  linked  with  movements  of  cash  lower  than 
EUR  10  000,  the  collecting  and  recording  of  information  related  to  these  movements  is  also 
authorised.  

This provision was introduced in order to limit the practice of 'smurfing' or 'structuring', the practice of 
deliberately  carrying  amounts  lower  than  the  threshold  with  the  intention  to  escape  the  obligation  to 
declare.  This  can  be  achieved  either  by  dividing  a  large  sum  of  cash  between  several  individuals 
travelling together, such as a family of 2 adults and 2 young children, each carrying 9500 Euro, or by a 
single  individual  who  travels  multiple  times  in  a  short  time-span  and  on  each  occasion  transfers 
amounts  slightly  below  the  declaration  threshold.    Structuring  can  be  linked  to  money  laundering, 
terrorist financing, fraud or other financial crimes and should therefore be monitored by the competent 
authorities. 

Designation of powers of the competent authorities11 

In  order  to  ensure  compliance  with  the  obligation  to  declare,  the  national  competent  authorities  are 
empowered to: 

  Request, accept, check and certify a cash declaration; 

  Check compliance with the obligation to declare; 

  Carry out controls on natural persons, their baggage and their means of transport 

Recording and processing of information 

Member States must record and process all information they obtain through declarations or controls, 
and make this information available to the national authorities competent for fighting money laundering 
and terrorist financing. 

These authorities are designated as national Financial Intelligence Units (FIUs), central national units 
responsible  for  receiving  and  analysing  information  and  suspicious  transactions  received  from 
authorities  or  private  sector  operators,  analysing  them  and  if  there  are  reasons  to  suspect  that  illicit 
activity may be going on, to notify the competent (judicial) authorities.  

It should be noted that all information obtained through the Cash Control Regulation is confidential. All 
personal information must be dealt with in accordance with the relevant data protection provisions and 
respect for fundamental rights.  

Exchange of information 

Where there are indications that the sums of cash are related to any illegal activity associated with the 
movement  of  cash,  exchange  of  information  may  take  place  with  competent  authorities  in  other 
Member  States.  Information  adversely  affecting  the  financial  interests  of  the  EU  must  also  be 
transmitted to the Commission. 

Under  the  framework  of  existing  agreements  on  mutual  administrative  assistance,  information 
obtained under the Cash Control Regulation may also be communicated to a third country, subject to 
compliance with relevant national and EU provisions on the transfer of personal data to third countries. 

Penalties 

Member States are required to provide for penalties against persons who fail to declare EUR 10 000 
or  more  in  cash  when  crossing  EU  external  borders.  The  penalties  resulting  from  such  proceedings 
must be effective, dissuasive and proportionate to the offence12, so as to have a deterrent effect.   

11 As in most Member States the national customs authorities are competent authorities for the implementation of the Cash 
Control  Regulation,  the  terms  'competent  authorities'  and  'customs  authorities'  are  used  interchangeably  in  the 
evaluation, depending on context.  

12 Offence refers to the mere failure to declare and is not related to any underlying illicit activity concerning the 

money. 

8 

 
 
 
 
                                                            
1.5 Quantitative data 

On average, 100 000 cash control declarations are submitted annually in the EU, representing a total 
amount  declared  between  60-70  billion  Euro.  While  amounts  of  undeclared  or  incorrectly  declared 
cash which have been detected by authorities are highly variable (240 Mio – 1.5 billion Euro/year), on 
average approximately 300 Mio Euro per year is detected following controls. 

Statistics  show  a  sustained,  high  level  of  cash  declarations  over  the  years  and  also  a  significant 
increase in the number of recordings at the EU border in recent years.  

It is difficult to pinpoint the exact combination of reasons behind these trends based on the available 
data. 

 Possible factors  include higher numbers  of travellers  in general, more frequent controls  by customs 
authorities,  cash  being  used  as  an  alternative  means  of  payment  due  to  increased  regulation  in  the 
financial sector etc. 

1.6 Evaluation of the Cash Control Regulation 

The existing CCR has been subject to regular monitoring and evaluations. 

The  existing  legal  framework  and  the  implementation  of  the  Regulation  were  the  subject  of  an 
extensive evaluation, performed in 2015 (See annex 2).   This evaluation identified several areas that 
could be considered for amendment and which are now included in the problem definition section.  
According to the evaluation; the overall performance of the Cash Control Regulation was considered 
adequate, but consideration should be given to the possibility of more in-depth analysis to improve the 
following aspects: 

  Consider including cash movements by mail and freight at EU external borders within the scope of 

the Cash Control Regulation; 

  Consider  widening  and  harmonising  the  possibilities  for  information  exchange  between  Member 

States:  

a.  By including all cash control information (including non-suspicious voluntary declarations); 

b.  By setting clear procedures and providing effective tools for the exchange of information; 

  Consider  to  explicitly  provide  for  the  possibility  of  using  cash  declaration  information  for  tax 

purposes, including the fight against tax fraud and evasion; 

  Consider  a  level  of  approximation  of  cash  control  penalties  applied  by  Member  States  at  EU 

external borders. 

In  addition,  the  Commission  is  in  continuous  interaction  with  Member  States'  national  experts  who 
implement the Regulation.  This interaction is both ad hoc and structural, with 2 annual meetings of the 
'Cash Controls Working Group' held under the aegis of the Customs 2020 programme.  

Following  the  terrorist  attacks  in  Paris  and  taking  into  account  conclusion  Nr.  8  of  the  extraordinary 
Justice  and  Home  Affairs  Council  of  20  November  2015,  the  Commission  published  on  2  February 
2016 a Communication to the Council and the Parliament on an Action Plan to further step up the fight 

9 

 
 
 
 
 
 
 
against the financing of terrorism13. The Action Plan builds on existing EU rules to adapt to new threats 
and aims at updating EU policies in line with international standards.  

One of the elements of the Action Plan concerns the commitment of the Commission to present – at 
the latest by Q4 2016 - a legislative proposal to amend the Cash Control Regulation14. 

The Commission Action Plan emphasises the need to speed up the evaluation/revision exercise of the 
cash control regulation which was already ongoing and specifically identifies a number  of key areas 
on which expeditious action should be undertaken to strengthen the existing framework.  The areas in 
question are: 

- Cash shipments in post and freight 

-  Allowing  authorities  to  act  on  amounts  of  cash  below  the  declaration  threshold  in  case  there  are 
indications of suspicious activity associated with the cash. 

- Examining the possibility to include precious metals and/or other highly liquid stores of value in the 
definition of cash. 

While  these  areas  were  already  under  investigation  for  amendment,  the  Action  Plan,  clearly 
establishes the political priorities assigned by the Commission to the specific topics mentioned.  

The conclusion from the evaluations and the recommendations from the Commission's Action Plan to 
further step up the fight against the financing of terrorism resulted in the identification of a number of 
areas in which the existing CCR could be improved15. 

1.7 Effectiveness of the Cash Control Regulation 

The  effectiveness  of  the  cash  controls  regulation  has  to  be  considered  in  the  wider  framework  of 
supranational EU-measured which seek to tackle money laundering and terrorism finance, such as the 
AMLD,  as  described  in  the  previous  section..  The  CCR  is  complementary  to  this.  The    overall 
performance  of  the  Cash  Control  Regulation  was  considered  adequate  based  on  feedback  from 
various sources (national FUI's,  law enforcement agencies). 

The information collected by the authorities via the declaration system allows to achieve the goals  set 
out  by  the  Cash  Control  Regulation  and  the  utility  of  this  information  is  judged  to  be  good  by 
authorities involved. 

An important part of the effectiveness of the CCR is the fact that it implements FATF recommendation 
32.  The European Commission (Commission) represents the European Union with the FATF and is 
therefore committed to implementing its recommendations.  

15 EU Member States are also full members of the FATF in their own right, while the countries that 
joined the EU from 2004 onwards are represented in the Committee of  Experts on the Evaluation of 
Anti-Money Laundering Measures (MONEYVAL), FATF's affiliated regional body.   

Through a system of mutual evaluations between members, according to a defined methodology, the 
FATF monitors countries' progress in implementing AML/CFT policies by rating their compliance with 
its  recommendations  and  measuring  the  effectiveness  of  their  AML/CFT  systems,  techniques  and 

13 http://eur-lex.europa.eu/legal-content/en/TXT/HTML/?uri=CELEX:52016DC0050&from=EN  

14 Annex 1 of the Action Plan presents the timeline for the proposals. 

15 Annex 2 Evaluation report and the Commission Action Plan 

10 

 
 
 
 
                                                            
relevant counter-measures.  

FATF-evaluations  of  Member  States  conclude  that  the  existing  regime  of  controls  at  the  external 
border is largely effective, so does feedback received from Europol and competent authorities. 

FIUs  play  a  key  role  in  ensuring  that  the  information  collected  through  cash  declarations  and  cash 
controls  is  properly  analysed  and  where  appropriate,  used  effectively  to  investigate  suspicions  of 
money laundering and terrorist financing. The information on cash controls obtained by national FIUs 
results in a significant number of investigations coordinated by the FIUs, as well as in court convictions 
on money laundering and other criminal activities, as demonstrated by the statistical information and 
examples presented in Annex 2. 

It is often difficult to link a conviction for money laundering or terrorist financing to a customs control on 
cash, due to lack of feedback from law enforcement agencies and/or FIUs to customs authorities that 
provided  the  information,  as  well  as  the  fact  that  cash  controls  frequently  form  only  part  of  the 
evidence in a particular case and that cases may take years to be decided. 

In response to a  questionnaire sent by the Commission in 2014, only 9 Member States provided 
examples (not complete statistics) on investigations/convictions that can be attributed to the 
implementation of the Cash Control Regulation between 2011 and 2013: 

Austria – 36 convictions (type of offence not specified); 

Bulgaria – 72 convictions for money laundering; 

Estonia – 58 convictions for money laundering 

France – 176 judicial enquiries for money laundering (69 related to narcotics), out of which 

customs authorities can confirm 11 convictions (results of most investigations unknown or 
investigations still on-going); 

Germany – 6 convictions for money laundering and 2 for other illegal activities; 

Greece – 3 pending court cases on money laundering charges; 

Lithuania – 17 convictions for other illegal activities; 

Malta – 11 convictions (type of offence not specified); 

The Netherlands – 105 cases (2013) of money laundering prosecutions. 

Other Member States either do not have available statistics, have not recorded any investigations / 
convictions or have not provided an answer. 

1.8 Consultation of stakeholders 

In  parallel  with  the  evaluation  of  the  Regulation  in  2015  an  open  public  consultation16  was  held  by 
Directorate-General  Taxation  and  Customs  Union  (TAXUD).    This  consultation  took  the  form  of  a 
questionnaire that sought input on a number of potential policy options that could be envisaged in a 
revision of the CCR.  The consultation was published on the 'My Voice in Europe' site which ensures 
automatic notification of all registered interest representatives.  The consultation document was also 
accessible via the TAXUD homepage.  The scope of the consultation was wide, with private citizens 
(EU and other), public authorities, private enterprises and interest representatives invited and able to 

16 Annex 3:  Summary report of the public consultation 

11 

 
 
 
 
 
 
 
 
 
 
 
 
 
                                                            
respond. 

The consultation was accessible from March until June of 2015. Due to the limited number of replies 
received  and  the  methodology  it  can  in  no way be  seen as  representative  for  overall public  opinion.  
Nevertheless  the  responses  received  provide  valuable  insight  in  the  way  various  policy  approaches 
are perceived by the stakeholders. 

A targeted questionnaire was sent to the fiscal authorities of Member States in 2015 where they were 
queried about the possibilities of using cash control data for fiscal purposes and the current practice at 
national level. A total of 24 Member State authorities replied. 

Another  targeted  questionnaire  was  sent  in  June  2016  to  police  authorities,  FIUs  and  customs 
authorities regarding the use of gold a way to circumvent cash controls. A total of 42 replies from 27 
Member States were received.   

In  addition,  national  experts  on  cash  controls  were  invited  to  provide  technical  feedback  on  policy 
options under examination and these were discussed during a session of the Cash Controls Working 
Group.    Additionally  and  given  the  potential  impact  that  some  options  could  have  on  specific 
categories of economic operators (postal services and express couriers), interest representatives for 
these  sectors  (as  registered  in  the  EU's  transparency  register)  were  specifically  invited  to  provide 
comments 

In  line  with  Commission  policy,  TAXUD  remains  available  for  any  comments  regarding  the  revision 
initiative even beyond the conclusion of the formal public consultation 

2. 

Problem definitions and the drivers of the problems 

According to the findings of the evaluation and to the latest developments, a series of problems have 
been identified. The problem tree below summarises the drivers behind the problems, the main issues 
and their consequences. The first six drivers and  four problems (shaded in light tones) are the ones 
that are the most important for the current Impact Assessment, but given the holistic approach of the 
exercise, the remaining three problems, with more limited consequences have been examined as well.    

12 

 
 
 
 
Table 1. Problem tree 

Post and freight 
are used as 
alternative 
means of 
transporting cash 

 Customs 
declaration does 
not capture all 
required details 

 Information 
exchange is 
optional not 
automatic 

Cumbersome 
tools, unclear 
procedure 

  Smurfing 
occurs to 
circumvent 
obligation 

 No legal basis 
to take action 
on lower 
amounts in 
case of 
suspicion 

Highly liquid 
stores of value 
other than 
currency 

The Regulation 
does not define 
the penalties, 
general guidance 
only 

Voluntary 
nature of 
statistical 
reporting 

No legal obligation 
to raise awareness, 
done according to 
available resources 

Drivers 

Imperfect coverage 
of cross-border 
cash movements 

Difficulties 
regarding exchange 
of information  

Sub-threshold 
amounts 

Imperfect 
definition of 'cash 

Divergent  
'penalties' 

Different 
implementation 
levels among MS 

Divergent national 
measures to raise 
awareness 

Problems 

International obligations are not fully met 

Cash is diverted through different channels for 
money laundering and financing terrorism 

Unequal treatment of citizens entering or exiting 
the EU, depending on the point of entry/exit 

Consequences 

13 

 
 
 
 
 
2.1  Problem 1:   Imperfect coverage of cross -border cash 
movements 

2.1.1  The problem and its drivers 

The  current  Regulation  only  covers  cross  external  border  movements  of  cash  carried  by  natural 
persons, its Article 3.1 states:   

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. 

The notion 'Carrying cash' is indirectly defined through Article 4.1 of the CCR: 

In  order  to  check  compliance  with  the  obligation  to  declare  laid  down  in  Article  3,  officials  of  the 
competent authorities 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. 

Cash above the declaration threshold which is sent through other means (postal consignment, express 
freight,  commercial  courier,  cargo,  unaccompanied  luggage….)  is  not  subjected  to  the  full  set  of 
control measures  imposed under the CCR, which specifies  in its Article 3.2 the data elements to be 
collected (see table 2 below). 

Apart  from  the  Regulation,  the  only  alternative  that  potentially  allows  for  the  capture  of  information 
regarding cross-external border cash movements where the cash is not carried by natural persons but 
crosses  the  border  in  postal  consignments,  courier  shipments  or  freight  is  the  regular  customs 
declaration. 

This is problematic for a number of reasons: 

- the level of detail captured by a customs declaration falls short of what is required under the CCR, 
notably because the customs declaration does not contain any information regarding the provenance 
and  intended  use  of  the  cash,  nor  details  regarding  the  identity  of  the  declarant.    For  the  same 
reasons a regular customs declaration fails to fully meet the objective of FATF Recommendation 32. 
The table below illustrates, in a simplified manner, the main differences in information required by the 
two forms.  

Table 2. Comparison between the two declaration forms 

Cash declaration form 

Customs declaration form 

Declarant, including full name, date and place of 
birth and nationality 

Declarant, including full name, date and place of 
birth and nationality 

Owner of the cash 

Intended recipient of the cash 

Amount and nature of the cash 

Provenance and intended use of the cash 

Transport route 

Means of transport 

Not required 

Not required 

Amount and nature of the cash 
Not required 

Transport route 

Means of transport 

14 

 
 
 
 
 
  
 
 
 
 
 
 
 
- considerable legal uncertainty exists regarding the nature of cash (currency), notably regarding the 
question  whether  cash  (in  the  sense  of  currency  in  circulation  as  a  means  of  exchange)  is  to  be 
considered  a  good  in  the  sense  of  the  customs  legislation.    If  it  were  considered  that  cash  is  not  a 
good, then the provisions of the Union Customs Code do not apply and cash would not be subject to a 
customs declaration. 

It is not easily feasible to obtain detailed, reliable and representative data regarding potentially illegal 
phenomena.  Nevertheless, concerning the problem drivers the FATF remark17: 

'[…]  although  FATF  Recommendation  32  sets  standards  for  the  control  of  physical  cross-border 
transportation  of  cash  by  natural  persons,  cargo  and  mail,  its  focus  on  ‘natural  persons’  may  help 
explain why many jurisdictions seem to consider  that their obligations under this recommendation to 
be limited to having in place a disclosure or a declaration system for transportation of cash by natural 
persons only.' 

2.1.2  Consequences and size of the problem 

These  weaknesses  are  exploited  by  criminals  who  perceive  the  shipping  of  cash  through  postal 
consignments as a means to avoid an obligation to declare and exploit a lower frequency of controls. 

Example 1. USD 89 000 criminal cash in postal packages  

Based on a routine check by customs, an investigation by the joint financial investigation group of 
police  and  customs  forces  in  Berlin  lead  to  the  discovery  of  USD  89  000  which  were  forwarded 
from the US to Berlin.  
Perpetrators, which were unknown to this time, had sent five packages containing electric devices 
to  various  beneficiaries  in  Berlin  by  post.  The  money  (solely  USD  100  bills)  was  hidden  in  these 
devices.  

Source: FATF report 'Money Laundering through the Physical Transportation of Cash', p.71  

After an information exchange with US authorities it was possible to assign the funds to a group of 
criminals, which had acquired at least USD 4 200 000 000 through criminal activities (mainly fraud 
and cybercrime). The money was seized.  

Several  control  operations  undertaken  by  EU  Customs  authorities  where  post  and 
freight 
consignments  were  specifically  targeted  for  controls  on  cash  at  the  external  border  have  detected 
sometimes  very  large  amounts  being  sent  in  postal  and  freight  consignments18.    In  many  cases  no 
information regarding the economic origin or the destination of the cash was available as this does not 
need to be provided on the customs declaration. 

The  size  of  the  problem  is  hard  to  quantify  as  little  systematic  study  has  been  performed  and  the 
available tools do not offer the possibility to reliably extrapolate. The control operations mentioned as 
well  as  surveys  and  studies  performed  at  international  level19  point  to  a  significant  regulatory  gap 
which is being exploited. 

17 FATF-Report 'Money laundering through the physical transportation of cash', October 2015, p. 4 

18 One Member State reported exports and imports of cash in freight consignments (19th plenary meeting of the 
Cash Controls Working Group) of respectively 20 and 25 billion Euro for 2015, citing concerns about the 
origin and intended purpose of the operations due to specific circumstances regarding the movements.  

19  FATF  report 

'Money  Laundering  Through  the  Physical  Transportation  of  Cash'  http://www.fatf-

gafi.org/media/fatf/documents/reports/money-laundering-through-transportation-cash.pdf  

15 

 
 
 
 
 
 
 
 
 
 
                                                            
  
 
 
 
 
Moreover, as FATF Recommendation 32, its interpretative note and the best practices intend all cross-
border  transfers  to  be  monitored,  irrespective  of  whether  the  cash  is  carried  by  natural  persons  or 
shipped and the customs declaration does not adequately capture shipments of cash, it is doubtful if 
the EU are complying with FATF Recommendation 32, a norm to which is has committed to.  Although 
the  FATF-standards  are  not  directly  binding,  a  periodic  mutual  evaluation  system  is  in  place  and  a 
finding  of  non-compliance  may  result  in  significant  reputational  damage  for  the  EU  and  individual 
Member States. 

2.2  Problem 2:  Difficulties regarding the exchange of information 
between competent authorities   

Under the Regulation, five major theoretical 'information flows' can be identified and should be clearly 
distinguished and  borne in mind for what follows. The  figure below captures the 5 flows, the 3 most 
significant  one  being  represented  by  larger  spheres.  The  green  circles  represent  the  national  flows 
while the blue ones represent external flows of information.  

Figure 2. Information flows of cash controls data 

Financial 
intelligence 
unit (FIU) 

Customs 
authorities 

European 
Commission 

3rd 
countries 

Other  
competent 
authorities  

Customs 
authorities 
in other MS 

a)  The  making  available  of  information  to  the  FIU:    all  information  collected  by  the  competent 
authorities (declarations, infractions, indications of illegal activity) is made available to the FIU of that 
Member State. 

b)    Information  collected  by  competent  authorities  in  one  Member  State  and  communicated  to  other 
authorities who did not collect it but have a legitimate interest in obtaining access. 

16 

 
 
 
 
 
 
 
c) Information collected by competent authorities in one Member State and which is made available to 
other competent authorities in another Member State. 

d) Information collected by a competent authority in a Member State which is made available to a third 
country. 

e) Information collected by a competent authority in a Member State and which is made available to 
the Commission. 

2.2.1 The problem and its drivers 

In order for the CCR to be effective in meeting its objectives, the effective sharing of information is of 
vital importance.  All information from declarations as well as from controls which revealed lower than 
threshold amounts being transported under suspicious circumstances is made available by competent 
authorities to the FIU of the Member State where the information was collected.  While most20 Member 
States  understand  'make  available'  as  some  form  of  transmission  on  the  initiative  of  the  competent 
authorities to the FIU using automated means (XLS-sheet or database), in some cases the FIU has to 
contact  the  competent  authority  who  collected  the  information,  while  in  one  case,  the  physical 
declaration forms were stored in a secured room and thus 'made available'. 

The FIU's have access to21 all cash control declaration information and use it in their analysis.  If the 
FIU  detects  anomalies  they  may  decide  to  contact  other  competent  authorities  to  launch  an 
investigation.    In  practice,  Member  States  competent  authorities  regarding  cash  control  indicate  that 
they rarely receive feedback from the FIU and are relegated to the task of 'data-collectors'. 

Under  the  CCR,  'competent  authorities'  are  customs  authorities  or  other  authorities  designated  by 
national  legislation  to  apply  the  cash  control  regulation.    Within  one  Member  State,  all  'competent 
authorities' usually have access to the declaration information.  As a consequence, in some Member 
States the tax authorities have access to the declaration information, while in in other Member States 
they do not.    Further, it is unclear if and  to what extent the tax authorities may use the cash control 
declaration information in order to investigate fiscal crimes (a recognized predicate offence to money 
laundering)  and  use  the  information  to  levy  taxes  on  undeclared  income.    This  situation  leads  to 
divergent treatment of declarants among Member States. 

The  FATF  has  repeatedly stated  that  more attention should be  given  to  the  fiscal  aspects  of  Money 
Laundering  /  Terrorist  Finance.    On  EU  level,  the  4th  Anti-Money  laundering  directive  specifically 
introduces and defines the notion 'fiscal crime' and specifies, that whatever action the FIU decides to 
take, this should not prejudice the possibility to exchange and make use of the information obtained 
based on the AML/TF legislative framework for fiscal purposes.22 

Cash  control  information  may  (facultative)  be  exchanged  between  competent  authorities  of  different 
Member  States  but  only  if  there  are  indications  of  illegal  activities  as  designated  in  the  Anti-Money 

20 21 out of 28 Member States provide either direct access to their database to the FIU or periodically transmit 
the declaration data to the FIU.  The other 7 Member States either provide access on demand to electronic 
data,  provide  access  to  the  physical  declaration  forms  or  only  make  available  information  concerning 
infraction.  Cf. the Evaluation report of the Cash Control Regulation. 

21  What  is  meant  by  'access  to'  depends  on  how  'make  available'  is  implemented  by  the  Member  State  in 

question. 

22  Recital  (56)  of  Directive  (EU)  2015/849:    'The  exchange  of  information  on  cases  identified  by  FIUs  as 
possibly  involving  tax  crimes  should  be  without  prejudice  to  the  exchange  of  information  in  the  field  of 
taxation in accordance with Council Directive 2011/16/EU or in accordance with international standards on 
the exchange of information and administrative cooperation in tax matters.' 

17 

 
 
 
 
 
 
 
                                                            
laundering directive  91/308/EEC (predicate offences to money laundering).  Further, the reference in 
the  Regulation  to  'the  directive'  concerns Directive 91/308/EEC  -  the  first  iteration  of  the  Anti-Money 
laundering directive-  in which fiscal crimes were not designated as predicate offences.  In the current 
anti-money  laundering  directive  the  scope  has  been  considerably  enlarged,  notably  concerning  the 
predicate offences.   

The mechanisms for the exchange of cash control (declaration) data have been described by Member 
States as being cumbersome and unclear. 

2.2.2 Consequences and size of the problem 

A  2014  questionnaire  which  was  sent  to  Member  States  regarding  the  exchange  of  information 
between customs authorities of one Member State with other Member states resulted in the following 
answers:  

Table 3. Information exchange between authorities 

Customs authorities to custom authorities 
Customs authorities to fiscal authorities 
Customs authorities to other type of authorities 
No direct exchange of information 

Yes 

16 
3 
5 
4 

No 

8 
16 
n/a 
n/a 

Source: European Commission Questionnaire to Member States 2014 

The  lack  of  clarity  regarding  the  modalities  for  cash  declaration  data  exchange  and  the  lack  of 
flexibility of the tools involved result in practice in very limited sharing of information23. 

Further, the divergent approach by Member  States regarding the sharing of cash control declaration 
information  and  the  treatment  thereof  raise  concerns  regarding  unequal  treatment  of  declarants 
between Member States and impediments as to the maintenance of a 'level playing field' regarding the 
internal market. 

Regarding the sharing of cash control declaration for fiscal purposes, the present situation is unclear, 
with competent authorities in various Member States not in agreement about the question whether this 
is  legally  possible,  what  data  can  be  exchanged,  how  the  data  should  flow  from  the  collecting 
authorities to the fiscal authorities in the same or another Member State, which instrument should be 
used for the exchange of data etc.  

At the end of 2015, 2 Member States (BE and NL) decided to launch a pilot project in order to examine 
the  potential  to  use  cash  control  data  for  purposes  of  fighting  against  tax  evasion  and  'fiscal  crime'.  
The  pilot  project  proceeded  under  the  condition  that  the  data  exchanged  would  not  be  used  for 
taxation purposes, given the legal uncertainty involved. The result of the pilot project are presented in 
the box below. 

23 See Annex 2 - Evaluation report of the Cash Control Regulation for more details. 

18 

 
 
 
 
 
 
 
 
                                                            
Example 2:  Fiscal relevance of cash control data 

For  the  period  2013-2016  the  BE  authorities  provided  cash  declaration  details  to  NL  about  79 
individuals who reside in the NL but entered or exited the Union through BE. It should be noted that 
the  data  which  was  transmitted  concerns  ALL declarations,  not  only  infractions.  The  total  amount 
declared was 4.2 Mio EUR. Overall, in  52% of cases the data was found to be relevant for fiscal 
purposes.  Additionally,  a  number  of  cases  were  detected  where  links  could  be  established  to 
money laundering and criminal activity which had until then not been flagged by the FIU. 

For  the  same  time  period,  BE  received  from  the  NL  180  cash  declarations  lodged  in  NL  by 
individuals who reside in BE for a total amount of 4.3 Mio Euro. 

Initial investigation by fiscal authorities detected that in 65% of cases the information was relevant 
for fiscal purposes. Findings include 

a) 43% of all cash declarations were filed by persons involved in the management of an enterprise, 
20% of the category in question were involved in bankruptcy proceedings 

b)  6%  of  all  declarants  were  known  by  the  tax  authorities  (suspicion  of  fiscal  fraud).  One  person 
who declared a substantial amount of cash had outstanding tax debts of 1 Mio Euro 

c) 25% of declarants received pension, unemployment or welfare benefits (which does not per se 
imply fraud but raises questions regarding the origin of the cash, especially when it is declared as 
'income from professional activity') while 16% did not declare any income to the tax authorities for 
the year in which they filed a declaration relating to a cash movement of > 10 000 Euro. 

Source: Pilot project between Belgium and the Netherlands  

The  above  are  clear  indications  pointing  to  the  relevance  of  the  use  of  cash  control  declaration 
information for fiscal purposes.,  
In  the  open  public  consultation,24  a  large  majority  of  respondents  favour  facilitating  the  exchange  of 
cash control information between Member States and between various authorities within one Member 
State, for tax purposes. 

In the course of further analysis it became apparent that for legal reasons it was not possible to tackle 
this problem through a modification of the Cash Control Regulation.  As the data exchange is intended 
to take place between customs authorities and fiscal authorities, it was determined that the legal basis 
in primary law to make this exchange possible resides in Arts. 113 and 115 TFEU.   

Neither  the  mechanism  for  such  exchange  nor  the  elaboration  of  the  instrument  required  are 
compatible with the legal basis in primary law upon which the CCR is based (Arts. 33 and 114, TFEU) 
and hence cannot be tackled via this instrument.   

As  a  consequence  the  possibilities  of  further  regulating  the  sharing  of  cash  control  declaration  for 
fiscal purposes will not be further developed here.  

24 Cf. Annex 3 

19 

 
 
 
 
 
 
 
 
 
                                                            
2.3  Problem 3:  Impossibility for competent authorities to temporarily 
detain sub-threshold amounts 

2.3.1 The problem and its drivers 

Under  the  current  cash  control  regulation,  natural  persons  carrying  cash  on  their  person,  in  their 
means of transport or in their luggage are only subjected to the obligation to declare if they carry cash 
for a value of 10 000 Euro or more when entering or leaving the EU.  This follows from a reading of 
Articles 3 and 4 of the Regulation. 

The declaration threshold is evaluated by competent authorities per traveller who physically carries the 
cash  in  question.  Further,  Article  5.2  describes  the  possibilities  for  action  by  competent  authorities 
under  the  cash  control  regulation  in  case  they  discover  amounts  of  cash  lower  than  the  declaration 
threshold: 

Where it appears from the controls provided for in Article 4 that a natural person is entering or leaving 
the  Community  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  Directive 
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  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. 

Temporary detention of the suspicious cash is not possible under the Cash Control Regulation if the 
amount is lower than the threshold to declare.  This results in a notification to the FIU but without any 
way to temporarily stop the cash in case of suspicion. 

In  this  context  it  should  be  pointed  out  that  the  interpretative  note  to  FATF  Recommendation  32 
specifies: 

In the following two cases, competent authorities should be able to stop or restrain cash or BNIs for a 
reasonable time, in order to ascertain whether evidence of money laundering or terrorist financing may 
be found: (i) where there is a suspicion of money laundering or terrorist financing; or (ii) where there is 
a false declaration or false disclosure. 

From  the  context  of  the  wording  it  is  clear  that  the  possibility  to  temporarily  detain  should  be 
considered  bearing  in  mind  the  criterion  of  suspicions  of  money  laundering  (predicate  offenses)  or 
terrorist  financing,  irrespective  of  the  declaration  threshold.    It  is  highly  doubtful  that  the  objective 
should be interpreted in the sense that, regardless of any suspicious circumstances, provided that the 
declaration threshold were not reached and that hence there was no obligation to declare, the person 
would be free to enter/leave the EU with the cash while the information made its way to the FIU. 

Further, in its best practices paper on recommendation 32, the FATF advises25: 

'When  a  false  declaration  or  false  disclosure  occurs,  or  when  there  are  reasonable  grounds  for 
suspicion of money laundering or terrorist financing, countries are encouraged to consider imposing a 
reverse burden of proof on the person carrying currency or bearer negotiable instruments (BNI) across 
borders  on  the  question  of  the  legitimacy  of  such  currency  and  bearer  negotiable  instruments. 
Therefore if, under these circumstances, a person is unable to demonstrate the legitimate origin and 

25  FATF  Guidance  Document  'International  best  practices  Detecting  and  preventing  the  cross-border 
transportation  of  cash  and  bearer  negotiable  instruments',  19  February  2010,  p.  12,  accessible  at 
http://www.fatf-
gafi.org/media/fatf/documents/recommendations/International%20BPP%20Detecting%20and%20Preventin
g%20illicit%20cross-border%20transportation%20SR%20IX%20%20COVER%202012.pdf  

20 

 
 
 
 
 
 
 
 
 
 
 
 
                                                            
destination  of  the  currency  or  bearer  negotiable  instruments,  those  funds  may  be  stopped  or 
restrained.' 

More than setting up merely a system of declarations, the Cash Control Regulation is part of the EU's 
AML/CFT  framework,  its  prime  objective  is  to  enable  authorities  to  act  and  trigger  investigations  in 
case of suspicion in order to prevent ML/TF 

In  a  number  of  cases,  the  suspicious  circumstances  might  trigger  (temporary)  detention  of  the  cash 
under  (national)  legislation  outside  the  cash  control  regulation,  such  as  when  lower  than  threshold 
amounts are found in luggage containing narcotics.   

It  is  however  problematic  that  in  cases  of  suspicion,  there  is  no  'backstop'  in  the  cash  control 
regulation  allowing  authorities  to  temporarily  detain  the  cash  in  question.    It  is  also  doubtful  if  the 
objective of FATF Recommendation 32 is fully reached under these circumstances. 

Example 3:  Foreign fighters 
A  number  of  cases  were  detected  of  persons  who  were  travelling  to  regions  neighbouring  ISIS-
controlled territory.  ISIS propaganda calls for fighters to come, bringing the money they can raise 
through small loans/sales of assets.  Typically these individuals were found in possession of sums 
ranging  between  3000-7000  Euro  and  they  were  either  detected  via  intelligence  information  or 
identified  following  controls  at  borders  in  possession  of  ISIS  propaganda,  guidelines  on  how  to 
reach the ISIS-held territory and below-threshold amounts of cash. 

Source: Information received from Member States 

A  variant  of  the  problem  described  above  occurs  when  persons  are  clearly  travelling  together  (e.g. 
relatives)  with  each  individual  carrying  amounts  below  the  threshold  while  the  cumulative  amount  is 
higher than the threshold.  This is sometimes done with the specific intention to escape the obligation 
to declare.  This type of behaviour is referred to as 'smurfing' or 'structuring' and is regularly mentioned 
by cash national control experts. 

Example 4:  Smurfing illustration 
A family of 2 adults and 2 young children (4 and 6 years old) leave the EU.  After a control  it is 
determined that every individual is carrying 9500 Euro in cash (500 Euro notes) on their person, 
carried in the same type of envelope. Additionally, both parents are each carrying approximately 
200 Euro in small notes in their wallet, presumably to cover expenses while travelling.  They were 
aware  of  the  regulation,  pointed  out  that  they  are  individually  carrying  less  than  the  declaration 
threshold and offer no remotely credible explanation as to what the origin of the cash is and why 
the children are carrying these amounts. 

Source: case example received from one Member State, variants of the mechanism were also mentioned by 
other  Member  States  during  meetings  between  the  Commission  and  national  experts  but  less  detail  was 
provided. 

2.3.2 Consequences and size of the problem 

Firstly,  it  is  doubtful  if  the  present  situation  where  no  temporary  detention  of  the  cash  is  possible  in 
case of lower than declaration threshold amounts under suspicious circumstances is fully compatible 
with the spirit of FATF Recommendation 32.   

Although in many cases a legal basis for (temporary) detention of the cash will be available outside the 
Cash Control Regulation, the absence of a 'catch-all' clause in the Regulation itself may give rise to 

21 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
compliance issues.  For the sake of transparency it should be noted  that  thus far, the issue has not 
yet been mentioned by the FATF, to that extent it remains a theoretical vulnerability. 

Secondly,  in  the  course  of  expert  group  meetings,  Member  States  regularly  mention  cases  where 
competent authorities were powerless to act under circumstances such as mentioned under example 
3  and  4  and  notified  the  FIU  but  otherwise  had  to  let  the  persons  in  question  travel  onward  in 
possession of their cash.   

Although no concrete cases have been identified in which the lack of possibilities to detain the cash 
after a control resulted in e.g. the financing of a terrorist attack, it should be noted that the absence of 
a means provided in regulation itself is a potentially very serious security problem keeping in mind the 
relatively low amounts carried by foreign fighters or required to finance terrorism.   

2.4  Problem 4:  Imperfect definition of 'cash' 

2.4.1 The problem and its drivers 

As described previously, the definition of 'cash' as used by the FATF does not include gold, jewels or 
precious commodities which can also be easily used to transfer value. 

The interpretative note to Recommendation 32 states: 

For the purposes of Recommendation 32, gold, precious metals and precious stones are not included, 
despite their high liquidity and use in certain situations as a means of exchange or transmitting value. 
These items may be otherwise covered under customs laws and regulations. 

Reports from Member States (e.g. France who specifically attracted attention to this  phenomenon26) 
and operational information such as the results from operation 'Bingo' which was conducted by French 
customs and focused on cash and precious commodities shipped in post and freight, have identified 
shipments of gold which were identified as suspicious. 

A number of Member States27  include precious metals in their definition of 'cash' for intra-community 
control purposes.  

In  addition,  the  Commission  Action  Plan  on  terrorism  finance  specifically  lists  the  expansion  of  the 
definition of 'cash' to include highly liquid, high value commodities as an option to be explored.  

A  customs  declaration  does  not  enable  competent  authorities  to  obtain  all  the  information  which 
should  be  collected,  notably,  there  is  no  obligation  to  provide  information  on  the  provenance  or 
intended use of the goods and in the case of natural persons carrying precious metals and leaving the 
EU, there is no legal obligation to make a customs declaration on exit. 

26 Contribution provided by France to the Public Consultation on the Review of Regulation (EC) Nr. 1889/2005 
on  controls  of  cash  entering  or  leaving  the  Community,  operation  'Bingo'  which  was  conducted  in 
November-December  of  2014  detected  gold  bullion,  cheques  and  prepaid  cards  to  the  amount  of  9.2  Mio 
Euro, sent in parcels and freight.  However, it was not possible to isolate the value of the gold. 

27 E.g. France, Germany. 

22 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                            
2.4.2 Consequences and size of the problem 

Member States indicated that they suspect illicit cash (currency) is converted into precious metal prior 
to  exiting  or  entering  the  EU  with  the  intention  to  escape  the  obligation  to  declare  and  in  the 
knowledge that this can be re-converted into cash at minimal cost. 

Illustration of cash being converted into gold 

Using  the  rate  applicable  in  June  2016,  a  person  could  purchase  a  Canadian  'Maple  Leaf'  gold 
coin for 1167 Euro, paying in cash and staying below the limit above which identity data needs to 
be recorded in the Member State in question.  This operation could be repeated at multiple points 
of sale.  The transaction cost incurred on the sale of such coins would typically not be higher than 
4.5%  (leaving  underlying  gold  price  fluctuations  out  of  consideration).    When  exiting  the  EU  this 
individual would not be required to make a customs declaration. 

Disclaimer:  this  is  a  theoretical  case,  reflecting  actual  parameters  regarding  prices,  possibilities  for 
anonymous purchases and spreads.  It illustrates the mechanism but does not reflect actual events. 

Even though operations and literature28 provide some indications that criminals may be escaping the 
obligation  to  declare  by  using  precious  metals  as  stores  of  value  it  has  proven  to  be  very  hard  to 
quantify  this  phenomenon.    A  recent  questionnaire29  which  was  sent  by  Commission  services  to 
relevant  law  enforcement  authorities,  FIU's,  customs  authorities  and  Europol  indicated  however  that 
67% of all replying authorities had recorded cases where precious commodities where  were detected 
on  a  person  entering  or  leaving  the  EU  which  were  identified  as  suspicious  with  regard  to  money 
laundering, terrorist financing or other illegal activity.  In 90% of cases gold was mentioned as the high 
value commodity which was detected.  The frequency of occurrence was described as high or medium 
in about half of the cases (with 18% of all replying authorities describing it as 'high' ,30% as 'medium' 
and 52% as 'low'30). 

Some  Member  States  have  national  provisions  similar  to  the  obligation  to  declare  cash  as  regards 
other commodities such as precious metals or precious stones.  
The  attractiveness  of  a commodity  for  such  purpose  also  depends  on  the  liquidity  of  the  commodity 
and  the  ease  with  which  it  can  be  resold  without  incurring  high  margin  costs.  For  criminals,  the 
situation  becomes  much  more  difficult  when  other  commodities  such  as  diamonds  or  jewellery  are 
used which are harder to evaluate and carry higher conversion costs.  

