Source: EURLEX
Language: en
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##### **COMMISSION OF THE EUROPEAN COMMUNITIES** Brussels, 22.07.1998 COM(1998) 474 final Commission communication to the Council, the European Parliament and the European Central Bank **PROTECTION OF THE EURO** **COMBATING COUNTERFEITING**

**Contents**

**K** **INTRODUCTION** **I**

**1** **1.1** **Problems and objectives** **.....1**

**2.** **1.2** **The responsibilities of the** **ECB,** **Europol and the Commission** **4**

**2** **AREAS FOR PRIORITY ACTION** **5**

**3.** **TRAINING** **6**

**4** **THE** **INFORMATION SYSTEM** **.7**

**5.** **COOPERATION** **10**

**6** **PROTECTION** **UNDER** **CRIMINAL** **LAW/APPROXIMATION** **OF**

**NATIONAL LAWS: CRIMINAL LIABILITY, PENALTIES, MUTUAL**
**ASSISTANCE IN LEGAL MATTERS** **; 11**

**7** **SUPPORT FROM EXISTING INSTRUMENTS** **12**

**8.** **THE DEADLINES** **13**

**1 i**

**1.** **INTRODUCTION**

**1.1** **Problems and objectives**

The successful introduction of the single European currency, the euro, is part of an
irreversible process which necessitates the creation of a framework for prevention,
training, cooperation and law enforcement strategies to protect the euro from
counterfeiting.

Under Council Regulation 974/98 of 3 May 1998 [1] euro banknotes and coins will be put
into circulation in the countries participating in the first wave of EMU on 1 January 2002.
In accordance with the provisions of the E.C. treaty (article 105 A) the ECB alone is
authorized to issue euro bank notes. The Member States retain the responsibility for the
issue of coins with the ECB's approval. The European Monetary Institute has taken
important initiatives to ensure a high level of technical protection of the notes by
providing for security elements in line with the latest technical progress.

The Board of Governors of the European Central Bank adopted on 7 July a number of
guidelines to protect euro notes. A recommendation refers more particularly to combating
counterfeiting and asks the Council, Member States, Europol and the Commission to take
the measures required [2] .

I [;] or its part, the European Parliament by means of its committee on budgetary control,
asked the Commission to develop targeted initiatives at Community level to strengthen
the protection of the euro. The parliament referred in particular to experience gained in
the area of protection of the Communities' financial interests

Now, following the work done by the EMI we need to set out the basic guidelines
concerning ways of protecting the euro. Combating counterfeiting is a key aspect of this
protection. [3 ]

The risks to be countered mainly derive from the euro's enormous circulation potential,
both within the Community and elsewhere. The euro will become a transaction and
reserve currency world-wide.' [4 ]

The protection of the euro will need to be tailored to deal with this new dimension. The
risks of counterfeiting are always greater when new banknotes or coins are issued and
clearly they will be even greater when the new single currency is launched. As an
international reserve currency, the euro will have an easily convertible value and will
attract all forms of crime, including organised crime. The risks are increased by the
potential for uttering forgeries in a larger territory which is beyond national jurisdiction;
the scope for intervention by authorities of each Member State is confined within

1 OJL 139 of 11.5.1998, p. 2.

2 This recommendation will be the subject of detailed examination by the Commission.

**3** Other forms of crime, particularly the laundering of major assets in national currency, may occur in
the transition phase, especially when national currencies and euros are both in circulation.

This means that it is essential to develop special cooperation between the partners in the Community.

national boundaries. The availability of such technological developments as colour
photocopying and digital off-set printing both to international organised crime and to
small-scale criminals operating in a single Member State and a small group of individuals
only increase the dangers further.

