COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE 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

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   EUROPEAN COMMISSION  Brussels, 21.12.2016  SWD(2016) 471 final   COMMISSION STAFF WORKING DOCUMENT  EXECUTIVE SUMMARY OF THE 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) 470 final}  
 
 
Proposal for an amendment of Regulation (EC) No 1889/2005 of the European Parliament and the Council of 26 
October 2005 on controls of cash entering or leaving the Community 

Executive Summary Sheet 

A. Need for action 

Why? What is the problem being addressed?  
An evaluation of the present Regulation demonstrated the need to review this instrument to take account of the 
evolution  of  international  norms,  the  EU  anti-money  laundering  /  anti-terrorist  financing  framework  and  the 
Commission priorities listed in the 2016 Terrorism Finance Action Plan.   
100 000 cash control declarations are submitted annually by persons carrying 10 000 Euro or more into or out of 
the EU, representing a total amount declared between 60-70 billion EUR.  
Four major problems have been identified: 

1.  smuggling of cash in post and freight consignments;  
2. 
3. 
4. 

inefficiencies regarding information exchange between authorities;  
the use of other highly liquid stores of value, such as gold to escape the obligation to declare; 
the inability by competent authorities to act on cases where amounts lower than 10.000 EUR are found 
but indications of criminal activity exist. 

Three additional, less significant problems are also discussed and analysed in the IA report. 
The  absence  of  Union  action  will  lead  to  failure  to  meet  the  international  obligations.  The  most  affected 
stakeholders are citizens, authorities and enterprises who will suffer from increased diversion of cash associated 
with money laundering and terrorism financing. 

What is this initiative expected to achieve?  
The  objective  of  the  proposal  is  the  promotion  and  maintenance  of  a  safe,  balanced  and  sustainable 
development of economic activities throughout the internal market.  This will be achieved through: 

1. 

2. 

the  extension  of  regulatory  coverage  to  all  ways  in  which  cash  can  be  transported  thus  enabling  the 
effective monitoring of cash sent in post and freight;  
the  improvement  of  the  framework  for  information  exchange  regarding  cash  controls  data  between 
competent authorities within the EU;  
the development of a proportionate approach to tackle evasion behaviour that uses gold instead of cash;  
3. 
4.  enabling of competent authorities to act on sub-threshold amounts where indications of criminal activity 

exists.  

What is the value added of action at the EU level?  
The problem of money laundering and terrorist financing through the smuggling of cash is transnational.  Given 
the principles of the internal market and the associated freedoms of movement the response to these challenges 
needs to be harmonised to an extent that cannot be achieved through national measures. 

B. Solutions 

What  legislative  and  non-legislative  policy  options  have  been  considered?  Is  there  a  preferred 
choice or not? Why?  
Maintaining the status quo was considered for all the options but was only retained in a limited number of cases. 
The problems identified were tackled through a mix of legislative and non-legislative options (on EU level).  The 
four  main  problems  have  been  tackled  using  an  EU  level  legislative  approach;  while  in  the  case  of  the  three 
remaining problems, they were addressed through a mix of soft-law measures and EU level legislation.  

Who supports which option?  
A  public  consultation  has  been  conducted  and  feedback  was  requested  through  various  questionnaires 
addressed  to  competent  authorities  and  the  Cash  Controls  Working  Group  national  experts.  As  the  opinions 
were  heterogeneous  depending  on  the  issue  queried,  it  is  not  possible  to  provide  a  succinct  and  correct 
overview but account was taken of the opinions during option selection.  

C. Impacts of the preferred option 

What are the benefits of the preferred option (if any, otherwise main ones)?  
Broadening the scope of controls to include cash sent in post and freight and the possibility for detention of sub-
threshold  amounts  in  case  of  indication  of  criminal  activity  will  ensure  full  and  explicit  compliance  with 
international norms and best practice standards. This will be complemented by better possibilities for controls by 
competent authorities while keeping the additional administrative burden on citizens, enterprises and authorities 

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low.     
The  enlargement  of  the  definition  of  'cash'  to  include  gold  and  certain  prepaid  payment  instruments  and  the 
mechanism  selected  which  provides  for  a  possibility  to  flexibly  amend  the  constitutive  elements  in  function  of 
evolving trends and technology takes account of the latest developments flagged by competent authorities and 
demonstrates the commitment of the EU to tackle escape routes used to transfer value. These measures also 
translate  into  action  points  which  were  listed  for  consideration  in  the  Commission's  Terrorism  Finance  Action 
Plan and strengthen the EU's Anti-Money Laundering and Terrorism Finance framework. They contribute to the 
harmonious  development  of  the  internal  market  and  the  protection  of  citizens  and  enterprises.    The  options 
proposed  regarding  penalties  for  non-declaration,  implementation  levels  among  Member  States  and  the 
provision  of  information  to  stakeholders  strive  to  achieve  a  common  approach  while  being  mindful  of  the 
subsidiarity principle..     

What are the costs of the preferred option (if any, otherwise main ones)?  
No  significant  negative  impact  in  terms  of  compliance  cost  (economic,  social,  environmental)  is  expected  for 
stakeholders (see item below for businesses).  

How will businesses, SMEs and micro-enterprises be affected?  
The  measures  developed  concern  cash  equal  to  or  in  excess  of  10  000  euro  moved  across  the  external  EU 
borders either by persons or as freight/post.  Enterprises very rarely employ this mode of transport.  Currently, a 
physical  person  accompanying  the  cash  shipment  has  to  make  a  mandatory  cash  declaration.    Experience 
shows that professional couriers accompanying the cash shipments are highly aware of their obligations and are 
largely compliant. The newly developed disclosure obligation for cash shipments in post/freight is conceived so 
as to allow authorities to perform controls and if they judge this necessary, request documentation. There is no 
obligation  to  systematically  file  a  declaration  and  authorities  are  able  to  exercise  discretion  (e.g.  in  case  of 
shipments  between  banks).    It  is  expected  that,  due  to  the  relative  rarity  of  this  shipment  mode  and  the 
approach,  any  impact  on  professional  couriers  will  be  minimal.  No  specific  SME  or  micro-enterprise  impact  is 
expected.  

Will there be significant impacts on national budgets and administrations?  
No significant impact on national budgets and administrations is expected.  Some of the additional controls will 
require the allocation of human resources but the overall impact compared to the baseline is not expected to be 
significant.  The cost of the system to transfer information between authorities will depend on the option retained, 
which is to be determined but is likewise not expected to be significant.  

Will there be other significant impacts?  
Concerning fundamental rights and personal data it should be noted that more information will be collected than 
under  the  present  situation.    This  information  will  be  shared  with  the  Financial  Intelligence  Units  which  are 
subject  to  strict  controls  regarding  the  use  and  dissemination  and  between  competent  authorities.    This  is 
balanced  by  the  necessity  to  do  so  in  order  to  protect  society  and  may  be  mitigated  by  the  technology  to 
exchange this data between authorities. 

D. Follow up 

When will the policy be reviewed?  
Initial review five years after the entry into force of the new Regulation and every five years subsequently.  The 
evaluation will take the form of a Commission report to the Parliament and the Council. 

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