Currently  ongoing  supranational  risk  assessments  relating  to  money  laundering  and  terrorism 
financing  and  data  from  law  enforcement  authorities  have  shown  risks  of  money  laundering  with 
regard to the cross-border movements of anonymous prepaid cards. Europol has specifically pointed 
out those risks and issued a public call for the revision of the legal framework. 31  

28  FATF  report  on  Money  Laundering  and  Terrorism  Financing  risks  and  vulnerabilities  associated  with  gold 
http://www.fatf-gafi.org/media/fatf/documents/reports/ML-TF-risks-vulnerabilities-associated-with-gold.pdf  

29 Questionnaire sent by DG Home in collaboration with DG Taxud, during June 2016.   42 replies were received 

from authorities in 27 Member States. 

30 For technical and organisational reasons it was impossible to establish a common quantitative definition of the 
notions 'high', 'medium' and 'low', the appreciation was hence qualitative and left to the appreciation of the 
individual respondents. 

31  See  Europol  report  "Why  cash  is  still  king"  https://www.europol.europa.eu/newsroom/news/cash-still-king-

criminals-prefer-cash-for-money-laundering 

23 

 
 
 
 
 
 
 
 
                                                            
 
From an enforceability perspective, it should be borne in mind that competent authorities need to be 
able to reasonably quickly determine what is covered in the expanded definition of cash and if so, if 
the value reaches the threshold for declaration. The technical challenges for doing so and the concern 
to not cause undue burden to the traveller or the operator involved in the shipment and the legal duty 
not  to  infringe  the  right  of  free  movement  and  the  right  to  property  demands  such  an  expansion  be 
underpinned by clear evidence.   

As regards prepaid cards, it appears that technical solutions are possible to ensure the enforceability 
of  a  rule  providing  an  obligation  to  declare  them,  which  could  help  competent  authorities  to  make 
reasonably  quick  decisions.  In  the  US,  for  example,  solutions  have  been  developed  for  law 
enforcement such as the Electronic Recovery and Access to Data machine (ERAD).  
Therefore the addition of prepaid cards in the definition of cash would not require an immediate and 
major  shift  in  the  enforcement  of  the  rule,  but  it  would  contribute  greatly  to  creating  the  necessary 
nexus to the work of competent authorities to better identify and be able to take action against a major 
source  of  concern:  prepaid  instruments  loaded  with  considerable  amounts  issued  in  third  countries 
with strategic deficiencies in their money laundering and terrorism financing frameworks.  

2.5 Problem 5:  Divergent penalties 

2.5.1. Context 

Article 9.1 of the Cash Control Regulation specifies that:   

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,  proportionate  and 
dissuasive. 

It  is  thus  left  to  the  national  legislators  to  specify  penalties  for  non-declaration  which  respect  these 
criteria. 

It  should  be  pointed  out  that  the  penalty  under  Article  9.1  of  the  Cash  Control  Regulation  concerns 
solely  the  failure  to  declare  and  in  no  way  prejudices  the  existence  of  any  predicate  offence  in 
connection  to  the  cash  which  was  not  declared  and  any  penalties  which  may  be  imposed  for  the 
commission of that predicate offence, which should be the subject of a separate investigation.  

2.5.2 The problem and its drivers 

When examining the penalties specified by Member States, it becomes apparent that wide differences 
exist  in  the  level  of  penalty  and  whether  aggravating/mitigating  circumstances  taken  into  account  or 
not.  For purposes of illustration, the table below presents a partial overview of Article 9.1 penalties in 
9  Member  States.    The  information  was  provided  by  Member  States  to  the  Commission  following  a 
questionnaire sent in 2014: 

Figure 3. Differences in penalties between Member States 

Member state 

Minimum 
penalty 

Maximum penalty 

Mitigating 
circumstances 

Aggravating 
circumstances 

24 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
MS 1 

MS 2 

MS 3 

10% 

Amount undeclared 

500 € 

2-21% 

100,000 € 

1,000,000 € 

MS 4 

600 € 

200% of amount 
undeclared  

MS 5 

MS 6 

MS 7 

MS 8 

660 € 

330 € 

0 € 

0 € 

6,600 € 

3,300 € 

10,000 € 

46,000 € 

Yes 

Yes 

Yes 

Yes 

No 

n/a 

n/a 

n/a 

Yes 

Yes 

Yes 

Yes 

No 

n/a 

n/a 

n/a 

Source: European Commission Questionnaire to Member States  2014 

The level of certain penalties and the way in which they are imposed in jurisdictions indicates that in 
some cases, Member States competent authorities seem to: 

a) Assume the existence of an underlying offense that needs to be penalised, once a failure to declare 
has been established 
and/or 
b)    The  payment  of  the  penalty  imposed  is  'liberatory'  and  less  emphasis  is  placed  on  investigating 
whether an underlying predicate offence is present. 

The Court of Justice of the European Union remarked in a recent judgment where the proportionality 
of the penalty for non-declaration was at issue32 that:  

'However, in the light of the nature of the infringement concerned, namely a breach of the obligation to 
declare laid down in Article 3 of Regulation No 1889/2005, a fine equivalent to 60% of the amount of 
undeclared  cash,  where  that  amount  is  more  than  EUR 50 000,  does  not  seem  to  be  proportionate. 
Such a fine goes beyond what is necessary in order to ensure compliance with that obligation and the 
fulfilment of the objectives pursued by that regulation.' 

And 

'It  should  also  be  noted  that  Article 4(2)  of  Regulation  No 1889/2005  provides  for  the  possibility  to 
detain,  by  administrative  decision  in  accordance  with  the  conditions  laid  down  under  national 
legislation, cash which has not been declared in accordance with Article 3 of that regulation, in order, 
inter alia, to allow the competent authorities to carry out the necessary controls and checks relating to 
the provenance of that cash, its intended use and destination. Therefore, a penalty which consists of a 
fine  of  a  lower  amount,  together  with  a  measure  to  detain  cash  that  has  not  been  declared  in 
accordance  with  Article 3  thereof,  is  capable  of  attaining  the  objectives  pursued  by  that  regulation 
without  going  beyond  what  is  necessary  for  that  purpose.  In  this  case,  it  is  apparent  from  the  file 
submitted to the Court that the legislation at issue in the main proceedings does not make provision for 
such a possibility.' 

32  Judgment in Case C-255/14 (Chmielewsky vs. Nemzeti Adó- és Vámhivatal Dél-alföldi Regionális Vám- és 

Pénzügyőri Főigazgatósága) as well as the opinion of Advocate-general Wathelet. 

25 

 
 
 
 
 
 
 
 
 
                                                            
2.5.3 Consequences and size of the problem 

The wide divergence in penalties and the way in which these are imposed creates several undesirable 
consequences: 

a)  Unequal  treatment  of  European  and  third  country  citizens  who  fail  to  declare,  depending  on  the 
Member State through which they were entering or leaving the EU. While leaving the determination of 
the  penalty  for  non-declaration  to  the  Member  States  entails  a  different  approach  which  is  not 
necessarily  discriminatory  in  itself,  the  extent  to  which  penalties  vary  in  this  specific  case  raises 
proportionality questions in respect of these differences. 

b) As a consequence, the possibility for  persons who deliberately  fail to declare to engage in 'forum 
shopping' via the selection of Member States with minimal penalties or who seem to levy a penalty for 
non-declaration but otherwise take no measures to investigate underlying predicate offences. 

c) In case of penalties for non-declaration which are clearly disproportionately high taking into account 
the objective of the measure, the measure may amount to an infringement of the right to property.33 

Concerning the size of the problem, no precise quantitative data is available regarding the amounts of 
penalties  imposed  in  Member  States.    However,  in  2015,  approximately  11  000  cases  of  failure  to 
declare were detected, for a total amount of approximately 338 Mio Euro34 incorrectly declared cash.   
In all of such cases, Article 9.1 applies. 

2.6  Problem 6:  Different implementation levels among Member States 

2.6.1 The problem and its drivers 

Further  to  specific  issues  relating  to  the  undesired  effects  of  different  implementation  levels  among 
Member States which were mentioned earlier (e.g. regarding data exchange and level of penalties) a 
number of specific issues exist. 

a) Statistical data. 

Under  the  current  cash  control  regulation,  there  exists  no  obligation  for  the  Member  States  to 
periodically  provide  statistical  data  regarding  controls,  declarations,  infractions  and  penalties  to  the  
Commission.  Having such information available, analysing it and acting upon it is essential in order to 
verify that the Regulation is applied equally in the Member States.  For instance parameters such as 
the number of infractions detected / number of declarations filed and the number of controls performed 
could help assess the level of implementation of the Cash Controls Regulation. 

b)  The declaration form 

33 Article 17, Charter of Fundamental rights of the European Union. 

34  Data  provided  by  Member  States  to  the  European  Commission  on voluntary  basis  and presented  at the  19th 

plenary meeting of the Cash Controls Expert Working Group. 

26 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                            
Article 3.2 of the Cash Control regulation specifies the data elements which need to be collected and 
assessed when a declaration is made.  Article 3.3 leaves the way in which the data is collected to the 
Member  States  and  provides  for  the  possibility  of  requesting  an  oral  declaration,  a  declaration  in 
writing or an electronic declaration, albeit with the proviso that the declarant has at all times the right to 
demand a copy in writing.   While all Member States opted for a declaration in writing or an electronic 
declaration, the Regulation does not lay down a specific form or layout which is to be used. 

c) The penalties 

The regulation specified that all Member States had to inform the Commission regarding the penalties 
under  national  legislation  for  non-declaration.    This had  to  be  done  by  the  15th  of  June  2007  but  no 
provision was made to inform the Commission of any subsequent changes. 

2.6.2 Consequences and size of the problem 

Regarding statistical data, the Commission currently has a non-enforceable agreement with Member 
States to provide data on the number of cash declarations received and the number of infractions.   

These are communicated on a quarterly basis and analysed/ discussed yearly.  Information regarding 
the penalties imposed is however only provided by about 2/3rd of Member States, leading to difficulties 
in the assessment of the effectiveness of the measure. 

Regarding the declaration form, on a voluntary basis the majority of Member States (24 out of 28) use 
a harmonised form which has been developed by the Member States together with the Commission.  
This  form  can  to  some  extent  be  customised  to  provide  the  possibility  to  include  specific  national 
elements (e.g. the flag of the Member State, references to national legislation etc).   

The use of a harmonised layout has as considerable advantage that travellers benefit from the same 
'look  and  feel'  of  a  declaration  regardless  of  the  Member  State  through  which  they  are  entering  or 
leaving  the  EU  and  that  language  problems  can  be  largely  avoided,  as  the  fields  to  be  completed 
match  across  forms,  regardless  of  the  language  of  the  document.    Lastly,  a  harmonised  declaration 
form also facilitates the practical aspects of information exchange. Information regarding penalties for 
non-declaration is collected periodically by the Commission. 

The elements mentioned above do not currently present large problems.  This fortuitous situation is a 
result  of  the  voluntary  cooperation  of  all  Member  States.    Considered  from  the  perspective  of  good 
administration,  transparency,  equality  and  enforceability  the  possibility  of  formalisation  should  be 
examined. 

2.7 Problem 7:  Divergent national measures to raise awareness 

2.7.1  The problem and its drivers 

Under  the  present  cash  control  regulation,  there  is  no  obligation  for  the  Member  States  to  provide 
information  to  travellers  regarding  the  existence  of  and  their  obligations  under  the  Cash  Control 
Regulation.  The adage that 'everyone is supposed to know the law' applies.  

It  should  however  be  recognised  that  in  the  context  of  declarants  who  are  largely  private  persons, 
coming  from  different  backgrounds,  speaking  different  languages,  from  a  good  administration 
perspective  some  effort  should  be  made  to  make  easily  understandable  information  available  to  the 
public regarding their obligations. 

27 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
At the time of entry into force of the Cash Control Regulation, this was achieved through a promotion 
campaign sponsored at EU-level, with documentation made available to Member States.  Currently, in 
some Member States points of entry or exit, information is provided but this is not a uniform practice.   

The Commission maintains a webpage informing travellers of their obligations under the Cash Control 
Regulation35.  This webpage has links to the declaration forms used in Member States. 

Further, as the obligation to declare cash when entering or leaving the EU is imposed based on EU-
legislation,  a  secondary  question  arises:  could  some  benefit  be  derived  from  presenting  the 
information in a harmonised way in order to achieve the same 'look and feel' regardless of the Member 
State of entry or exit? 

2.7.2 Consequences of the problem and size of the problem 
The  most  frequently  heard  explanation36  for  failure  to  declare  cash  is  a  statement  by  the  traveller 
expressing ignorance of his/her obligations under the cash control regulation.  Regardless of whether 
such statement reflects reality, it is clear that professing ignorance –and potentially invoking ignorance 
as a mitigating factor- will be less credible if ample information in easily accessible terms is provided or 
made available to the traveller. 

The  initial  EU-information  and  awareness-raising  campaign  was  financed  by  the  Commission  and 
consisted of 'cash suitcases' (large suitcases filled with 'paper money'  with a transparent lid that were 
made  available  to  Member  States  who  could  circulate  them  on  luggage  conveyor  belts,  flyers  and 
information  booklets  in  multiple  languages,  as  well  as  an  animation  that  could  be  shown  on  airport 
monitors.37 It received very good feedback regarding visibility.  Subsequently, stocks of material were 
distributed  to Member States, who were given access to design templates with which they could print 
additional  quantities  on  a  national  level.    Overall,  this  did  not  work  with  reasons  cited  such  as 
budgetary constraints, administrative difficulties etc.  Currently the Commission has obtained budget to 
start printing and  distributing materials again and  is  taking  'orders' from Member States who wish to 
use this. 

It is recalled that on an average year, approximately 100 000 cash control declarations are made for a 
total  amount  of  between  60  and  70  billion  Euro.    Over  the  same  time  period,  approximately  11  000 
infractions  representing  a  sum  average  of  approximately  300  Mio  Euro  are  detected.    The  potential 
target audience for any awareness-raising initiatives is thus significant. 

3. 

EU right to act and subsidiarity 

3.1  Legal basis in primary law 

The legal basis for the initiative will continue to be Articles 33 and 114 of the Treaty on the Functioning 
of the European Union. 

35  Accessible 

via 

the  Directorate-general  Taxation 

and  Customs  Union 

homepage 

at 

http://ec.europa.eu/taxation_customs/customs/customs_controls/cash_controls/index_en.htm  

36   As reported by Member States national experts to the Commission. 

37  Accessible 

via 

the  Directorate-general  Taxation 

and  Customs  Union 

homepage 

at 

http://ec.europa.eu/taxation_customs/customs/customs_controls/cash_controls/index_en.htm  

28 

 
 
 
 
 
 
 
 
 
                                                            
3.2   Subsidiarity 

Regarding Article 114, TFEU: 

The  proposal  is  an  element  in  the  EU's  Anti-Money  laundering  /  anti-terrorist  finance  framework.  
Where  the  Anti-Money  Laundering  Directive  seeks  to  provide  a  harmonised  framework  of  measures 
with  regards  to  the  formal  financial  sector  and  certain  professions  deemed  a  potential  risk,  this 
proposed regulation seeks to address the issue of cash which is being moved, either carried by natural 
persons or otherwise via freight/parcel/post services, between a Member State of the EU and a third 
country and vice versa.   

The  organisation  of  an  internal  market  with  free  movement  of  goods,  persons,  services  and  capital 
necessarily  involves  measures  of  harmonisation  between  Member  States  in  order  to  ensure  an 
appropriate  and  equal  measure  of  protection  and  the  maintenance  of  a  level  playing  field  where 
measures or control are deemed necessary in the public interest.   

It  would  not  be  possible  to  achieve  this  degree  of  harmonisation  based  solely  on  measures  taken 
under  national  legislation.    Money  launderers  and  terrorist  financiers  could  exploit  divergences  in 
approaches under national legislation and attempt to move their cash into or out of the EU through the 
Member  States  where  controls  or  penalties  are  weakest.    Taking  into  account  the  amounts  of  cash 
entering  or  leaving  the  EU  on  a  yearly  basis,  such  differences  would  have  a  distortive  effect  on  the 
internal market. 
Further, following the provisions existing under the existing Cash Control Regulation, the proposal is 
without  prejudice  to  any  national  control  measures  regarding  cash  movements  which  may  be  laid 
down pursuant to Article 65, TFEU. 

Regarding Article 33, TFEU: 

As  regards  to  customs  cooperation,  the  proposal  lays  down  a  harmonised  approach  for  customs 
authorities  and  other  authorities  acting  as  such  in  the  course  of  controls  at  the  external  border  to 
register, process and transfer cash control declarations and perform controls.  This approach and its 
underlying objective are closely related to the internal market principles as noted supra and could not 
be achieved sufficiently on a national level. 

29 

 
 
 
 
 
 
 
 
4.  Objectives of the proposal 
Table 4. Objectives of the proposal 

GENERAL 

Promote    safe,  balanced  and  sustainable 
development  of  economic  activities 
throughout the internal market 

SPECIFIC 

Provide tools to safeguard society against money 
laundering and terrorist finance through cash 
movements 

•Cover all  ways of cross-border cash movements 
•Improved exchange of information between competent 
authorities 
•Enable competent authorities to temporarily detain sub-
threshold amounts 
•Extend  the definition of 'cash' to include precious metals 
•Recommendations/guidance on penalties for non-declaration 
•Converge implementation levels among Member States as 
regards to reporting and the declaration form 
•Improve the provision of information to citizens in order to 
inform them of their obligations 

OPERATIONAL 

5. 

Policy options  

5.1 Problem 1: Imperfect coverage of cross-border cash movements 

5.1.1 Option description 

5.1.1.1  Option A BASELINE, no policy change:          Do  not  change  the  present  regulatory  system 
and continue to apply the standard customs declaration system to cash shipped in post and freight.   
Under  the  baseline  option,  the  obligation  to  declare  cash  above  a  certain  threshold  would  remain 
limited to cash carried by natural persons. 

5.1.1.2  Option B: 
Apply  the  current  declaration  system  for  natural  persons  (obligation  for  the 
person to approach authorities and make a declaration) but provide for a disclosure system for cash 
shipped in post or freight.   
Persons  or  enterprises  involved  in  shipments  of  cash  through  post,  courier  or  freight  (any  cross-
external  border  shipment  which  does  not  involve  a  natural  person  accompanying  the  consignment) 
could be requested by competent authorities to disclose particulars of the cash shipment and submit a 
(disclosure) declaration if, upon checking,  amounts of cash higher than the declaration threshold are 
found and the competent authorities decide to request additional information. 

30 

 
 
 
 
 
  
 
 
 
Provide for a mandatory cash declaration system for all types of movement of 
5.1.1.3  Option C: 
cash  in  amounts  over  the  threshold,  irrespective  of  the  method  (carried  by  a  person  or  shipped  in 
parcels or freight).   
Under  Option  C  a  cash  control  declaration  would  have  to  be  systematically  filed  by  natural  persons 
carrying  cash  over  the  threshold  value  as  well  as  by  natural  or  legal  persons  sending  or  receiving 
unaccompanied  cash  consignments  over  the  declaration  threshold.    This  declaration  would  come  in 
addition to any customs declaration filed.   

Provide for a mandatory cash declaration system for all types of movement of 

5.1.1.4  Option D: 
cash in amounts over the threshold but provide for an exemption for registered financial institutions.   
This  exemption  takes  into  account  that  those  institutions  are  already  covered  by  AML/CFT  rules.  
However, authorities would have to be able to determine if an exemption applies or not. 

Provide  for  a  system  which  is  entirely  based  on  disclosure,  both  for  cash 

5.1.1.5  Option E: 
carried by natural persons and for cash sent in post/freight.  
Option  E  can  be  compliant  with  FATF  Recommendation  32  (when  paired  with  adequate  control 
levels).It would not require any systematic declaration to be made, irrespective of the mode of border 
crossing.    Only  in  case  of  controls  by  competent  authorities  who  request  disclosure  would  a  natural 
person  carrying  cash  or  the  sender  /  intended  recipient  of  unaccompanied  cash  consignments  be 
required to make a declaration.   

The  open  public  consultation  did  not  query  stakeholder  opinion  for  option  E  as  this  option  was  only 
taken into account later in the process, following inter-service discussion.  For the other options, the 
vast majority of respondents favour options B or C, with opinions divided almost equally between both 
options (14 respondents favouring B and 12 favouring C). 

5.2  Difficulties regarding the exchange of information between 
competent authorities 

As  the  topic  of  information  exchange  is  highly  complex,  involves  considerations  of  a  legal,  practical 
and  technological  nature  and  has  an  impact  on  personal  data  protection  and  fundamental  rights, 
please refer to Annex 6 for additional information.  
Given that there are five different possible flows of information (as presented in Figure 2) out of which 
two  flows  are  significant  for  the  current  proposal,  it  has  been  decided  to  treat  these  important  flows 
individually. Thus, the problem of information exchange has been split into two sub-problems.  

5.2.1  Sub-problem 2.1:  Exchange of information between competent authorities 

 (BASELINE,  no  policy  change)  Declaration  and  infraction  data  may  be 
5.2.1.1  Option A: 
shared between competent authorities in different Member States only in case of indications of illegal 
activity.   
5.2.1.2  Option B: 
 Provide  for  an  obligation  in  the  regulation  to  mandatorily  exchange 
information  regarding  infractions  against  the  obligation  to  declare  or  declarations  where  there  are 
indications of illegal activity between competent authorities of different Member States.   
5.2.1.3  Option C: 
 Provide  for  an  obligation  in  the  regulation  to  mandatorily  exchange 
information  regarding  infractions  against  the  obligation  to  declare  or  declarations  where  there  are 
indications of illegal activity  between competent authorities of different Member States but keep the 
sharing of regular declaration information optional 
5.2.1.4  Option D: 
Provide  for  an  obligation  in  the  Regulation  to  mandatorily  exchange  both 
infractions,  declarations  where  there  are  indications  of  illegal  activity  and  regular  declaration 
information between competent authorities in different Member States.   
Compared  to  the  baseline  scenario  in  current  legislation  (A),  which  obtained  support  from  4 
respondents,  there  seems  to  be  a  majority  of  25  respondents  in  favour  of  increasing  the  sharing  of 
information  regarding  declarations  or  infractions  between  Member  States.  The  opinion  is  almost 

31 

 
 
 
 
 
 
 
 
evenly split between respondents who want to make the sharing of all declaration data mandatory via 
legislation  (13  respondents)  and  those  who  only  want  to  impose  the  sharing  of  information  about 
infractions but keep the sharing of regular declaration data optional (12 respondents).  
For  the  above  options,  it  should  be  noted  that  with  'competent  authorities'  are  meant  the  authorities 
designated in a Member  State to receive declarations  and perform controls.  In the large majority of 
cases these will be the customs authorities. 

5.2.2  Sub-problem 2.2:  Exchange of information between the competent authorities 
and the FIU 

5.2.2.1  Option  A:  (BASELINE,  no  policy  change)  Declaration  data  has  to  be  made  available  by  the 
competent  authority  to  the  FIU  of  its  Member  State,  no  definition  is  given  of  what  'made  available' 
implies  and  whether  it  involves  active  availability  (sending  the  information,  providing  access  to  a 
database)  or  passive  availability  (such  as  storing  the  paper  declarations  in  a  room  where  they  are 
accessible to the FIU). 
5.1.1.2 Option B: Specify that 'making available' means transmission of the data by electronic means 
or providing the FIU access to a database which contains all the declaration information. 

As these options concern modalities of the exchange of data between the competent authority and the 
FIU, the consultation did not solicit feedback regarding this point. 

5.3   Problem 3: Impossibility for competent authorities to temporarily 
detain sub-threshold amounts 

5.3.1 Option description 

(BASELINE,  no  policy  change):    Competent  authorities  may  record,  process 
5.3.1.1  Option A: 
and make available to the FIU a number of details concerning the person and the cash, provided that 
there  are  indications  of  illegal  activities  concerning  the  movement  of  cash.    They  do  not,  however, 
have the authority to temporarily detain the cash based on the cash control regulation. 
Lay  down  an  explicit  provision  which  would  allow  competent  authorities  to 
5.3.1.2  Option B: 
temporarily  detain  the  cash  if  they  judge  that  indications  of  criminal  activity  (predicate  offences  to 
money laundering or terrorist finance) are present. 
5.3.1.3  Option C: 
legislation which, if they are present, would allow authorities to temporarily detain the cash. 

As  in  Option  B  but  specify  a  limited  list  of  objective  criteria  in  (delegated) 

5.3.1.4  Option D: 
As  in  option  B  but  in  addition  provide  a  guideline  concerning  suspicious 
activities.  This guideline would be a non-legislative 'soft law' option.  This option would take the middle 
ground between Options B and C, providing flexibility and preventing circumvention of the norm while 
at  the same  time  offering some  (albeit non-binding) guidance  as  to  the  types  of  circumstances    that 
could constitute indications of criminal activity 

Results from the public consultation indicate that a large majority of stakeholders who responded are 
in  favour  of  'a'  mechanism  that  enables  the  authorities  to  act  on  in  case  sub-threshold  amounts  are 
detected  but  there  are  indications  of  illegal  activity.    However,  many  of  those  added  that  some 
limitation should be provided so as to safeguard against arbitrary temporary detention. 

5.4  Problem 4: Imperfect definition of 'Cash' 

5.4.1  Option description 

32 

 
 
 
 
 
 
 
 
 
 
 
5.4.1.1  Option A:         (BASELINE, no policy change)  Maintain the definition of cash as it is presently 
worded in the CCR (currency and bearer negotiable instruments) but do not expand the definition to 
include precious metals / commodities. 

5.4.1.2  Option B:       Redefine the notion ‘cash’ in the regulation to include the elements under option 
A and add gold as a main category.  Refer to an annex in the regulation, modifiable by delegated act 
for  the  specification  of  the  constitutive  elements  within  each  of  these  categories,  leaving  open  the 
possibility to expand or amend this taking account of the circumstances and evolution of society.     

5.4.1.3  Option  C:              Expand  the  definition  of  'cash'  in  the  regulation  including  gold  and  precious 
metals and specify this in the revised CCR.   

5.5  Problem 5: Divergent  'penalties' 

5.5.1 Option description 

5.5.1.1  Option A (BASELINE, no policy change):       Maintain the current provision stating that: "each 
Member State shall introduce penalties to apply in the event of failure to comply with the obligation to 
declare […] Such penalties shall be effective, proportionate and dissuasive".  In this case the Member 
States  determine  the  penalty  for  non-declaration  which  they  deem  appropriate  and  specify  if/which 
mitigating or aggravating circumstances should be taken into account.    

5.5.1.2  Option  B:              Specify  in  the  regulation  or  in  a  delegated  act  provisions  on  the  nature  and 
severity of penalties to be applied for failing to declare.   

5.5.1.3  Option  C:  Maintain  the  current  provision  stating  that  'Each  Member  State  shall  introduce 
penalties  to  apply  in  the  event  of  failure  to  comply  with  the  obligation  to  declare  […]  Such  penalties 
shall  be  effective,  proportionate  and  dissuasive,  in  addition,    propose  –through  a  Commission 
recommendation – guidance on penalties to be applied for failure to declare. 

The  Commission  should  then  evaluate  if  the  penalties  in  a  Member  State  are  compatible  with  the 
decision by the European Court of Justice and if required initiate proceedings to ensure compliance. 

There  is  no  majority  in  favour  of  establishing  harmonised  penalties  for  the  failure  to  declare.  It  was 
explicitly mentioned in the questionnaire that these penalties would be intended to deal with the failure 
to declare only and have no relation with the licit or illicit origin or destination of the cash.  

Nevertheless,  according  to  the  results  of  the  open  public  consultation,  the  largest  group  of 
respondents  (17)  is  favouring  an  initiative  to  harmonise  the  sanction  regime  to  some  extent,  with  a 
minority of 9 respondents  being opposed to harmonisation initiatives and  an equal group  holding no 
strong opinion on the matter.  

Further to this, following discussions with Member States national experts who discussed the issue of 
approximation  of  penalties,  approximately  half  were  in  favour  of  a  legislative  approach  toward 
approximation while the other half were opposed to this and proposed an approach –if any- through a 
guideline.    The  single  element  on  which  universal  agreement  was  expressed  was  that  whatever 
system was chosen, it should be transparent and simple to apply in practice. 

5.6  Problem 6: Different implementation levels among Member States 

5.6.1  Option description 

33 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
5.6.1.1  Option A:  (BASELINE, no policy change):  The CCR does not lay down obligations to use a 
standard declaration form nor to provide any statistical data or performance metrics regarding controls 
to  the  Commission,  other  than  the  obligation  to  notify  the  Commission  about  the  penalties  for  non-
declaration (one time event, no-follow up on modifications).   

5.6.1.2  Option  B:  Make  it  mandatory  for  Member  States  to  use  a  harmonised  declaration  form,  the 
model of which is to be determined in implementing legislation, lay down an obligation to periodically 
provide statistical information to the Commission on declarations registered, controls made on cases 
where  a  declaration  is  made,  controls  made  in  the  absence  of  declaration  and  the  results  of  the 
controls  performed.  Statistical  information  should  also  refer  to  penalties  imposed  for  non-declaration 
including any amendments to those penalties.  
This  option  is  to  be  split  in  three  parts:    a)  harmonisation  of  the  declaration  form,  b)  systematic 
provision of statistical documentation to the Commission and c) informing the Commission of penalties 
under national legislation for failing to comply with the obligation to declare (or disclose, depending on 
the path chosen for problem 5.1) and of any modifications in the penalties regime. 

Important note:  During the open public consultation, stakeholder opinion was only solicited regarding 
the  harmonisation  of  the  cash  declaration  form,  not  regarding  any  provision  which  would  impose  an 
obligation on Member States to provide statistical data and performance metrics to the Commission. 

A majority of 19 respondents are in favour of using a standardised form, the format of which should be 
specified in the legislation. Another 10 respondents are in favour of maintaining the present system, 
where  the  large  majority  of  Member  States  use  the  same  form  (which  can  be  modified  to  reflect 
national elements) but without there being binding legislation to do so.  

5.7  Problem 7:   Divergent national measures to raise awareness 

5.7.1  Option description 

5.7.1.1  Option A (BASELINE, no policy change):       no legal obligations nor guidelines to raise public 
awareness.   
5.7.1.2  Option  B:        Provide  for  an  obligation  to  Member  States  to  raise  awareness/inform 
stakeholders about their obligations, but allow them to determine the most appropriate way to achieve 
this.   
5.7.1.3  Option C: Provide for an obligation to Member States to raise awareness and harmonise the 
measures as regards to form and content.   
5.7.1.4  Option  D:  Do  not  lay  down  harmonised  provisions  for  awareness-raising,  but  encourage 
Member States via guidelines to inform stakeholders of their obligations (non-regulatory option). 

According to the open public consultation, 20 respondents support a policy option where it would be 
made mandatory for Member States to inform the public about the duty to declare cash movements. 
An  additional  7  consider  that  an  explicit  reference  should  be  made  about  awareness-raising  in  the 
legislation  by  means  of  a  recommendation  to  the  Member  States,  not  an  obligation.  Maintaining  the 
current framework, where no mention about awareness-raising is made in the legislation, is supported 
by 5 respondents. 

Only  in  case  respondents  indicated  that  a  reference  to  awareness-raising  should  be  made  the 
question was asked if this should be harmonised.  20 respondents were in favour of one harmonised 
approach. 

34 

 
 
 
 
 
 
 
 
 
 
 
6. 

Impacts and option comparison  

This  section  assesses  the  options  outlined  above  in  terms  of  their  effectiveness,  efficiency 
(focusing  on  administrative  burden/costs)  and  coherence  (with  the  legislative  framework 
related  to  fundamental  rights  and  data  protection)  in  reaching  the  specific  objectives,  which 
contribute  to  the  general  objectives  of  promoting  a  harmonious,  balanced  and  sustainable 
development of economic activities throughout the internal market.  

The preferred option has been highlighted in green in each summary table, to facilitate reading. 

From a methodological point of view it makes sense to assign a value of “0” (neutral) to the baseline 
option,  relative  to  which  the  other  options  are  weighed.    However,    a  value  of  “-“  (negative)  has 
sometimes been assigned where the baseline option fails the criterion and is  ineffective. 

6.1 Problem 1:    Imperfect coverage of cross-border cash movements 

6.1.1  Option impact analysis. 

6.1.1.1 Option A (Baseline option):  no policy change 

As option A is  not compliant with an international norm to which the EU has  committed itself, to  the 
extent  that  it  does  not  cover  cash  shipped  via  other  methods  than  carried  by  natural  persons,  it  is 
considered not to be viable.   

6.1.1.2  Option  B:    Apply  the  current  declaration  system  for  natural  persons  but  provide  for  a 
disclosure system for cash shipped in post or freight. 

Effectiveness:    Such  approach  would  maintain  the  baseline  regarding  cash  carried  by  natural 
persons,  which  has  been  evaluated  as  largely  satisfactory.  A  disclosure  system  is  compliant  with 
FATF  Recommendation  32,  which  also  allows  a  disclosure-based  approach  (when  paired  with 
adequate control levels). A disclosure system allows flexibility, as authorities could perform risk-based 
controls and selectively decide if/when to request additional information which would add to a customs 
declaration and capture details not present on the customs declaration.  
The disadvantage of a disclosure system is that no systematic details regarding such shipments would 
be collected through declarations and would be available for analysis by the Member States Financial 
Intelligence Units.  For cash not carried by natural persons, the effectiveness will  –for the disclosure 
system- depend on the implementation of controls and the evaluation and follow-up. Option B was the 
option preferred by most stakeholders responding to the public consultation. 

Administrative  burden/  Cost:    Concrete  estimates  are  difficult.  It  is  to  be  expected  that  authorities 
will  mostly  request  a  disclosure  to  be  made  in  case  of  suspicion  that  a  predicate  offence  to  money 
laundering or terrorist finance may exist, based on risk analysis and an appreciation of elements of the 
case.  The  main  additional  burden  for  the  administrations  will  likely  consist  of  additional  work  on  risk 
analysis  to  try  to  target  the  right  consignments,  some  level  of  extra  controls  and  administration 
regarding the request for a declaration. It should be borne in mind however that an international norm 
imposes  controls  on  any  type  of cross-external  border  movement.  This  form  of  control would  be  the 
least intrusive one to comply with the international standard.  Compared to option C the administrative 
burden would be smaller since the amount of declarations that needs to be handled is less extensive. 
The burden will also be smaller for the consigner/consignee who will only have to make a declaration 
upon request, not in a systematic way.   
In addition to the above it should be remarked that most postal/parcel operators expressly prohibit the 
sending  of  cash  or  valuable  commodities  in  their  general  conditions  of  carriage.    This  effectively 
renders it impossible to ensure such consignments against loss.  These disadvantages make that only 
a  very  limited  number  of  economic  operators  (except  for  large  financial  institutions  who  negotiate 

35 

 
 
 
 
 
 
 
 
 
 
separate  arrangements  and  are  already  covered  by  AMLD  provisions)  use  this  channel  to  send  or 
receive important quantities of cash and the administrative cost for the postal /parcel operators should 
therefore  be  small.  If  a  consignment  with  cash  is  found  the  competent  authority  will  keep  the 
consignment while waiting for a disclosure declaration or until it can be sent to its addressee and this 
will  consequently  not  render  any  significant  administrative  burden  or  cost  for  the  postal/parcel 
operators.   

For the purpose of trying to quantify the administrative burden and costs related to the introduction of 
the  'disclosure  declaration'  principle  for  unaccompanied  cash,  the  following  overview  presents 
potential EU-wide costs per year.  It is important to understand that this estimate makes a number of 
assumptions  which  in  the  opinion  of  the  authors  are  realistic  for  scenario  1.  However,  no  verifiable 
data  is  available  and  modification  of  the  variables  may  have  an  important  impact  on  total  costs38.  
Scenario  2  is  intended  to  illustrate  a  'highest-cost'  scenario  but  is  deemed  unlikely  due  to  the  facts 
mentioned above regarding that most postal/parcel operators expressly prohibit the sending of cash or 
valuable commodities.  Neither scenario takes into account the potential income for the Treasury as a 
result of penalties imposed for failure to declare. 

Assumptions: 

1.  Average  EU-wide  hourly  labour cost  of  both  persons  performing  the controls  as  those completing 
the declaration is estimated at 25.00 Euros/hour39. 

2.  The  average  time  to  complete  a  declaration  is  estimated  at  10  minutes,  filing  and  sending  the 
document takes another 20 minutes40. 

3. The average time for an initial control is estimated at 3 minutes/consignment.  In case a declaration 
is requested, follow-up (counting the cash, sending the declaration form accompanied by instructions) 
is estimated to take another 30 minutes/file.  Infractions are estimated to require 2 hours of follow-up 
per file (on the level of authorities who perform controls and receive declarations). 

4.  The  controls  will  be  performed  by  competent  authorities  in  the  course  of  their  regular  duties 
(controls on parcels). 

5. Time for detection: 3 minutes/package. 

6. Follow up on the disclosure declarations: 30 minutes/file. 

7.  In  25%  of  cases  where  disclosure  is  requested,  no  answer  or  an  incorrect  answer  would  be 
forthcoming so further enquiries are initiated and these take 2 hours/case. 

8. Filing of declaration for operators 30 min/ declaration.  

38 The figure of 10 000 detections under scenario 1 represent 10% of the amount of declarations made by natural 
persons.    The figure of 10% is reasonable  in  light of  the  fact  that  most operators prohibit the  shipping of 
large amounts of cash through their systems, hence it cannot be insured for losses. 

39 http://ec.europa.eu/eurostat/statistics-explained/index.php/Hourly_labour_costs  

40 Internal average measured when persons unfamiliar with the process were requested to perform these actions, 

not statistically significant, for information purposes only. 

36 

 
 
 
 
 
 
 
                                                            
Quantification of costs 

Time for 
detection 

Follow up on 
the 
disclosure 
declarations 

Further 
enquiries 

Total cost  
for authori-
ties  

30 000 min/  
500 hours at 
25 €/h = 

8000 cases * 
0.5 h * 25 €/h 
= 

2000 cases * 
2 h * 25 €/h =  

Overall 
total per 
year 

Total cost for 
operators 
who need to 
complete a 
declaration 
8000 cases * 
0.5 h 
/declaration  
* 25 €/h = 

12 500 € 

100 000 € 

212 500 € 

100 000 € 

312 500 € 

100 000 € 

150 000 
min/2500h  at 
25 €/h =  

50 000 cases 
* 0.5 h * 25 
€/h =  

12500 cases 
* 2 h * 25 €/h 
=  

50000 cases * 
0.5 h/ 
declaration * 
25 €/h =  

62 500 € 

625 000 € 

625 000 € 

1 312 500 € 

625 000 € 

1 937 500 € 

Scenario 1:   
10 000 
detections, 
disclosure 
requested in 
80% of 
cases: 

Scenario 2:  
50 000 
detections, 
disclosure 
requested in 
100% of 
cases 

Coherence with data protection/fundamental rights41: A provision allowing for obligatory disclosure 
would interfere with the rights to private life (Article 7 of the Charter of Fundamental Rights of the EU) 
(henceforth:   CFR) and  the  freedom  to  conduct  a  business (Article  16  CFR;  any  regulation  affecting 
the  conduction  of  business  interferes  with  this  right).    As  this  option  would  involve  the  collection  of 
personal data, Art. 8 CFR is also impacted.   At the same time the justification conditions of Article 51 I 
CFR would need to be fulfilled. The aim of the restriction of the rights at hand is one recognised by the 
EU  (detect  cash  movements  linked  to  Money  laundering  offences  or  the  financing  of  terrorist 
activities).  Being  of  less  intrusive  character  compared  to  an  automatic  obligatory  declaration  of  all 
shipments the measure would be proportionate to its objective.  The regulation would need to explicitly 
list the legal basis for the action envisaged. 

6.1.1.3 Option C:  Provide for a mandatory cash declaration system for all types of movement of cash 
in amounts over the threshold. 

Effectiveness:  The  benefit  of  this  option  is  that  it  captures  in  principle  all  cross-external  border 
movements  and  allows  for  a  great  quantity  of  information  to  be  collected  and  analysed.  This 
theoretical  advantage  is  however  negated  to  a  large  extent  as  the  principal  targets  of  the  control 
system  (criminals)  will  likely  not  declare  and  ultimate  effectiveness  would  still  be  dependent  on 
controls.  
Administrative  burden/Cost:    The  administrative  burden  for  the  consigners/consignees  would  be 
higher  than  option  B,  as  a  systematic  declaration  obligation  would  be  imposed  on  all  cross-border 
movements.  This  would  add  to  the  obligations  under  a  customs  declaration  which  might  apply  and 
double declarations would be necessary in some cases. Moreover, as explained above, it is probable 
that this burden would largely be shouldered by persons and enterprises who seek to comply with the 
law whereas criminals are not likely to comply. For the administrations there would be an extra burden 
associated with the  handling of   declarations but also for performing controls.. Extra resources would 
need to be allocated. 