The euro will also need protecting in an environment containing a series of specific

factors, such as:

- the fact that European citizens are unfamiliar with the banknotes and coins.
Notwithstanding awareness-raising campaigns it is clear that users of euro notes and
coins will take time to become as used to the new coins and notes as they are to their
national currencies; [5 ]

different degrees of experience of the various national departments. It is clear that
counterfeiters work on the basis of risks and the possibilities of selling the note or coin
they have targeted. Some national currencies are rarely counterfeited;

the lack of experience among some staff and of detection methods. There is a need for
trained staff and control and detection methods, particularly at certain financial
establishments whose business activity consists largely of collecting, exchanging,
transporting or circulating currencies; [6 ]

- the number of places where banknotes or coins are produced. In spite of the uniform
technical security standards provided for by the ECB (notes) and national mints or
treasuries (coins), Member States will still be able to use different production, printing
and minting techniques;

the variety of national sides of the coins. Euro coins have one standard side and one
national side, which makes recognition more difficult for users in other Member States
where the same coins may circulate;

the considerable increase in the number of exchange operations (when the national
currencies and euros are both in circulation). [7] Holders of national notes and coins
(including large-scale crime organisations) will need to adhere to strict time limits to
be able to exchange their stocks of national currency for euros;

the circulation of euros other than in the participating Member States. The circulation
and use of the new currency will not be confined to countries participating in the third

5 Experiments in some Member States revealed that, in some regions, the appearance of counterfeit new
coins led to a systematic refusal on the part of users to exchange or effect payments using the coins.

The feasibility of a simple and effective forgery detection scheme will need to be examined together
with the professional sectors concerned so as to put in place additional safeguards prior to police
investigations. If necessary, incentives should be drawn up with this in mind.

Council Regulation (IvC) No 974/98 of 3 May 1998 on the introduction of the euro, OJ L 139,
I 1.5.1998, stipulates that this period may not be longer than six months. It should also be borne in
mind that during the peak tourist season demand for exchange is greater, cash is more widely used and
these activities tend to be concentrated at certain places (airports, stations, ports, tourist areas, etc.).

stage of EMU. All the Member States of the Union will be affected as will a large
number of third countries, especially the applicant counlries; [x ]

the limitations of the principle of territoriality. Differences between the legal systems
and the maintaining of criminal boundaries would appear to render the equivalent
enforcement of the law and protection of the currency more difficult;

- technological progress will make reproduction techniques using lasers and digital
technology more easily accessible for small-scale counterfeiters.

In order to counter these factors which will appear in particular when euro notes and
coins are introduced, the Community must be given the means and facilities it needs to
mount coordinated preventive and enforcement action against counterfeiting.

The prospect of replacing national currencies with the single currency, together with the
differences between the approaches and structures for combating counterfeiting in the
individual Member States, mean that the Community must take the necessary measures
for effective coordination and cooperation. We need to arrive at a situation where
equivalent protection of the European currency can be guaranteed throughout the Union.

The Madrid European Council and subsequently the treaty of Amsterdam considered
equivalent protection to be an objective assigned to the institutions and Member States as
far as the money of the European taxpayer which passes through the Community budget
is concerned. The European citizen has the right to expect that the institutions and
Member States use the same principle for the protection of the European currency.

The need to develop shared concepts and reciprocal obligations means that we must
develop a common method of interpretation and for settling disputes in the case of
disagreements. To attain this objective we must create the proper instruments to protect
Community interests subject to judicial control. In so far as the instruments come under
the EC treaty, the jurisdiction of the Court of Justice is established. Where Community
interests have to be completed by instruments which come under Title VI of the TETJ, the
precedence of Convention type instruments is important to ensure that the Court of
Justice has jurisdiction.

The prevention of counterfeiting of the euro is a top priority and requires thorough
preparation before the single currency is introduced. Prevention strategies must be
sufficiently dissuasive to deter potential counterfeiters and make their counterfeiting
operations difficult, risky and expensive. Cooperation will need to be sufficiently

effective and enforcement uniform.

This overall policy of preventing and combating counterfeiting requires all the
Member States, the Union institutions and bodies and international organisations to work
together. The legal framework will need to be in place during the year 2000 if we are to
be able to establish appropriate structures well before the introduction of coins and notes.

This will most definitely have an impact on the sources of forgery and counterfeiting. Figures
available on counterfeit denominations, based on notifications to Interpol, show that certain national
currencies are counterfeited internationally, with some unlawful production taking place outside the
country in question. As an international reserve currency, the dollar most probably offers the best
example of the risks faced by the euro.