41  The  Charter  of  Fundamental  Rights  of  the  European  Union  can  be  consulted  here:    http://eur-
lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:12012P/TXT&from=EN  Additional information 
can be obtained here:  http://ec.europa.eu/justice/fundamental-rights/charter/index_en.htm  

37 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                            
Coherence  with  data  protection/fundamental  rights:    The  impact  on  the  fundamental  rights  to 
private life and protection of personal data (Articles 7 and 8 CFR) would be stronger than in option B 
as  a  lot  of  data  will  be  systematically  collected.  If  statistics  regarding  declarations  vs  infractions  for 
cash carried by natural persons may be extrapolated, in <10%42 of the total number of controls would 
infractions  against  the  obligation  to  declare  be  found,  while  also  the  90%  of  compliant43  declarants 
would have to provide personal data and details about the transaction. 

6.1.1.4 Option D:  Provide for a mandatory cash declaration system for all types of movement of cash 
in  amounts  over  the  threshold  but  provide  for  an  exemption  for  cash  sent  by  registered  financial 
institutions.  

Effectiveness: As it is not always possible to determine44 in a reasonable time whether a company is 
indeed a registered financial institution, this would negatively impact effectiveness.   
Administrative burden/costs:  As in option C, with an additional burden on the authorities who need 
to determine in a short time if an exemption applies.  In addition, access to a comprehensive list would 
need to be provided to competent authorities in the field, which would incur extra costs. 
Coherence with data protection/fundamental rights:  similar to option C. 

6.1.1.5  Option  E:    Provide  for  an  entirely  disclosure-based  system,  both  for  cash  carried by  natural 
persons and cash shipped through post/express courier or freight. 

Effectiveness:  Would be wholly dependent on implementation of controls and evaluation of control 
measures.  The  effectiveness  would  be  difficult  to  evaluate  and  prone  to  divergent  levels  of  controls 
between  Member  States.  Such  divergent  approach  would  increase  the  risk  of  forum  shopping  by 
criminals and therefore diminish the effectiveness of the control regime.  
Administrative burden / costs:  Low as it does not require any systematic declaration to be made.  
Coherence with data protection / fundamental rights:  This option would be least intrusive on the 
fundamental right to a private life (Article 7 CFR) and the freedom to conduct a business (Article 16 
CFR)  however  it  would  still  negatively  impact  those  rights,  albeit  to  a  lesser  degree  than  the  other 
options. 

42  For  cash  carried  by  natural  persons  crossing  the  external  border,  there  are  +-10%  failures  to  declare, 
considered vs the total number of declarations.  This is not the same as 10% of the controls performed which 
are  positive,  as  no  exact  data  are  available  concerning  the  controls  performed  that  were  ‘non-positive’ 
(persons carrying amounts lower than the threshold who were controlled).  It is however certain that the total 
number of controls performed are higher than the declarations and detections reflected in the statistics. 

43  Compliant  as  regards  the  obligation  to  declare,  not  necessarily  compliant  in  the  sense  that  no  predicate 
offences to money laundering or terrorist finance are present, as it has been demonstrated in the BE-NL pilot 
project that for at least a substantial fraction of declarants who declared in a Member State other than their 
own, there were indications of potential ‘fiscal crime’. 

44  Communication  between  DG  Taxud  and  DG  ECFIN  regarding  the  existence  and  accessibility  of  a  reliable 

database with a list of all ‘financial institutions’ worldwide. 

38 

 
 
 
 
 
 
                                                            
6.1.2 

 Summary and preferred option selection45 

Objective/Impact  Option A  Option B  Option C  Option D  Option E 
Effectiveness 
Cost/Burden 
DP/FR impact 
Conclusion 

- 
-- 
- 
---- 

- - 
0 
0 
-- 

+ 
- 
-- 
-- 

-- 
+ 
0 
- 

+ 
0 
- 
0 

Option B (Apply the current declaration system for natural persons but provide for a disclosure system 
for  cash  shipped  in  post  or  freight.)  is  the  preferred  option  since  it  is  compliant  with  FATF 
Recommendation 32 (when paired with adequate control levels). The benefit compared to option A is 
that authorities will have the power to demand a cash control declaration which would capture details 
that  cannot  be  provided  on  a  customs  declaration  when  finding  suspicious  consignments.  The 
information collected can also be used for future risk analysis purposes and increase the accuracy of 
the risk assessment regarding these types of consignments.  

Compared to option C the administrative burden on authorities would be smaller for option B since the 
amount of declarations that needs to be handled is less extensive. The burden will also be smaller for 
the consigner/consignee who will only have to make a declaration upon request.  Option D is not to be 
favoured  since  it  imposes  an  extra  burden  on  the  competent  authorities  who  have  to  make  a 
determination  on  the  legitimacy  of  exemption  requests  by  purported  financial  institutions,  without 
adding enough value. 
Option E could easily give rise to divergent implementation and unequal treatment in various Member 
States,  and  is  therefore  not  considered  as  effective  as  option  B.  Most  Member  States  have  also 
indicated  not  being  in  favour  of  option  E  which  they  would  consider  a  step  backwards  where  it 
concerns natural persons.   

Option  B  was  the  option  favoured  by  most  stakeholders  responding  to  the  public  consultation    and 
seems  most  proportionate,  keeping  in  mind  the  pursued  effectiveness,  acceptable  level  of 
administrative burden and the lowest impact on fundamental rights and personal data protection.  For 
all these reasons it is the preferred option.  

6.2  Problem 2: Difficulties regarding the exchange of information 
between competent authorities 

As  the  topic  of  information  exchange  is  highly  complex,  involves  considerations  of  a  legal,  practical 
and  technological  nature  and  has  an  impact  on  personal  data  protection  and  fundamental  rights 
please refer to Annex 6 for additional information. 

6.2.1 
between competent authorities 

Option  impact  analysis  sub-problem  2.1:    Exchange  of  information 

45  It  should  be  noted  that  the  'rating'  of  various  options  depicted  in  the  table  above  is  based  on  a  'reasonable 
effort'  approach  and  not  exact  science  as  it  involves  the  interpretation  of  many  variables,  most  of  which  defy 
quantification.    Further  to  this,  it  is  impossible  to  objectively  weigh  the  relative  importance  of  the  categories.  
The attribution of a weighting factor would only introduce a false sense of precise quantification.  The reader 
should keep this in mind while evaluating the comparison tables 

39 

 
 
 
  
 
 
 
 
 
 
                                                            
 
 (BASELINE,  no  policy  change)  Declaration  and  infraction  data  may  be 
6.2.1.1  Option A: 
shared between competent authorities in different Member States only in case of indications of illegal 
activity.   

Effectiveness: As demonstrated in the problem description, the present situation is unclear and leads 
to little sharing of information and is unequally applied.  For this reason it is deemed ineffective. 
Administrative  burden/cost:    The  instruments  to  be  used  for  data  exchange  are  unclear  and  their 
use  burdensome,  they  require  inputting  the  information  repeatedly  in  a  variety  of  applications.  The 
sharing of data is severely impacted by this lack of clarity and the lack of standards for doing so.  
Coherence with data protection/fundamental rights: Unequal application and uncertainty regarding 
procedures and the legal framework lead to issues regarding fundamental rights and equal treatment. 

 Provide  for  an  obligation  to  mandatorily  exchange  information  regarding 
6.2.1.2  Option B: 
infractions against the obligation to declare or declarations where there are indications of illegal activity 
between competent authorities of different Member States.   

Effectiveness:  It  is  important  for  the  effectiveness  of  the  regime  that  all  Member  States  share  the 
same  information,  using  the  same  format.  Information  regarding  persons  who  are  known  to  have 
committed  an  infraction  is  highly  relevant  to  competent  authorities  performing  controls  in  other 
Member States.  However, it should be noted that in some cases it can also be relevant for authorities 
to be aware of persons who have complied with their obligations but where indications of illegal activity 
exist  such  as  in  cases  where  persons  declare  large  amounts  of  cash  but  can  provide  no  credible 
information as to the economic origin or the purpose of the movement. For this reason the obligation  
to share information regarding declarations where there are indications of criminal activity adds to the 
effectiveness of the control regime and  contributes to the fight against money laundering and terrorist 
financing.  In the open public consultation, together with option C, this was the preferred approach. 
Administrative  burden/cost:    The  information would  have  to  be  stored  in  a database  but  the  extra 
cost vs the storing of the regular declaration which is submitted to the FIU would be marginal, provided 
an appropriate technical solution is chosen.  For the  traveller or economic operator, there would be no 
extra burden, except that those who committed infractions might be submitted to extra controls.  
Coherence  with  data  protection/fundamental  rights:    Although  this  option  negatively  impacts  the 
rights described in Arts. 7 and 8, CFR, this has to be balanced by the legitimate purpose for which the 
data  was  collected  and  the  proportionality  of  the  transmission.    The  exchanged  information  would 
concern persons who are known to have committed a prior infraction or where there are indications of 
illegal activity and would hence be proportionate, keeping into account the objective of the regulation.   

 Provide  for  an  obligation  in  the  regulation  to  mandatorily  exchange 
6.2.1.3  Option C: 
information  regarding  infractions  against  the  obligation  to  declare  or  declarations  where  there  are 
indications of illegal activity  between competent authorities of different Member States but keep the 
sharing of regular declaration information optional.   

Effectiveness:    As  under  B,  there  is  no  certainty  regarding  the  sharing  of  regular  declaration 
information  which  may  cause  unequal  application.  The  unequal  sharing  of  regular  declaration 
information while some do will be detrimental to the overall effectiveness.   
Administrative burden/cost:  As under B but with the extra burden of handling regular declarations 
that some Member States might share while some will not. 
Coherence with data protection/fundamental rights: As under B but risk of unequal application and 
unequal  treatment  regarding  the  exchange  of  personal  data  of  persons  who  made  a  regular 
declaration.  The question of proportionality arises but may be mitigated by technology, which allows 
decentralised sharing of information without systematically transferring personal data. cf. annex 6. 

6.2.1.4  Option D: 
infractions,  declarations  where  there  are  indications  of  illegal  activity  and  regular  declaration 
information between competent authorities in different Member States.   

Provide for an obligation in the Regulation to mandatorily exchange both  

40 

 
 
 
 
 
 
 
 
 
Effectiveness:  As  under  B  for  the  infractions,  the  information  regarding  regular  declarations  would 
allow risk analysis to extend to persons who declare as required but regularly enter or leave the Union 
carrying large amounts of cash. 
Administrative burden/cost:  As under B but with the extra burden of sharing all regular declarations. 
Coherence with data protection/fundamental rights: Negative in comparison with other options, as 
the volume of data collected would be higher and impact more declarants.  Moreover, a large part this 
increased  volume  of  data  exchange  would  concern  regular  declarations  for  which  no  underlying 
suspicion  of  wrongdoing  is  present,  raising  issues  of  proportionality  with  regard  to  the  effectiveness 
and the objective of the Regulation. 

6.2.2 Summary and preferred option selection 

Objective/Impact  Option A  Option B  Option C  Option D 
+ 
Effectiveness 
- 
Cost/Burden 
+ 
DP/FR impact 
Conclusion 
+ 

-  
0 
- 
-- 

+ 
- 
-- 
-- 

+ 
- 
- 
- 

Option B (mandatory exchange of infraction data and cases where there are indications of illegal 
activity) is the most effective and proportionate option for this type of exchange. It is important that the 
Member States are able to share declarations where there are indications of illegal activity but as 
mentioned earlier the use of sharing all declarations, even those where no indications of illegal activity 
are present, might not be proportionate, keeping in mind fundamental rights aspects. Considering that 
the effectiveness of option B, C and D are similar but that the proportionality and coherence with 
fundamental rights and data protection is better for option B this is the preferred option, 

6.2.2.3 Option impact analysis sub-problem 2.2:  Exchange of information between the 
competent authorities and the FIU 

6.2.3.1  Option A: (BASELINE, no policy change) Declaration data has to be made available by the 
competent authority to the FIU of its Member State. 

Effectiveness:  Not totally effective considering that there are cases where the declaration information 
is  either  made  available  to  the  FIU  with  a  long  delay  or  the  forms  are  merely  stored  and  thus 
'available', which respects the letter but not the spirit of the legislation and does not allow the FIU to 
perform  adequate  analysis.  The  possibility  to  use  the  data  for  risk  assessments  or  in  other  ways 
analyse  it  electronically  is  not  ensured  in  this  option,  which  makes  it  ineffective  regarding  the 
objectives of the CCR. 
Administrative burden/cost:  The FIU should receive the information in some form.  At the moment 
the information is encoded in a national system in most Member States. The lack of harmonisation of 
standards or compatibility results in an additional burden on the FIU's who need to use various tools in 
order to be able to import the data in question. 

Coherence  with  data  protection/fundamental  rights:    FIU's  are  pivotal  instruments  in  the  overall 
AML/TF framework and their operation is subject to strict limitations on the way in which personal data 
is  used  and  how  and  under  what  circumstances  it  can  be  made  available  to  FIU's  in  other  Member 
States or to other authorities. 

6.2.3.2  Option B: Specify that 'making available' means transmission of the data by electronic means 
or providing the FIU access to a database which contains all the declaration information. 

41 

 
 
 
 
  
 
 
 
 
 
Effectiveness:  The active duty to 'make available' data by electronic means will ensure that the FIU 
receives all relevant data in a form that is easy and effective to handle and use for electronic analysis 
of the data. The effectiveness of option B compared to option A is much higher.  
Administrative burden/cost:   The cost would be largely dependent on the system which is chosen.  
This selection should be the subject of technical analysis. The administrative burden would be borne 
by the authorities who encode the information and maintain the IT system.  However, as the present 
situation  already  requires  coding  the  information  and  making  it  available  to  the  FIU,  the  additional 
burden should be marginal in most Member States.  Without prejudice to any solution chosen it seems 
likely that the largest cost would be setting up an IT-system, with a recurrent hardware cost and staff 
costs.    Such  harmonisation  may  however  generate  economies  of  scale.    Notably,  if  a  compatible 
solution can be retained, the administrative burden on FIUs could be much smaller with this option as 
it might negate the need for dual data input. 
Coherence with data protection/fundamental rights:  As under option A. 

6.2.4  Summary and preferred option selection. 

Objective/Impact  Option A  Option B 
-  
Effectiveness 
0 
Cost/Burden 
0 
DP/FR impact 
- 
Conclusion 

+ 
- 
0 
0 

As shown in the evaluation the current situation is not as effective as it could be. The significant value 
that  cash  control  data  can  have  in  money  laundering/terrorist  financing  investigations  makes  it 
desirable to conduct a study on the technological aspects and modalities with which such exchange of 
data  should  be  conducted.    Measures  need  to  be  taken  to  ensure  that  the  FIU  receive  all  pertinent 
data in a timely and effective manner.   Option B is the preferred option. 

6.3  Problem 3:  Impossibility for competent authorities to temporarily 
detain sub-threshold amounts 

6.3.1 Option impact analysis 

6.3.1.1  Option A (BASELINE, no policy change):  Competent authorities may record, process and 
make available to the FIU a number of details concerning the person and the cash, provided that there 
are indications of illegal activities concerning the movement of cash.  They do not, however, have the 
authority to temporarily detain the cash based on the cash control regulation. 

Effectiveness:  It is doubtful if the absence of an option to allow temporary detention of sub-threshold 
amounts in case there are indications of illegal activity is in conformity with the letter and spirit of FATF 
Recommendation  32  to  which  the  EU  has  committed  itself.    Additionally,  this  issue  was  specifically 
flagged  by  both  Member  States  and  the  Commission46  as  a  weakness  to  be  addressed.    For  this 
reason it is determined that option A needs to be discarded as it does not fully reach the objectives. 

6.3.1.2  Option B: 
Lay  down  an  explicit  provision  which,  in  addition  to  the  baseline  scenario, 
would  allow  competent  authorities  to  temporarily  detain  the  cash  in  accordance  with  national 

46 In the Terrorism Finance Action Plan, as indicated before. 

42 

 
 
 
 
 
 
 
 
 
                                                            
legislation if they judge that indications of criminal activity (predicate offences to money laundering or 
terrorist finance) are present. 

Effectiveness:    This  option  would  be  able  to  provide  a  'catch-all'  provision  in  case  no  legal  basis 
outside the cash control regulation is present to (temporarily) detain the cash but there are reasons to 
do so pending further investigation. The possibility to temporarily detain sub-threshold amounts would 
increase the effectiveness of the regulation. The approach would however, not be totally harmonised 
in all Member States as it is based on national legislation which will by definition differ. 
A  clear  majority  ofof  stakeholders  responding  to  the  public  consultation  was  in  favour  of  competent 
authorities being empowered to temporarily detain cash amounts below the threshold of 10 000 Euros 
if there are indications that illegal activities are associated with the movement of the cash.  
Administrative  burden/Cost:    Not  quantifiable,  essentially  this  would  be  the  cost  of  administration 
and of the security arrangements associated with physically storing the cash.  The number of cases 
where action is taken specifically based on this provision is expected to be low as the mechanism is 
conceived  as  a  'catch  all'  instrument,  to  be  used  if  no  legislation  outside  the  cash  control  regulation 
allows (temporary) detention of the cash. Under present legislation competent authorities already have 
the  option  to  temporarily  detain  higher  than  threshold  amounts  of  cash  in  case  these  were  not 
declared and there are indications of illicit activities, hence the necessary infrastructure will already be 
present.  The impact on the owner/carrier of the cash may however be substantial in the event that the 
FIU decides there were no grounds for suspicion and decide that the is to be refunded.  In an extreme 
scenario this could mean having to travel in order to retake possession of his/her money. 
Coherence  with  data  protection/fundamental  rights:    The  initial  appreciation  of  'indications  of 
criminal activity' lies solely with the competent authority.  The fundamental rights mentioned in Arts. 7, 
8 and 16, CFR would be negatively impacted, as would be the right to property enshrined in Art. 17, 
CFR.  This is mitigated to some extent as a) this would be a strictly time-limited detention pending a 
decision  by  the  FIU  or  other  authority,  b)  the  competent  authority  will  be  required  to substantiate  its 
action  in  the  documentation  submitted  to  the  FIU  and  the  owner  or  carrier  of  the  cash.  And  c)  the 
threshold  for  action  is  ‘indications  of  criminal  activity’,  not  merely  ‘illegal  activity’.,  raising  the  bar  for 
intervention.  Further, the objective of the regulation and the legitimate interests and right to safety of 
society need to be taken into account while considering this aspect.   

6.3.1.3  Option  C:  As  Option  B  but  with  a  limited  list  of  objective  criteria  specified  in  (delegated) 
legislation which, if they are present, would constitute indications of criminal activity and would allow 
authorities to temporarily detain the cash. 

Effectiveness:  As option B, however, a limitative list opens the door to circumvention behaviour and 
negatively impacts effectiveness.   
Administrative burden/cost:  As option B. 
Coherence with data protection/fundamental rights:  As option B but offering more guarantees for 
impartial  and  proportionate  treatment  as  the  circumstances  that  constitute  'indications  of  criminal 
activity' would be imitatively determined in a binding legal instrument that would comply with relevant 
legislation and be harmonised among Member States. The diversion behaviour that might be triggered 
by a positive list could negatively impact the objectives of the regulation and the interests of society. 

6.3.1.4  Option D: As in option B but in addition, providing a guideline concerning suspicious activities.  
This guideline would be a non-legislative 'soft law' option. 

Effectiveness:  As  option  B,  however  this  guidance  would  necessarily  be  of  a  non-binding  nature, 
hence not enforceable yet might trigger legal problems when challenged.  In its decision on the Digital 
Rights Ireland case47, the European Court of Justice made clear that where the EU institutions offer a 
legal base to restrict fundamental rights (i.a. the right to property which could be impacted), they also 
have an obligation to clearly regulate the conditions of such restrictions. Guidelines do not meet this 
criterion.   

47 CJEU case C-293/12 and C-594/12, paras. 54, 63, 64 

43 

 
 
 
 
 
 
 
                                                            
Administrative  burden/cost:    As  option  B,  additionally  there  would  be  a  one-time  administrative 
burden on behalf of the competent authorities who would have to analyse the guidelines and translate 
them into administrative instructions. 
Coherence with data protection/fundamental rights: This option takes the middle ground between 
Options B and C, however, due to the factors mentioned under the paragraph relating to effectiveness, 
from a legal perspective the option is not to be retained. 

6.3.2  Summary and preferred option selection. 

Objective/Impact  Option A  Option B  Option C  Option D 
++ 
Effectiveness 
- 
Cost/Burden 
- 
DP/FR impact 
0 
Conclusion 

- (0) 
0 
0 
0 

-- 
- 
+ 
-- 

- 
- 
+ 
- 

As option A represents the baseline, it should be assigned the value (0).  However it was assigned (-) 
as  it  is  not  in  conformity  with  a  norm  to  which  the  EU  has  committed  itself  and  due  to  stakeholder 
opinion indicating that a balanced possibility to act against lower than threshold amounts needs to be 
found.  As compared to baseline any approach will result in higher costs (even though very limited) so 
this parameter is weighed negatively in the other approaches. Option A was discarded as it does not 
fully reach the objectives. Option B is the most effective option since it is ensuring formal compliance 
with  the  FATF  norm  while  giving  the  authorities  a  possibility  to  temporarily  detain  sub-threshold 
amounts.  Option  B  is  placing  the  bar  for  detention  reasonable  high  at  the  same  time  as  it  prevents 
evasive behaviour that could be possible under option C. Option D presents a legal problem due to the 
aforementioned judicial ruling and fails for reasons of effectiveness. Because of the above mentioned 
option B is considered the most effective at the same time as it is considered to be in coherence with 
proportionality regarding data protection and fundamental rights.  

6.4   Problem 4:  Imperfect definition of 'cash' 

6.4.1  Option impact analysis 

6.4.1.1  Option A:  (BASELINE, no policy change) Maintain the definition of cash as it is presently 
worded in the CCR (currency and bearer negotiable instruments) but do not expand the definition to 
include precious metals / commodities. 

Option A does not modify the existing definition with which most declarants are familiar.  Further, it is 
compliant  with  what  the  FATF  requires  as  a  minimum.    A  consequence  of  this  approach  is  that 
criminals might continue using commodities that can act like highly liquid stores of value to escape the 
obligation to declare.  As such evasion tactics have been demonstrated, modifying the definition in the 
regulation to address such developments would require a revision of the regulation.  Additionally it is 
not inconceivable that the technological evolution creates some carriers of value that are not currently 
considered under the definition or that may not even exist.  

6.4.1.2  Option B: Redefine the notion ‘cash’ in the regulation to include the elements under option A 
and add gold as a main category.  Refer to an annex in the regulation, modifiable by delegated act for 
the  specification  of  the  constitutive  elements  within  each  of  these  categories,  leaving  open  the 
possibility to expand or amend this taking account of the circumstances and evolution of society.   

Effectiveness:  As in A, but taking into account data that demonstrates that gold is used as a medium 
to  transfer  value  and  escape  the  obligations  to  declare.  The  solution  to  put  the  definition  of 
commodities acting as liquid stores of value in an annex modifiable by a delegated act, is effective in 

44 

 
 
 
 
 
 
 
 
 
 
 
that way that it ensures  practical enforceability and future-proofs the instrument against possible new 
evidence  arising  regarding  what  commodities  are  being  used  to  circumvent  the  CCR.      Until  further 
evidence of evasion or the use of new mechanisms emerges, the annex would only include gold coins 
and  high-purity  gold  bars.    Any  expansion  of  the  annex  should  take  into  account  considerations 
regarding the demonstrated necessity to act, practical enforceability in the field and proportionality.  
Administrative burden/ Costs:  As in A.  It is not expected that the enlargement of the definition of 
the categories that are to be considered as cash (e.g. certain forms of gold) will result in  large scale 
increases of declarations, considering that the value carried would still need to be equal to or higher 
than 10 000 Euro.  It should be noted that in certain cases the obligation to declare could lead to an 
obligation to make both a customs declaration and a cash controls declaration.  This additional burden 
needs to be weighed against the objective of the regulation.  
Coherence with data protection/fundamental rights:  As in A. The rights listed in Arts. 7, 8 and 16, 
CFR  are  impacted.    Enlargement  of  the  definition  would  lead  to  more  persons  having  to  make  a 
declaration but this would be subject to the same safeguards regarding the use of the data as under 
option  A.    In  order  to  provide  sufficient  guarantees  regarding  fundamental  rights  and  with  regard  to 
both applicability and the provision of information to citizens it is important to precisely and positively 
describe the exact commodities or forms of the commodities (e.g. in the case of gold:  gold coins and 
bars,  thus  excluding  jewelry)  included  in  the  definition  and  to  strictly  adhere  to  a  fact-based  and 
proportionate approach before modifying the annex. 

6.4.1.3  Option  C:              Expand  the  definition  of  'cash'  in  the  regulation  including  gold  and  precious 
metals and specify this in the revised CCR. 

Effectiveness: As under option 'B', however, there would be no possibility to later flexibly amend the 
list of commodities covered by the definition.  Any change would require a revision of the regulation 
and a lengthy legislative process, undermining the effectiveness as the regulation would not be 'future-
proofed'. 
Administrative burden/ costs:  higher than A, cf. description under B in the hypothesis of enlarging 
the  definition,  the  larger  or  less  described  the  categories  falling  under  the  definition  would  be,  the 
higher the potential number of declarations. 
Coherence with data protection/fundamental rights:  As under option B. 

6.4.2  Summary and preferred option selection 

Objective/Impact  Option A  Option B  Option C 
Effectiveness 

+ 

0 

0 

Cost/Burden 

DP/FR impact 

Conclusion 

0 

0 

0 

0 

0 

0/+ 

- 

0 

- 

In  summary,  the  present  baseline  option  A  meets  with  international  requirements  but  does  not  take 
into  account  study  results that  demonstrate  the  use of  highly  liquid  stores  of  values  such  as  gold  to 
transfer value across borders while escaping the obligation to declare or disclose resting on currency.  
The case for enlarging the definition of cash in the regulation itself would result in a lack of flexibility 
and  future-proofing  of  the  norm.      A  hard-coded,  positive  list  could  also  in  itself  stimulate  diversion 
behaviour.  Hence option C is negatively evaluated.  The argument in favour of option B is that it takes 
into account data which indicates that highly liquid stores of value (i.c. gold ) present a problem yet this 
approach allows for flexibility and for a reasonably fast modification of the definition of cash should a 
demonstrable need arise.  For this reason it is the preferred option.   

45 

 
 
  
  
 
 
 
 
Addendum:  
During internal consultation and after new evidence had been presented, following further analysis it 
was deemed useful and appropriate to add and define the category 'Commodities used as highly liquid 
stores of value' in the Regulation.  The definition would read as follows:  'commodities used as highly 
liquid stores of value' means goods that present a high ratio between their value and their volume 
and  that  can  easily  be  converted  into  currency  through  accessible  trading  markets  whilst  incurring 
only modest transaction costs'.  Instances of such commodities are to be specified in Annex 1 to the 
Regulation, which currently will include (1) Coins with a gold content of at least 90%; and (2) Bullion 
such as bars, nuggets or clumps with a gold content of at least 99.5%, instead of listing the different 
types  of  gold  included  in  the  Regulation  itself.    The  approach  chosen  allows  for  future-proofing  and 
flexibility  in  case  evidence  were  to  be  presented  that  demonstrates  the  use  of  other  types  of 
commodities to avoid the obligation to declare.  Any future amendment of the Annex by delegated act 
will only happen after a thorough analysis of available data and following an impact assessment.  

It was also deemed appropriate to include 'prepaid cards' in the definition of cash in the legislative 
proposal.  The reasons for this approach are twofold:  1) indications of abuse and high potential for 
abuse associated with this relatively novel phenomenon (cf. infra) and 2) legal analysis which 
concluded that it would be doubtful if –in the absence of a specific provision in the Regulation relating 
to prepaid cards- these instruments could potentially be included under the category 'bearer 
negotiable instruments'.  Organisations such as the FATF indicate that the possibility for inclusion 
under 'bearer-negotiable instruments' should be considered. 48  However, the commonly accepted 
legal definitions of 'negotiable instruments' refer (possibly for historical reasons) only to documents, 
not to cards. 

The proposed definition of 'prepaid card' would read:  'a non-nominal card storing monetary value or 
funds which can be used for payment transactions, for acquiring goods or services or for redemption 
of currency and which are not linked to a bank account.'.  The definition of 'cash'  for the category 
'prepaid  cards'  refers  to  an  annex,  modifiable  by  delegated  act  in  which  the  constitutive  elements 
(types of prepaid cards to be subjected to the obligation to declare) will be specified.  At the time of 
writing,  this  annex  is  left  blank,  which  implies  that  it  will  act  as  a  placeholder  but  not  have  any 
practical effect until specific types of cards are included.  Determination of the types of cards to be 
included will be the subject of further analysis and be based on the evaluation of relevant data in the 
context of an Impact Assessment.. 

As  prepaid  cards  were  not  included  in  the  original  scope  of  this  Impact  Assessment,  for 
methodological  reasons  a  brief  overview  regarding  the  phenomenon  is  presented  in  this  separate 
section.    

1.  Background concerning prepaid cards 

Prepaid  cards  are  one  of the  more recent  developments  in  the  world  of  consumer  electronic  money 
(including electronic payments). Beginning as an electronic replacement for paper gift certificates, so-
called  gift  cards  have  become  especially  popular  with  consumers  and  are  marketed  by  retail 
merchants.  Recent  innovations  to  prepaid  cards  have  led  to  their  integration  into  the  payment  card 
networks, significantly expanding the range of applications beyond the simple gift card concept. These 

48 An  approach  also  explored  by  the  Financial  Action  Task  Force:    ‘Countries  should  also 
consider  whether  Recommendation  32  applies  to  certain  prepaid  access  products,  such  as 
prepaid  cards,  that  would  qualify  as  bearer  negotiable  instruments.’,  FATF  Guidance  for  a 
risk-based  approach:    prepaid  cards,  mobile  payments  and  internet-based  payment 
providers, 2013, p. 16, Cf.   
http://www.fatf-gafi.org/media/fatf/documents/recommendations/Guidance-RBA-NPPS.pdf  

46 

 
 
 
 
 
                                                            
network-branded  prepaid  card  programs  are  now  gaining  traction  as  attractive  alternatives  for 
traditional  paper-based  solutions  such  as  payroll  payments,  cross-border  remittances,  government 
assistance programs, and many other emerging applications. 

Prepaid card have an obvious potential to more efficiently and effectively deliver financial services to 
the  unbanked  and  underserved  segments  of  society.  Unfortunately,  many  of  the  same  features  that 
make prepaid cards such a positive payment innovation make them attractive to criminals interested in 
exploiting this new payment form to facilitate money laundering. 

2.  Prepaid card types 

The prepaid card market is a complex aggregate of niche products, presenting different characteristics 
in different jurisdictions in terms of financial size, products or distribution channels. Prepaid cards can 
be offered as one-off solutions (typically in limited networks as technology based on magnetic stripe, 
not electronic chip) or reloadable cards.  

A large payment card company has defined 3 types of prepaid cards, according to the services  and 
functionalities they offer, and to their AML regime: 

1. Many prepaid cards are used in limited networks, for instance prepaid fuel cards for use at a given 
brand  of  petrol  station,  or  cards  whose  use  would  be  limited  to  a  chain  of  retail  stores  (closed  loop 
prepaid cards), or to a given shopping centre (semi-open loop prepaid cards), or to buy lunch.  
2. Gift cards are also an important market segment for prepaid cards (representing EUR 6 billion in 
the UK only). Gift cards can generally be used domestically only, cannot be used to withdraw cash at 
ATMs and are sometimes not allowed for online use. All these parameters are defined by the e-money 
issuer. The acceptance of a foreign gift card by a merchant would require that the latter be equipped 
with an online terminal capable of reading the card (like for a pre-authorised debit card), which would 
be too complex and costly for the acquirer.  
3.  Besides  these  closed  loop  or  semi-open  loop  prepaid  cards,  there  are  general-purpose 
(reloadable or non-reloadable) prepaid cards (also called open-loop cards). According to EMA, this 
segment would  represent about 5%  of the  total  prepaid  card  market.  The  reloadable cards  sold by 
certain  card  companies  can  accept  up  to  20.000  euro.  Their  holder  is  subject  to  customer  due 
diligence (CDD). 
Non reloadable prepaid cards usually carry fixed amounts of 10, 20, 50 or 100 EUR. The maximum 
value often is of 250 euro as a result of the  rules defined by the 3rd AML Directive. Below that amount 
the cardholder is not subject to CDD requirements.  

There are some niche exceptions such as travel money cards which are a substitute to paper-based 
travellers  cheques  (for  instance  in  the  UK),  often  for  larger  amounts  (up  to  5000  euro),  but  where 
customer due diligence is carried out upfront. 

Some prepaid cards are linked to an IBAN number. They emulate a bank account and are fully subject 
to CDD requirements. 

3.  The risks associated with prepaid cards 

The anonymity that certain prepaid cards (i.e. CDD-exempted prepaid cards) confer to their holder is 
seen  as  an  advantage  by  those  people  who  are  very  attached  to  protect  their  privacy,  which  has 
become an increasing issue on the web. Whilst these concerns are legitimate, anonymity can also be 
sought or abused to conduct illegal actions.  
The  terrorism  financing  risk  posed  by  prepaid  cards  is  essentially  linked  to  CDD-exempted  general 
purpose (reloadable or non-reloadable) prepaid cards that run on domestic or international schemes.  
The challenge is  how to address the concerns raised by anonymity of those general purpose cards, 
without undermining their convenience and their availability. 

47 

 
 
 
 
 
 
 
 
  
 
 
Prepaid cards are as transferable as cash. While even a classical debit or credit card is transferable 
when the original cardholder passes his PIN code to the new holder. A difference however lies in the 
fact  that  the  original  holder  of  a  debit  or  credit  card  has  been  subject  to  CDD  –  which  would  not 
necessarily be the case for a prepaid cardholder. 
Prepaid  cards  provide  a  compact,  easily  transportable,  and  potentially  anonymous  way  to  store  and 
access  cash  value.  General  purpose  prepaid  cards  lower  the  barrier  to  the  Union  payment  system, 
allowing  individuals  without  a  bank  account  to  access  illicit  cash  via  ATMs  globally.  When  used  for 
illicit  purposes,  branded  general  purpose  reloadable  prepaid  debit  cards  have  been  associated  with 
cashing out the proceeds of fraud and are being used as an alternative to cash in much the same way 
that money orders, travellers’ checks, and nonbank wire transfers are used. 
Prepaid  card  programs  often  accept  applications  online,  via  fax,  or  through  local  check  cashing 
outlets, convenience stores, and other retailers. Programs that lack customer identification procedures 
and  systems  to  monitor  transactions  for  suspicious  activity  present  significant  money  laundering 
vulnerabilities,  particularly  if  there  are  liberal  limits  or  no  limits  on  the  amount  of  cash  that  can  be 
prepaid into the card account or accessed through ATMs. Offshore banks also offer stored value cards 
with cash access through ATMs internationally.  
Further, programs designed to facilitate cross-border remittance payments often allow multiple cards 
to  be  issued  per  account  so  that  friends  and  family  in  the  receiving  country  can  use  the  cards  to 
access  cash  and  make  purchases.  These  programs  can  also  be  used  to  launder  money  if  effective 
AML policies, procedures, and controls are not in place. 
EUROPOL has specifically pointed out  those risks ("in today's  world, cash and prepaid instruments 
share striking similarities, and there is a clear trend in criminal circles to revert to the use of prepaid 
cards  for  obvious  ease  of  transportation")  and  issued  a  public  call  for  the  revision  of  the  legal 
framework.49 

4.  Union AML legal framework 

E-money  issuers  are  subject  to  AML/CFT  requirements  in conformity  with  EU  law  (Second  Directive 
on electronic money and 4th AMLD). Whilst card schemes are not per se subject to AML requirements; 
to protect their brand, they have developed a set of rules and AML/CFT guidelines which the e-money 
issuers they work with have to respect. 
It should be noted that the AML legislation is territorial by nature and the EU directives are of minimum 
harmonisation  whilst  the  directives  on  payment  services  and  electronic  money  are  essentially  of 
maximum harmonisation. 
By extending the definition of cash under the Regulation to prepaid cards, coherence is ensured with 
the 4th AMLD – and its proposed amendments – which constitutes the other important element in the 
legal framework for the prevention of money laundering, as well as with the undergoing supranational 
risk assessment relating to money laundering and terrorism financing undertaken by the Commission.  

5. 

International efforts  

The  Financial  Action  Task  Force  (FATF)  released  its  “Report  on  New  Payment  Methods,”  which 
reviews  prepaid  cards  and  other  new  payment  methods  that  allow  for  electronic  cross-border  fund 
transfers  that  might  also  facilitate  money  laundering.  Examining  the  structure  of  prepaid  card 
processing, the FATF highlighted programs that incorporate offshore card issuers and access to cash 
at  ATMs  as  environments  with  the  greatest  risk  for  money  laundering  abuses.  Concurrently,  the 
private-sector  side  of  the  payments  industry  is  also  actively  examining  these  same  issues  in  an 
attempt to better understand prepaid cards’ vulnerability to abuse by money launderers and to develop 
appropriate risk mitigation strategies 
In the United States, both the Financial Crimes Enforcement Network (FINCEN), part of the 
Department of Treasury, responsible for anti-money laundering and the U.S. Department of Justice’s 
(DOJ) National Drug Intelligence Centre (NDIC) have highlighted the vulnerability of prepaid cards to 
money laundering and are seeking to set out and enforce rules similar to those proposed under the 
Regulation. 

49  Europol  report  "Why  cash  is  still  king"  https://www.europol.europa.eu/newsroom/news/cash-still-king-

criminals-prefer-cash-for-money-laundering 

48 

 
 
 
                                                            
6.5  Problem 5: Divergent 'penalties' 

6.5.1  Option impact analysis. 

6.5.1.1  Option A:  (BASELINE, no policy change)  Maintain the current provision stating that 'Each 
Member State shall introduce penalties to apply in the event of failure to comply with the obligation to 
declare […] Such penalties shall be effective, proportionate and dissuasive.  

Effectiveness:    It  is  up  to  the  judiciary  to  decide  whether  a  specific  penalty  is  indeed  effective.  
Considered  in  conjunction  with  the  elements  ‘proportionate’  and ‘dissuasive’  and  taking  into  account 
the wide variation in penalties for non-declaration and the occasional conflation of penalties for failing 
to declare and a –potential but at that point not yet established- underlying predicate offence, it can be 
doubted  if  the  present  situation  is  wholly  satisfactory.    Effectiveness  may  also  be  undermined  as  a 
result  of  ‘forum  shopping’  where  criminals  could  have  an  incentive  to  choose  Member  States  with 
seemingly low penalties. As was demonstrated in the problem description, the present situation leads 
to highly divergent approaches. 
Administrative burden/cost: Highly variable in function of national procedures. 
Coherence with data protection/fundamental rights:  The inequality in treatment resulting from an 
approach  which  leaves  the  determination  of  penalties  to  the  Member  States  is  inherent  to  this 
mechanism  and  by  itself  not  illegal.    However,  given  the  observed  divergences  the  question  arises 
whether  the  variance  can  still  be  considered  proportionate.    Recent  jurisprudence50  indicates  that 
some penalties as applied in the Member States do not seem to be in compliance with the  limits set 
out by the European Court of Justice. 

6.5.1.2  Option  B:      Specify  in  the  regulation  or  in  a  delegated  act  provisions  on  the  nature  and 
severity of penalties to be applied for failing to declare.    
Such approach would provide for a more approximated treatment of infraction cases and could specify 
outer boundaries  as to the penalty to be applied by Member States.  If modifiable through a delegated 
act this would allow for flexibility and the rapid taking into account of jurisprudence.  If a penalty or a 
range of penalties were to be mentioned in the Regulation itself, the risk exists that the judiciary might 
rule against these at some point, which might not be easy to remedy.  For this reason if option B is 
chosen it seems  preferable to specify a range  of penalties  in an annex, modifiable by delegated act 
and supervised by the Council and the Parliament. 

Effectiveness:  Better than option A as more approximation would reduce the opportunities for ‘forum 
shopping’  and  offer  more  guarantees  for  a  proportionate  treatment  which  takes  only  the  failure  to 
declare into account.   
Administrative  burden/cost:    Member  States  would  need  to  take  account  of  such  provisions  and 
possibly  modify  or  repeal existing  legislation  and  administrative  procedures/instructions,  leading  to  a 
relatively high initial burden. 
Coherence with data protection/fundamental rights:  Determined by the level or range of penalties 
but a higher degree of approximation would increase overall equality of treatment and achieve greater 
compliance with the limits established by the judiciary.   

6.5.1.3  Option  C:  Maintain  the  current  provision  stating  that  'Each  Member  State  shall  introduce 
penalties  to  apply  in  the  event  of  failure  to  comply  with  the  obligation  to  declare  […]  Such  penalties 
shall  be  effective,  proportionate  and  dissuasive,  in  addition,    propose  –through  a  Commission 
recommendation – guidance on penalties to be applied for failure to declare. 

Effectiveness:  Dependent on the degree of de facto approximation which would be achieved through 
this approach which would not be directly binding for the Member States.  The guidance would mainly 
consist of explaining the possible approaches  as regards  penalties for failure to declare and explain 

50 Judgment by the ECtJ in case C-255/14, op. cit. supra. 

49 

 
 
 
 
 
 
 
                                                            
existing jurisprudence on the matter.  Also dependent on follow-up by the Commission and initiation of 
proceedings against Member States who fail to comply with established jurisprudence. 
Administrative burden/cost:  Between option A and B.  The additional administrative burden would 
also  be  shouldered  by  the  Commission  who  would  need  to  provide  continuous  follow-up  and  if 
necessary initiate action against Member States. 
Coherence  with  data  protection/fundamental  rights:    Dependent  on  the  penalties  applied,  their 
proportionality/effectiveness and the degree of approximation and follow-up by the Commission. 

6.5.2 Summary and preferred option selection. 

Objective/Impact  Option A  Option B  Option C 
Effectiveness 
Cost/Burden 
DP/FR impact 
Conclusion 

0 
0 
0 (-) 
- 

+ 
0 
0 
0/+ 

+ 
- 
+ 
0/+ 

Option  A  is  the  present  baseline  but  does  not  seem  satisfactory  in  view  of  the  large  variance  in 
penalties applied and the undesired effects this may generate.  Option B achieves approximation but 
reduces  the  liberty  of  Member  States  to  act,  generates  a  higher  administrative  burden  and  is  not 
favoured by stakeholders.  Option C is a non-legislative option which would leave the prerogatives of 
the  Member  States  to  decide  on  appropriate  penalties  intact  while  the  Commission  could  provide 
guidance on the level of penalties that are compliant with established jurisprudence.  If anomalies are 
detected  which  are  not  corrected,  a  letter  of  formal  notice  could  be  sent  by  the  Commission  and 
followed  up  on,  thereby  achieving  a  measure  of  approximation  in  line  with  jurisprudence.    Option  C 
places the administrative burden for  evaluation and follow-up largely with the Commission but is  the 
preferred  option  as  it  also  respects  the  principle  of  subsidiarity  to  the  largest  extent  while  balancing 
this with a proportional approach based on guidance by the judiciary. 

6.6  Problem 6: Different implementation levels among Member States 

6.6.1  Option impact analysis 

6.6.1.1  Option A:  (BASELINE, no policy change):  The CCR does not lay down obligations to use 
a  standard  declaration  form  nor  to  provide  any  statistical  data  or  performance  metrics  regarding 
controls to the Commission, other than the obligation to notify the Commission about the penalties for 
non-declaration (one time event, no-follow up on modifications).   

Effectiveness:    In  practice  regarding  the  declaration  form  25/28  Member  States51  already  use  a 
harmonised form (which allows for some flexibility to include national elements) that provides the same 
‘look  and  feel’  to  declarants52,  regardless  of  the  Member  State  of  entry  or  exit.    This  approach  is 
effective  but  dependent  on  the  goodwill  of  the  Member  States.    Statistical  information  is  voluntarily 
submitted in an agreed upon format but the level of detail provided is not equal among Member Staes, 
especially  regarding  infractions  and  penalties..    No  systematic  updates  are  sent  to  inform  the 
Commission in case penalties are modified. 

51 The three Member States who do not use the ‘standard’ form state as reasons a) a large stock of pre-printed 
‘old’ forms which have to be used up first, b) an electronic declaration form which is submitted online and 
includes  national  elements  and  c)  a  form  that  combines  cash  control  regulation  elements  with  national 
elements. 

52 Cf. http://ec.europa.eu/taxation_customs/customs/customs_controls/cash_controls/how_to_declare_en.htm  

50 

 
 
 
 
 
 
 
 
                                                            
Administrative  burden/cost:    The  data  fields  which  have  to  be  collected  are  specified  in  the  cash 
control regulation. in practice the use of a single form provides the same ‘look and feel’. 
Coherence with data protection/fundamental rights:  The right to protection of personal data of Art. 
8,  CFR  is  impacted.    However,  the  data  fields  which  have  to  be  collected  are  specified  in  the  cash 
control  regulation  which  is  based  on  the  FATF  norm.    No  superfluous  information  is  collected.    The 
collected  information  does  not  go  beyond  the  elements  which  are  internationally  recognized  as  the 
minimum set required in the fight against money laundering /terrorist finance. 

6.6.1.2  Option B:  Make  it  mandatory  for  Member  States  to  use  a harmonised  declaration  form,  the 
model of which is to be determined in implementing legislation, lay down an obligation to periodically 
provide statistical information to the Commission on declarations registered, controls made on cases 
where  a  declaration  is  made,  controls  made  in  the  absence  of  declaration  and  the  results  of  the 
controls performed.  Statistical information should also refer to penalties imposed for non-declaration 
including any amendments to those penalties.  

Effectiveness:    This  approach  is  more  effective  on  all  levels  as  a  formalisation  would  imply 
enforceability  of  the  declaration  format  (allowing  for  national  elements),  submission  of  statistics  and 
the provision of information on penalties.  
Both  the  disclosure  obligation  on  cash  moved  in  post  and  freight  and  the  preferred  option  for  data 
exchange    between  competent  authorities  and  the  FIU  can  only  be  effectively  measured  and 
evaluated  if  data  is  provided  in  a  standardized  way  as  regards  to  procedure  and  elements  to  be 
provided.  The  most  effective  approach  and  the  only  approach  which  offers  legal  guarantees  and  is 
enforceable is a standardised declaration form.  
This was the option preferred by more than half the stakeholders in the public consultation..  
Administrative burden/cost:  In practice the same as under A except for the three Member States 
who  would  have  to  change  their  declaration  forms  and  face  a  one-time  burden.    A  harmonised 
approach would also provide benefits in terms of information exchange and standardisation. 
Coherence  with  data  protection/fundamental  rights:    As  under  option  A  but  while  offering  legal 
certainty  to  the  declarant  regarding  the  form  which  is  to  be  used,  certainty  for  the  Commission  and 
other Member States as to the submission of statistical data and the provision of up to date penalties 
information which will assist the detection of ineffective or disproportionate penalties systems. 

6.6.2  Summary and preferred option selection 

Objective/Impact  Option A  Option B 
0 
Effectiveness 

+ 

Cost/Burden 

DP/FR impact 

Conclusion 

0 

0 

0 

0 

+ 

++ 

*:  Stakeholder  opinion  was  only  queried  regarding  the  harmonisation  of  declaration  forms,  not 
regarding the provision of statistical information to the Commission nor about the obligation to provide 
information on penalties. 

The  Commission  recognises  that  –except  possibly  regarding  the  point  on  providing  information  on 
penalties-  no  problems  exist  in  practice.    The  argument  for  a  formalized  approach  toward  the 
harmonisation which largely exists in practice is based on the concern to provide the same declaration 
form  -be it in writing or electronic- to all declarants which will also allow for easy information exchange 
and to be able to offer a legal guarantee that what is currently voluntarily provided will remain available 
in the future and enable evaluation.  For this reason, option B is the preferred option.   

51 

 
 
 
 
 
 
 
6.7  Problem 7:   Divergent national measures to raise awareness 

6.7.1  Option impact analysis 

6.7.1.1  Option A (BASELINE, no policy change):  no legal obligations, nor guidelines to raise public 
awareness.53  

6.7.1.2  Option B:  Provide for an obligation to Member States to raise awareness/inform stakeholders 
about their obligations, but allow them to determine the most appropriate way to achieve this.   

Effectiveness:    Better  than  the  baseline  but  the  lack  of  harmonisation  or  specificity  could  result  in 
divergent  approaches and  unequal  levels  of  implementation.    Enforceability could  be  problematic  as 
Member  States  could  e.g.  limit  themselves  to  a  reference  on  the  website  of  their  customs 
administration or on the EU website concerning cash controls.  The larger problem would be  that a 
legal norm is self-standing and after publication, knowledge of the norm is implied; deviating from this 
approach by specifying measures to raise awareness risks complications where non-declarants could 
argue  about  the  effectiveness  of  the  measures  and  argue  that  the  obligation  to  provide  information 
was not fulfilled by the authorities.  The duty to raise awareness can be considered a good practice but 
no as a prescriptive element.  
Administrative burden/cost:  In function of measures undertaken, the administrative burden and the 
cost of production would be borne by the Member States. 
Coherence with data protection/fundamental rights:   Dependent on the level of implementation.  
Qualitatively any information provided would be better than doing nothing.  Formally, ignorance of the 
law  could  never  be  an  excuse  for  non-compliance  but  at  least  a  passive  moral  obligation  exists  to 
make stakeholders aware of their rights and obligations under the law. 

6.7.1.3  Option C:  Provide for an obligation to Member States to raise awareness and harmonise the 
measures as regards to form and content.  This might be achieved by specifying the design of posters, 
flyers, through EU-campaigns etc.   

Effectiveness:    As  option  B  but  with  better  guarantees  for  recognisability  and  with  the  benefit  of 
presenting  a  similar  looking  approach  in  all  Member  States.    The  same  remark  regarding 
enforceability, the exact scope of the measures and the consequences in case the obligation to raise 
awareness were not respected would apply. 
Administrative burden/cost:  The cost would be borne by the Member States or by the Commission. 
A  preliminary  estimate  of  yearly  'maintenance'  costs  for  all  Member  States  is  estimated  at 
approximately 20 000 Euro, provided that basic materials (posters etc are used). 
Coherence with data protection/fundamental rights:   Dependent on the level of implementation.  
Qualitatively any information provided would be better than doing nothing.  Formally, ignorance of the 
law can never be an excuse for non-compliance but at least a passive moral obligation exists to make 
stakeholders aware of their rights and obligations under the law. 

6.7.1.4  Option  D:    Do  not  lay  down  harmonised  provisions  for  awareness-raising,  but  encourage 
Member States via guidelines to inform stakeholders of their obligations (non-regulatory option). 

Effectiveness:  Would depend on Member State participation.  Judging by historical data54 it requires 
a continued effort to stimulate awareness-raising measures and to ensure that these are implemented.  

53 It should be mentioned that although the legislation does not provide for any obligation to inform the public 
nor are there any official guidelines, in practice a system has been developed between the Commission and 
the Member States which mitigates the impact of this situation, cf. below. 

52 

 
 
 
 
  
 
 
 
 
 
                                                            
Practice  has  shown  that  the  realities  in  the  field  and  administrative  hurdles  make  it  very  difficult  to 
follow up on these campaigns solely on Member  State level.  Better results  could be obtained if the 
Commission  were  to  produce  material  and  organises  the  logistics  to  make  this  available  to  the 
Member States on request.  
Administrative burden/cost:  as in option C, to be borne by the Commission. 
Coherence with data protection/fundamental rights:  as in option C. 

6.7.2  Summary and preferred option selection. 

Objective/Impact  Option A  Option B  Option C  Option D 
- 
Effectiveness 

+ 

0 

0 

Cost/Burden 

DP/FR impact 

Conclusion 

0 

0 

0 

- 

+ 

- 

- 

+ 

0 

- 

+ 

+ 

Stakeholder opinion favours a legal obligation to provide information, which would argue in favour of 
options  B  and  C.    Nevertheless  a  legal  obligation  to  provide  information,  while  positive  from  a 
fundamental  rights  perspective,  also  opens  the  door  to  legal  challenges  where  persons  who  did  not 
declare  could  argue  that  the  authorities  did  not  fulfil  their  (unquantifiable)  obligation  to  provide 
information.    Experience  has shown  that  Member  State  based  awareness-raising campaigns  (option 
B) based on a guideline meet with substantial logistic problems if the Member States themselves have 
to produce the materials.  From a subsidiarity / proportionality viewpoint a harmonised approach, laid 
down  in  legislation  such  as  under  option  C  appears  disproportionately  heavy,  given  the  objective 
which is to be attained (informing the public). Considered from this perspective, an approach such as 
under  option  D  where  a  guideline  is  established  meets  the  objective,  provided  that  the  Commission 
makes  available  the  material  to  the  Member  States.    This  has  the  added  benefit  of  ensuring  a 
harmonised approach.  For this reason, option D is the preferred option.  

6.8 Summary of preferred options 

Problem 

Preferred option 

Impacts 

Problem 1:    
Imperfect 
coverage of 
cross-border cash 
movements 

Option B:  Apply the 
current declaration 
system for natural 
persons but provide for 
a disclosure system for 
cash shipped in post or 
freight. 

Preferred option would maintain 
the baseline, which has been 
evaluated as largely satisfactory 
and also be compliant with FATF 
Recommendation 32. A 
disclosure system allows 
flexibility combined with the 
benefit that authorities will have 
the power to demand a 
declaration when finding 

54 Cf. Problem description under point 2.7. 

Assessment of 
effectiveness 
helping combating 
crime 

Administrations will be 
able to collect more data 
than under the current 
CCR when it comes to cash 
shipped in post or freight. 
This will increase the 
possibilities of 
investigating the origin of 
the shipped cash and in 
that way also possibly be 

53 

 
 
  
 
 
 
 
                                                                                                                                                                                          
suspicious consignments. The 
information collected can be 
used for future risk analysis 
purposes and in the long run 
increase the accuracy of the risk 
assessment regarding these types 
of consignments.  

Preferred option will ensure that 
all Member States share the 
same information and in the 
same format regarding 
infractions. The information 
regarding persons who are 
known to have committed an 
infraction is highly relevant to 
competent authorities 
performing controls in other 
Member States and it will be 
useful for them to receive this 
information. Also information 
regarding persons who have 
complied with their obligations 
but where indications of illegal 
activity exists will be possible to 
share which adds to the 
effectiveness to combat money 
laundering and terrorist 
financing.  

Preferred option will ensure that 
the FIU receives all relevant data 
and in a form that is easy and 
effective to handle and use for 
electronic analyses of the data.  

helpful when investigating 
crime.  

The increased amount and 
the harmonized format of 
shared information will be 
helpful in performing risk 
analysis and to target the 
right consignments and 
persons who may be 
entering or leaving the 
European Union through 
various Member States in 
order to make detection 
more difficult. It will also 
be helpful when 
investigating money 
laundering and financing 
of terrorism.  

The cash control data can 
have a significant value in 
money 
laundering/terrorist 
financing investigations.  
The fact that the FIU:s will 
receive all pertinent data 
in a timely and effective 
manner can be helpful 
when combating criminal 
activities.  

Option B: 
Provide for an obligation 
to mandatorily exchange 
information regarding 
infractions against the 
obligation to declare or 
declarations where there 
are indications of illegal 
activity between 
competent authorities of 
different Member 
States.   

Problem 2:  
Difficulties 
regarding the 
exchange of 
information 
between 
competent 
authorities 

Problem 2.1 
Exchange of 
information 
between 
competent 
authorities 

Problem 2.2:  
Exchange of 
information 
between the 
competent 
authorities and 
the FIU 

Option B: Specify that 
'making available' means 
transmission of the data 
by electronic means or 
providing the FIU access 
to a database which 
contains all the 
declaration information. 

54 

 
 
 
  
 
 
 
  
 
 
Problem 3:  
Impossibility for 
competent 
authorities to 
temporarily 
detain sub-
threshold 
amounts 

Problem 4:  
Imperfect 
definition of 
'cash' 

Problem 5: 
Divergent 
'penalties' 

The possibility to 
temporarily detain sub-
threshold amounts would 
increase the effectiveness 
of the regulation since it 
would offer a possibility to 
temporarily detain cash 
pending investigation. 
Today this is not the case 
and sub-threshold 
amounts that cannot be 
detained based on 
legislation outside the CCR 
would have to be released 
despite indications of 
criminal activity.  

The inclusion of gold in the 
regulation will increase the 
possibility of combating 
money laundering and 
financing of terrorism 
where gold is used instead 
of cash.  

An appropriate national 
penalty for failure to 
declare will stimulate 
compliance with the 
obligation to declare and 
facilitate oversight on 
cross-external border 
movements of cash.  

Option B: Lay down an 
explicit provision which, 
in addition to the 
baseline scenario, would 
allow competent 
authorities to 
temporarily detain the 
cash in accordance with 
national legislation if 
they judge that 
indications of criminal 
activity (predicate 
offences to money 
laundering or terrorist 
finance) are present. 

Option B: Redefine the 
notion ‘cash’ in the 
regulation to include the 
elements under option A 
and add gold as a main 
category.  Refer to an 
annex in the regulation, 
modifiable by delegated 
act for the specification 
of the constitutive 
elements within each of 
these categories, leaving 
open the possibility to 
expand or amend this 
taking account of the 
circumstances and 
evolution of society.   

Option C: Maintain the 
current provision stating 
that 'Each Member State 
shall introduce penalties 
to apply in the event of 
failure to comply with 
the obligation to declare 
[…] Such penalties shall 
be effective, 
proportionate and 
dissuasive, in addition,  
propose –through a 
Commission 
recommendation – 
guidance on penalties to 
be applied for failure to 
declare. 

The favoured option would 
provide a 'catch-all' provision in 
case no legal basis outside the 
cash control regulation is present 
to (temporarily) detain the cash 
when there are reasons to do so 
because of indications of criminal 
activity.  

The solution to put the definition 
of commodities acting as liquid 
stores of value in an annex 
modifiable by a delegated act, 
will ensure practical 
enforceability and future-proof 
the instrument against possible 
new evidence arising regarding 
what commodities are being used 
to circumvent the CCR. Until 
further evidence of evasion or 
the use of new mechanisms 
emerges, the annex would only 
include gold coins and high-purity 
gold bars.  

The prerogatives of the Member 
States to decide on appropriate 
penalties will be left intact while 
the Commission could provide 
guidance on the level of penalties 
that are compliant with 
established jurisprudence.  If 
anomalies are detected which are 
not corrected, a letter of formal 
notice could be sent by the 
Commission and followed up on, 
thereby achieving a measure of 
approximation in line with 
jurisprudence.   

Problem 6: 

Option B: Make it 

A harmonized declaration form 

Harmonisation of the 

55 

 
 
 
 
 
 
 
 
 
   
 
 
Different 
implementation 
levels among 
Member States 

Problem 7:   
Divergent 
national 
measures to raise 
awareness 

mandatory for Member 
States to use a 
harmonised declaration 
form, lay down an 
obligation to periodically 
provide statistical 
information to the 
Commission on 
declarations, controls 
and the results of the 
controls performed. 
Statistical information 
should also refer to 
penalties imposed for 
non-declaration 
including any 
amendments to those 
penalties.  

Option D:  Do not lay 
down harmonised 
provisions for 
awareness-raising, but 
encourage Member 
States via guidelines to 
inform stakeholders of 
their obligations (non-
regulatory option). 

declaration form and 
modalities for statistical 
data reporting will 
facilitate oversight and the 
maintenance of a level 
playing field among 
Member States which 
reduces the possibility of 
'forum shopping'. 

would be more effective on all 
levels as a formalisation would 
imply enforceability of the 
declaration format (allowing for 
national elements), submission of 
statistics and the provision of 
information on penalties.  

The draft regulation also 
proposes expanded and 
harmonized possibilities for 
information exchange between 
competent authorities in 
different member states and 
between competent authorities 
and the FIU which a harmonized 
declaration form would help 
facilitate.  

Flexibility maintained for 
Member States. The impact of 
the preferred option would 
depend on Member State 
participation.  No extra burden 
would be put on the authorities, 
unlike the regulatory options. 

The preferred option has 
no direct effect on the 
possibility to combat 
crime.  

7. 

Preferred options and cohesion 

The following preferred options have been identified: 

Coverage of cross-border cash movements 

Option  B:    Apply  the  current  declaration  system  for  natural  persons  but  provide  for  a 
disclosure system for cash shipped in post or freight. 

Exchange of information between competent authorities 

Exchange of information between competent authorities 
Option  B:  Provide  for  an  obligation  in  the  regulation  to  mandatorily  exchange  information 
regarding  infractions  against  the  obligation  to  declare  or  declarations  where  there  are 
indications of illegal activity between competent authorities of different Member States.  

Exchange of information between the competent authorities and the FIU. 
Option B: Specify that 'making available' means transmission of the data by electronic means 
or providing the FIU access to a database which contains all the declaration information. 

56 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Use of cash control declaration information for fiscal purposes 
Option  A:  Member  States  are  to  designate  competent  authorities  and  to  determine  the 
modalities  for  the  exchange  of  data  for  fiscal  purposes,  provided that  the  legal  prerequisites 
for data exchange have been met.   

Sub-threshold amounts 

Lay  down  an  explicit  provision  which,  in  addition  to  the  baseline  scenario,  would  allow 
competent authorities to temporarily detain the cash in accordance with national legislation if 
they  judge  that  indications  of  criminal  activity  (predicate  offences  to  money  laundering  or 
terrorist finance) are present. 

Definition of 'Cash' 

Option B:       Redefine the notion ‘cash’ in the regulation to include the elements under option 
A  and  add  gold  as  a  main  category.    Refer  to  an  annex  in  the  regulation,  modifiable  by 
delegated act for the specification of the constitutive elements within each of these categories, 
leaving open the possibility to expand or amend this taking account of the circumstances and 
evolution of society.   

Penalties 

Option  C:  Maintain  the  current  provision  stating  that  'Each  Member  State  shall  introduce 
penalties  to  apply  in  the  event  of  failure  to  comply  with  the  obligation  to  declare  […]  Such 
penalties  shall  be  effective,  proportionate  and  dissuasive,  in  addition,    propose  –through  a 
Commission recommendation – guidance on penalties to be applied for failure to declare. 

Implementation levels of Member States 

Option  B:  Make  it  mandatory  for  Member  States  to  use  a  harmonised  declaration  form,  the 
model  of  which  is  to  be  determined  in  implementing  legislation,  lay  down  an  obligation  to 
periodically  provide  statistical  information  to  the  Commission  on  declarations  registered, 
controls  made  on  cases  where  a  declaration  is  made,  controls  made  in  the  absence  of 
declaration and the results of the controls performed. Statistical information should also refer 
to penalties imposed for non-declaration including any amendments to those penalties.  

Measures to raise awareness 

Option  D:    Do  not  lay  down  harmonised  provisions  for  awareness-raising,  but  encourage 
Member  States  via  guidelines  to  inform  stakeholders  of  their  obligations  (non-regulatory 
option). 

Coherence and conclusion 

The preferred options which have been selected to tackle the identified problems are intercompatible. 
They would contribute to the realisation of the objectives of the cash control regulation through: 

- 

- 

correct  implementation  of  FATF  Recommendation  32  on  cash  couriers  through  measures 
based  on  disclosure  for  cash  sent  in  freight  and  courier  consignments  which,  coupled  with 
adequate  controls  and  evaluation  of  effectiveness  would  provide  insight  and  control  without 
the additional burden of systematic declaration. 
streamlining  and  clarifications    with  regard  to  the  exchange  of  data,  the  identification  of  the 
actors and the procedure to be applied.  It should be noted that for technical-legal reasons no 
satisfactory solution can be proposed in the CCR for the exchange of cash control declaration 
information between customs- and fiscal authorities.  Any  provision enabling this  exchange 
could  be  based  on  the  same  legal  basis  as  Council  Directive  2011/16/EU  on  administrative 
cooperation in the field of taxation (Articles 113 and 115 TFEU), and could also be inserted in 
that Directive, rather than in a separate instrument. All aspects of such an approach will  be 
examined when the Directive in question is declared open for revision. 

-  explicitly  allow  for  detention  of  sub-threshold  amounts  based  on  national  legislation  with  a 

- 

sufficiently high threshold for action. 
redefining  'cash'  based  on  objective  elements,  yet  future-proofed  by  allowing  a  possibility  to  
incorporate new elements through delegated legislation, under the supervision of Council and 
Parliament. 

57 

 
 
 
 
- 

- 

keeping penalties the purview of the Member States, but with the Commission assisting them 
by providing  guidance on the boundaries set out by the judiciary and  taking corrective action 
if required. 
formalising  a  number  of  other  supportive  elements  such  as  the  provision  of  statistics,  a 
harmonised declaration form and reporting on penalties for non-declaration which mostly have 
happened on a voluntary basis, providing guarantees for the quality of future evaluations and 
offering better legal certainty to stakeholders. 

-  guidelines  to  Member  States  to  provide  information  to  the  public  and  stakeholders  with 

assistance by the Commission, by making materials available. 

8.  Monitoring and evaluation 

8.1 Monitoring arrangements 
The Commission would monitor  the implementation of the legal proposal and its application in close 
cooperation  with  the  Member  States.  Monitoring  in  a  continuous  and  systematic  way  would  allow 
identifying  whether  the  policy  proposal  is  applied  as  expected  and  addressing  implementation 
problems in a timely manner. Collection of factual data of the suggested monitoring indicators (i.e. the 
statistical information to the Commission on declarations registered, controls made on cases where a 
declaration  is  made,  controls  made  in  the  absence  of  declaration  and  the  results  of  the  controls 
performed,  statistical  information  on  penalties  imposed  for  non-declaration)  would  also  provide  the 
basis for the future evaluation of the regulation. 

8.2 Evaluation 
An evaluation report would  be prepared by the Commission and submitted to the Parliament and the 
Council  5  years  after  the  entry  into  force  of  the  regulation  and  every  5  years  subsequently.  The 
evaluation of the Regulation should assess the extent to which the outlined objectives have been met. 
The  evaluation  results  could  be  communicated  to  other  European  Institutions  in  a  form  of  a  report.

58 

 
 
 
List of annexes to the Impact Assessment report 

Annex 1.   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 

Annex  2.   Evaluation  of  Regulation  (EC)  No  1889/2005  on  controls  of  cash 

entering or leaving the Community 

Annex  3.   Public consultation report 

Annex  4.   Procedural information 

Annex  5   Who is affected by the initiative and how  

Annex  6.   Fundamental rights and exchange of information 

59 

 
 
 
 
 
 
 
 
 
Annex 1. 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, 

Having regard to the Treaty establishing the European Community, and in particular Articles 95 and 
135 thereof, 

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

After consulting the European Economic and Social Committee, 

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

Whereas: 

(1)  One of the Community's tasks is to promote harmonious, balanced and sustainable development 
of  economic  activities  throughout  the  Community  by  establishing  a  common  market  and  an 
economic and monetary union. To that end the internal market comprises an area without internal 
frontiers in which the free movement of goods, persons, services and capital is ensured. 

(2)  The introduction of the proceeds of illegal activities into the financial system and their investment 
after  laundering  are  detrimental  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  laundering (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  application  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. 

(3)  At present such control systems are applied by only a few Member States, acting under national 
legislation.  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  movements  of  cash  crossing  the  borders  of  the  Community.  Such 
harmonisation  should  not,  however,  affect  the  possibility  for  Member  States  to  apply,  in 
accordance  with  the  existing  provisions  of  the  Treaty,  national  controls  on  movements  of  cash 
within the Community. 

(4)  Account should also be taken of complementary activities 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  governments  to  take  measures  to  detect  physical  cash  movements, 
including a declaration system or other disclosure obligation. 

(5)  Accordingly,  cash  carried  by  any  natural  person  entering  or  leaving  the  Community  should  be 
subject  to  the  principle  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 authorities 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 
agricultural 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. 

(6)  In  view  of  its  preventive  purpose  and  deterrent  character,  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 

60 

 
 
the natural person carrying the cash, regardless of whether that person is the owner. 

(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. 

(8)  It is desirable to establish the definitions needed for a uniform interpretation of this Regulation. 
(9)  Information gathered under this Regulation by the competent authorities should be passed on to 

the authorities referred to in Article 6(1) of Directive 91/308/EEC. 

(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 (5) and Regulation (EC) No 45/2001 of the European Parliament and of the Council 
of  18 December  2000  on  the  protection  of  individuals  with  regard  to  the  processing  of  personal 
data by the Community institutions and bodies and on the free movement of such data (6) 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  movement  of  cash,  as  referred  to  in  Directive  91/308/EEC,  information  gathered  under 
this Regulation by the competent authorities may be passed on to competent authorities in other 
Member  States  and/or  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. 

(12) Competent authorities  should be vested with the powers  needed to exercise effective control on 

movements of cash. 

(13) 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 accordance with this Regulation. 

(14) Since the objective of this Regulation cannot be sufficiently 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 accordance 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 Regulation does not go beyond what is necessary in 
order to achieve that objective. 

(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 of Fundamental Rights of 
the European Union, in particular in Article 8 thereof, 

HAVE ADOPTED THIS REGULATION: 

Article 1 

Objective 

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

2.   This Regulation shall be without prejudice to national 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: 

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: 

(a) bearer-negotiable  instruments  including  monetary  instruments  in  bearer  form  such  as  travellers 

61 

 
 
cheques,  negotiable  instruments  (including  cheques,  promissory  notes  and  money  orders)  that 
are either in bearer form, endorsed without restriction, made out to a fictitious payee, or otherwise 
in  such  form  that  title  thereto  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 

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. 

2.   The declaration referred to in paragraph 1 shall contain details of: 

(a)  the declarant, including full name, date and place of birth 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  electronically,  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 4 

Powers of the competent authorities 

1.   In  order  to  check  compliance  with  the  obligation  to  declare  laid  down  in  Article 3,  officials  of  the 
competent authorities 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. 

2.   In the event of failure to comply with the obligation to declare laid down in Article 3, cash may be 
detained  by  administrative  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 Community 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  Directive 
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  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. 

62 

 
 
 
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  information  shall  also  be 
transmitted to the Commission. 

Article 7 

Exchange of information with third countries 

In the framework of mutual administrative assistance, the information obtained under this Regulation 
may  be  communicated  by  Member  States  or  by  the  Commission  to  a  third  country,  subject  to  the 
consent  of  the  competent  authorities  which  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 implementation 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, particularly in connection with legal proceedings. Any disclosure or 
communication of information shall fully comply with prevailing data protection provisions, in particular 
Directive 95/46/EC and Regulation (EC) No 45/2001. 

Article 9 

Penalties 

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,  proportionate  and 
dissuasive. 

2.   By  15 June  2007,  Member  States  shall  notify  the  Commission  of  the  penalties  applicable  in  the 
event of failure to comply with the obligation to declare laid down in Article 3. 

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. 

63 

 
 
Article 11 

Entry into force 

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  

(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). 

(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). 

(5)  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). 

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

64 

 
 
 
Annex 2. Evaluation of Regulation (EC) No 1889/2005 on controls of 
cash entering or leaving the Community 

65 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Europe Direct is a service to help you find answers  

to your questions about the European Union. 

Freephone number (*): 

00 800 6 7 8 9 10 11 

(*)  The information given is free, as are most calls (though 

some operators, phone boxes or hotels may charge you). 

EUROPEAN COMMISSION 

Directorate-General for Taxation and the Customs Union 
Directorate B — Security, Safety, Trade facilitation, Rules of Origin & International Cooperation 
Unit B.1 — Protection of Citizens and Enforcement of IPR  

Contact:  
E-mail:  eucashcontrols@ec.europa.eu   
European Commission 
B-1049 Brussels 

LEGAL NOTICE 

This document has been prepared for the European Commission however it reflects the views only of the 
authors, and the Commission cannot be held responsible for any use which may be made of the information 
contained therein. 

More information on the European Community is available on the Internet (http://www.europa.eu). 

66 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Evaluation of the Cash Control Regulation 

Contents 

EXECUTIVE SUMMARY ..................................................................................................... 71 

1. 

INTRODUCTION .................................................................................................... 74 

1.1.  Purpose of the Evaluation ........................................................................................ 74 

1.2.  Scope of the evaluation ............................................................................................ 74 

2. 

BACKGROUND TO THE CASH CONTROL REGULATION ................................ 74 

2.1.  Situation prior to the Cash Control Regulation ......................................................... 74 

2.2.  Description of the Cash Control Regulation and its objectives ................................. 75 

3. 

4. 

EVALUATION QUESTIONS .................................................................................. 82 

METHOD/PROCESS FOLLOWED ........................................................................ 83 

4.1.  Process/Methodology ............................................................................................... 83 

4.2.  Limitations – robustness of findings ......................................................................... 84 

5. 

IMPLEMENTATION STATE OF PLAY (RESULTS) .............................................. 84 

5.1.  Definition of cash ...................................................................................................... 85 

5.2.  Obligation to declare ................................................................................................ 85 

5.3.  Designation of powers of the competent authorities................................................. 88 

5.4.  Recording and processing of information ................................................................. 90 

5.5.  Exchange of Information .......................................................................................... 92 

5.6.  Penalties ................................................................................................................... 96 

6. 

ANSWERS TO THE EVALUATION QUESTIONS ................................................ 97 

6.1.  To what extent is the current scope of the Cash Control Regulation still relevant for 

preventing money laundering/terrorist financing?..................................................... 97 

6.2.  To what extent do the current legal provisions of the Cash Control Regulation 

guarantee proper control of cash movements to prevent money laundering/terrorist 
financing? ............................................................................................................... 107 

6.3. 

Is the information collected in an easy and burden-free manner? To what extent is 
the information exchanged timely and accurately, with the national FIU and with 
other Member States and third countries? ............................................................. 114 

6.4.  How extensive is the information collected under the Cash Control Regulation and 
how useful is it for preventing money laundering/terrorist financing at national 
level/EU level? ........................................................................................................ 116 

6.5.  To what extent are the current provisions of the Cash Control Regulation in line with 

the latest developments in the EU and at the international level (FATF) to prevent 
money laundering /terrorist financing? ................................................................... 117 

7. 

8. 

CONCLUSIONS ................................................................................................... 118 

RECOMMENDATIONS ........................................................................................ 119 

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Evaluation of the Cash Control Regulation 

EXECUTIVE SUMMARY  

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,  (further,  'the  Cash  Control  Regulation')  applies 
from the 15th of June, 2007.   

The  Cash  Control  Regulation  builds  upon  the  supra-national  framework which has been established 
by  the  Financial  Action  Task  Force  ('FATF')  in  its  Recommendation  32  and  the  accompanying 
interpretative  note  which specify  the  nature  of  measures  that  countries  should  take  to  control  cross-
border cash movements.   

It  establishes  an  EU-wide  system  of  harmonised  control  measures  on  natural  persons  who  are 
entering or leaving the EU carrying 10 000 EUR or more in cash or bearer negotiable instruments and 
is an important complement to the EU's existing Anti-Money Laundering and Counter Terrorist Finance 
framework.    The  Cash  Control  Regulation  only  applies  to  cash  which  is  moved  by  natural  persons 
between a Member State and a third country or vice versa.  It does not prejudice the possibility that 
Member States have to set up a system of intra-community controls, provided that these stay within 
the  framework  of  Art.  63  (freedom  of  movement  of  capital)  of  the  Treaty  on  the  Functioning  of  the 
European Union. 

The Cash  Control Regulation  establishes  a  definition  of  'cash'  which mirrors  the  FATF-standard  and 
defines cash as currency and/or bearer-negotiable instruments.  Items such as gold, precious stones 
etc.  are  outside  of  the  scope  of  application  of  the  cash  controls  regulation.    The  Cash  Control 
Regulation lays down an obligation on natural persons carrying cash equal to or in excess of 10 000 € 
to declare this with competent authorities at the Member State of entry or exit of the EU.   

Cash  which  is  not  carried  by  natural  persons  but  shipped  in  mail  or  freight  is  not  subject  to  the 
provisions of the Cash Control Regulation but rather of general customs provisions.  The same applies 
for precious stones and metals. 

Most  Member  States  have  voluntarily  agreed  to  use  a  standardised  declaration  form  to  accept  the 
declarations,  which  are  then  made  available  to  the  Financial  Intelligence  Units  (FIU)  of  the  Member 
State for further analysis.  Member States also voluntarily provide statistical data regarding the number 
of declarations, irregularities etc. to the Commission. 

In  cases  where  indications  of  illicit  activity  are  present  the  declaration  data  may  be  exchanged  with 
other Member States or with third countries, subject to personal data protection guarantees.  In case 
no declaration was filed but cash equal to or  in excess of 10 000 € was found, authorities have the 
possibility  to  administratively  detain  cash  as  a  temporary  measure,  and  they  have  the  obligation  to 
provide for a penalty, which is established under national legislation. 

The main purpose of the evaluation of the Cash Control Regulation is to gather evidence on how it has 
been  implemented  by  the  Member  States,  and  to  analyse  to  what  extent  it  contributes  to  the 
prevention of and fight against money laundering and terrorist financing in the EU.  

The  analysis  and  evaluation  exercise  was  conducted  by  the  Commission,  based  on  earlier  review 
documents, analysis of statistical data, interaction with national experts from Member States and data 
available from various other sources.   

The  evaluation  has  been  produced  internally  by  Commission  Services.  Given  that  the  work  on  the 
review of the Cash Control Regulation started already in 2014, the process did not follow all the steps 
set  out  in  the  new  Commission  Better  Regulation  Guidelines  adopted  in  May  2015.   The  evaluation 
has been conducted back-to-back to the work on the impact assessment with no separate open public 
consultation covering  the retrospective elements. 

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Evaluation of the Cash Control Regulation 

 While it is a challenging task to try judging the extent to which legislation is effectively implemented 
and to judge the impact legislation has on an illegal phenomenon (something which, by its very nature, 
is difficult to collect accurate data on), the cross-matching of data from various independent sources 
offers assurances of robustness to the analysis and evaluation. 

The review process focussed on the following main aspects: 

The  relevance  of  measures  in  the  area  of  anti-money  laundering  and  terrorist  financing  is 
demonstrated based on statistical analysis and reports about the number of declarations / irregularities 
which show that cash remains more than ever a favourite medium used to transfer value by money-
launderers. While all Member States apply the Cash Control Regulation, the level of implementation 
may  not  be  the  same  in  each  Member  State,  particularly  in  the  areas  concerning  the  exchange  of 
information  where  various  tools  are  available,  each  subject  to  its  own  strengths  and  weaknesses, 
occasionally  exacerbated  by  provisions  which  allow  discretionary  interpretation  and  introduce 
variability  between  Member  States.    The  latter  becomes  particularly  visible  in  the  area  of  penalties 
which are laid down in national legislation and are highly variable in type, severity and application. 

Effectiveness  of  implementation  where  illicit  activity  is  concerned  is  hard  to  judge,  yet  feedback 
received  from  various  sources  (national  FIUs,  prosecutors,  law  enforcement  agencies)  as  well  as 
statistical  analysis  indicate  that  the  overall  level  of  effectiveness  of  the  Cash  Control  Regulation  is 
satisfactory. There is, however, room for improvement, especially in the field of data exchange and the 
aspect of controls on cash sent in mail and freight which is currently outside the scope of application of 
the Cash Control Regulation. 

The  efficiency  with  which  the  information  required  by  the  Cash  Control  Regulation  is  collected  is 
facilitated  by  the  voluntary  use  of  the  EU  Common  Declaration  Form  by  most  Member  States.  This 
Form  is  –  in  terms  of  nature  of  the  information  collected  and  complexity  –  in  line  with  international 
practice.   

The  information,  which  is  captured  by  authorities  via  the  declaration  system,  allows  to  achieve  the 
goals set out by the Cash Control Regulation and the utility of this information is judged to be good.  
Various  sources  made  the  remark  that  the  aspect  'fiscal  fraud'  as  a  predicate  offence  for  money 
laundering has gained importance over the last years and noted that the information obtained through 
cash  control  declarations  could  be  useful  to  tackle  this  aspect.    However  the  current  Cash  Control 
Regulation  and  the  national  implementation  of  the  provisions  contained  therein  as  well  as  in  other 
legal  norms  leads  to  substantial  divergence  between  Member  States  regarding  the  possibilities  to 
make use of this information for fiscal purposes. 

As to the coherence and conformity with international norms and newly emerging challenges, this 
aspect  of  the  Cash  Control  Regulation  is  judged  to  be  good  in  terms  of  definition  of  cash  and  the 
measures as they apply to cash carried by natural persons.  Data on cash shipped in mail and freight 
is  currently  imperfectly  captured  via  the  customs  declaration  and  an  increasing  emphasis  towards 
more and more efficient data exchange and the use of cash declaration data for fiscal purposes needs 
to be taken into account. 

In  conclusion,  while  the  overall  performance  of  the  Cash  Control  Regulation  for  the  parameters 
described  above  is  adequate,  consideration  should  be  given  to  the  possibility  of  more  in-depth 
analysis to improve the following aspects: 

  Consider including cash movements by mail and freight at EU external borders within the 

scope of the Cash Control Regulation; 

  Consider  widening  and  harmonising  the  possibilities  for  information  exchange  between 

Member States:  

a.  By  including  all  cash  control  information  (including  non-suspicious  voluntary 

declarations); 

b.  By  setting  clear  procedures  and  providing  effective  tools  for  the  exchange  of 

information; 

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Evaluation of the Cash Control Regulation 

  Consider to explicitly provide for  the possibility of  using cash declaration information for 

tax purposes, including the fight against tax fraud and evasion; 

  Consider  a  level  of  approximation  of  cash  control  penalties  applied  by  Member  States  at 

EU external borders. 