**1.2** **The responsibilities of the ECB, Europol and the Commission**

Under the EC [1] Treaty the protection of the euro as a tangible element of EMU is mainly a
Community matter, although Title VI instruments may of course be employed to improve
the protection of the currency.

The approach .envisaged by the Commission is based on the approach used for the
protection of the Communities'' financial interests. It includes a prevention aspect based
on the exchange of information and cooperation between the competent authorities. This
requires a Community legal framework. It also includes a criminal law protection aspect
which could be based on the title VI instruments of the TEU. This approach integrates all
the types of threat either from organised crime or other forms of criminal counterfeiting
which are equally formidable.

The ECB

The EMI has done important work to guarantee the technical security of the notes and
coins and has taken the decision to set up a technical data base to support the
counterfeiting analysis centre (CAC) for notes. The coins which are the responsibility of

the Member Stales could also be included in the EClVs technical database.

The data base will contain information about counterfeit euro notes and will be run under

the aegis ollhe ECB. I he technical details will be fed into the data base by the CAC.

I he ECB and the ESCB will be responsible for monetary policy and the issue and
circulation of the currency. This is why, since July 1996, the liMl has wanted its work to
be devolved to and completed by other Community bodies. Personal and operational
information will need to be treated separately and not stored on the data base developed
by the EMI.

Europol

The Europol Convention which has now been ratified by all the Member States, provides
the possibility for enlarging the remit of Europol with regard to international organized
crime as referred to in article 2 of the Convention [9] . Such a decision would be taken

unanimously by the Council using procedures laid down in title VI of the TEU.

Part of EuropoTs remit will also be to manage an information system with a voluntary
input from the Member States" national services and by liaison officers from national
units. Direct access by national units to the data (data concerning offences, charges, dates
and places, means used, services in charge and their file numbers, data concerning the
suspicion of membership of a criminal organization etc.) is available on request, by
means of the liaison officers as well as for the needs of a specific investigation (articles 7
and 8 of the Convention).Notification of this information is subject to the specific rules in
each Member State. Europol will be able to transmit data to third countries and bodies
including certain common bodies and Interpol (cf. articles 18 and 10.4) but only in

Extract from Article 2 of the Convention: " ...where there are factual indications that an organised
criminal structure is involved and two or more Member States are affected by the forms of crime in
question in such a manner as to require a common approach by the Member States owing to the scale,
significance and consequences of the offences concerned."

individual cases when this measure is necessary for the prevention or combating of
offences. Subject to a change in the Convention these rules apply for cooperation with the
ECB and the Commission.

he Commission

The role of the Commission is complementary to the role played by the ECB and adds
value to Europol's activities. The Commission will propose the establishment of a
Community data base and information system (see below) accessible in real time to the
competent authorities and Europol so that the latter can carry out analysis as part of its
remit.

The system for protecting the euro should be based on a wide-ranging, integrated
approach which requires continuous and regular monitoring of events and risks.
Information will have to be collected from the various sources. Eor the most part, this
information comes from issuing institutes, central banks, commercial banks, finance and
credit institutes as well as from the customs and the police. The use of all this
information by the Commission will improve the prevention and detection of illegal acts.

Eor this reason, since July 1996, the Commission has been carrying out with experts
from the Member States an assessment of the risks and the need to adopt common
provisions to prevent and combat the counterfeiting of the euro. The resulting
Commission document was sent to the Council and enabled the 19 May Ecofin Council
to reach its conclusions. These conclusions highlight the urgency of putting in place
effective protection for the euro, that is before it is in circulation,

**2.** AREAS **FOR PRIORITY ACTION**

Work carried out by the _cul_ _hoc_ group of the Advisory Committee set up by the
Commission to establish priority guidelines has pooled the experience acquired by the
Commission and by experts in the Member States, Europôl, the EMI and Interpol.

The group's work focused on certain aspects concerning "paper supports" (banknotes)
and "metal supports" (coins). They concentrated their attentions on the sorts of
information which could be usefully exchanged, the collecting of data and cooperation
between the relevant bodies for the purposes of prevention, investigating cases and
effectively combating any form of unlawful activity which could harm the euro . The
system will need to run for a trial period before euro notes and coins begin to circulate to
enable any problems to be identified.