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Evaluation of the Cash Control Regulation 

1. 

INTRODUCTION 

1.1. 

  Purpose of the Evaluation 

The main purpose of the evaluation of the Regulation (EC) No 1889/2005 on controls of cash entering 
or leaving the Community (Cash Control Regulation) is to gather evidence on how the Cash Control 
Regulation has been implemented by the Member States of the European Union (EU), and to analyse 
to  what  extent  it  contributes  to  the  prevention  of  and  fight  against  money  laundering  and  terrorist 
financing in the EU.  

The  evaluation  makes  recommendations  on  how  to  improve  the  current  legal  framework  and 
implementation of cash controls at the external borders of the EU, in order to ensure that cash controls 
are an effective tool in the fight against money laundering and terrorist financing in the EU, and are in 
line with international standards. 

1.2.  Scope of the evaluation 

The  evaluation  focuses  exclusively  on  the  measures  set  out  in  the  Cash  Control  Regulation  to  fight 
and prevent money laundering and terrorist financing, as implemented by the 28 Member States at the 
EU's external borders.  

National  measures  to  control  cash  movements  within  the  EU  are  not  evaluated  as  they  are  not 
covered  by  the  Cash  Control  Regulation,  although  certain  information  related  to  such  movements  is 
presented when considered relevant for achieving a better understanding of cash movements  in the 
EU.  

As the Cash Control Regulation is part of the EU's anti-money laundering/combating the financing of 
terrorism  (AML/CFT)  legal  framework,  the  framework  itself  is  also  presented  to  describe  the  legal, 
political  and  operational  context  in  which  the  EU  Member  States  implement  the  Cash  Control 
Regulation.  

The  evaluation  covers  the  period  starting  from  2007,  when  the  Cash  Control  Regulation  became 
applicable, until and including 2014, subject to availability of most recent data.  

2.  BACKGROUND TO THE CASH CONTROL REGULATION 

2.1. 

  Situation prior to the Cash Control Regulation 

Prior to the introduction of the Cash Control Regulation, the level of cross-border cash movements in 
the EU Member States was first examined by the Operation "Moneypenny" (Moneypenny).  

Moneypenny was a joint operation carried out by the then 15 Member States' customs services in the 
period September 1999 to February 2000, to monitor cash movements across EU's internal and 
external borders in excess of EUR 10 000. It examined whether the scale of such movements 
indicated a threat that the controls applied by financial institutions to prevent money laundering could 
be circumvented by cross-border movements of cash.  

Although the final Moneypenny report did not distinguish between intra and extra-EU cash 
movements, and included only limited input from 9 Member States that did not apply specific controls 
on cash at their borders (cash discovered through general customs controls), it nevertheless revealed: 

  The significant scale of cross-border cash movements in the EU with the total means of payment 
recorded during the six month period of the operation in the amount of EUR 1.6 billion, EUR 1.35 
billion of it in cash; 

  The  substantial  differences  in  the  controls  applied  by  Member  States,  with  most  not  having  any 
requirement  to  declare  cash  being  carried  across  the  border,  or  rights  to  perform  checks  to 
monitor cross-border cash movements.  

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Evaluation of the Cash Control Regulation 

Although it was not possible to gauge the exact scale of money laundering via cash movements, the 
Commission considered that: 

  The  volume of  cash  being  transported  was  such  that  it  presented  a  potential risk  to  the  EU  and 

national interests; 

  Existing  controls  to  prevent  money  laundering  were  undermined  by  the  disparate  nature  of 
controls on cross-border cash movements, as they left open loopholes for criminals to exploit; 

  As controls on money movements via financial institutions had been tightened since the events of 

11 September 2001, there could be increasing recourse to cash as an alternative solution; 

  The differences in the control systems applied by the Member States also raised questions from 
the standpoint of the single market, as depending on the Member State whose borders they were 
crossing, travellers would find themselves subject to rules that were divergent and thus difficult to 
understand.  

Therefore, in June 2002 the Commission presented to the Council its "Proposal for a Regulation of the 
European Parliament and the Council on the prevention of money laundering by means of customs co-
operation". 

The Commission proposed that the Anti-Money Laundering Directive1 should be complemented by a 
Regulation introducing controls on large sums of cash crossing the EU's external border. For the 
controls to be effective, a system would also be needed whereby the Member States could exchange 
information on suspicious movements with each other and the Commission.  

2.2. 

  Description of the Cash Control Regulation and its objectives 

The Cash Control Regulation entered into force on 15 December 2005 and is applicable since 15 June 
2007. It provides for an EU-wide approach to controlling cash movements into or out of the EU. It was 
a decisive step in the EU policy aimed at the strengthening of measures to prevent money laundering, 
terrorist financing and other illegal activities.  

2.2.1.  Money Laundering and Terrorist  Financing 

Money  laundering2  concerns  activities  related  to  assets  which  have  a  criminal  or  illicit  origin. 
Criminals engaged in money laundering will therefore attempt to conceal or disguise the true nature, 
source or ownership of the assets in question and transform them into seemingly legitimate proceeds. 
If  dirty  money  is  allowed  to  flow  through  the  financial  system,  the  stability  and  reputation  of  the 
financial sector can be seriously jeopardised - which in turn could undermine the integrity of the single 
market. 
Picture 1. Money Laundering process 

1 Directive 2005/60/EC of the European Parliament and of the Council of 26 October 2005 on the prevention of the use of the 

financial system for the purpose of money laundering and terrorist financing 

2  Definition  as  used  in  the  Impact  Assessment  accompanying  the  Proposal  Proposal  for  a  Directive  of  the 
European Parliament and of the Council on the prevention of the use of the financial system for the purpose 
of money laundering, including terrorist financing, p. 8, to be consulted at:  http://eur-lex.europa.eu/legal-
content/EN/TXT/PDF/?uri=CELEX:52013SC0021&from=EN 

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Source: OneStopBrokers.com 

Terrorist financing3 on the other hand concerns the provision or collection of funds to carry out any of 
the offences defined in Council Framework Decision 2002/475/JHA on combating terrorism. Terrorist 
activities  can  be  funded  through  legitimate  as  well  as  criminal  activities  and  terrorist  organisations 
engage  in  revenue-generating  activities  which  in  themselves  may  be,  or  at  least  appear  to  be, 
legitimate.  There  is  a  clear  risk  to  the  integrity,  proper  functioning,  reputation  and  stability  of  the 
financial system, and with potentially devastating consequences for the broader society. 
2.2.2.   

EU anti-money laundering and counter-terrorist financing legislation 

The  EU  considers  the  AML/CFT  framework  as  crucial  for  ensuring  the  successful  functioning  of  the 
single market and safeguarding the security of citizens.  
The EU legal framework to prevent money laundering is composed of Directive 2005/60/EC4, of the 
European  Parliament  and  of  the  Council  of  26  October  2005  on  the  prevention  of  the  use  of  the 
financial  system  for  the  purpose  of  money  laundering  and  terrorist  financing  (and  directive 
2006/70/EC)  as  amended  by  Directives  2007/64/EC,  2008/20/EC  and  2009/110/EC  and  Regulation 
(EC)  No  1781/2006  of  the  European  Parliament  and  of  the  Council  of  15  November  2006  on 
information on the payer accompanying transfer of funds.  
Equally  relevant  are  Council  Decision  2000/642/JHA  concerning  arrangements  for  cooperation 
between  financial  intelligence  units  of  the  Member  States  in  respect  of  exchanging  information,  and 

3 Op. Cit. supra, p. 9 

4 As of May 20, 2015, Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 
on  the  prevention  of  the  use  of  the  financial  system  for  the  purposes  of  money  laundering  or  terrorist 
financing,  amending  Regulation  (EU)  No  648/2012  of  the  European  Parliament  and  of  the  Council,  and 
repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive 
2006/70/EC,  ('4th  Anti-Money  Laundering  Directive')  was  adopted.    It  is  currently  being  transposed  into 
national legislation by Member States, who have until June 26th, 2017 to implement its provisions.   

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Evaluation of the Cash Control Regulation 

Council Framework Decision 2001/500/JHA on money laundering, the identification, tracing, freezing, 
seizing and confiscation of instrumentalities and the proceeds of crime.  

Complementary  to  this  framework,  the  EU  counter-terrorist  financing  strategy5  points  at  measures 
aiming to improve the results in the fight against terrorist financing. 

The  current  4th  Anti-Money  Laundering  Directive  and  its  legal  predecessors  going  back  to  2005 
contain  an  EU  mechanism  to  prevent  money  laundering  and  terrorist  financing  by  monitoring 
transactions  through  credit  and  financial  institutions  and  certain  types  of  other  non-financial 
professions.  

The risk that the application of this mechanism which applies to transfers of money through the formal 
financial system would be circumvented by cash movements for illicit purposes or for terrorist financing 
led to the need to complement this measure by a control requirement for cash entering/leaving the EU. 

The  Cash  Control  Regulation  was  adopted  for  this  purpose  and  seeks  to  reconcile  the  fundamental 
principle  of  free  movement  of  goods,  persons,  services  and  capital  with  the  prevention  of  money 
laundering and terrorist financing in the context of the single market and an economic and monetary 
union. 

2.2.3. 

International context 

A  major  partner  in  ensuring  the  effectiveness  of  the  Cash Control  Regulation  is  the  Financial  Action 
Task  Force  (FATF)6,  an  inter-governmental  body  set  up  by  the  G7  Summit  held  in  Paris  in  1989  in 
response to mounting concern over money laundering.  

As an international standard setter, the FATF has primary responsibility for developing and promoting 
global  policy  standards,  both  at  national  and  international  level,  to  prevent  money  laundering  and 
combat terrorist financing. It works to generate the necessary political will to bring about legislative and 
regulatory reforms in these areas, and for this purpose it has adopted 40 recommendations. 

The  European  Commission  (Commission)  is  a  member  of  the  FATF  and  is  therefore  committed  to 
implementing its recommendations, including Recommendation 32 on cash couriers, adopted as the 
FATF  recognises  the  use  of  cash  couriers  as  an  important  method  for  criminals  to  move  funds. 
Recommendation 327  is partially transposed into EU law by the Cash Control Regulation.  

The  FATF  Recommendation  32  states  that:  “countries  should  have  measures  in  place  to  detect  the 
physical cross-border transportation of currency and bearer negotiable instruments, including through 
a  declaration  system  and/or  disclosure  system.  Countries  should  ensure  that  their  competent 
authorities have the legal authority to stop or restrain currency or bearer negotiable instruments that 
are suspected to be related to terrorist financing, money laundering or predicate offences8, or that are 
falsely  declared  or  disclosed.  Countries  should  ensure  that  effective,  proportionate  and  dissuasive 
sanctions are available to deal with persons who make false declaration(s) or disclosure(s). In cases 
where  the  currency  or  bearer  negotiable  instruments  are  related  to  terrorist  financing,  money 
laundering  or  predicate  offences,  countries  should  also  adopt  measures,  including  legislative  ones 

5 http://register.consilium.europa.eu/doc/srv?l=EN&f=ST+14469+2005+REV+4 

6 Information about the FAFT, its recommendations and all related documents is available on the public web- pages of the 

FATF: http://www.fatf-gafi.org 

7 In 2012, the FATF revised all recommendations.  Recommendation 32 is an amendment of the former Special 

Recommendation IX which refers to cash controls. 

8  A  “predicate  offence”  is  an  offence  whose  proceeds  may  become  the  subject  of  a  money  laundering  offence,  source: 

United Nations Office on Drugs and Crime. 

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Evaluation of the Cash Control Regulation 

consistent  with  Recommendation  4,  which  would  enable  the  confiscation  of  such  currency  or 
instruments.” 

15 EU Member States are also full members  of the FATF in their own right, while the countries that 
joined the EU from 2004 onwards are represented in  the Committee of Experts on the Evaluation of 
Anti-Money Laundering Measures (MONEYVAL), FATF's affiliated regional body.   

Starting  with  its  own  members,  the  FATF  monitors  countries'  progress  in  implementing  AML/CFT 
policies by rating their compliance with its recommendations and measuring the effectiveness of their 
AML/CFT  systems,via  a  mutual  evaluations  procedure  and  by  reviewing  anti  money  laundering  and 
combatting terrorist financing techniques and relevant counter-measures.  

2.2.4.  The objectives of the Cash Control Regulation 

The objectives of the Cash Control Regulation, as described in the text of the Regulation are 
presented in the diagram below. 

OPERATIONAL 

SPECIFIC 

GENERAL 

Implement an effective 
and equivalent level of 
control on movements of 
cash crossing the borders 
of the Union 

Complement the control 
system on the prevention 
of money laundering 
through obliged entities 
under the AML/CFT 
directive. 

Prevent facilitation of 
money laundering and 
terrorist financing by 
cash movements 
to/from the EU. 

Promote a harmonious, 
balanced and 
sustainable 
development of 
economic activities 
throughout the 
internal market  

The provisions designed to meet these objectives were codified in the Cash Control Regulation in line 
with the requirements of the FATF's Recommendation 32 on cash couriers, with the view of aligning 
EU practices with the highest global AML/CFT standards9.  

2.2.5.  The main provisions of the Cash Control Regulation 

The main provisions of the Cash Control Regulation can be presented in terms of activities leading to 
outputs needed to meet the objectives outlined above. Each activity is subsequently described in more 
detail. 

9  The  revision  of  the  FATF  Recommendations  was  adopted  and  published  in  February  2012,  whereby  Special 

Recommendation IX on cash couriers became FATF Recommendation 32 on cash couriers. 

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Evaluation of the Cash Control Regulation 

Activities 

Outputs 

Definition of cash as per FATF 
Recommendation 32 

Obligation to declare by any 
natural person entering/leaving 
the EU and carrying cash of EUR 
10 000 or more. 

Competent authorities 
empowered to control natural 
persons, their baggage and their 
means of transport.   

Establish rules for the recording 
and processing of cash control 
information. 

Establish rules for the exchange of 
cash control information. 

Introduce a system of penalties for 
failure to declare. 

Uniform interpretation of the 
object of controls throughout the 
Union 

Information obtained through 
cash declarations / controls 
recorded and processed by the 
competent authorities. 

Regular controls of cash 
movements at EU external borders 

Recorded information made 
available to the national FIUs. 

Cash control information 
exchanged with other Member 
States and third countries. 

Penalties applied for failure to 
declare. 

Definition of cash  

The  definition  of  cash  in  the  Cash  Control  Regulation  matches  the  definition  used  by  the  FATF  for 
Recommendation 32 on cash couriers and includes: 

  Currency, i.e. banknotes and coins that are in circulation as a medium of exchange. 

  Bearer-negotiable instruments  (BNI),  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  payee,  or 
otherwise in such form that title thereto passes upon delivery; 

 

Incomplete instruments (including cheques, promissory notes and money orders) signed, but 
with the payee's name omitted; 

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As  the  Cash  Control  Regulation  mirrors  the  definition  of  'cash'  used  in  the  supra-national  standard 
(FATF recommendation 32), gold, precious metals or stones, electronic cash cards and casino chips 
are not included in the definition of cash.   These items are covered by Customs Code provisions. 

The obligation to declare 

The Cash  Control Regulation  establishes  a  uniform EU  approach  towards cash  controls  based  on  a 
mandatory declaration system.  

If a natural person10 entering or leaving the EU (including transiting) transports cash of a value of EUR 
10 000 or  more, he/she must declare these funds. It is  the total value in EUR  equivalent of all cash 
transported by the natural person that determines if the threshold of EUR 10 000 is exceeded. 

The  EUR  10  000  threshold  is  considered  high  enough  not  to  burden  the  majority  of  travellers  and 
traders with disproportionate administrative formalities.  

However,  when  there  are  indications  of  illegal  activities  linked  with  movements  of  cash  lower  than 
EUR  10  000,  the  collecting  and  recording  of  information  related  to  these  movements  is  also 
authorised.  

This provision was introduced in order to limit the practice of "smurfing", the act of carrying amounts 
lower  than  the  threshold  with  the  intention  to  escape  the  obligation  to  declare.  Smurfing  is  often 
related to money laundering, terrorist financing, fraud or other financial crimes and should therefore be 
monitored by the competent authorities. 

Designation of powers of the competent authorities11 

In  order  to  ensure  compliance  with  the  obligation  to  declare,  the  national  competent  authorities  are 
empowered to: 

  Request, accept, check and certify a cash declaration; 

  Check compliance with the obligation to declare; 

  Carry out controls on natural persons, their baggage and their means of transport 

Recording and processing of information 

Member States must record and process all information they obtain through declarations or controls, 
and make this information available to the national authorities competent for fighting money laundering 
and terrorist financing. 

These authorities are designated as national Financial Intelligence Units (FIUs), central national units 
responsible  for  receiving  and  analysing  information  and  suspicious  transactions  received  from 
authorities  or  private  sector  operators,  analysing  them  and  if  there  are  reasons  to  suspect  that  illicit 
activity may be going on, to notify the competent (judicial) authorities.  

10 The Regulation also applies to natural persons crossing the border as professional cash couriers, i.e. employees of cash-in-

transit (security) companies that specialise in the physical transport of cash. 

11 As in most Member States the national customs authorities are competent authorities for the implementation of the Cash 
Control  Regulation,  the  terms  'competent  authorities'  and  'customs  authorities'  are  used  interchangeably  in  the 
evaluation, depending on context.  

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FIUs therefore play a key role in ensuring that the information collected through cash declarations and 
cash controls, is properly analysed and where appropriate, used effectively to investigate suspicions  
of money laundering and terrorist financing.  

It should be noted that all information obtained through the Cash Control Regulation is confidential. All 
personal  information  must  be  dealt  with  in  accordance  with  the  relevant  data  protection  provisions. 
Where considered necessary, rules for the classification of the information to guarantee the security of 
the data apply. 

Exchange of information 

Where there are indications that the sums of cash are related to any illegal activity associated with the 
movement  of  cash,  exchange  of  information  may  take  place  with  competent  authorities  in  other 
Member  States.  Information  adversely  affecting  the  financial  interests  of  the  EU  must  also  be 
transmitted to the Commission. 

Under  the  framework  of  existing  agreements  on  mutual  administrative  assistance,  information 
obtained under the Cash Control Regulation may also be communicated to a third country, subject to 
compliance with relevant national and EU provisions on the transfer of personal data to third countries. 

Penalties 

Member States are required to provide for penalties against persons who fail to declare EUR 10 000 
or  more  in  cash  when  crossing  EU  external  borders.  The  penalties  resulting  from  such  proceedings 
must be effective, dissuasive and proportionate to the offence12, so as to have a deterrent effect.    

2.2.6.  Control of cash movements within the European Union 

The Cash Control Regulation does not cover cross-border movements of cash within the EU. Member 
States are however entitled to apply national measures to control cash movements within the EU, at 
their national borders and or on national territory, provided that such measures comply with Article 65 
of Treaty on the Functioning of the European Union (TFEU).  

Article 65 empowers MS to establish procedures for the declaration of cash movements for purposes 
of administrative or statistical information, or to take measures which are justified on grounds of public 
policy  or  public  security,  provided  that  the  measures  and  procedures  applied  do  not  constitute  a 
means of arbitrary discrimination or a disguised restriction on the free movement of capital.  

16 Member States apply some form of cash controls at their borders with other Member States.  

12 Offence refers to the mere failure to declare and is not related to any underlying illicit activity concerning the 

money. 

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Source: Europol report 'Why is cash still King', op. cit., p. 25. 

3.  EVALUATION QUESTIONS 

In  order  to  structure  the  evaluation  exercise,  the  current  analysis  sets  out  to  answer  a  series  of 
questions  that  will  provide  insight  into  the  effects  produced  by  the  Cash  Control  Regulation,  and  to 
investigate  to  what  extent  it  has  made  a  contribution  towards  reaching  the  intended  objectives  (see 
section 2.2.4 above). The following questions address each of the five main evaluation criteria that the 
Commission’s Evaluation Guidelines recommend for consideration:       

1.  To  what  extent  is  the  current  scope  of  the  Cash  Control  Regulation  still  relevant  for  preventing 

money laundering and terrorist financing? (relevance) 

2.  To what extent do the current provisions of the Cash Control Regulation guarantee proper control 
of cash  movements  to prevent money laundering/terrorist financing? What is  the value added of 
acting at EU level?  (effectiveness/EU added value) 

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3. 

Is the information collected in an easy and burden-free manner? To what extent is the information 
exchanged  timely  and  accurately,  with  the  national  FIU  and  with  other  Member  States  and  third 
countries? (efficiency) 

4.  How extensive is the information collected under the Cash Control Regulation and how useful is it 
for preventing money laundering/terrorist financing at national level/EU level? To what extent does 
it  allow  customs  to  gather  all  possible  information  to  assist  in  the  prevention  of  money 
laundering/terrorist financing? (effectiveness/utility) 

5.  To  what  extent  are  the  current  provisions  of  the  Cash  Control  Regulation  in  line  with  the  latest 
developments  in  the  EU  and  at  the  international  level  to  prevent  money  laundering  /terrorist 
financing? (coherence) 

4.  METHOD/PROCESS FOLLOWED 

4.1. 

Process/Methodology 

The  evaluation  serves  both  a  summative  (i.e.  focus  on  the  effectiveness  of  the  Cash  Control 
Regulation  in  the  EU  by  providing  an  objective  assessment  of  its  quality  or  value)  and  a  formative 
purpose (i.e. facilitate learning in order to prepare for a new legislative proposal which could replace or 
up-date the current Cash Control Regulation).  

Data collection 

For the purpose of answering the evaluation questions, different sources of data have been used.  An 
active effort was made in order to “triangulate” the data used throughout the analysis. This means that 
all  findings  presented  in  the  evaluation  are  supported  by  evidence  from  different  data  sources.  Any 
contradicting  evidence  has  been  weighed  according  to  its  strength  and  quality  before  reaching 
conclusions. 

Desk research  

A broad review of national, EU and international reports was conducted. The review covered a variety 
of policy and operational documents, evaluation/progress reports, economic data, court decisions etc. 
The list of sources can be found in Annex 1. 

Statistical data 

Regular statistics provided to the Commission by Member States on cash declarations and recordings 
(failures  to  declare  or  to  declare  correctly)  since  2007,  and  on  penalties,  cash  detentions,  cash 
seizures and cash confiscations since 2010, have been analysed. 

The 2010 Report on the implementation of the Cash Control Regulation 

As per the requirement of Article 10 of the Cash Control Regulation, in August 2010 the Commission 
submitted  a  "Report  on  the  implementation  of  the  Cash  Control  Regulation"  to  the  Council  and  the 
European Parliament (2010 Report).  

Since the Cash Control Regulation had been in force for a short amount of time, the focus of the 2010 
Report was mainly on assessing whether appropriate structures had been established and adequate 
procedures  developed  by  Member  States  to  allow  for  a  uniform  implementation  of  the  Cash  Control 
Regulation. 

The 2010 report has been an important source of information for the current evaluation.  

Questionnaires to Member States 

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In  June  2014,  a  questionnaire  (2014  Questionnaire)  was  sent  to  Member  States  in  order  to  get  an 
update  on  how  they  implemented  the  provisions  of  the  Cash  Control  Regulation  and  to  cover  any 
missing  gaps  in  data.  The  2014  Questionnaire  provides  data  on  the  general  implementation  of 
provisions,  as  well  as  the  extent  to  which  cash  movements  in  post  and  freight  were  covered  by  the 
national legislations. 

Answers  to  earlier  questionnaires  sent  to  Member  States  by  the  Commission  were  also  taken  into 
account as regards information not covered in the 2014 Questionnaire. 

Furthermore, a new questionnaire on the exchange of information on cash declarations and results of 
cash  controls  (cash  control  information)  for  the  purpose  of  fighting  tax  fraud  and  evasion  (Tax 
Questionnaire)  was  sent  to  Member  States  in  January  2015  and  also  informs  sections  of  the 
evaluation.  

Operational information from other sources 

Useful data has been obtained through responses to information requests by relevant national and EU 
institutions that deal with the fight against money laundering and terrorist financing. 

A  number  of  national  FIUs  provided  feedback  on  their  use  of  cash  control  information.  In  addition, 
Europol  (EU's  law  enforcement  agency)  agreed  to  provide  examples  of  criminal  investigations 
resulting from controls of cash by EU Member States.  

4.2. 

Limitations – robustness of findings 

Some limitations of the data used in this evaluation exist; they are stemming from: 

  Lack of complete statistics linking cash controls to criminal investigations and court decisions on 
money laundering or terrorist financing, as feedback is often not provided by the national FIUs to 
the competent authorities that collect the relevant information; 

  Variation in the amount and quality of information provided by the Member States in response to 
Commission's questionnaires and information requests, an example being the 2014 Questionnaire 
to  which  4  Member  States  provided  no  answers  and  several  Member  States  provided  partial  or 
incomplete answers; 

  Lack  of  first-hand  observation/monitoring  by  the  Commission  of  cash  controls  procedures  and 

results in the Member States. 

However, the evaluation analysis made efforts to overcome these limitations by relying on: 

  A  significant  number  of  examples  of  how  cash  controls  have  initiated  criminal  investigations  on 
money laundering/terrorist financing and resulted in convictions by courts, as well some statistical 
data on the use of cash controls provided by several national FIUs; 

  Numerous  discussions  with  Member  States'  cash  control  experts  at  the  plenary  meetings  of  the 
Cash Control Coordination Group (CCCG) which take place several times a year, as well as ad-
hoc  project  groups  on  cash  control  issues,  which  provide  an  opportunity  for  Member  States  to 
exchange  detailed  information  on  their  procedures  and  practices  and  complement  the  data 
provided via official information requests; 

  Regular  and  complete  statistical  data  provided  by  Member  States  according  to  Commission's 
the  practical 

templates,  which  enable  a  detailed 

guidelines  and  standard 
implementation of the main provisions of the Cash Control Regulation. 

insight 

into 

5. 

IMPLEMENTATION STATE OF PLAY (RESULTS) 

The  implementation  of  the  Cash  Control  Regulation  by  the  Member  States  is  monitored  by  the 
European Commission mainly through: 

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  Collecting  and  analysing  the  statistics  on  cash  declarations  and  recordings  (failures  to  declare 
correctly) as well as on penalties imposed, sent regularly by all the Member States on a voluntary 
basis. 

  Communication with cash control experts in the Member States: 

o  At  plenary  meetings  of  the  CCCG,  an  expert  group  set  up  by  the  Commission  which 

meets several times a year to discuss pertinent cash control issues; 

o  By setting-up smaller project groups of experts to deal with ad-hoc projects related to cash 

controls. 

  Taking note of mutual evaluations by the FATF (or MONEYVAL) of EU Member States, with the 

focus on recommendations relating to their systems of cash controls. 

  Obtaining  information  from  the  Member  States  by  way  of  Commission  questionnaires  on  cash 

controls. 

The following sections will provide an overview of the current state of the implementation of the Cash 
Control Regulation by looking at its main provisions and illustrating: 

  How each provision should be interpreted and applied by the competent authorities in the Member 

States; 

  Where relevant, an overview of implementation efforts since the introduction of the Cash Control 

Regulation; 

  The current state of play in relation to the implementation of each provision. 

5.1. 

Definition of cash  

As  foreseen  in  the  Cash  Control  Regulation,  all  Member  States  follow  the  definition  of  cash 
established  by  the  FATF  which  refers  to  financial  and  monetary  instruments  whose  value  can  be 
transferred from one person to another, i.e. whose origin and destination are anonymous or which can 
be endorsed and transferred successively by several recipients.  

Several  Member  States  also  have  national  provisions  similar  to  the  obligation  to  declare  cash  as 
regards gold and/or precious metals and stones (Austria (on its territory), Bulgaria, Cyprus, the Czech 
Republic,  Germany,  Italy  and  Poland).  In  addition,  Germany  has  national  provisions  to  declare 
electronic money.  

5.2. 

Obligation to declare 

Competent authorities of the Member States have to ensure the necessary organisational facilities are 
in place at the points of EU entry and exit, including airport transit zones, so that natural persons can 
fulfil their obligation to declare.  

This  should  be  achieved  by  guiding  the  natural  person  via  communication  material  to  the  relevant 
customs control posts or other equivalent technical facilities (on-line declaration possibility), where the 
declaration  forms  are  readily  available.  Sufficient  staffing  of  the  customs  control  posts/technical 
facilities at the external borders of the EU should be ensured and staff should have the authority and 
technical competence to accept declarations. 

5.2.1.  Raising awareness on the obligation to declare 

The Cash Control Regulation does not lay down any awareness-raising measures.  Nevertheless, the 
Commission has stimulated Member States to undertake initiatives in order to inform the public of their 
obligations and has undertaken specific actions since the coming into force of the Regulation. 

Current state of play 

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In  order  to  harmonise  the  communication  on  cash  controls,  common  communication  material  is 
developed  by  the  European  Commission.  Such  material  has  been  either  made  directly  available,  or 
provided  in  the  form  of  templates  that  can  be  used  by  Member  States,  and  includes:  cash  control 
leaflets,  posters,  advertorials,  alternative  advertising  (suitcases),  animated  clips,  roll-ups,  internet 
banners, web pages etc. Similar tools are also issued at the national level.  

In May 2014, the Commission asked the Member States to report on whether they had started using 
updated cash control communication templates, designed and provided by the Commission to ensure 
a uniform EU visual identity of communication actions.  

Most of the Member States reported not yet using the templates but nevertheless continue to use the 
material previously directly provided by the Commission.  

The Commission emphasised that a uniform EU-wide communication on cash control was crucial and 
passengers  should  be  adequately  informed  at  points  of  entry  and  exit,  as  well  as  via  internet,  in  a 
consistent  manner.  The  Member  States  were  advised  to  use  the  External  Communication  Network, 
the  Commission's  platform  for  coordination  of  communication  activities,  to  raise  specific  issues  and 
obtain  support  in  ensuring  that  a  uniform  EU  message  on  cash  declaration  obligation  reaches 
passengers.  

5.2.2.  Place to declare 

The declaration has  to be completed and lodged with the competent authorities  at the point through 
which the natural person is entering or leaving the EU.  

The  2010  report  showed  that  for  air  transit13  passengers,  the  obligation  to  declare  cash  at  the  first 
point of entering or the last port of leaving the EU was difficult to comply with due to the variations in 
airport transit infrastructure. There were few or different facilities provided for declaring cash in transit 
zones and there was often not enough time between flights. 

A Project Group of Member States experts analysed the transit issue in 2011 and concluded that an 
amendment  to  the  Cash  Control  Regulation  would  not  provide  a  solution  to  the  practical  problems 
encountered, as the combined use of the Cash Control Regulation and the implementing provisions of 
the EU Customs Code formed a sufficient base to perform controls.  

This was confirmed  by  an opinion  of  the  European Commission' Legal  Service,  which  indicated  that 
transit  was  only  one  method  of  entering  or  leaving  the  EU,  and  terms  entering  and  leaving  were 
already specified in Article 3 and should be interpreted literally. 

Current state of play 

Following  the  conclusion  of  the  2011  Project  Group  of  Member  States'  cash  experts  that  non-
legislative  measures  were  more  appropriate  for  transit  passengers,  the  Commission  updated  the 
Handbook  of  Guidelines  on  Cash  Control  to  include  more/better  references  to  transit  and  made 
available the updated version to all Member States.  

13 The term 'transit' as used here means either a movement from one third country to another via the territory of a 
Member State but without clearing immigration and customs controls or entering the EU via the territory of 
one Member State with an ultimate destination in another Member State or departing in one Member state to 
another Member State, from which the EU is exited. 

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The introduction of a new transit-specific CDF14 was not considered necessary due to the introduction 
of a new general EU-CDF, which is applicable for transit passengers as well.  

The recent discussions at plenary meetings of the CCCG however indicate that a number of Member 
States  continue  to  experience  practical  problems  with  cash  declarations  and  controls  in  relation  to 
transit passengers.  

5.2.3.  Methods to declare 

The  Cash  Control  Regulation  does  not  prescribe  the  method  of  the  declaration.  As  a  result  the 
declaration  can  be  presented  in  written,  oral  or  electronic  form  depending  on  the  requirements  laid 
down by national legislation. The minimum information to be provided includes: 

  The declarant (name, date and place of birth, nationality, etc.); 

  The owner of the cash; 

  The intended recipient of the cash; 

  Description of the cash (nature, amount, currency); 

  Provenance and intended use of the cash; 

  The transport route; 

  The means of transport.  

The acceptance of the declaration should include at the minimum a check on:  

  The readability of the data (in combination with a check on the acceptability of the form used and 

the language used to complete the data); and 

  The completeness of the declaration (the minimum required boxes are completed);  

  The  identity  of  the  natural  person  that  submits  the  cash  declaration  (the  data  to  identify  the 
declarant  as  completed  on  the  declaration  form  should  conform  to  the  passport  or  travel 
documents the natural person can provide as proof of his/her identity).  

Any  further  control  action  on  the  validity  of  the  data  in  the  declaration  is  not  required  by  the  Cash 
Control  Regulation.  As  a  result,  an  accepted  declaration  never  proves  the  legal  status,  the  origin  or 
destination of the funds and can never be accepted as a substitute for verifying the source of funds. 

The  competent  authorities  should  nevertheless  carry  out  a  reasonable  number  of  random  and/or 
targeted controls and investigations to ensure that natural persons respect not only the completeness 
but also the correctness of the cash declarations presented. 

Most Member States had opted to require written declarations. Only three Member States allowed for 
an oral declaration, which would then be written up by a customs officer. Three Member States also 
allowed for electronic declarations to be lodged (one only for professional cash couriers).  

In  almost  all  Member  States,  cash  declarations  could  be  completed  in  the  official  languages  of  the 
country in which one had to declare, and also in English. Some Member States accepted and allowed 
the cash declaration form to be completed in other widely spoken EU languages. 

The initial implementation phase showed that making use of a common declaration form would be an 
important  contribution  to  improve  the  (electronic)  exchange  of  information  on  cash  declarations. 
Furthermore it would also enhance the understanding by international travellers on what is expected 
from them, thus improving compliance with the requirements. 

14 Common Declaration Form, a harmonised declaration form used by most Member States on a voluntary basis 

and elaborated in cooperation with the Commission, cf. infra. 

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For  that  purpose,  a  European  Common  Declaration  Form  (EU-CDF)  was  developed  in  collaboration 
between  the  Member  States  Experts  and  the  Commission  services  in  the  CCCG  framework.    This 
process was initiated in 2008 and the current form is regularly reviewed in order to determine if it still 
meets current needs. 

 Current state of play 

The  competent  authorities  of  24  Member  States  require  the  use  of  the  EU-CDF  and  have 
accommodated  it  to  include  a  national  flag,  references  to  national  legislation  and  where  applicable, 
intra EU cash controls procedures.  

4 Member States have not yet implemented the EU-CDF: 

  The  United  Kingdom  (UK)  has  approved  the  EU-CDF  but  is  still  using  the  old  stock  of  national 

cash declaration forms until these are depleted; 

  Spain  is  waiting  for  the  adoption  of  national  regulation  related  to  IT  system  requirements, 

implementation is expected in January 2016; 

 

Italy  is  waiting  for  a  decision  by  the  Ministry  of  Finance  in  relation  to  the  cost  of  the  required  IT 
solution (estimate of timing not given); 

  France does not use the EU-CDF due to national legislation provisions. 

Spain and France offer the possibility of submitting a (currently national) cash declaration form online. 
7 Member States offer the possibility to fill in the EU-CDF form online and then print it for submission 
in paper form, while 4 Member States are currently developing IT solutions for the EU-CDF. 

5.2.4.  Statistics on cash declarations/recordings 

There is no explicit requirement in the Cash Control Regulation for Member States to provide statistics 
to the Commission. However, in the technical working group on cash controls to prepare the original 
proposal for the Cash Control Regulation, the Member States agreed that the collection of statistics on 
cash  controls  would  be  an  important  element  in  the  follow-up  of  an  effective  implementation  of  the 
Cash Control Regulation. 

Current state of play 

Since 15 June 2007, when the Cash Control Regulation became applicable, all Member States have 
been  sending  in  statistics  on  the  cash  declarations  submitted  and  control  results  obtained  to  the 
Commission.  Incorrect  cash  declarations  or  findings  as  a  result  of  controls  are  referred  to  as 
"recordings" in the statistics. 

The  Commission,  with  support  of  Member  States'  cash  control  experts,  has  developed  a  Guide  for 
Cash  Control  Statistics,  which  is  annexed  to  the  Handbook  of  Guidelines  on  Cash  Controls  and 
provides detailed guidance to the Member States on how to complete the standard Excel spreadsheet. 

The  statistics  demonstrate  that  cash  declarations  are  processed  and  controls  are  carried  out  on 
passengers,  the  luggage  and  the  means  of  transport,  by  all  Member  States.  However,  there  are 
significant differences in the levels of declarations submitted and controls results reported by different 
Member States. 

These results will be presented and discussed in section 6. 

5.3. 

Designation of powers of the competent authorities 

Article 4 of the Cash Control Regulation provides the legal basis for competent authorities to carry out 
controls on  natural  persons,  their  baggage  and  their  means  of  transport  in  accordance with  national 
legislation.  

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Controls according to the Cash Control Regulation should include: 

  Control on the obligation to declare - check whether a natural person entering or leaving the EU 
(including  transiting)  and  carrying  cash  of  a  value  of  EUR  10  000  or  more  has  fulfilled  his/her 
obligation to declare.  

  Control of natural persons - upon request the declarant is obliged to submit his/her identity papers 
in order to prove his/her identity; in cases of possible concealing of cash by persons, they may be 
subject to a ‘personal search’ depending on national legislation. 

  Control  of  the  baggage  -  check  the  baggage  of  the  natural  persons  concerned;  officials  should 
ensure  to  check  or  gather  information  on  all  baggage  of  a  natural  person  (hand  and  hold 
baggage), both during targeted controls as well as during random checks.  

  Control of the means of transport and cargo - check whether natural persons entering or leaving 
the  EU  carry  cash  in  their  means  of  transport;  this  includes  the  possibility  to  search  vehicles, 
containers in the vehicle or within the structure and fabric of the vehicle. 

To ensure a comprehensive control approach for cash entering or leaving the EU, controls should take 
place on all transport modes (maritime, road, rail, air), and should be targeted based on risk analysis 
and include a random element.  

The following control techniques should be used: 

  Risk management; 

  Questioning and procedures at the border; 

  Use of special (detection) equipment; 

  Advance passenger information (API) – data concerning passengers and flight details provided by 

the carrier prior to the start of travel; 

  Common and national databases; 

  Exchange  of  information  with  other  Member  States  and  third  countries,  including  information 

specific to passengers in transit; 

  Cooperation and coordination with law enforcement authorities; 

  Feedback from the FIU. 

In  the  event  of  failure  to  comply  with  the  obligation  to  declare,  cash  may  be  detained  by  an 
administrative  decision  in  accordance  with  the  conditions  laid  down  under  the  national  legislation. 
Cash should be detained where there are indications of money laundering or terrorist financing and/or 
where there is a need to gather further relevant information on a cash border movement. For example, 
cash  can  be  detained  to  determine  the  value  of  the  cash  transported  and/or  to  await  further 
declaration information to be provided by the passenger. 

The  competent  authority  should  record  the  detained  cash  and  gather  evidence  to  assist  with  the 
investigation, taking into account the links to wider criminality e.g. drug trafficking, money laundering, 
terrorist  financing  etc.  The  information  should  be  made  available  to  the  authorities  responsible  for 
combating  money  laundering  and  terrorist  financing  in  the  Member  State  where  the  information  is 
collected, and to the Commission. 

Current state of play 

Currently all Member States perform controls of cash movements at the external borders, even though 
the  numbers  and  types  of  controls  differ  between  Member  States,  depending  on  national 
circumstances and priorities.  

All Member States reported performing controls, including physical verifications, of cash movements at 
the external borders, focusing on the submitted declarations, passengers, luggage and the means of 

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transport. Nearly all Member States made use of scanning equipment, while the use of trained sniffer 
dogs for cash controls was reported by 4 Member States. 

12 Member States reported  on the use of a specific  national strategy related to cash controls, while 
others reported on the use of risk analysis criteria for cash control in the main points of entrance and 
exit.  17  Member  States  indicated  they  applied  risk  profiling  for  cash  control  and  18  made  use  of 
intelligence alerts on cash controls, either by receiving and/or issuing these kinds of alerts. 4 Member 
States reported that they organised national joint targeting actions with other competent authorities. 

16 Member States reported that they applied specific controls on movements of sums of cash under 
the threshold of 10 000 € where there are indications of illegal activities associated with the movement 
of cash, commonly referred to as smurfing. This possibility is  provided  for by article 5.2 of the Cash 
Control Regulation. 

The discussions at the plenary meetings of CCCG indicate that the overall levels and types of controls 
remain similar to those reported in 2010.  Nevertheless, recent discussions of the CCCG reveal that 
more Member States are introducing sniffer dogs for cash controls. 

Risk  management  techniques  continue  to  be  used  but  they  depend  on  national  access  by  customs 
authorities  to  API  or  national  PNR..  The  Commission  has  been  working  with  the  Member  States  to 
develop  and implement  a  Common  Risk  Management  Framework,  which  is  also  applicable  for  cash 
controls.  

A resource already established to identify and  analyse the risk within the EU is  the Risk Information 
Form (RIF) module within the electronic EU Customs Risk Management System (CRMS). The aim of 
RIF is to exchange risk information to raise the awareness of the relevant competent authorities with 
regard to a potential irregularity or concealment trend. This exchange of information can be done very 
quickly and enables customs authorities to be informed rapidly about a potential risk. 

As  such,  the  RIF  is  a  simple  and  effective  tool  to  raise  awareness  of  new  risks  and  support  the 
national implementation of risk analysis at the external borders on cash control. It enables competent 
authorities to provide to, or receive from, other Member States information on identified routes, flights, 
ships,  concealment  methods  that  are  considered  high-risk  because  of  known  or  possible  links  to 
money laundering, terrorist financing or other illicit financial transactions. 

Common  EU  risk  indicators  have  also  been  established  in  order  to  improve  the  vigilance  to  the 
physical movement and transportation of cash, and have been disseminated to the Member States as 
guidance. Where a link between particular risk indicators and any natural person, means of transport 
etc.  is  established,  competent  authorities  carry  out  additional  verification  and  check  the  compliance 
with the Cash Control Regulation. 

Since  2010,  all  Member  States  have  been  providing  yearly  statistics  on  the  sanctions  imposed  on 
natural persons in cases where controls of cash at the external EU border identify a failure to meet the 
obligation to declare or indicate a link to illegal activity. These include penalties, cash detentions, cash 
seizures and cash confiscations.  

5.4. 

Recording and processing of information 

The information collected from cash controls must be recorded in a specific database and processed 
by  the  competent  authorities  in  a  timely  and  effective  manner.  This  information  must  be  made 
available to the FIU of the Member State, in the manner established by national regulations. 

The  first  objective  of  the  Cash  Control  Regulation  is  that  customs  authorities  make  all  the  cash-
declaration related data available to their national FIU for the assembly, analysis and investigation of 
information that might indicate money laundering, terrorist financing or other illegal activity. 

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The information that customs authorities must make available to the FIU includes: 

  Details from cash declarations; 

  Details concerning cash not declared, incorrect declarations and incomplete declarations; 

  Facts  established  during  cash  controls  carried  out  on  natural  persons,  their  baggage  and  their 

means of transport that provoke suspicions on money laundering and terrorist financing; 

  Any other facts related to movements  of cash which provoke suspicions of money laundering or 

terrorist financing; 

  Details concerning cash detained; 

  Any additional information which could be useful in accordance with the procedures established by 

national legislation.  

Data  collected  in  the  case  of  smurfing  may  also  be  recorded,  processed  and  made  available  to  the 
FIU, including a detailed description of particular suspicions and circumstances of the case.  

In 2010, all Member States reported that they registered information on cash declarations. Half of the 
Member States registered this information in an automated central database, which was in most cases 
a stand-alone database at central level sometimes directly accessible for the national FIU, while for 2 
Member States it was actually held by the national FIU. In most cases, the information registered was 
not  directly  retrievable  by  other  competent  authorities such  as  the  national  FIU.  The  Member  States 
that reported not having automated registration of cash declarations, most commonly referred to the 
use of excel files or a local database.  

25  Member  States  reported  that  they  registered  and  processed  the  information  obtained  from  the 
controls  of  cash  carried  out.  One  Member  State  reported  not  to  file  this  type  of  information  despite 
article  5  of  the  Cash  Control  Regulation  explicitly  requiring  Member  States  to  do  so.  One  Member 
State  notified  that  only  the  irregularities  detected  were  registered  and  another  registered  only  the 
results of thorough controls. 

21 Member States made all information on cash declarations spontaneously available to their national 
FIU.  Only  3  Member  States  reported  to  make  this  information  available  on  demand,  whereas  2 
Member States provided only information on suspicious cases to the national FIU.  

The information was made available to the FIU via official letter or immediate access to the database 
of cash declarations. Periodicity of providing this  information varied from immediate transmission via 
direct  access  to  the  databases,  to  daily,  weekly,  monthly  or  quarterly  bases.  Some  Member  States 
reported faster procedures to inform national FIU's when the information related to the detection of a 
suspicious cash movement.  

Current state of play 

All Member States register information on cash declarations and results of cash controls. The methods 
in which this information is registered still vary and reflect the descriptions provided in the 2010 report. 
This is due to the organisational differences of the national competent authorities.  

In  response  to  the  2014  Questionnaire,  20  Member  States  answered  questions  on  providing 
registered information to national FIUs.  

The  results  showed  that,  out  of  the  20  respondents,  18  Member  States  provide  both  regular  cash 
declaration  data  and  data  linked  to  potential  money  laundering  or  terrorist  financing  activities  to 
national  FIUs.  Greece  reported  only  providing  information  linked  to  money  laundering/terrorist 
financing,  while  Latvia  referred  to  providing  only  operational  data.  8  Member  States  also  reported 
providing data related to tax fraud/evasion to their national FIUs.  

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The information is provided to FIUs in a number of ways based on national legislation and procedures, 
which include the use of databases, IT systems, secure internet networks etc.  

5.5. 

Exchange of Information  

The  exchange  of  information  in  the  area  of  cash  controls  is  an  important  tool  for  better  targeting 
controls and supporting money laundering/terrorist financing investigations.  

5.5.1.  Exchange of information with other Member States. 

Under  Art.  6  of  the  Cash  Control  Regulation,  the  information  obtained  from  cash  declarations  and 
results of cash controls may be exchanged with other Member States' competent authorities in cases 
where there are indications that the sums of cash are related to any illegal activity associated with the 
movement of the money; 

A  number  of  provisions  in  other  EU  legislation  complement  Art.  6  of  the  Cash  Control  Regulation 
regarding information exchange:  

  Council  Regulation  (EC)  No  2913/92  of  12  October  1992  establishing  the  Community  Customs 

Code; 

  Council  Directive  2011/16/EU  of  15  February  2011  on  administrative  cooperation  in  the  field  of 
taxation  and  repealing  Directive  77/799/EEC  amended  by  Council  Directive  2014/107/EU  of  9 
December 2014 as regards mandatory automatic exchange of information in the field of taxation; 

  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  agricultural  matters 
(Mutual Assistance Regulation); 

  Council  Decision  2000/642/JHA  of  17  October  2000  concerning  arrangements  for  cooperation 
between financial intelligence units of the Member States in respect of exchanging information. 

In addition, the Naples II Convention is used by Member States to exchange cash control information 
at the prosecution/conviction stage. 

In summary: 

  Currently, the Regulation only mentions the exchange of information where there are indications of 
illicit activities but there is no legal basis for the exchange between Member States of regular cash 
declaration data voluntarily submitted by natural persons.  

Exchange of information with third countries. 

With  regards  to  the  exchange  of  cash  control  information  with  third  countries,  Article  7  of  the  Cash 
Control  Regulation  provides  that  information  can  be  exchanged  under  the  framework  of  existing 
agreements on mutual administrative assistance.  No detailed quantitative information is available on 
information  exchange  with  third  countries  but  from  Member  States  national  experts  comments  it 
seems that such exchange rarely takes place. 

The  exchange  of  cash  control  information  between  Member  States  and  third  countries  includes 
exchange  of  personal  data  and  Member  States  must  ensure  compliance  with  the  national  laws 
implementing the Data Protection Directive 95/46EC. Where the Commission's IT systems are used to 
exchange such information, the Commission must ensure compliance with Regulation 45/2001 on the 
protection of individuals with regard to the processing of personal data by the Community institutions 
and bodies and on the free movement of such data. 

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5.5.2.  Means for information exchange. 

The  following  common  databases  and  means  of  information  exchange  are  available  to  Member 
States: 

  RIF (Risk Information Form) system – as described in section 5.3  

o  Managed by Commission's Directorate-General for Taxation and Customs Community(DG 

TAXUD);  

o  A RIF should raise the awareness of the customs control offices and national risk analysis 
centres with regard to a potential irregularity/risk related to movements of cash across EU 
external borders; 

o  For example, a RIF can be prepared following a finding of an irregularity (for example an 
incorrect  declaration  or  finding  of  concealed  undeclared  cash),  giving  information  on  the 
technique  used  to  find  the  irregularity  (e.g.  use  of  cash  sniffer  dogs  or  pre-analysis  of 
routing information); 

o  A RIF can also be prepared to disseminate risk trends (for example with regard to unusual 
routing  or  method  of  concealment  of  cash)  observed  in  a  Member  State  that  can  be  of 
relevance to other Member States; 

o  As it is directly available in most customs control points, it permits rapid, direct and secure 

exchange of information; 

o  The  RIF  system  can  be  used  to  target  a  limited  group  of  users  (e.g.  risks  addressed  to 

airports only), or to all members of the RIF system; 

o  The applicable legal basis currently does not allow storing personal data, such as names, 
dates  of  birth,  personal  numbers  (identity  card/passport  number)  etc.  obtained  through 
cash controls.  

o  The system is meant to be used reciprocally, e.g. the risks found should be recorded into 
the  system  but,  at  the  same  time,  information  from  the  system  should  be  used,  for 
example, for risk analysis in the field of cash controls. 

  FIDE (Files Identification Database)  

o  Managed by the European Anti-Fraud Office (OLAF); 

o  An  EU-wide  index  of  investigation  records  generated  by  Member  States'  customs  and 
other  investigation  authorities  for  administrative  purposes  and  for  purposes  of  criminal 
investigations and prosecutions in the customs area; 

o 

Information related to investigations has to be introduced into the system by the Member 
States  (including  personal  data),  so  that  the  system  can  be  used  to  verify  whether  a 
person (or business) has been subject of a criminal or administrative investigation in one 
of the Member States; 

o 

In the area of cash controls, FIDE can be used: 

  Where there are indications that the sums of cash are related to any illegal activity 

associated with the movement of cash,  

  Where  there  is  non-compliance  with  the  Cash  Control  Regulation  (a  criminal 

background, such as money laundering or intent, is not required), 

  When a person is suspected to have split transports of cash into sums below the 
threshold  and  there  are  indications  of  illegal  activity  concerning  these  cash 
movements (smurfing). 

  CIS (Customs Information System) 

o  Managed by OLAF; 

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Evaluation of the Cash Control Regulation 

o  A  database  in  which  information  is  stored  for  the  purposes  of  "discreet  surveillance", 

"specific controls", "sighting and reporting", "operational analysis" and “strategic analysis; 

o  CIS  is  a  personal  data  -  processing  system  which  aims  to  assist  in  preventing, 
investigating and prosecuting operations which are in breach of customs legislation;  

o 

In the area of cash controls, CIS can be used as follows: 

  To store information on cash detained, seized or confiscated in a Member State 

  To  prevent,  investigate  and  prosecute  operations  which  do  not  comply  with  the 
Cash  Control  Regulation  (CIS  can  be  used  to  monitor  persons  crossing  the 
internal  borders  of  the  Member  State  with  the  intention  of  crossing  the  external 
borders of the EU without complying with the obligation to declare).    

  24H and Central contact points 

o 

o 

In a number of cases communications may be made by telephone, fax or e-mail in order 
to share precise and quick ad-hoc information; 

In  order  to  facilitate  such exchanges  for  competent officers  in  the  area  of cash  controls, 
lists of 24-hour and central contact points have been established; 

o  The 24h contact points are to be used when immediate ad-hoc exchange of information is 
needed, while central contact points are to be used for policy and other operational issues; 

o  Member  States  can  also  add  to  this  list  direct  contact  details  of  relevant  major 
the  exchange  of  urgent  operational 
facilitate 

to 

airports/ports/road  border  posts 
information. 

  Agreements on cooperation 

o  The  EU  has  signed  customs  cooperation  and  mutual  administrative  assistance 
agreements (with Canada, China, Hong Kong, India, Japan, Korea and US) which provide 
for the possibility of information exchange with third countries.  

o  The EU also has Partnership and  Co-operation Agreements with a number  of countries, 
including  Russia  and  Ukraine,  which  cover  customs  co-operation  and  include  a  protocol 
on mutual administrative assistance. 

  Working meetings 

o  Participation in working groups and regular working meetings at national and international 
level  helps  improve  cooperation  concerning  exchange  of  experience,  presentation  and 
introduction of new requirements, difficulties with cash controls, elaboration of procedures 
and control measures etc.; 

o  At  the  level  of  Commission,  cash  control  experts  from  Member  States  have  the 

opportunity to participate in the work of: 

  Cash Controls Coordination Group (CCCG), which meets several times a year to 
discuss issues related to the control of cash movements at external EU borders, 

  Project  Groups  convened  on  an  ad-hoc  basis  to  elaborate  solutions  to  practical 
problems related to the implementation of the Cash Control Regulation in the EU. 

  Statistical information – as described in section 5.2.4. 

o  The  statistics  submitted  by  the  Member  States  are  summarised by  the  Commission  and 
contribute to the collection of information on cash movements across the EU border and 
provide  a  good  basis  for  risk  analysis.  This  statistical  information  however  is  rather  a 
quantitative  approach  and  further  improvement  is  required  with  information  on  the  origin 
and  destination  of  cash  movements  (with  results  from  random  and  targeted  controls  as 
well  as  of  cases  for  which  there  is  a  pending  decision  from  Justice).  It  will  enable  FIUs 

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Evaluation of the Cash Control Regulation 

and/or other competent authorities to map clearly the cash movements around the world. 
Such information is undoubtedly important for risk analysis purposes.  

o 

  Joint operations 

o  Participation  in  joint  operations  (national,  regional  or  international)  and  reports  on  their 
results  offer  the  opportunity  to  achieve  significant  results  in  a  short  period  of  time  and 
based on regular exchange of information. 

Current state of play 

The  most  recent  information  on  the  exchange  of  cash  control  information  was  collected  via  the 
Commission's  2014  Questionnaire.  The  questionnaire  primarily  focused  on  finding  out  whether 
Member  States  make  available  the  information  collected  at  their  external  borders  to  other  Member 
States and third countries, rather than whether they receive such information in return. 

This information is complemented by references to previous questionnaires and analyses to minimise 
any gaps in data.   

In  relation  to  the  exchange  of  cash  control  information  (by  customs  authorities)  with  other  Member 
States: 

  16  Member  States  exchange  information  with  customs  authorities  of  other  Member  States,  8 

Member States do not, others have not provided an answer; 

  3 Member States exchange information with tax authorities of other Member States, 16 Member 

States do not, others have not provided an answer; 

  5 Member States exchange information with other authorities of other Member States, but do not 

specify which authorities; 

  4  Member  States  confirm  that  they  don't  directly  exchange  cash  control  information  with  any 

authorities in other Member States. 

In relation to the exchange of cash control information (by customs authorities) with third countries: 

  12  Member  States  exchange  information  with  customs  authorities  of  third  countries,  6  Member 

States do not, others have not provided an answer; 

  2 Member States exchange information with tax authorities of third countries, 14 Member States 

do not, others have not provided an answer; 

  2  Member  States  exchange  information  related  to  money  laundering  and  terrorist  financing  with 

other authorities of third countries, but do not specify which authorities; 

  Member  States  which  exchange  information  with  third  countries,  do  so  on  the  basis  of  bilateral 

agreements with relevant countries; 

  2  Member  States  confirm  that  they  don't  directly  exchange  cash  control  information  with  any 

authorities in third countries. 

In addition, available information on the exchange with other Member States and third countries shows 
that: 

  Reasons for not exchanging information include: exchange is the responsibility of the national FIU 

(2 Member States), no requests for information have been received (2 Member States); 

  The type of information exchanged also varies significantly and includes: regular cash declaration 
data, data linked to money laundering or terrorist financing, data linked to tax fraud/evasion, risk 
information and data on cash seizures; 

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  Member  States  exchange  information  using  a  wide  range  of  means,  from  official  letters  to 

common databases and email and telephone communication; 

The results of the 2014 Questionnaire show that 21 Member States use at least one of the common 
databases (RIF, FIDE, CIS) or 24H contact points. However, at the CCCG plenary meeting in January 
2013, the Commission informed the Member States that, although almost all had all reported making 
use of the common databases (RIF, FIDE, CIS) for information purposes, only 9 Member States had 
uploaded cases in RIF, only 12 had uploaded cases in CIS and only 8 had uploaded cases in FIDE.  

The  majority  of  Member  states  actively  participate  in  and  contribute  to  the  work  of  the  CCCG,  and 
nominate experts to take part in ad-hoc Project Groups set up by the Commission. In addition, several 
Member  States  have  organised  national  or  joint  cash  controls  operations,  and  participate  in 
international  joint  operations,  such  as  the  Joint  Customs  Police  Operations  "Athena",  which  target 
cash couriering, including criminal investigations in cases where EU and Member States’ laws on the 
declaration and transportation of large amounts of cash are violated. 

All  Member  States  provide  regular  statistics  to  the  Commission  on  cash  declarations  and  results  of 
cash controls (recordings), as well as penalties, cash detentions, cash seizures and cash confiscations 
imposed in cases where cash controls identify a failure to meet the obligation to declare or indications 
of illegal activity.  

5.6. 

Penalties 

According to Article 9 of the Cash Control Regulation, each Member State must introduce penalties for 
cases of failure to comply with the obligation to declare. Such penalties applied by each Member State 
must be prescribed in the national legislation and, in line with the FATF Recommendation 32, should 
be effective, proportionate and dissuasive. 

A failure to comply with the obligation to declare should be treated as an administrative offence and/or 
as  a  criminal  offence.  Penalties  may  be  monetary  or  may  include  forfeiture  or  expropriation  of  the 
detained cash.  

Criminal  penalties  are  established  by  national  regulations  and  added  to  administrative  penalties.  In 
serious  cases,  they  can  include  expatriation  of  the  person  committing  the  offence  from  a  Member 
State,  as  well  as  refusal  to  enter  the  territory  of  a  Member  State  (if  the  national  legislation  enables 
such a sanction), or in case of suspicion of serious infringement of the law or of terrorist financing, an 
arrest of the person concerned. 

An imposed penalty should be: 

  Effective  -  e.g.  in  case  an  amount  is  not  declared  by  a  particular  person  repeatedly 
punishment  should  be  punitive,  compared  to  a  person  making  a  similar  offence  obviously 
unintentionally just because of lack of awareness of the regulations. 

  Proportionate  -  e.g.  it  should  correspond  to  the  relevance  of  the  infringement  of  the  law,  so 
that the amount of the fine should depend on relevant circumstances, such as the amount of 
undeclared cash, the person’s cash control history and any other relevant circumstances (the 
person is a traveller, a professional courier etc.) 

  Dissuasive - e.g. it should point out consequences a person may face in case he/she intends 
to fail to comply with the obligation to declare; such penalties should dissuade a person from 
committing further illicit activities. 

Current state of play 

All  Member  States  have  introduced  systems  of  penalties  to  deal  with  failures  by  natural  persons  of 
meeting the obligation to declare amounts of cash of 10,000 EUR  or more when entering or leaving 
the EU through their national borders.  

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However,  the  types  and  levels  of  imposed  penalties  differ  significantly  between  Member  States15. 
Discussions at CCCG meetings confirm that Member States have very different interpretations of the 
meaning  of  terms  "effective",  "proportionate"  and  "dissuasive",  resulting  in  substantial  variation  of 
treatment of natural persons who failed to declare. 

For  illustrative  purposes  only,  the  table  below  provides  an  anonymised  overview  of  the  penalties 
applied  in  a  limited  number  of  Member  States  which  had  been  contacted.    The  table  also  shows 
whether mitigating or aggravating circumstances are taken into account.  The left column shows the 
minimum penalty (before taking into account particular circumstances, if applicable) levied in case of 
failure to declare (either as a % of the undeclared sum or a fixed fine).  The same reasoning applies to 
the  'Max  penalty'  column.    Lastly,  the  right  hand  columns  indicate  if  mitigating  or  aggravating 
circumstances  particular  to  the  case  are  taken  into  account  when  determining  the  penalty.  
Jurisdictions  who  do  not  take  into  account  such  circumstances  consider  failure  to  declare  a  'strict 
liability'16 offence. 

Table 1 – Penalties applied by Member States for failure to declare   

Source:  Responses to Commission questionnaire sent to the Member States in 2014.  

3 Member States have not introduced administrative penalties but treat the failure to comply with the 
obligation to declare as criminal offence.  

6.  ANSWERS TO THE EVALUATION QUESTIONS 

6.1. 

To what  extent  is  the  current  scope  of  the  Cash  Control  Regulation  still  relevant 
for preventing money laundering/terrorist financing?   

In  order  to  analyse  the  relevance  of  the  current  scope  of  the  Cash  Control  Regulation,  firstly  the 
sustained  use  of  cash  as  a  convenient  and  anonymous  means  of  payment  will  be  briefly  touched 
upon, secondly statistical data provided by the Member States will be analysed to paint a quantitative 
picture  of  the  current  situation.    Thirdly,  it  will  be  shown  that  cash  controls  contribute  to  the  fight 
against Money-laundering and Terrorist Finance which both remain important phenomena that need to 
be tackled. 

15 A questionnaire sent to Member States in August 2014 indicated that where pecuniary penalties are imposed, 
these ranged from zero (in cases where authorities took into account mitigating circumstances) to fines up to 
twice the undeclared amount.  Some Member States levy a fixed amount fine, others a percentage of the sum 
undeclared or use an approach which takes into account the undeclared amount. 

16 Simply put, the notion of 'Strict liability' implies that no fault, negligence or intent needs to be established to 

assign responsibility for an infraction.. 

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In  recent  times,  cash  has  lost  the  status  of  the  main  means  of  payment  in  the  EU,  with  non-cash 
payment  methods  such  as  debit/credit  cards  and  e-payment  taking  over.  Other  relevant  innovations 
that have experienced growth in the EU include pre-paid cards and virtual currencies. 

However,  despite  such  growth  in  the  volumes  of  non-cash  transactions  and  new  types  of  payment 
methods,  the  graph  below  illustrates  the  global  increase  in  value  of  various  denominations  of  Euro 
notes in circulation between 2002-2014.17 

In  the  Eurozone,  the  amount  of  cash  in  circulation  per  inhabitant  nearly  doubled  between  2002  and 
2011.18 

There are several causes of the increase in the use of cash as means of payment, but the one that 
calls for strong cash controls at EU's external borders is that cash largely remains an anonymous and 
easy to value means of payment, indicating that there is a risk of criminals and terrorists using cash to 
avoid increasingly stringent AML/CFT rules in the financial sector.19 

6.1.1.  Statistics on cash declarations and cash controls 

The voluntary statistics provided by the Member States to the Commission show that more than 120 
000  voluntarily  declared  cash  declarations  by  natural  persons  are  recorded  at  the  EU  borders  by 
customs  every  year,  totalling  around  60-70  billion  EUR    in  cash  annually.  Customs  also  report cash 
results on around 10 000 random and targeted customs controls per year. 

The diagrams  below  show  the accumulated statistics on cash declarations  and recordings  from July 
2007 (Q3 2007) to December 2014 (Q4 2014).  

17 Graph from the Europol 'Why is cash still King', report, o.c., p. 14,  based on ECB statistical data available at: 

https://www.ecb.europa.eu/stats/money/euro/circulation/html/index.en.html 

18  Idem  World  Payments  Report  2013.  Trend  confirmed  in  ECB  statistics  on  euro  banknotes  and  coins  in  circulation: 

http://www.ecb.europa.eu/stats/euro/circulation/html/index.en.html. 

19  Cf.  'Why  is  cash  still  King?',  Europol  report  of  08  July  2015:    https://www.europol.europa.eu/content/cash-

still-king-criminals-prefer-cash-money-laundering 

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Diagram 1 – Number of cash declarations from Q3 2007 to Q4 201420 

Diagram 2 – Number of recordings21  from Q3 2007 to Q4 2014  

20 Unless explicitly mentioned otherwise, all diagrams shown are based on anonymous statistical declaration data 

delivered quarterly to the Commission by Member States, then further analysed. 

21  A  'recording'  is  a  declaration  which  was  registered  when  the  obligation  to  declare  was  not  fulfilled,  either 
following  a  customs  control  which  detected  non-declared  cash  or  if  a  control  showed  that  the  declaration 
made was incomplete or incorrect (e.g. wrong amount) 

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Diagram 3 – Value of cash declarations in EUR from Q3 2007 to Q4 2014 

Diagram 4 – Value of recordings in EUR from Q3 2007 to Q4 2014 

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While the data in the diagrams needs to be interpreted with caution22, and it must be kept in mind that 
the data for 2007 cover only Q3 and Q4 for all diagrams shown, diagram 1 shows a sustained, high 
level  of  cash  declarations  over  the  years.    Diagram 2  shows  a  significant  increase  in  the  number  of 
recordings at the EU border in recent years, while diagrams 3 & 4 illustrate a less marked increase in 
the amounts of cash declared or recorded in the same period.  

It is difficult to pinpoint the exact combination of reasons behind these trends based on the available 
data.  Possible  factors  include  higher  numbers  of  travellers  in  general,  more  frequent  controls  by 
customs authorities, cash being used as an alternative means of payment due to increased regulation 
in the financial sector etc.  

Relevance / Effectiveness of cash controls as a tool to prevent money laundering and terrorism 
financing  
It is often difficult to link a conviction for money laundering or terrorist financing to a customs control on 
cash, due to lack of feedback from law enforcement agencies and/or FIUs to customs authorities that 
provided  the  information,  as  well  as  the  fact  that  cash  controls  frequently  form  only  part  of  the 
evidence in a particular case. 

In response to the Commission's 2014 Questionnaire, only 8 Member States provided examples (not 
complete  statistics)  on  investigations/convictions  that  can  be  attributed  to  the  implementation  of  the 
Cash Control Regulation between 2011 and 2013: 

  Austria – 36 convictions (type of offence not specified); 

  Bulgaria – 72 convictions for money laundering; 

  Estonia – 58 convictions for money laundering 

  France  –  176  judicial  enquiries  for  money  laundering  (69  related  to  narcotics),  out  of  which 
customs  authorities  can  confirm  11  convictions  (results  of  most  investigations  unknown  or 
investigations still on-going); 

  Germany – 6 convictions for money laundering and 2 for other illegal activities; 

  Greece – 3 pending court cases on money laundering charges; 

  Lithuania – 17 convictions for other illegal activities; 

22 Illustrative for the caution required while interpreting the data is e.g. one single detection for a value of 1.1 

billion EUR which accounts for the spike in value of recordings shown in diagram 4 for 2008 

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  Malta – 11 convictions (type of offence not specified); 

  The Netherlands – 105 cases (2013) of money laundering prosecutions. 

Other  Member  States  either  do  not  have  available  statistics,  have  not 
investigations/convictions or have not provided an answer. 

recorded  any 

At the meeting of the EU FIU Platform (an expert group set up by the Commission to bring together 
Member States' FIUs and help them coordinate with each other) in Brussels on 18 November 2014, 
DG  TAXUD  asked  the  FIUs  to  provide  information  on  how  they  use  the  information  on  cash 
declarations/controls made available to them by the customs authorities of their Member State. 

14 FIUs provided their responses by email (without differentiating between the cash controls at internal 
and external EU borders): 

  6  FIUs  emphasised  the  significant  value  of  cash  control  data  in  money  laundering/terrorist 

financing investigations,  

  1  FIU  (Sweden)  reported  that  cash  control  data  generally  does  not  lead  to  significant  results  in 

relation to AML/CFT investigations; 

  4 FIUs described the procedures relating to receiving and processing the cash control data; 

  3 FIU provided additional statistics on the use of cash control data: 

o  Hungary  –  received  55  cash  declarations  in  2014  based  on  suspicion  of  money 

laundering, 

o  Latvia  –  sent  8  cash  declarations  in  2011  and  3  cash  declarations  in  2014  to  national 

police authorities for further investigation, 

o  The  Netherlands  -  256  criminal  investigations  were  initiated  in  2014  as  a  result  of 

suspicious cash declarations or absence of cash declarations; 

  3 FIUs provided examples of investigations resulting from cash controls. 

These  examples,  in  addition  to  those  obtained  from  the  customs  authorities  of  Member  States  in 
response  to  Commission's  2014  Questionnaire,  complement  the  limited  statistical  information 
presented  above  and  demonstrate  further  the  usefulness  of  information  obtained  through  cash 
controls for subsequent investigations.  

A  selection  of  relevant  examples  is  presented  below,  including  results  of  controls  at  EU's  internal 
borders as they also illustrate the value of cash controls for reaching AML/CFT objectives.  

Example 1 – Terrorist financing investigation (Belgium) 

Over a period of three consecutive days, three different individuals declared a total amount of 90 000 
EUR in cash to customs officials at the airport in Zaventem. The funds were said to originate from a 
non-profit  organisation  (NPO)  in  Germany  as  part  of  humanitarian  aid  for  Burundi,  Benin  and 
Zimbabwe. All three couriers were Belgian nationals and had been living in Belgium for a long time. 

All three individuals had bank accounts to which money was transferred from a Belgian coordinating 
body of a radical Islamic organisation. Over a period of one year, a total amount of nearly 20 000 EUR 
had been withdrawn in cash. Around 10 000 EUR was transferred to Turkey. 

According to the German FIU, the NPO was one of the largest Islamic organisations in Germany and 
was said to be linked with an organisation that had been banned in Germany for allegedly supporting 
a  terrorist  group.  All  board  members  of  this  organisation  also  played  a  major  role  in  the  NPO. 
Information from the Belgian intelligence services indicated that all three individuals were known to be 
involved in local branches of a radical Islamic organisation.  

Given the conflicts in the African countries for which the cash was intended, the potential links with a 
banned organisation and its links with a terrorist group, it was deemed probable that at least part of 
these funds would have been used to support terrorist activities, and that the individuals involved had 
been used as cash couriers to provide financial support for terrorist activities. 

Example 2 – Money laundering investigation (Slovenia) 

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Evaluation of the Cash Control Regulation 

Slovenian customs performed a routine control of a person leaving Slovenia to Croatia (before joining 
EU)  in  a  car.  Passenger  raised  suspicion  since  he  was  a  Serbian  national  traveling  alone,  in 
possession of a Portuguese passport and driving a car owned by third person with Italian registration 
plates.  

During the control, Customs discovered a bag on the rear seat, which included 400  banknotes of 20 
EUR, more than 400 banknotes of 100 EUR and more than 8 000 banknotes of 50 EUR, totalling more 
than 500 000 EUR.  

The passenger claimed that the money related to the proceeds of his second-hand car sales business 
in Portugal. Since the passenger had not made a declaration and the origin of cash was considered 
suspicious, the cash was seized and a suspicious transaction report (STR) was sent to the Slovenian 
FIU. 

The  FIU  notified  the  Police  and  the  Public  Prosecutor  of  the  suspicion  of  money  laundering  derived 
from drug trafficking (relatively small denominations are red flags for cash derived from street sales of 
drugs). The FIU then proceeded  to collect more information on the origin of cash from Portugal and 
Italy,  and  although  neither  drug  trafficking  nor  money  laundering could  be  proven,  the  cash  was  not 
returned as insufficient information was provided regarding the car-sales business in Portugal.  

After some time, the FIU was notified that the person was in an Italian prison following a conviction on 
drug trafficking. As a result, the outcome of the criminal procedure in Slovenia is uncertain. However, 
the customs authorities have seized the entire consignment of undeclared cash according to national 
regulation.  

6.1.2.  Usefulness of cash controls in the fight against tax fraud/evasion 

It  should  be  noted  that  cash  controls  have  also  led  to  findings  of  art-robbery,  corruption,  arms 
smuggling, cyber-crime and tax fraud. 

In particular, based on discussions at recent CCCG meetings as well as the answers provided by the 
Member  States  to  a  number  of  recent  questionnaires,  identified  instances  of  cash  smuggling 
(transporting  cash  across  EU  borders  while  intentionally  not  declaring  or  incorrectly  declaring  the 
relevant amount) are often linked to tax evasion or tax fraud.  

In March 2014, FATF launched a study on Money Laundering through the Physical Transportation of 
Cash. All Member States, as members of the FATF or its regional body, the Committee of Experts on 
the  Evaluation  of  Anti-Money  Laundering  Measures  and  the  Financing  of  Terrorism  (MONEYVAL) 
were asked to respond to the questionnaire.  

While  the  analysis  of  all  the  responses  to  the  questionnaire  is  still  on-going  at  the  FATF  level,  26 
Member  States  have  made  available  their  responses  to  the  Commission  for  the  purpose  of  this 
evaluation. In response to the question on the offences with which smuggled cash at their borders is 
associated  with,  13  Member  States  listed  tax  fraud/evasion,  making  it  the  most  frequent  response 
followed by other types of fraud, drugs trafficking, human and arms trafficking etc.  

Since  the decision  by  banks  in  Switzerland23,  Luxembourg,  Liechtenstein  and  Monaco  to  loosen  the 
rules of secrecy governing accounts held by foreigners, the number of instances of undeclared cash 
associated  with  tax  related  offences  being  discovered  through  cash  controls  has  increased  even 
further.  Individuals  who  had  previously  not  declared  accounts  held  in  these  countries  to  the  tax 

23 In a 2014 report, PriceWaterhouseCoopers estimated total asset outflows from Swiss banks since the start of 
'adverse' publicity regarding banking secrecy to be 350 billion USD, 250 billion of which are estimated to be 
'final' repatriations.  While the importance of cash in these asset outflows is undetermined it is reasonable  to 
assume    that  individuals  who  wish  to  avoid  detection  by  authorities  in  their  home  countries  will  tend  to 
avoid 
report  can  be  consulted  at:  
https://www.pwc.ch/user_content/editor/files/publ_bank/pwc_private_banking_switzerland_from_yesterday
_to_the_day_after_tomorrow.pdf 

formal  banking  system. 

transfers  via 

  The 

full 

the 

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Evaluation of the Cash Control Regulation 

authorities in their country of residence now faced the risk of the financial institutions disclosing these 
accounts  on  their  behalf.  Many  therefore  resorted  to  withdrawing  their  money  in  cash  and  moving  it 
elsewhere. 24 

In their response to the Commission's 2014 Questionnaire, 18 Member States provided information on 
the exchange of information between their national customs and tax authorities: 

  10  Member  States  reported  exchanging  all  cash  control  data  between  national  customs  and  tax 

authorities; 

  3 Member States reported exchanging only cash control data linked to potential tax evasion/fraud 

offences between national customs and tax authorities;  

  5 Member  States reported that their customs  authorities do  not exchange any cash control data 

with national tax authorities; 

Furthermore,  11  out  of  18  Member  States  supported  the  proposal  to  add  a  provision  in  the  Cash 
Control Regulation that would explicitly allow the recording, processing and exchanging of cash control 
information  for  the  purpose  of  fighting  tax  fraud/evasion.  2  Member  States  encouraged  further  legal 
analysis  but  offered  a  positive  view  of  the  proposal,  while  5  Member  States  did  not  support  the 
addition of such a provision as they consider that sufficient legal basis already exists.  

The proposal has also been supported by the majority of Member States' tax experts, who recognised 
the usefulness of information available on cash declarations and obtained through cash controls.    

Article 9 of the Council Directive 2011/16/EU of 15 February 2011 on administrative cooperation in the 
field  of  taxation  (Tax  Directive)  provides  the  legal  basis  for  spontaneous  exchange  of  cash  control 
information  between  tax  authorities  of  different  Member  States  (customs  can  also  designate  liaison 
departments or competent officials for this purpose) that is foreseeably relevant to the administration 
and enforcement of the domestic laws of the Member States concerning taxes (VAT, customs duties 
and excise duties being excluded).   

However,  only  the  Netherlands  and  Lithuania  referred  to  using  the  Tax  Directive  as  the  appropriate 
legal base for the exchange of cash control information with the tax authorities of other Member States 
in their responses to the 2014 Questionnaire. Considering the evident and significant differences in the 
level and legal/administrative set-up of the exchange of cash control information between customs and 
tax authorities at national and EU level, the Commission asked the Member States for more detailed 
information in relation to their national legislative frameworks and internal procedures.  

In  January  2015,  a  questionnaire  addressed  to  both  cash  control  and  tax  experts  requesting  joint 
answers, was sent to Member States. Replies from all Member States have been received and some 
of the relevant findings can be summarised as follows: 

 

In 15 Member States customs and tax authorities are part of the of the same administration; 

  20 Member States have a national legal basis for the provision of information on cash movements 
by the customs authorities to national tax authorities, with 17 making use of this legal basis and 13 
positively evaluating the exchange process; 

  Out  of  the  8 Member  States  that  do  not  have such a  legal  basis,  6  noted  that  the Cash Control 
Regulation should explicitly provide a legal basis for the exchange of cash control information for 
tax purposes (including at national level); 

24 http://www.newsweek.com/2014/09/26/why-europes-super-rich-are-resorting-smuggling-cash-271540.html 

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  5 Member States have a national legal basis for the provision of cash control information by the 
customs authorities to the tax authorities of other Member States, with 3 doing being able to do so 
directly and 2 indirectly via national tax authorities; 

  Out  of  the  23  Member  states  that  do  not  have  such  a  legal  basis,  14  consider  that  the  Tax 
Directive provides a sufficient legal basis for the exchange of cash control information with the tax 
authorities  of  other  Member  States (even  though  only  a  few  customs authorities  report  using  it), 
while 8 consider that the current EU legislative framework does not allow such exchange;  

  26 Member States consider that exchange of cash control information for tax purposes is justified 
and necessary for the following reasons: fighting tax fraud/evasion (22), enhancing tax compliance 
(5), recovering tax debts (6), use in risk analysis as evidence of wealth (2), prevention of money 
laundering (2); 

  Several Member States provided figures illustrating the usefulness of cash control information for 

initiating or supporting tax investigations: 

o  Greece  reported  78  cash  control  cases  submitted  for  further  tax  investigation  (with  tax 

discrepancies found in 28 cases 19 ongoing investigations) just in 2013; 

o  Portugal  confirmed  the  usefulness  of  cash  control  information  for  the  detection  of  tax 

debtors and commencing recovery proceedings; 

o 

In  the  Netherlands,  the  extra  collected  tax  on  the  basis  of  exchanged  cash  control 
information amounted to 1 100 000 EUR in 2014; 

  On the other hand, the usefulness of cash control information has so far not been noted to such 

an extent in Hungary, or is recognized specifically in the context of VAT fraud in Austria. 

6.1.3.  Cross-border cash movements in post and freight 

In 2013, the FATF Interpretative Note on Recommendation 32 on cash couriers made clear that the 
obligation  to  establish  a  control  system  on  cash  should  cover  cash  moved  through  all  modes  of 
transport, including post and freight. 

However,  the  Cash  Control  Regulation  applies  only  to  natural  persons  (including  professional  cash 
couriers25) carrying cash across the EU  external borders. Cash movements through  post and  freight 
(i.e. not accompanied by a natural person) are not included. 

The Community Customs Code and/or national legislation generally apply for the movements of cash 
in post and freight at the Member States' borders. This means that, in most Member States, cash has 
to be declared on a customs declaration form for a particular parcel, container etc.  

However, the information required on the customs declaration form is significantly less comprehensive 
than  the  data  required  on  the  EU-CDF  and  does  not  include  the  desired  level  of  detail  required  for 
AML/CTF purposes (e.g. owner of cash, provenance and intended use of cash).  

Although  customs  authorities  have  the  competence  to  carry  out  further  controls  on  cash  discovered 
during  regular  controls  on  goods  based  on  the  Community  Customs  Code,  there  are  no  specifically 
designed  provisions  in  the  Community  Customs  Code  for  controls  on  cash,  neither  for  a  systematic 
exchange  of  information  on  cash  with  the  national  FIU  in  order  to  prevent  money  laundering  and 
terrorist financing.  

25  Meant are natural persons carrying or physically  accompanying cash  consignments on behalf  of 

third parties in a remunerated capacity, not postal services, shipping companies etc. 

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As  cash  is  generally  treated  in  accordance  with  customs  procedures  for  any  other  good,  it  is  also 
difficult  for  Member  States  to  impose  effective,  proportionate  and  dissuasive  penalties  to  prevent 
money laundering and terrorist financing. 

On the other hand, operational work by the Member States and information gathering and analysis by 
the Commission have resulted in a number of reports on findings of bulk cash in post and freight: 

  Project Pecunia (the Netherlands) - cash flows in air cargo (Oct 2009 – Mar 2010) 

o  Total value of cash declared in the control period amounted to approximately 1,85 billion 

EUR, with a significant amount relating to cash transfers between banks; 

o  No  undeclared  cash  was  discovered  but  many  consignments  raised  suspicions  (e.g. 
unknown 

shoddy 
recipient/sender/owner, strange combination of currencies etc.); 

banknotes, 

banknotes, 

packaging, 

EUR 

new 

500 

  Operation Bingo (France) - cash movements in post and freight (Nov-Dec 2014) 

o  Monitoring and information gathering operation at Charles de Gaulle Airport (freight area) 

with the same goals as Project Pecunia; 

o  90  detections  of  transported  means  of  payment  (9  million  EUR  in  value)  were  made, 

predominantly in express freight; 

o  No undeclared means of payment were discovered but a detection linked to tax evasion 

and counterfeit notes (20 000 EUR) linked to drug trafficking were found;  

o  The lack of national and EU (Cash Control Regulation) legal basis prevented the French 

customs to make further inquiries regarding detections.  

  FATF Questionnaire on Money Laundering through Physical Transportation of Cash (2014)  

o  A significant number of Member States indicated finding suspicious consignments of cash 

sent in parcel or freight; 

  Commission Questionnaire as part of the Report of the Project Group "To support the Commission 

in preparing the assessment report to the Council" (2011): 

o  Overall large variation in the extent to which sending cash in post or freight consignments 

was authorised and which restrictions apply.; 

o  Variation  in  national  legal  implementation  of  UPC  for  sending  cash  leads  to  divergent 

approach 

o  2014 follow-up confirmed findings and issues 

o  Some  (limited  in  number)  cases  of  cash  smuggling  in  post  or  freight  were  reported  by 

Member States 

It should also be noted that, while Germany has reported separate instances of cash being discovered 
in  post  and  freight,  it  did  not  detect  any  cash  when  conducting  Operation  Pylon,  a  3-day  operation 
focusing on express cargo at two relevant airport cargo hubs - Cologne-Bonn and Leipzig-Halle.  

Although 11 000 parcels and document shipments were selected by customs and controlled, mostly by 
using  mobile  scanning  units  and  cash  dogs  (5%  were  also  opened  and  inspected  physically),  no 
detections were made. 

The  above  demonstrates  that  although  there  are  indications  of  substantial  amounts  of  cash  in  post 
and freight being moved across borders, authorities experience difficulties in getting a full grasp on the 
issue, notably due to divergent legal provisions and a lack of clarity on the formalities to be complied 
with.      Without  a  specific  control  system  on  cash  moved  by  post  and  freight  across  EU  external 
borders, the likelihood of regularly finding cash moved in this manner, reporting it to the national FIU 
and  dealing  with  it  effectively  to  prevent  money  laundering  and  terrorist  financing  is  significantly 
diminished. 

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Evaluation of the Cash Control Regulation 

In this context it is  relevant to add  that  after the adoption of the Cash Control Regulation, the FATF 
issued an interpretative note to its Special Recommendation IX26 on cash couriers, clarifying that the 
Special Recommendation applies to any cross-border movement, not only to cash carried by natural 
persons. 

6.1.4.  Conclusion   

The EU AML/CFT framework certainly benefits from a control system on cash movements at the EU 
external  border.  As  the  regulatory  framework  in  the  financial  sector  has  become  more  stringent,  the 
controls  of  cross-border  cash  movements  play  an  even  more  important  role  in  limiting  the  extent  to 
which cash is used by criminals as an alternative means of payment enabling them to stay outside the 
scope of the financial sector's regulatory framework. 

The  regular  statistics  on  cash  declarations  and  recordings  provided  by  the  Member  States  indicate 
that large amounts of cash continue to be moved by natural persons across the EU external borders, 
and that cash controls on natural persons are needed to ensure that these cash movements are not 
related to criminal or terrorist activities.  

Although  limited,  statistical  data  and  case  descriptions  provided  by  Member  States  in  relation  to 
investigations and court judgements on money laundering and terrorist financing cases resulting from 
or using cash controls information demonstrate the relevance of the EU system of cash controls and 
the contribution of the Cash Control Regulation towards the achievement of EU's AML/CFT objectives. 

In addition, cash controls have proven to be very useful in the fight against tax fraud and evasion in 
some  Member  State  even  though  the  Cash  Control  Regulation  does  not  explicitly  provide  that  cash 
control information may be processed and exchanged for tax related purposes.   

However, although based on a small number of targeting operations and random controls, findings of 
large amounts of cash being moved across the EU external border by post and freight emphasise a 
weakness of the Cash Control Regulation in relation to its main objective.  

As  its  provisions  do  not  impose  an  obligation  to  declare,  nor  designate  powers  to  control  the 
movements of cash amounts of 10 000 EUR or more by post or freight, and since only a few Member 
States have such national legislation, the Cash Control Regulation does not address the risk of money 
laundering or terrorist financing cash being moved across EU borders in post and freight. Thus it can 
be concluded that the Regulation is still of high relevance in the current environment,  but the existing 
scope does not fully cover all the risks for preventing money laundering and terrorism financing.   

6.2. 

To  what  extent  do  the  current  legal  provisions  of  the  Cash  Control  Regulation 
to  prevent  money 
guarantee  proper 
laundering/terrorist financing? 

cash  movements 

control  of 

In order to judge the effectiveness of the current legal provisions of the cash controls regulation, firstly 
the  definition  of  cash  and  its  ease  of  implementation  along  with  remarks  made  by  Member  States 
regarding problems will be touched upon, secondly the declarative process is investigated along with 
statistics regarding implementation results in various Member States.  

It should be borne in mind that the statistics and results which were already mentioned under point 7.1 
where  the relevance  of  the  cash  control  regulation was  analysed  also should  be  considered  but  are 
not duplicated under this section for reasons of brevity and in order to avoid useless duplication. 

Thirdly,  the  implementation  in  the  Member  States  will  be  considered  along  with  the  question  of 
whether  competent  authorities  dispose  of  sufficient  powers  to  adequately  implement  the  legal 
provisions along with the powers of those authorities to use and transfer the declarative and infraction 
data collected. 

26 Subsequently renumbered, presently Recommendation 32. 

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Evaluation of the Cash Control Regulation 

Lastly, attention will be paid to the raising of public awareness regarding the obligation to declare and 
to the penalties imposed for non declaration as both elements have significant bearing on the overall 
effectiveness.  In order for a legal provision to be respected, it should firstly be known, secondly, non-
respect should be discouraged through appropriate penalties. 

6.2.1.  Definition of cash  

The  Cash  Control  Regulation  clearly  defines  the  payment  instruments  considered  to  be  cash  and 
thereby  provides  clarity  and  consistency  with  regards  to  the  subject  of  controls  and  assists  in  the 
selection of control methods (e.g. dogs trained to sniff banknotes). 

A  few  Member  States  have  in  recent  years  voiced  an  opinion  that  the  definition  of  cash  should  be 
expanded to include additional payment instruments such as gold and other precious metals (as well 
as e-money, casino chips etc.). 

However,  upon  joint  analysis  by  the  Commission  and  Member  States  of  the  advantages  and 
disadvantages of including gold and other precious goods under the definition of cash in 2011, it was 
concluded  that,  as  the  existing definition  follows  that  used by  the  FATF  and  the  majority  of  Member 
States  did  not  support  expanding  it,  the  definition  of  cash  as  per  the  Cash  Control  Regulation  – 
currency and bearer-negotiable instruments, should not be amended.  

The following disadvantages of expanding the current definition of cash were identified as part of the 
analysis: 

 

It  is  difficult  to  draw  a  line  on  where  to  stop  when  considering  the  widening  of  the  definition  as 
there will always be new instruments that could require inclusion; the minority of Member States in 
favour  of  widening  the  definition  have  different  viewpoints  on  what  should  be  covered  (gold  and 
precious metals, stones, stored value cards etc.). 

  There  is  at  present  no  tendency  at  international  level  to  widen  the  scope  of  the  cash  definition; 
widening the definition at the Commission's own initiative would create a divergent approach from 
FATF and its members on AML/CFT; 

  The  implementation  of  a  wider  definition  would  entail  extra  staff  and  administrative  costs  for  the 

customs authorities. 

6.2.2.  Obligation to declare 

Although  the  statistics  on  cash  declarations/recordings  in  Member  States  should  be  interpreted 
cautiously and there are indications of diversity in the level of controls in Member States, the obligation 
for natural persons to declare cash amounts of 10 000 EUR as well as the examples of cash control 
results,  contribute  to  the  development  and  application  of  consistent  and  effective  controls  of  cash 
moved by travellers across the EU external border. 

Raising awareness  

Communication  actions by  the  Commission  and  the Member  States  have significantly  contributed  to 
the awareness by travellers of the obligation to declare cash (the 2011 information campaign reached 
60% of target audience and markedly increased the number of voluntary declarations). 

However, only 4 Member States report monitoring the results of the communication campaigns and no 
Member States use monitoring tools to measure the efficiency or effectiveness of the campaigns. 

Some  Member  States  also  see  the  need  for  including  an  obligation  to  raise  awareness  on  cash 
controls  in  the  Cash  Control  Regulation,  as  this  would  ease  contacts  with  relevant  authorities  (e.g. 
airports) to display the awareness raising material. 

Place to declare 

Some Member States report that practical problems continue in relation to accepting cash declarations 
and  performing  cash  controls  in  airport  transit  areas,  despite  the  guidance  provided  by  the 

105 

 
Evaluation of the Cash Control Regulation 

Commission  so  far,  and  consider  that  an  amendment  to  the  Cash  Control  Regulation  would  be 
necessary to improve the current situation.  

Methods to declare 

As part of the Commission's 2014 Questionnaire, Member States' feedback was requested on the use 
of the EU-CDF since its introduction:  

  The 

feedback 

the  questionnaire  was 
overwhelmingly positive, both with regards to the practicality of use for the competent authorities 
and the simplification and consistency offered to travellers; 

the  24  Member  States 

that  responded 

from 

to 

  The sole criticism related to minor practical issues, such as the size of boxes to be filled in and the 

clarity of explanations on the form; 

  A few Member States suggested that the  format of the EU-CDF should  be included in the Cash 

Control Regulation, making it obligatory and ensuring consistent use in the EU. 

Statistics on declarations/recordings 

Although the statistics show that all Member States apply the Cash Control Regulation at their external 
EU borders, there are also significant differences in the numbers of declarations accepted and controls 
performed between Member States27.   

Diagram 5 – Total number declarations (Q3 2007 – Q4 2014) by Member State 

Diagram 6 - Total number of recordings (Q3 2007 – Q4 2014) by Member State 

27 It should be noted that Croatia joined the EU in July 2013 and its total statistics are not comparable with other Member 

States, who have been providing statistics since July 2007. 

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Diagram 7 – Ratio of total number recordings per declarations (Q3 2007 – Q4 2014) by Member State 

Diagram 8 – Total EUR amount of declarations (Q3 2007 – Q4 2014) by Member State 

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Evaluation of the Cash Control Regulation 

Remark for diagram 8:  Data for Germany truncated to maintain legibility.  The total for DE was > 300 
billion EUR. 

Diagram 9 - Total EUR amount of recordings (Q3 2007 – Q4 2014) by Member State 

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Evaluation of the Cash Control Regulation 

6.2.3.  Designation of powers to competent authorities 

Based  on  available  data  and  Member  States  opinions,  the  Cash  Control  Regulation  designates 
adequate  powers  to  customs  officers  to  perform  proper  control  of  cash  movements  at  the  external 
borders of the EU. 

However, as shown by diagrams 6 and 9 above, the majority of the total recordings are accounted for 
by  a  handful  of  Member  States.  While  some  of  the  differences  may  be  accounted  for  by  national 
circumstances  (levels  of  cross-border  trade,  existence  of  external  land  borders,  number  of 
ports/airports,  levels  of  passenger  traffic  etc.),  the  figures  clearly  indicate  significant  differences 
between Member States with regards to the implementation of cash controls at EU external borders.  

A lack of closer monitoring by Commission services does not allow for regular detection and follow-up 
of particular differences in control approaches between Member States, which would in turn allow for 
adjustments to ensure uniform implementation of the control approaches considered as optimal.    

6.2.4.  Processing and recording of information 

The requirement to record, process and make available cash control data to national FIUs is met by 
Member  States,  even  though  the  relevant  procedures  vary  based  on  national  legislation  and 
administrative set-up in each Member States.  

The  information  on  cash  controls  obtained  by  national  FIUs  results  in  a  significant  number  of 
investigations coordinated by the FIUs, as well as in court convictions on money laundering and other 
criminal  activities,  as  demonstrated  by  the  statistical  information  and  examples  presented  in  section 
6.1.2. 

As  the  Cash  Control  Regulation  does  not  explicitly  provide  for  cash  information  to  be  recorded, 
processed  and  exchanged  for  the  purpose  of  fighting  tax  fraud  and  evasion,  only  the  customs 
authorities of some Member States exchange such information with the national tax authorities or tax 
authorities of another Member State.  

6.2.5.  Exchange of information  

Article 6 of the Cash Control Regulation contributes to proper control of cash movements by allowing 
exchange of cash control information for the purpose of money laundering, terrorist financing or other 
criminal investigations. 

However, it also hinders better targeting of cash controls by not allowing for the exchange of regular 
cash declaration data between Member States that would enable global data analysis to detect new 
trends.  This  conclusion  is  in  line  with  some  of  the  objectives  of  the  Commission  Communication  on 
Customs  Risk  Management28,  calling  for  a  comprehensive  analysis  of  the  data  necessary  for  the 
different  authorities  involved  in  risk  analysis  (customs,  investigation  and  prosecution)  and  the 
respective roles of these authorities both at national and EU (28 MS) level. 

Article  7  of  the  Cash  Control  Regulation  also  contributes  to  proper  control  of  cash  movements  by 
allowing  exchange  of  cash  control  information  with  third  countries  under  certain  conditions  (e.g. 
meeting  data  protection  requirements).  Such  exchange  is  generally  based  on  bilateral  agreements 
between Member States and third countries. 

28http://ec.europa.eu/taxation_customs/resources/documents/customs/customs_controls/risk_management/customs_eu/com_2

012_793_en.pdf 

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Evaluation of the Cash Control Regulation 

A  limited  number  of  examples  where  information  exchange  of  cash  controls  has  led  to  or  assisted 
money laundering or  terrorist financing  investigations have been provided by Member  States. These 
include: 

Example 1 

Around  1  million  EUR  was  seized  at  Brussels  National  Airport  after  Belgian  Customs  received  a  tip 
from French Customs on two passengers leaving for Lebanon.  

The control on the passengers was performed together with the Belgian police, during which 980 000 
EUR of undeclared cash was found in checked-in luggage. The Police also controlled the passengers 
just before boarding the plane and found 19 700 EUR of undeclared cash in their hand luggage. The 
case was further investigated by the Belgian Police. 

Example 2 

A  joint  investigation  of  police  and  customs  authorities  in  Berlin  led  to  the  discovery  of  89  000  USD 
which were forwarded from the United States (US) to Germany by post.  

Perpetrators, which were unknown at the time, had sent 5 postal packages containing electric devices 
to various beneficiaries in Berlin. Cash in the form of 100 USD banknotes was hidden in the electrical 
devices.  

After an exchange of information with the US authorities, it was possible to link the cash to a group of 
criminals  which  had  acquired  more  than  4  million  USD  through  criminal  activities,  mainly  fraud  and 
cybercrime. 

However, no Member States report using the provisions of the Cash Control Regulation to exchange 
cash control data with other Member States or third countries for tax purposes, although tax fraud and 
evasion fall under the definition of illegal activity and tax fraud is recognised as a predicate offence for 
money laundering. 

Considering the potential contribution information exchange  can make to money laundering, terrorist 
financing and even tax fraud/evasion investigations, as well as risk analysis and targeting of controls 
by customs authorities, the current legal framework and procedures don't encourage the utilisation of 
the full potential of information exchange on cash controls between Member States.   

6.2.6.  Penalties 

Penalties imposed by the Member States contribute to proper control of cash movements by signalling 
to  natural  persons  the  disadvantages  of  failing  to  meet  the  declaration  obligation  and  reducing  the 
reward/risk ratio of failing to declare.  

However,  significant  differences29  in  types  and  levels  of  penalties,  visible  in  Member  States'  yearly 
statistics,  may  potentially  reduce  their  effectiveness  at  EU  level  and  lead  to  unequal  treatment  of 
citizens.  In  addition,  these  differences  may  increase  the  risk  of  "customs  shopping"  whereby  cash 
smugglers choose to cross the EU border where the penalties are the lowest30.  

Several Member States are currently involved in judicial proceedings following legal actions brought by 
natural persons over the level of penalties imposed. In addition, a number of Member States have so 
far  received  comments  as  part  of  FATF's  mutual  evaluations  that  their  penalties  were  not  effective, 
proportionate or dissuasive. 

29 Cf. table listing comparative differences in penalties applied by Member States, p. 29. 

30 Other drivers related to the Cash Control Regulation may be the perceived differential in control probability 

between Member States, rather than the consequences of a control if this takes place. 

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6.2.7.  Conclusion 

One of the Union's tasks is the promotion of  harmonious, balanced and sustainable development of 
economic  activities  throughout  the  Union    by  establishing  a  common  market  and  an  economic  and 
monetary union. To that end the internal market comprises an area without internal frontiers in which 
the  free  movement  of  goods,  persons, services  and  capital  is  ensured.  Disparities  in  legislation  are 
detrimental  to  the  proper  functioning  of  the  internal  market  and  the  equal  treatment  of  citizens.  The 
basic elements should therefore be harmonised at EU level to ensure an equivalent level of control on 
movements  of  cash  crossing  the  borders  of  the  EU.    This  is  without  prejudice  to  Member  States' 
competence  to  provide  for  intra-community  controls  on  cash,  provided  these  are  in  accordance  with 
the provisions of Art. 63, TFEU. 

Overall, the provisions of the Cash Control Regulation enable proper controls of cash movements by 
natural persons at EU external borders and remain relevant for the fight against money laundering and 
terrorist financing.  
However, it is clear that the controls are not implemented by the Member States in a fully uniform way.  

In addition, significant improvements in relation to using  the exchange of cash control information to 
improve  the  effectiveness  of  cash  controls  and  contribute  even  more  to  money  laundering,  terrorist 
financing and tax fraud/evasion investigations can be made based on a comprehensive analysis of the 
data  necessary  for  the  different  authorities  involved  (customs,  investigation,  prosecution)  and  their 
respective roles both at national and EU level. 

Finally,  the  fact  that  penalties  imposed  for  a  failure  to  declare  differ  significantly  between  Member 
States  may  result  in  inconsistent  communication  to  EU  citizens  on  the  matter.    Depending  on  the 
itinerary one chooses to take, exiting or entering the EU via one Member State rather than another can 
have  radically  different  consequences  in  terms  of  the  penalty  which  is  applied  in  case  of  non-
declaration.   While the severity of the penalty may not be the only driver, this situation may increase 
the risk of customs shopping and unequal treatment of EU citizens.  

6.3. 

Is the information collected in an easy and burden-free manner? To what extent is 
the  information  exchanged  timely  and  accurately,  with  the  national  FIU  and  with 
other Member States and third countries?  

As described in section 5.4, all Member States have set up systems and procedures to register and 
process cash control information. 

The  Commission  does  not  dispose  of  validated  quantitative  information  regarding  the  administrative 
burden associated with filing a cash controls declaration; however: 

  The  voluntary  use  in  most  Member  States  of  the  EU-CDF  presents  a  highly  harmonised 
interface which makes filling in the document easier in cases where persons regularly have to 
file declarations while entering or leaving through different Member States. 

  The level of detail and data elements which are collected from travellers pursuant to the Cash 
Controls  Regulation  are  in  line  with  what  is  specified  in  FATF  recommendation  32  and  its 
interpretative note.   

  The  form  and  information  collected  are  comparable  in  type  and  complexity  with  what  is 

collected in many third countries31. 

31 For comparison see FATF recommendation report , FinCen Form 105 which is used in the United States and 

can be compared with the EU-CDF in annex 2. 

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Evaluation of the Cash Control Regulation 

  On  the  occasion  of  meetings  with  national  experts,  the  EU-CDF  is  regularly  scrutinised  and 
discussion  takes  place  on  possible  modifications.    The  present  structure  of  the  form  is 
supported by a large majority of Member States. 

The exchange of information with national FIUs takes place in all Member States but the procedures 
differ according to the type of information (even though the Cash Control Regulation clearly specifies 
the  type  of  information  that  should  be  made  available),  as  well  as  timing  and  method  of  exchange, 
which are based on national legislation. 

The information received directly from FIUs, as presented in section 6.1.2, confirms that FIUs indeed 
receive or have access to cash control information for analysis and investigation purposes.  

While most Member States practice some type of information exchange with other Member States, the 
legal bases, methods and frequency differ significantly as shown in section 5.5. 

However,  it  should  also  be  noted  that  the  Member  States'  use  of  the  Commission's  existing 
information databases applicable to cash control information (RIF, CIS, FIDE) is considered less than 
satisfactory.  

Member States have provided very limited feedback regarding the reasons for not using the available 
databases to a larger extent. Some suggested that their national risk analysis centres do not input risk 
information  related  to  cash  controls  into  the  RIF  database  on  a  regular  basis.  One  Member  State 
referred to the limitations of the RIF database in relation to the possibility of uploading personal data, 
while  another  Member  State  considered  the  CIS  database  to  be  too  complex  and  not  sufficiently 
adapted for uploading cash control information.  

In  their  responses  to  the  2014  Questionnaire,  in  relation  to  the  exchange  of  information  with  other 
Member States:  

  5 Member States reported that they had satisfactory procedures for information exchange; 

  Other  Member  States  stated  the  need  for  a  specific  and  clear  legal  base  for  the  exchange  of 
information  (including  for  tax  purposes  and  cash  movements  by  post  and  freight)  and  better 
cooperation and uniform implementation among Member States; 

  Member States informed that the main hindrances to further formalisation of information exchange 
include data protection issues and a lack of legal base, with some Member States suggesting that 
the  Cash  Control  Regulation  should  be  amended  to  allow  the  exchange  of  regular  cash 
declaration information, including for the purpose of fighting tax fraud and evasion. 

As  part  of  the  2014  Questionnaire,  Member  States  also  provided  information  in  relation  to  the 
exchange of information with third countries: 

  6 Member States reported that they had satisfactory formal procedures for information exchange; 

  2  Member  States  informed  that  the  exchanges  of  cash  information  with  third  countries  are  the 

responsibility of the national FIU; 

  Other Member States  stated the need for bilateral agreements  and clear  legal base in the Cash 

Control Regulation, including in relation to cash movements in post and freight; 

  Member States informed that the main hindrances to further formalisation of information exchange 
include  differences  in  data  protection  rules,  exclusive  FIU  competence  and  need  for  bilateral 
agreements and better cooperation between Member States; 

  Out of the Member States which exchange information with third countries: 

o  5  were  satisfied  with  the  efficiency  and  effectiveness  of  their  procedures  for  information 

exchange with third countries; 

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Evaluation of the Cash Control Regulation 

o  Others reported that exchange took place only upon request, there was a small number of 
cases of information exchange, the exchanges were not registered and/or were made by 
FIUs which often did not provide feedback;  

  Member  States  which  do  not  exchange  information  with  third  countries  reported  the  following 
reasons:  no  legal  base,  no  requests  so  far,  personal  data  protection  issues,  exclusive  FIU 
competence; 

  6 Member States plan to exchange information with third countries in the future if there is an EU 

legal base and based on future bilateral agreements; 

No  Member  States  reported  issues  regarding  the  timeliness  and  correctness  of  exchanged  cash 
information. 

6.3.1.  Conclusion 

Overall, the evidence collected shows that basic cash control information is collected regularly without 
undue administrative burden. It is made available to the national FIU in a manner regulated by national 
legislation  and  exchanged  with  other  Member  States  and  third  countries  within  the  existing  legal 
framework  which  limits  the  exchange  of  all  cash  declaration  information  (e.g.  indication  of  illegal 
activity  or  usefulness  for  risk  analysis  has  to  be  established  before  exchange  with  another  Member 
State can take place).   

6.4. 

How extensive is the information collected under the Cash Control Regulation and 
how  useful  is  it  for  preventing  money  laundering/terrorist  financing  at  national 
level/EU  level?  To  what  extent  does  the  regulation  allow  customs  to  gather  all 
possible  information  to  assist  in  the  prevention  of  money  laundering/terrorist 
financing? 

The information collected under the Cash Control Regulation includes information provided on the EU-
CDF (outlined in section 5.2.3) and the results of cash controls. Member States may also request data 
from other Member States in order to obtain additional information relevant to their investigations. 

As  shown  in  previous  sections,  the  information  collected  by  customs  authorities  often  plays  an 
important role in investigations of money laundering or terrorist financing.  

The procedures in place for the recording and processing of data, as well the designated powers of 
competent officials to request additional information as a result of controls, ensure that extensive and 
accurate information is provided to other national authorities or other Member States.  

However, even though other legal bases in addition to the Cash Control Regulation are also used (e.g. 
Community  Customs  Code  for  the  exchange  of  risk  information),  there  is  no  legal  basis  to  freely 
exchange all regular (daily, non-suspicious and voluntary) cash control information between Member 
States. 

The  benefits  of  exchanging  regular  cash  declaration  information  between  Member  States  would 
include: 

  The  customs  authority  in  the  Member  State  where  the  cash  declaration  is  submitted  or  control 
performed would not have to make a judgement on the existence of a legal basis for spontaneous 
exchange with another Member State, removing the risk of potentially useful information not being 
exchanged; 

 

Investigations  of  money  laundering  and  terrorist  financing  operations  (which  are  mostly 
transnational in nature) would benefit from access to all cash control data collected across the EU, 
enabling easier tracking of relevant cash movements to/from the EU. This would include access to 
information on cash declarations that did not raise immediate suspicion at the time of submission 
(therefore  not  exchanged  with  other  Member  States  and  difficult  to  identify/obtain  under  the 
current provisions of Article 6 of the Cash Control Regulation), but become relevant at later stage 
(e.g. in order to determine the origin and point of entry of illicit cash discovered in the EU);  

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Evaluation of the Cash Control Regulation 

  Since  information  on  a  person's  previous  failures  to  meet  the  obligation  to  declare  or  to  prove 
legitimate  origin  of  cash  carried  when  crossing  external  EU  borders  elsewhere,  is  often  not 
available to the Member State whose external EU border this person subsequently crosses, free 
exchange  of/access  to  all  cash  controls  information  at  EU  level  would  make  it  easier  for  the 
customs authorities to identify such individuals and adjust their controls accordingly (e.g. search of 
luggage, request for additional proof of legitimacy etc.);  

  A  significant  increase  in  the  amount  of  cash  controls  data  available  to  customs  authorities  of 
Member States would benefit their data analysis and risk profiling efforts, enabling better targeting 
of  controls  based  on  data  on  routings,  cash  smuggling  methods,  successful  controls  in  other 
Member States etc. 

Due  to  the  fact  that  the  main  purpose  of  cash  controls  is  to  prevent  money  laundering  and  terrorist 
financing, the collaboration between customs, FIUs and other law enforcement authorities is of major 
importance. It is a necessary link to ensure the usefulness of cash control data in meeting AML/CFT 
efforts.  

Furthermore, in response to Commission's Tax Questionnaire, the customs and tax experts of a few 
Member States have jointly suggested that a requirement to provide the tax residence of the owner of 
cash should be added to the EU-CDF. 

This  would  ensure  that,  when  exchanged  for  tax  purposes  (information  foreseeably  relevant  to  the 
administration and enforcement of the tax domestic laws of Member States, including the fight against 
tax  fraud  and  tax  evasion),  cash  declaration  information  would  be  exchanged  with  tax  authorities  of 
the  correct  Member  States  (provided  the  information  is  correct,  which  should  be  verified  by  the 
relevant tax authority). 

6.4.1.  Conclusion 

The  cash  control  information  currently  collected  and  exchanged  by  customs  authorities,  both  with 
other  national  authorities  and  other  Member  States,  is  extensive  and  makes  a  valuable  contribution 
towards the fight against money laundering and terrorist financing.   

However,  availability  of  regular  cash  declaration  information  would  enable  that  better  decisions  are 
made by appropriate officials based on a more complete body of cash control information, resulting in 
better targeting and more effective cash controls at the EU external borders. 

6.5. 

To  what  extent  are  the  current  provisions  of  the  Cash  Control  Regulation  in  line 
with  the  latest  developments  in  the  EU  and  at  the  international  level  (FATF)  to 
prevent money laundering /terrorist financing?  

The Cash Control Regulation is an integral part of the EU's AML/CFT framework, complementing the 
controls  that  apply  to  the  transfers  of  capital  through  the  formal  financial  sector32through  the 
implementation of control measures on cash physically transported across external borders by natural 
persons  and implements FATF Recommendation 32 on cash couriers in the EU.  

following  provisions  of 

The 
Recommendation 32 and/or relevant FATF methodology: 

the  Cash  Control  Regulation  exactly  or  closely 

follow  FATF 

  Definition of cash; 

32  The  formal  sector  comprises,  inter  alia,  wire  transfers  performed  through  financial  institutions,  controls  on 
'high risk' professions which mainly take place through the implementation in national legislation of the EU' 
ant-money laundering directives (cf. supra). 

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  Obligation to declare for natural persons carrying cash of 10 000 EUR33 or more across external 

EU borders; 

  Designation of powers to competent authorities; 

  Recording and processing of cash control information; 

  Requirement  to  impose  effective,  proportionate  and  dissuasive  penalties  for  failures  to  meet  the 

obligation to declare; 

The  following  aspects/provisions  of  the  Cash  Control  Regulation  do  not  entirely  follow  FATF 
Recommendation 32 and/or relevant FATF methodology:  

  Exchange of information between Member States; 

o  FATF has recognised the EU a supranational authority, which means that there should exist 

free exchange of cash information within its territory;  

  Exchange of information with third countries; 

o  FATF encourages high levels of information exchange as a tool for fighting money laundering 

and terrorist financing; 

  Movements  of  cash  in  post  and  freight  should  be  regulated  as  per  the  FATF  Interpretative  to 

Recommendation 32; 

  Lack  of  approximation34  of  penalties  to  ensure  they  are  effective,  proportionate  and  dissuasive 

across the EU.  

6.5.1.  Conclusion 

The current provisions of the Regulation are mostly  in line with the latest international developments; 
However, in order for the Commission, as an FATF member, to fully comply with its Recommendation 
32 on cash couriers, which is also the global standard, it has to regulate movements of cash in post in 
freight  across  its  external  borders,  as  well  as  enable  free  exchange  of  cash  control  information 
between Member States.  

The latter is especially important considering the recognition of the EU as a supranational organisation 
for evaluation purposes by the FATF.  

7.  CONCLUSIONS 

Overall, the EU AML/CFT framework certainly benefits from a control system on cash movements at 
the  EU  external  border.  As  the  regulatory  framework  in  the  financial  sector  has  become  more 
stringent,  the  controls  of  cross-border  cash  movements  play  an  even  more  important  role  in  limiting 
the extent to which cash is used by criminals as an alternative means of payment enabling them stay 
outside the scope of the financial sector's regulatory framework. 

The  regular  statistics  on  cash  declarations  and  recordings  provided  by  the  Member  States  indicate 
that large amounts of cash continue to be moved by natural persons across the EU external borders, 
and that cash controls on natural persons are needed to ensure that these cash movements are not 
related to criminal or terrorist activities.  

33  FATF  Recommendation  32  specifies  a  maximum  threshold  of  15  000  USD/EUR  before  control  measures 
should  apply.    With  10  000  EUR,  the  EU  is  in  line  with  the  commonly  applied  threshold  which  hovers 
around 10 000 USD. 

34  It  should  be  noted  that  the  typical  audience  of  the  FATF  are  individual  countries,  the  recommendation  and 
interpretative note do not  take into account the legal specificity of the EU as an entity in which circulation 
of capital and persons are in principle free but where certain areas remain the competency of the individual 
Member States. 

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Although  limited,  statistical  data  and  case  descriptions  provided  by  Member  States  in  relation  to 
investigations and court judgements on money laundering and terrorist financing cases resulting from 
or using cash controls information demonstrate the usefulness of the EU system of cash controls and 
the contribution of the Cash Control Regulation towards the achievement of EU's AML/CFT objectives. 
In addition, cash controls have proven to be very useful in the fight against tax fraud and evasion in 
some  Member  State  even  though  the  Cash  Control  Regulation  does  not  explicitly  provide  that  cash 
control information may be processed and exchanged for tax related purposes.   

However, although based on a small number of targeting operations and random controls, findings of 
large amounts of cash being moved across the EU external border by post and freight emphasise a 
weakness  of  the  Cash  Control  Regulation  in  relation  to  its  main  objective.  As  its  provisions  do  not 
impose an obligation to declare, nor designate powers to control the movements of cash amounts of 
10  000  EUR  or  more  by  post  or  freight,  and  since  only  a  few  Member  States  have  such  national 
legislation,  the  Cash  Control  Regulation  does  not  address  the  risk  of  money  laundering  or  terrorist 
financing cash being moved across EU borders in post and freight.  

The provisions of the Cash Control Regulation enable proper controls of cash movements by natural 
persons  at  EU  external  borders  and  remain  relevant  for  the  fight  against  money  laundering  and 
terrorist financing. However, it is clear that the controls are not implemented by the Member States in 
a fully uniform way.  

In addition, significant improvements in relation to using  the exchange of cash control information to 
improve  the  effectiveness  of  cash  controls  and  contribute  even  more  to  money  laundering,  terrorist 
financing and tax fraud/evasion investigations can be made based on a comprehensive analysis of the 
data  necessary  for  the  different  authorities  involved  (customs,  investigation,  prosecution)  and  their 
respective roles both at national and EU level. 

The fact that penalties imposed for a failure to declare differ significantly between Member States may 
result in inconsistent communication to EU citizens on the matter.  The existing differences in penalties 
regimes  result  in  wide  variations  in  the  level  of  penalties  to  which  the  public  is  exposed  in  case  of 
failure to declare, depending  solely on the Member State through which they enter or  leave the EU.  
The lack of approximation may increase the risk of customs shopping.  

Basic  cash  control  information  is  collected  regularly  without  undue  administrative  burden.  It  is  made 
available to the national FIU in a manner regulated by national legislation and exchanged with other 
Member States and third countries within the existing legal framework which limits the exchange of all 
cash declaration information (e.g. indication of illegal activity or usefulness for risk analysis has to be 
established before exchange with another Member State can take place).   

The  cash  control  information  currently  collected  and  exchanged  by  customs  authorities,  both  with 
other  national  authorities  and  other  Member  States,  is  extensive  and  makes  a  valuable  contribution 
towards  the  fight  against  money  laundering  and  terrorist  financing.    However,  availability  of  regular 
cash  declaration  information  would  enable  that  better  decisions  are  made  by  appropriate  officials 
based  on  a  more  complete  body  of  cash  control  information,  resulting  in  better  targeting  and  more 
effective cash controls at the EU external borders. 

Finally, In order for the Commission to fully comply with FATF's Recommendation 32 on cash couriers, 
it has to regulate movements of cash in post in freight across its external borders, as well as enable 
free exchange of cash control information between Member States.  

8.  RECOMMENDATIONS 

Main recommendations : 

  Consider including cash movements by mail and freight at EU external borders within the 

scope of the Regulation; 

  Consider  widening  and  harmonising  the  possibilities  for  information  exchange  between 

Member States:  

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Evaluation of the Cash Control Regulation 

a.  By  including  all  cash  control  information  (including  non-suspicious  voluntary 

declarations), 

b.  By  setting  clear  procedures  and  providing  effective  tools  for  the  exchange  of 

information. 

  Consider to explicitly provide for  the possibility of  using cash declaration information for 

tax purposes, including the fight against tax fraud and evasion; 

  Consider  a  level  of  approximation  of  cash  control  penalties  applied  by  Member  States  at 

EU external borders. 

Secondary issues for consideration:  

  Consider streamlining the cash declaration exchange process as it pertains to FIUs; 

  Consider modifying the definition of cash to also include gold and precious stones; 

  Consider  the  development  of  a  mechanism  to  ensure  a  sufficient  and  equal  level  of 

implementation in the Member States 

l

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118 

 
 
Annex  3.   Report on the outcome of the Public Consultation on the 
review of Regulation (EC) Nr. 1889/2005 on controls of cash 
entering or leaving the Community 

Table of Contents 

1. 

2. 

Introduction ........................................................................................................ 123 

Setting the scope and defining objectives ....................................................... 123 

2.1 

Identification of key policy areas susceptible to possible improvement for 
which stakeholder input is relevant. ................................................................... 123 

2.2 

Identification of stakeholders.............................................................................. 124 

2.3  Selection of the consultation instrument ........................................................... 124 

3. 

The consultation ................................................................................................. 124 

3.1  Concept ................................................................................................................. 124 

3.2  Question methodology ........................................................................................ 124 

3.3  Consultation methodology .................................................................................. 125 

3.4  Timeframe ............................................................................................................. 125 

3.5  Limitations ............................................................................................................ 125 

4. 

Consultation results ........................................................................................... 126 

4.1  Number of contributions received. ..................................................................... 126 

4.2  The respondents. ................................................................................................. 126 

4.3  The questions and answers provided. ............................................................... 127 

4.3.1  Question 1 ..................................................................................................... 127 

4.3.2  Question 2. .................................................................................................... 128 

4.3.3  Question 3. .................................................................................................... 129 

4.3.4  Question 4. .................................................................................................... 130 

4.3.5  Question 5 ..................................................................................................... 130 

4.3.6 

Follow-up question to question 5. .............................................................. 131 

4.3.7  Question 6 ..................................................................................................... 131 

4.3.8 

Follow up question to question 6. ............................................................... 132 

4.3.9  Question 7 ..................................................................................................... 133 

4.3.10  Question 8 ..................................................................................................... 134 

4.3.11  Follow-up question to question 8 ............................................................... 134 

4.3.12  

Question 9 .................................................................................................. 135 

5. 

Annexes and additional information. ................................................................. 135 

119 

 
 
 
 
 
1.  Introduction 

Regulation 1889/2005 on the controls of cash entering and leaving the Community came into force in 
2007. It establishes a framework in line with the present FATF recommendation 32 on cash couriers. It 
imposes,  inter  alia,  an  obligation  for  physical  persons  entering  or  leaving  the  European  Union  who 
carry  cash  or  cash-equivalents  of  10  000  Euro  or  more  to  file  a  declaration  with  customs  or  other 
competent  authorities.  It  enables  competent  authorities  to  temporarily  hold  the  cash  in  case  of  non-
declaration  or  incorrect  declaration  pending  further  investigation  and  possible  confiscation/forfeiture 
after  judiciary  intervention.  It  provides  for  the  possibility  of  sharing  information  with  competent 
authorities  in  other  Member  States,  with  the  Commission  or  with  third  countries  under  certain 
circumstances. Finally, the Regulation imposes Member States to provide for penalties in case of non-
declaration, even if after investigation there are no indications of illicit activity. Regulation 1889/2005 
does not apply to natural persons carrying cash or cash equivalents between two Member States. 

Pursuant to Article 10 of Regulation 1889/2005, the Commission submitted a report to the Council and 
the  European  Parliament  on  the  application  of  the  Regulation  in  2010.  The  report  concluded  that 
generally,  the  Regulation  is  meeting  its  objective  and  adequately  transposes FATF  recommendation 
in  several  areas  were  mentioned. 
improvements 
32 

law.  However,  possible 

in  EU 

Discussions with Member State experts in cash controls on the implementation of the Regulation as 
well  as  international  developments  lead  the  Commission  to  believe  that  there  may  be  a  scope  for 
improvement in the regulatory framework and/or the implementation procedures. 

In order to judge the desirability of potential actions and policy options and to obtain new insights, the 
Commission  Services  initiated  a  public  consultation  to  receive  the  views  of  stakeholders  on  the 
possible action to be taken to address the identified gaps. 

2.  Setting the scope and defining objectives 

2.1 

Identification  of  key  policy  areas  susceptible  to  possible  improvement  for  which 
stakeholder input is relevant. 

Based on input provided by the 2010 report by the Commission to the European Parliament and the 
Council,  feedback  from  national  experts  and  the  outcome  of  an  ex-post  evaluation  on  the 
implementation  which  was  conducted  as  part  of  the  review  process  for  Regulation  1889/2005,  the 
following  key  areas  susceptible  to  modification  and  for  which  stakeholder  input  was  required  were 
identified: 

1.  Cash shipped in post and freight shipments 
2.  Exchange of cash declaration information between competent authorities 
3.  Use of cash declaration data for taxation purposes 
4.  Allowing  authorities  to  act  upon  and  detain  amounts  lower  than  the  ordinary  declaration 

threshold in case of suspicious circumstances 

5.  Awareness-raising of the public 
6.  Enlarging the definition of ‘cash’ 
7.  Harmonization of administrative penalties 

120 

 
 
 
 
 
 
 
 
2.2 

Identification of stakeholders 

Input gained from the 2010 evaluation report, the review roadmap, feedback from national experts and 
statistical data regarding declarations filed and infractions recorded allowed for the identification of the 
following categories of stakeholders: 

1.  Private  persons  carrying  cash  on  their  person,  in  their  luggage  or  conveyance  or 

shipping/receiving shipped cash 

2.  Companies  or  entities  involved  in  shipping  cash  (courier  companies,  financial 

institutions, shipping companies, the official mail services) 

3.  Professional associations and interest representatives  
4.  Public authorities 

2.3 

Selection of the consultation instrument 

Considering  the  wide  range  of  stakeholders  and  the  technical  nature  of  certain  questions,  it  was 
decided to develop an open public consultation based on the ‘EU Survey’ template which was going to 
be available via the internet after publication via ‘My Voice in Europe’ and could be completed by any 
interested  party.    The  use  of  the  EUSurvey  template  allows  for  the  introduction  of  certain  dynamic 
elements such as not showing sub-options in case respondents indicated that they did not have a view 
on or did not wish to answer a previous, more general question.  At the same time it allows a certain 
extent of input validation and easy analysis of results. 

3.  The consultation 

3.1 

Concept 

The consultation was conceived as a multi-page document where an introduction was given about the 
subject, information was provided about the consultation itself as well as background documents (links 
to legislation and international norms). 

Subsequently there were sections on 

1. 

Identification  of  respondent  (stakeholder  category,  personal  data,  authorization  to  seek 
contact and/or publish the contribution etc). 

2.  Technical questions regarding policy areas for which input was sought 
3.  A final section where any opinions on any subject not queried in the previous questions could 

be expressed by the respondent if he/she thought this relevant. 

3.2 

Question methodology 

After a brief introduction to the question, the questions were asked in a ‘closed/multiple choice’ format 
with the choices corresponding to the major policy options under consideration.  In each instance an 
option  corresponding  to  a  baseline  (no  change  vs.  current  situation)  scenario    was  proposed.  
Providing an answer to each question except for the final one was mandatory and checked via input 
validation.    In  order  not  to  restrict  answers  to  policy  alternatives  that  were  envisaged  by  the 
Commission or to overburden respondents who might feel very strongly about one aspect but hold no 
opinion on other topics, the following provisions were made:  

121 

 
 
 
 
 
 
 
 
 
 
It was possible to select ‘Don’t know / no opinion’ with each question. 

 
  After  each  question,  an  optionally-fillable  free  text  field  asked  'Please  tell  us  WHY  you 
selected this option'; it was explained to contributors that knowing the reasoning behind their 
choice would facilitate understanding and interpretation of the results. 

  With  each  question  an  option  was  provided  where  the  respondent  could  select  ‘Other’  as 

answer and formulate an own contribution in a free text field (unrestricted length). 

  Certain  main  questions  were  of  a  highly  technical  nature.    In  order  not  to  overburden 
respondents, follow-up questions to these were only shown if a respondent provided any other 
answer than ‘No opinion/don’t know’. 

  A final question at the conclusion of the survey invited respondents to provide any remarks on 
topics that were not previously addressed in the survey but which they considered relevant for 
the review process. 

3.3 

Consultation methodology 

The open public consultation was developed using the ‘EU Survey’ template and published on the ‘My 
voice  in  Europe’  webpage  in  three  language  versions  in  order  to  ensure  a  good  public 
reach/expenditure ratio:  English, French, German.   

An introduction to the publication in the same three languages on the DG Taxud webpage was also 
published, with a direct link to the online consultation document. 

Additional publicity measures: 

  Publication on ‘My voice in Europe’ triggers an automatic alert to any registered entity, more 
specifically the interest representatives.  Moreover, the consultation is visible to the public via 
the ‘My voice in Europe’ webpage. 

  DG Taxud sent out a Twitter message regarding the publication of the consultation. 
  Web  search  engine  providers  were  notified  about 

  A  Google/ 
Bing  search  on  ‘cash  controls  consultation’  and  related  queries  resulted  in  a  list  of  search 
results with the consultation survey on number one. 

the  consultation. 

  The consultation was announced to meetings of the ‘Cash Controls Experts Group’, the ‘FIU-
platform  meeting’  and  the  ‘Risk  Analysis  Experts  Group’  accompanied  by  an  invitation  to 
provide input either in a private capacity or as public authority. 

3.4 

Timeframe 

The  consultation  ran  from  February  28,  2015  until  and  including  May  31st,  2015,  for  a  total  of  14 
weeks. 

3.5 

Limitations 

Any public consultation is subject to a number of limitations, some inherent to the process, others to 
the methodology chosen.  Some of these limitations as they pertain to this consultation are: 

  The  results  of  this  public  consultation  cannot  in  any  way  be  interpreted  as  correctly 
representing overall public opinion.   Representativeness cannot be achieved without rigorous 
definition  of  the  queried  group,  both  qualitatively  and  quantitatively.    Achieving  these 
objectives through an open public survey is not possible. 

122 

 
 
 
 
 
 
 
 
  Despite selecting the languages in which the consultation was held in function of reaching as 
wide  an  audience  as  possible  while  keeping  costs  under  control,  this  measure  excludes  a 
significant number of potential contributors. 

  The  format  chosen  (internet  survey)  precludes  participation  by  persons  who  do  not  have 

access to this medium. 

  Potential for manipulation:  although we do not have any indication of this happening, it cannot 
be  rigorously  excluded  that  attempts  were  made  to  steer  answers  in  a  certain  direction.  
Reasonable  measures  (use  of  'Captcha'  technology)  were  taken  to  prevent  automatic  form 
submission. 

Nevertheless,  despite  the  limitations  associated  with  the  consultation  mechanism  chosen,  we 
believe that on balance the concept allowed us to reach a substantial part of the population and 
gain valuable insights into the opinions of the respondents. 

4.  Consultation results 

4.1 

Number of contributions received. 

In  total,  31  contributions  were  received  via  the  online  application.    In  addition,  4  contributions  were 
received via e-mail sent to the functional mailbox associated with the consultation.  After consultation 
of the 4 contributors and obtaining their approval, their contributions (which strictly followed the online 
template structure) were encoded so as to allow analysis.   

A total of two contributions were eliminated from consideration, one due to the nature of the responses 
(the term ‘test’ filled into each field, no contact name or address given) and one consisting of a reply 
which was saved as 'draft' but not submitted and  for which the contact person did not reply to a mail in 
which it was explained that he had to formally submit the draft document or explicitly allow us to do so 
on his behalf. 

4.2 

The respondents. 

The  majority  of  respondents  indicated  that  they  were  doing  so  in  a  capacity  of  individual,  private 
citizens.    The  number  of  contributions  by  public  authorities  (3  Member  States,  one  local  public 

123 

 
 
 
 
 
 
 
 
 
authority)  was  rather  limited,  as  was  participation  from  the  private  sector.    Two  out  of  three  interest 
representatives were registered as such and provided their identification number.   

Finally, although 90% of respondents (n=32) agreed to the publication of their contribution, only 40% 
(n=14) consented to the publication of their name and personal data. 

4.3 

The questions and answers provided. 

In what follows an overview will be provided of the questions as they were asked in the consultation 
document itself, followed by the answers per policy option.  Where ‘other’  was selected or additional 
comments were made, these will be mentioned explicitly. 

4.3.1  Question 1 

40%  of  respondents  favor  an  approach  where  the  competent  authorities  have  the  right  to  request 
additional information from the sender in case cash is sent through mail/courier company/in freight. 

In  addition,  31.43%  are  in  favor  of  a  system  where  a  mandatory  cash  declaration  would  have  to  be 
filed in addition to the regular customs declaration, thereby imposing an extra administrative burden.  

124 

 
 
 
 
 
 
  
An  additional  11.43%  of  respondents  are  in  favor  of  filing  a  mandatory  extra  declaration  but  would 
mitigate the administrative burden by providing for an exemption for financial institutions as well as for 
companies acting strictly as a transporter of cash. 

In  the  ‘why  did  you  provide  this  answer?'  field  associated  with  this  question,  representative  remarks 
were: 

 
‘There really is no good reasons for transfer of large cash amounts in the 21st century.’ (sic). 
  Choices  for  Option  B  (disclosure  obligation)  or  option  D  (additional  declaration  but  with 
exemptions  for financial institutions and transporters) were mainly motivated by respondents 
acknowledging that additional controls are in their opinion required but no extra administrative 
burden  should  be  imposed  (‘Good  balance  between  adequate  control  and  limitation  of 
paperwork'). 

  Some  respondents  who  opted  for  option  ‘C’  (mandatory  extra  declaration  in  addition  to  the 
customs declaration) motivated their choice by pointing out that the customs declaration itself 
does  not  contain  all  pertinent  information  and  that  filing  an  additional  declaration  was  an 
acceptable burden ('A separate declaration would make things simplier and clearer.') (sic). 

It should be noted that only a small minority of respondents favored maintaining option A (to maintain 
the  present  legislative  framework:    only  an  obligation  to  declare  by  natural  persons  carrying  10  000 
EUR or more). 

4.3.2  Question 2. 

An absolute majority (51%, n=18) of respondents are in favor of using a standardized form, the format 
of  which  should  be  specified  in  the  legislation.    Another  28.6%  of  respondents  are  in  favor  of 
maintaining  the  present  system,  where  the  large  majority  of  Member  States  use  the  same  form  but 
without there being binding legislation to do so. 

In  the  ‘why  did  you  provide  this  answer'  field  associated  with  this  question,  some    representative 
remarks were: 

‘One same approach in all countries is better'. 
‘1 EU, 1 form’. 
‘If the present system works there is no need to impose it by law' 

- 
- 
- 
-  A remark made by a couple of contributors was that Member States should have the option of 
customizing  the  form  to  take  into  account  additional  information  regarding  domestic  cash 
controls or national legislation’. 

125 

 
 
 
 
 
4.3.3  Question 3. 

Compared to the baseline scenario in current legislation (A), which obtained support from 11.5% (n=4) 
of    respondents,  there  seems  to  be  a  clear  majority  of  72.28%  (n=26)  respondents  in  favor  of 
increasing  the  sharing  of  information  regarding  declarations  or  infractions  between  Member  States.  
The opinion is evenly split between respondents who want to make the sharing of all declaration data 
mandatory by legislation and respondents who only want to impose the sharing of information about 
infractions. 

In the ‘why did you select this answer' field associated with this question, some remarks were: 

- 
- 
- 
- 

‘I cannot believe this was not yet possible, with the IT systems that exist'. 
‘There is one legal basis, it makes sense that all information is shared.’. 
‘Respect the privacy of declarants who follow the law’. 
‘This is the only effective way to ensure transparency and tackle fraud’. 

126 

 
 
 
 
 
 
4.3.4  Question 4. 

A  clear  absolute  majority  of  74%  (n=26)  of  respondents  are  of  the  opinion  that  in  cases  where 
authorities  have  indications  of  illicit  activities  associated  with  the  cash  in  question  or  with  the 
movement, they should be empowered to temporarily detain the cash in question even in case the 
amount is lower than the threshold value. 

However, it should be noted that many of those respondents further elaborated upon their opinion 
with the qualification that the temporary detention should under no circumstances be arbitrary and 
that some guidelines need to be laid down in order to better describe what type of element can be 
considered as indicative of illegal activity. 

Additionally, some other elements which were mentioned in the comments to the question: 

- 

- 
- 

‘To prevent circumvention of the rule. It should however be clear that the indications have to 
be sufficiently clear and objective’. 
‘This already exists in the UK under national legislation and works very well.’ 
‘Indications  of  illegal  activities"  is  too  low  a  bar.  In  extermis  this  could  lead  to  a  pensioner's 
purse being emptied simply on the basis of a vague ‘suspicion’. (sic). 

4.3.5  Question 5 

A large majority of almost 83% (n=29) of respondents are in favor of the facilitation of cash control 
information  between  Member  States  and  within  one  Member  States  between  various  authorities 
for tax purposes. 

Additionally, some other elements which were mentioned in the comments to the question: 

- 
- 

‘Because there are more tax dodgers than terrorists but they also undermine society'. 
‘Fight against tax fraud should be a priority in Europe.' 

127 

 
 
 
 
 
 
- 

‘Not at this level (10 000 EUR), risk of divergent and discriminatory treatment among Member 
States’. 
'Too high administrative burden' 

- 
4.3.6  Follow-up question to question 5. 

Important  remark:    The  following  question  was  shown  only  in  case  any  other  answer  than  ‘No 
opinion/don’t know’ or ‘No’ was provided to question 5.  The percentages mentioned are relative to 
the original group who answered question 5, hence do not add up to 100%. 

A  small  minority  of  respondents  favor  maintaining  the  present  status  quo  where  the  sharing  of 
information of declaration data for tax purposes should be left to national legislation. 

Of the approximately 75% (n=26) of respondents who are in favor of further steps to facilitate the 
exchange  of  declaration  data  for  taxation  purposes in  the  Member  State  in question  or  between 
Member  States,  opinions  are  almost  split  (40%  vs  34%)  on  whether  all  available  information 
(declarations  +  infractions)  should  mandatorily  be  shared  or  if  the  mandatory  sharing  of 
information  should  be  restricted  to  data  regarding  infractions,  with  the  sharing  of  regular 
declaration data being left to national legislation modalities. 

Considered in combination with the answers provided to the previous question there does seem to 
be  a  clear  will  to  further  facilitate  and  develop  the  sharing  of  declaration  or  infraction  data  for 
taxation purposes. 

4.3.7  Question 6 

128 

 
 
 
 
 
 
An  absolute  majority  of  57%  (n=20)  of  respondents  supports  a  policy  option  where  it  would  be 
made mandatory for Member States to inform the public about their duty to declare. An additional 
20%  (n=7)  considers  that  an  explicit  reference  should  be  made  about  awareness  raising  in  the 
legislation but that this should be on the basis of a recommendation to the Member States, not an 
obligation.  Maintaining the current framework where no mention about awareness raising is made 
in the legislation is supported by 11.5% (n=4) of respondents. 

Additionally, some other elements which were mentioned in the comments to the answer given: 

 
 
 

 

‘Because a law is obeyed if it is known and then there is no excuse about ignoranz.' (sic) 
‘people have to respect the law but they need to know it first' 
‘Unnecessary  additional  expenditure  should  be  avoided.  The  issue  is  currently  well 
understood by travellers’ 
‘Ignorance can never  be a defence but people have to explicitly be made aware of their 
duty to declare.'(sic). 

4.3.8  Follow up question to question 6. 

Important  remark:    The  following  question  was  shown  only  in  case  any  other  answer  than  ‘No 
opinion/don’t know’ or ‘No’ was provided to question 6.   The percentages mentioned are relative 
to the original group who answered question 6 , hence do not add up to 100%. 

An  absolute  majority  of  respondents  are  in  favor  of  a  harmonized  approach  across  Member 
States.    Arguments  offered  in  support mostly  revolved  around  the  idea  that,  as  the  legislation  is 

129 

 
 
 
 
 
 
 
harmonized in the EU, so should campaigns for awareness raising be harmonized.  Respondents 
were  of  the  opinion  that  this  would  improve  comprehension  and  recognition  of  the  information, 
regardless of the Member State of entry or exit. 

The respondents who answered negatively were of the opinion that Member States should be free 
to determine the way in which this is achieved. 

Optionally, respondents were offered the possibility to explain HOW such harmonized campaigns 
could in their opinion best be realized.  Some answers provided were: 

 
 
 

 

'Ads in airports, on the internet, folders, information provided by plane/boat operators....'  
'It could be achieved via an international graphic design contest.' 
'By  delegating  responsibility  for  those  campaigns  to  the  EC  -  surely  Commission  is 
capable of running one campaign' 
'By internet ads on travel sites, ads on airplanes/ships. In airport.' 

4.3.9  Question 7 

The  consultation  document  explains  that  the  current  definition  of  ‘cash’  as  used  in  Regulation 
1889/2005  follows  the  international  standards.    However,  it  is  not  inconceivable  that  criminal 
groups could attempt to escape the obligation to declare by converting cash into other goods that 
can easily be carried yet do not have to be declared via a cash declaration (though they might be 
subject to a normal customs declaration). 

From the answer it seems that while most respondents favor not modifying the definition (48.57%, 
n=17) , a large minority of 37.14% (n=13) is in favor of expanding the definition. 

Additionally, some other elements which were mentioned in the comments to the question: 

 
 

 
 

‘The definition of ‘cash’ should stick to international standards’ 
‘Enlarging the definition is easy, but where does one stop? What to include, what not to 
include?’ 
'It would be best to keep this in line with international standards' 
 ‘Yes, the definition should be enlarged, but only if this can happen on international level’. 

The  respondents  who  answered  ‘Yes’  to  the  question  concerning  expanding  the  definition  of  cash 
were asked an additional question:  ‘Please explain briefly why you answered ‘YES’ and tell us which 
elements (which goods, commodities etc) should, in your opinion, be included in the new definition’. 

Answers to this optional question include: 

130 

 
 
 
 
 
 
 

 

 

‘Only legally obtained travelers checques and bank drafts should be eliminated.  By that I 
mean elements which can be proved as having been obtained through legal means.’(sic). 
‘It is difficult to adequately define but all high value and liquid assets should be included so 
certainly gold and jewels should be included'. 
In  past,  the  Czech  AML  legislation  included  obligation  to  declare  commodities  of  high 
value, such as precious metals or stones, in the value of EUR 10,000 or higher. Based on 
recommendation  of  the  European  Commission  that  such  items  are  covered  by  customs 
legislation, we have changed national legislation and repealed the provisions concerning 
obligation  to  declare  commodities  of  high  value,  such  as  precious  metals  or  stones. 
Movement  of  mentioned  goods  cross  borders  of  EU    is  monitored  by  customs 
declarations. 

4.3.10  Question 8 

There  is  no  absolute  majority  in  favor  of  establishing  harmonized  penalties  for  the  failure  to 
declare.  It was explicitly mentioned in the questionnaire that these penalties would be intended to 
deal with the failure to declare only and have no relation with the licit or illicit origin or destination 
of the cash. 

Nevertheless,  the  largest  group  of  respondents  (45.71%,  n=16)  are  in  favor  some  initiative  to 
harmonize the penalties regime to some extent, with a minority of 25.71% (n=9)  being opposed to 
harmonization  initiatives  and  a  slightly  larger  group  of  28.57%  (n=10)  holding  no  strong  opinion 
either way. 

In the ‘why did you select this answer' field associated with this question, some remarks were: 

 
 

 

'member states should not have their independence compromised in this area.' 
'A  harmonizing  would  lead  to  an  equal  procedure  in  EU,  but  I  think  it  is  up  to  the  MS 
national legislation.' 
'National competence of the individual states' 

4.3.11  Follow-up question to question 8 

Important  remark:    Answering  the  following  question  was  optional.    It  was  displayed  only  in  case 
question 8 was answered with 'Yes' . 

Please explain below how, in your opinion, this could be achieved. 

Some answers provided: 

131 

 
 
 
 
 
 
 
 
 
 
 

 

'At least minimum and maximum sanctions should be provided' 
'Plain level field concerns require an effective harmonization'(sic) 
' If the same rules apply all over the EU, the penalty (at least for non-declaration) should also 
be equal' 
'Devise a common set of rules to treat non-declaration and enshrine these in legislation' 

From  the  feedback  provided  it  seems  that  concerns  about  equal  treatment  of  persons  in  the  same 
situation, regardless of the Member State of entry or  exit is the driving force behind the opinion that 
harmonization of penalties should be considered. 

4.3.12   Question 9 

The question was conceived  as  an open-ended, facultative text field of unlimited length.  Only three 
responses  were  received,  as  the  question  is  intended  to  cover  any  aspects  not  treated  by  other 
questions  but  which  were  deemed  relevant  by  the  contributors  we  represent    the  answers  in  full 
(translated  to  English  where  required).    One  lengthy  contribution  dealt  largely  with  intra-community 
and national measures concerning cash payments which fall outside the scope of the review and the 
questionnaire.  It  has been substantially redacted for reasons of brevity and relevance. 

 

'  Consider  a  differentiated  cash  limit.  Lower  cash  limit  for  bringing  cash  in  (perhaps  5000 
Euro), reducing the ability to fund illegal activity within the EU and encouraging greater use of 
electronic means.' 

 

  Abbreviated and redacted comment:  Respondent remarked that in their sector (purchase and 
sale  of  new  and  second  hand  vehicles)  in  many  cases  the  buyers  are  African  businessmen 
operating  in  conditions  where  the  local  banking  system  is  neither  as  transparent  nor  as 
performant  as  in  the  EU,  as  a  consequence  many  transactions  are  paid  for  in  cash,  which 
might cause problems regarding the legislation. 
'France  supports  the  legal  recognition  of  the  concept  of  'community  of  interests'  in  EU 
legislation as far as the obligation to declare is concerned.  This notion allows to add up and 
consider  as  one  amount  sums  carried  by  two  persons  that  are  linked  by  kinship  or 
professionally.      The  notion  allows  to  consider  that,  once  a  common  interest  is  established, 
whether  this  be  through  kinship  (parents  with  underage  children),  marriage  (married  or 
through legal partnership) the threshold of 10 000 EUR be applied to the community and not 
to each individual considered separately.  When they travel together, spouses would then be 
individually obliged to declare sums carried that are equal to or greater than 10 000 EUR even 
if each of them carries less than 10 000 EUR.  This 'common interest' notion would extend to 
other  couples  than  spouses:    employer  and  employees,  employees  of  the  same  company 
travelling together using the same means of transport.'  

5. 

Annexes and additional information. 

 

Information regarding this public consultation as published on the webpage of DG Taxud can 
be accessed here:  
http://ec.europa.eu/taxation_customs/common/consultations/customs/cash_2015_02_en.htm  

132 

 
 
 
 
 
 
 
The full consultation document can be accessed as a .pdf-file from the link above, as can the 
background documents. 

  The detailed results of the consultation with individual replies (where permitted by the authors) 

can be accessed here: [link to be inserted] 

133 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annex  4. Procedural information 

This  annex  presents  the  procedural  information  concerning  the  process  to  prepare  the  impact 
assessment report and the related initiative. 

1. Lead DG, Agenda Planning and Work Programme 

The  cash  controls  impact  assessment  was  prepared  under  the  lead  of  Directorate  General  for 
Taxation and Customs Union. Within the Agenda Planning of the European Commission, the project is 
referred  to  under  item  2016/TAXUD/001.  In  the  2016  Action  Plan  to  strengthen  the  fight  against 
terrorist financing, the Commission committed to put forward a legislative proposal against illicit cash 
movements at the latest by 4th quarter 2016.  

2. ORGANISATION AND TIMING 

Work on the revision of the Cash Controls Regulation started in September 2014, with the evaluation 
of the Regulation. These works were followed by the impact assessment which was kicked off in April 
2016.  

An Inter-services Steering Group assisted DG Taxation and Customs Union in the preparation of this 
Impact  Assessment  report.  The  Steering  Group  was  set  up  in  September  2014  and  included 
colleagues  from  DG  Migration  and  Home  Affairs  (HOME),  DG  Financial  Stability,  Financial  Services 
and  Capital  Markets  Union    (FISMA),  DG  Economic  and  Financial  Affairs  (ECFIN),  -  DG  Internal 
Market, Industry, Entrepreneurship and SME's (GROW), the European Anti-fraud Office (OLAF), DG 
Justice and Consumers (JUST), the Legal Service and the Secretariat-General. 

The  Steering  Group  met  on  five  occasions  between  September  2014  and  October  2016.  The  last 
meeting of the Steering Group took place on the 26th of October 2016. At each occasion, the members 
of the Steering Group were given the opportunity to provide comments in writing on the draft versions 
of the documents presented.  

3. CONSULTATION OF THE REGULATORY SCRUTINY BOARD 

The Impact Assessment report was reviewed by the Regulatory Scrutiny Board on the 12th of October 
2016. A positive opinion was issued. Based on the Board's recommendations, the Impact Assessment 
has been revised in accordance with the following points: 

134 

 
 
 
 
 
Chapter 1.2, 1.6 and 1.7 amended  

Chapter 2.4, 5.4 and 6.4 amended  

(1) Better present the evidence on the 
effectiveness of the existing cash control 
regulation and present more clearly the context 
into which the regulation is placed.   
The report should use information (including from the 
annexes) to speak to the cash control system's 
usefulness in detecting and preventing criminal 
activity. It should also better present the context of 
cash controls regulation and surrounding measures that 
address illicit trafficking (such as anti-money 
laundering legislation and customs declarations) by 
mapping potential avenues of trafficking and the 
measures in place to address them. 

(2) Clarify the trade-offs linked to a possible 
expansion of the regulation into substitutes for 
cash. Explain to what extent the proposal can be 
made future proof by leaving flexibility to 
include future emerging cash substitutes. 

The report should explain why non-cash stores of 
value were not included in declaration requirements 
earlier, why this is now being reconsidered and what 
practical consequences this would have. What are 
the relevant policy tradeoffs? This should include 
considerations about the pertinence and the 
possibility of including other possible future 
trafficking items (e.g. electronic means of payment), 
but also other high value suspicious commodities 
(e.g. raw or cut diamonds), as well as the 
implications for the future-proofing of the regulation 
and for the amount of 'double' declarations incurred. 

135 

 
 
 
 
 
Chapter 2.2 and 6.1- 6.6 amended to 
strengthen the assessments of options, to 
explain where the compliance and 
administrative costs for different actors lie 
and further make use of stakeholders’ views. 
Under almost each option in chapter 6 
information about administrative burden/cost  
has been added to explain the types of costs 
and benefits.   

Chapter 2.2, 5.2, 6.2 and Annex 6 have been 
amended to change and clarify the inclusion 
of information regarding the use of cash 
control declarations for fiscal purposes.  

Chapter 6.6 has been amended to clarify 
options regarding declaration forms. 

(3) Strengthen the assessment of options. More 
should be done to explain the types of costs and 
benefits of each option and of the package of 
preferred options. Overall consistency should be 
ensured in the comparison of the different 
options and the rationale for choosing the 
preferred package. There is also room to make 
more use of stakeholders' views. The relevance of 
including the option to use cash control 
declarations for fiscal purposes should be 
clarified. Assess non-regulatory options to 
harmonise declaration forms. 

The discussion and assessments of policy options 
should be further elaborated. 
The Cash Control Declarations for fiscal purposes 
cannot be addressed under the Cash Control 
Regulation. The report should clarify whether this 
matter will be addressed under the administrative 
cooperation between tax authorities. If there is no such 
commitment, the issue may be acknowledged but 
should be discarded from the outset and not elaborated 
in the report. Concerning the declaration form, a non-
regulatory option should be assessed given the existing 
close co-operation with Member States in this area and 
the fact that 24 Member States require already the use 
of the EU-Common Declaration Form. The report 
should better underpin conclusions on costs and 
benefits by adding further explanations, evidence and 
stakeholders’ views. The report should better explain 
where the compliance and administrative costs for 
different actors lie (on declarations, disclosures, 
controls or exchanges and IT investments and 
handling) and include (quantified) estimates where 
possible. The cost implications for postal and parcel 
handling – and for their operators - should be made 
clearer. Overall consistency should be ensured in the 
comparison of the different options and the rationale 
for selecting the preferred package further elaborated. 
Summarise the overall impacts of the preferred options 
in a table that also assesses their envisaged 
effectiveness in helping to combat criminal activities, 
including financing of terrorism. Stakeholder views 
should be presented throughout the report and used 
more effectively to underpin the assessment of the 
different options. 

4. External Expertise 

DG  Taxation  and  Customs  Union  made  use  of  the  expertise  provided  by  Member  States'  national 
experts who implement the Regulation.  This interaction was both ad hoc and structural, with 2 annual 
meetings of the 'Cash Controls Working Group' held under the aegis of the Customs 2020 programme. 
However, no separate external study has been carried out for the purpose of this impact assessment. 

136 

 
 
 
 
 
 
Annex  5. Who is affected by the initiative and how 

The objective of this annex is to set out the practical implications of the initiative for the actors that will 
be impacted by this initiative: natural persons, economic operators and public authorities. 

Natural persons carrying cash across the external EU borders will continue to remain subject to the 
current provisions. However, in case they will be carrying also gold, in the shape and form described 
by  the  revised  Regulation,  they  will  have  to  declare  it,  or  risk  being  sanctioned  according  to  the 
national laws of the Member State where they are required to declare.  

Natural persons or economic operators who send cash or gold through post or  freight will not be 
affected  significantly  given  that  the  Regulation  provides  for  a  disclosure  system.  In  practice  this  will 
mean that only the suspicious parcels or shipments will be selected by the authorities, and the burden 
to declare will only fall on a limited number of cases, depending on the intensity of controls decided by 
the authorities.  In certain cases the obligation to declare could lead to an obligation to make both a 
customs declaration and a cash controls declaration.   

Competent authorities (in most cases these are the custom authorities of the Member States) 
will  have  to  allocate  extra  resources  for  controls.    The  burden  for  the  administrations  will  most 
importantly be more work on risk analysis to try to target the right consignments, some level of extra 
controls and administration regarding the request for a declaration. As an international norm imposes 
controls  on  any  type  of  cross-external  border  movement,  this  form  of  control  would  be  the  least 
intrusive  one  to  comply  with  the  international  standard.  This  would  require  resource  allocation  by 
competent authorities and hence a burden.  

Each Member State authority will have to provide their respective national Financial Intelligence Unit 
(FIU)  with  access  to  a  database  which  contains  all  the  cash  controls  declaration  information. 
Dependent  on  the  technical  system  chosen,  the  administrative  burden  would  be  borne  by  the 
authorities who encode the information and maintain the IT system.  However, as the present situation 
already requires coding the information and making it available to FIU, the additional burden should be 
marginal in most Member States.  The largest cost would be setting up an IT-system, with a recurrent 
hardware  cost  and  staff  costs.  Such  harmonisation  may  generate  economies  of  scale.  The 
administrative burden for FIUs would be much smaller with this option. 

In the case of sub-threshold amounts, the Regulation would allow competent authorities to temporarily 
detain the cash in accordance with national legislation if they judge that indications of criminal activity 
(predicate offences to money laundering or terrorist finance) are present. Essentially this would lead to 
costs of administration and of the security arrangements associated with physically storing the cash.  
The number of cases where action is taken specifically based on this provision is expected to be low 
as the mechanism is conceived as a 'catch all' instrument, to be used if no legislation outside the cash 
control  regulation  allows  (temporary)  detention  of  the  cash.  Under  present  legislation  competent 
authorities  already  have  the  option  to  temporarily  detain  higher  than  threshold  amounts  of  cash  in 
case  these  were  not  declared  and  there  are  indications  of  illicit  activities,  hence  the  necessary 
infrastructure will already be present.  The impact on the owner/carrier of the cash of sub-threshold 
amounts  may  however  be  substantial  in  the  event  that  the  FIU  decides  there  were  no  grounds  for 
suspicion and decide that the owner/carrier  is to be refunded.  In an extreme scenario this could mean 
having to travel in order to retake possession of his/her money. 

The  obligation  for  competent  authorities  to  use  a  harmonised  declaration  form  would  impact    three 
Member States who currently do not use it and who would have to change their declaration forms and 
face a one-time burden.  However these costs would be offset by the benefits in terms of information 
exchange and standardisation that a harmonised approach would provide. 

137 

 
 
 
 
 
 
 
Annex  6. Fundamental rights and exchange of information 

Exchange of information 

1. 

Introduction 

Under Regulation 1889/2005, five major theoretical 'information flows' can be identified and should be 
clearly distinguished and borne in mind for what follows: 

a)  The  making  available  of  information  to  the  FIU:    all  information  collected  by  the  competent 
authorities (declarations, infractions, indications of illegal activity) is made available to the FIU of that 
Member State. 

b)    Information  collected  by  competent  authorities  in  one  Member  State  and  communicated  to  fiscal 
authorities in that same Member State. 

c) Information collected by competent authorities in one Member State and which is made available to 
other competent authorities in another Member State. 

d) Information collected by a competent authority in a Member State which is made available to a third 
country. 

e) Information collected by a competent authority in a Member State and which is made available to 
the Commission. 

In  practice  information  flows  d)  and  e)  do  not  pose  any  significant  problems  at  this  point  and  b)  is 
discarded  for  legal  reasons  as  explained  in  section  2.2.2.    These  will  not  be  considered  in  this 
document. 

As  described  in  the  evaluation  of  the  cash  control  regulation  and  under  point  2.2  of  the  problem 
description in the impact assessment, there are a number of problems associated with items a) and c). 

This annex will examine those items, provide additional information that would be out of the scope of 
the Impact Assessment document itself but is essential to understanding the issue, the policy options 
examined and the choices made. 

It shall be clearly established for each type of information flow: 

 a) who these 'competent authorities' authorities are; 

 b) what type of information shall be exchanged; 

 c) under which circumstances; 

 d) for what purpose; 

 e) according to what procedure; 

 f)  how  respecting  personal  data  protection  provisions  and    fundamental  rights  are  evaluated  and 
balanced with the legitimate interests of society as a whole, given the overall objective of the CCR.   

Further, it will briefly describe the mechanics of such data-exchange. 

138 

 
 
 
 
 
 
 
 
 
 
 
 
2. Making available information to the FIU. 

Article 5 of regulation 1889/2005 specifies: 

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 Community 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  Directive 
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  

The  reference  to  Directive  91/308/EEC  is  to  be  construed  as  a  reference  to  the  Anti-Money 
Laundering  Directive  which  currently  applies.1    For  the  sake  of  brevity  it  shall  be  referred  to  as 
‘AMLD4’. 

The  Financial  Intelligence  Units  (FIU)  are  entities  established  based  on  recommendations  of  the 
Financial Action Task Force (FATF) which the EU has committed itself to.  In the EU legal order, the 
establishment  of  the  FIUs  is  organised  through  AMLD4.    The  FIU  is  established  on  Member  State 
level,  it  is  intended  as  the  hub  element  that  receives  and  analyses  information2  from  a  variety  of 
sources in order to assess whether or not there are grounds to suspect ML/TF.  If such suspicions are 
present,  the  FIU  may  notify  competent  (judicial)  authorities  that  may  subsequently  start  an 
investigation. 

The functioning of the FIU is subject to strict conditions of data confidentiality.  Extremely simplified, 
the  FIU  is  an  independent  entity  which  receives  information  from  sources  that  would  not  be  able  to 
pass this data directly to other authorities, collates this data, analyses it and then determines if there 
are  grounds  for  suspicion  and  further  action.  Only  in  the  latter  case  will  the  FIU  contact  other 
authorities, hence it acts as a filter for the information provided.  

It has been established that next to abuse of the financial system, cross border movements of cash 
are  another  major  element  in  ML/TF.    The  CCR  covers  this  aspect  and  imposes  a  declarative 
obligation and other formalities.  The CCR states explicitly in its objectives that (Article 1): 

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

1  DIRECTIVE  (EU)  2015/849  OF  THE  EUROPEAN  PARLIAMENT  AND  OF  THE  COUNCIL  of  20  May 
2015  on  the  prevention  of  the  use  of  the  financial  system  for  the  purposes  of  money  laundering  or  terrorist 
financing which has entered into force and has to be transposed by the Member States by 26 May 2017. 

2 E.g. Suspicious Transaction Reports from financial institutions and other obliged entities or professions such as 

determined by the AMLD. 

139 

 
 
 
 
 
 
 
 
 
 
                                                            
 
It follows that the intended objective of the CCR has to be considered within the framework of the fight 
against ML/TF, like the AMLD. 

In  order  for  the  FIU  to  perform  its  role,  it  is  indispensable  that  it  also  has  access  to  cash  control 
declarations and infraction / suspicious activity data.  It can then take this into account and compare it 
with information received from other sources in order to screen for activities related to AML/TF. 

In the context of the CCR, the competent authorities are (Article 2): 

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

With  this  are  meant  the  authorities  who  record  and  process  cash  control  declarations  and  perform 
controls  on  passengers,  their  luggage  and  means  of  transport  in  order  to  detect  if  cash  above  the 
declaration threshold is carried.  In the vast majority of cases this will be the customs authorities, not 
e.g. the tax authorities, even if tax authorities and customs  both operate under  one entity such as  a 
Ministry of Finance. 

Those competent authorities have to ‘make available’ the information mentioned to the FIU.   

The  impact  assessment  proposes  to  more  clearly  define  that  ‘make  available’  implies  recording  and 
processing the information followed by actively giving the FIU access to the information stored in an 
secured  electronic  system,  not  merely  by  providing  access  to  physical  declaration  forms  stored  in  a 
room. 

Considering  the  purpose  for  which  the  declarative  information  is  collected  (AML/TF),  the  function  of 
the FIU and the safeguards built in to the legislation governing the functioning of the FIU, appropriate 
safeguards  exist  to  guarantee  respect  for  fundamental  rights  and  data  protection,  while  the 
proportionality of the measure is clear. 

3.  Information  collected  by  competent  authorities  in  one  Member  State  and  which  is  made 
available to other competent authorities in another Member State. 
In most cases this will concern the exchange of information from a customs authority in one Member 
State to a Customs Authority in another Member State. 

The exchange of such information is useful where it might help customs with the detection of potential 
infractors, such as in the case of persons who have already failed to declare in another Member State. 

For  customs  authorities,  it  is  important  to  be  able  to  determine  transactional  risk  and,  from  that,  the 
appropriate  level  of  controls.    It  is  not  important  to  have  full  time  access  to  all  information  on  all 
declarations that were made in the Member State of control and of other Member States but it is highly 
relevant  –from  the  perspective  of  determining  whether  or  not  a  declaration  is  truthful  or  if  additional 
controls are required- to have access to a system which might inform them, given input of the name of 
a  person  or  the  identity  document  reference,  if  this  person  is  known  in  another  Member  State  for 
infractions against the obligation to declare or if the person makes recurring declarations on a regular 
basis  in  various  Member  States.    A  solution  exists  (cf.  infra,  Match3  technology)  which  makes  this 
possible without the bulk exchange of personal data which is systematically accessible. 

For  the  purposes  of  information  exchange  (or  rather  'information  availability'  )  between  customs 
authorities, the appropriate contact points for customs administrations of a Member State would be the 

140 

 
 
 
 
 
 
 
 
 
 
designated  national  contact  point  for  the  application  of  Regulation  515/97  on  customs  mutual 
administrative assistance. 

Considered  in  conjunction  with  a  technological  approach  such  as  explained  below,  this  allows 
authorities quick access to relevant data while simultaneously safeguarding fundamental rights of the 
individual. 

Technology for data exchange. 

4. 
The appropriate means to manage the various data flows is to be determined through a study. 

In  this  context  it  should  be  remarked  that  the  FIU's  already  use  established  technology  to  transfer 
information between Member States through FIU.net3. 

FIU.net is based on the principle of distributed data storage where each Member State keeps control 
of  his  own  data  but  shares  an  encrypted  but  searchable  'filter'  with  other  Member  States.    Member 
State 'B' may perform a search on the name, identity document number or a combination of factors in 
this filter and if a result is found, this will mark as a 'hit' in the system, indicate which Member State 
holds the information but not per definition automatically make this available.  Availability is controlled 
by the Member State holding  the data.  Regarding  the 'making available' of cash control declaration 
data between customs authorities in different Member States, such a system holds promise. 

Further,  this  would  have  the  added  benefit  of  building  on  existing  technology  and  potentially  ensure 
interoperability with FIU systems. 

Regarding  the  data  provision  to  FIU's  the  most  appropriate  system  (subject  to  confirmation  by 
technical  specialists)  might  be  a  harmonised  database  that  allows  for  the  encoding  of  cash  control 
declarations / infraction / suspicious activity data, which is made available to the FIU of the Member 
State in question and then integrated in the FIU's secure system for analysis. 

Lastly, data exchange tools and modalities for the exchange of data between fiscal authorities in one 
Member  State  and  their  counterparts  in  another  Member  State  are  described  in  Directive  (EU) 
2011/16. 

3  Basic 

information 

is 

accessible  on 

the 

site  of  Europol,  who  host 

the 

technology:  

https://www.europol.europa.eu/content/fiunet-financial-investigation-units 

141