On 1 January 2002 when the coins and notes are simultaneously introduced in all the
participating countries the necessary provisions and means will have to be operative and
effective.

Therefore we need to continue our preparation of the regulatory framework needed to
increase prevention, facilitate and render effective the cooperation between the national
authorities to improve the rate of detection and make notifications of findings
compulsory. With regard to protection of the euro, the provisions adopted will have to
cover the obligations of the participating countries and the other Member Stales and will

_n^cd_ to provide for the necessary cooperation with international bodies and those of third
countries.

Protective measures must also include a cooperation system which goes beyond the
possible action provided by the traditional forms of international mutual aid, which has
hitherto been seen as cooperation between the authorities of sovereign nation states for
the protection of their national currencies.

This approach demonstrates the need for a structure within the Commission's services. A
Community structure such as this must be the counterpart of the body which issues
Europe's currency (the ECB) for notes and Member States for coins and the other
partners at the EU (Europol) and international (Interpol) levels.

lor these reasons action must be taken on

training, [10 ]

- information and communications systems and data bases,"

- cooperation, mutual assistance, technical and operational assistance in investigations [12 ]

definition of counterfeiting activities and deterrent penalties.

3. TRAINING

The introduction of the euro necessitates an approach to training so as to better protect
and combat counterfeiting. The Commission has therefore been called on to present a
reflection document on the professional training policy at Community level. Such an
approach will have to be based on a balanced and consistent division of labour between
the various levels (Member States, Community, Union), taking account of costeffectiveness and respecting the principles of subsidiarity and proportionality.

On the basis of the guidelines set out in the meeting paper produced by the Commission
services at the request of the Council Police Cooperation Group, [13] the Commission will
examine the possibility of launching a pilot scheme which could begin in 1999 and serve
as a basis for a multiannual action plan on professional training.

**10**

**12**

Everyone concerned must be involved, including financial institutes and bodies able to play a part in
detection at as early a stage as possible. Suitable systems must be set up to make the necessary
resources and techniques readily available (for example, an incentive scheme).

Conditions for access to the data base, the establishment of an operational and strategic police grid,
method of transmitting information (the creation of a computerised exchange mechanism based on
standardised messages and ensuring that systems are technically compatible).

Bearing in mind the increased need for coordination at European level for the protection of the euro
and the need to extend this cooperation to partners outside the Community, given the international
nature of counterfeiting.

As a preparatory item, a meeting paper, _Expert group on counterfeiting the euro:_ _an_ _approach to_
_training_ has been presented to the group "police cooperation".

In the customs field, an extension of the field of application of the Community
MAITIIAEUS training programme which covers the training aspect referred to in the
CUSTOMS 2000 decision, to action to combat counterfeiting of the euro may be
envisaged.

The Commission will also take into account in this context imperatives linked to
enlargement so as to integrate the specific training actions for protection of the euro into
its pre-acccssion strategy.

Within the limits of resources available, the private sector experts liable to play a role in
the detection of counterfeit money could be involved in certain targeted training

activities.

4. THE INFORMATION SYSTEM

The experts have focused on the exchange of information and on the standardisation of
exchange procedures so as to avoid communications containing sorts of information
which vary from one Member State to another, are consequently difficult to use for the
purposes of effective analysis and do not provide a clear understanding of the
phenomenon in the Union as a whole.

Methods of protecting the single currency are largely based on information and therefore
on the collection, compilation and evaluation of data on lorged notes and coins and
information concerning the production, holding, transport and circulation of forgeries.

The data can be broken down into two main categories:

technical information concerning the collection of data and the processes involved in
the production and technical characteristics of forged notes. This kind of information
will be processed by the counterfeiting analysis centre (CAC) which will report to the
ECB. The same approach is being considered for coins,

- administrative, customs and police intelligence, concerning the collection of data both strategic and operational- on counterfeiting

The systematic and methodical use of information provides an overall picture and helps
in identifying counterfeiting circuits or networks. It is important to collect and organise
all the details, from the investigation, the information or the reporting to the closure of
the investigation, the submission of the case to the court and sentencing. This will make
it possible to pursue an effective prevention policy on the basis of information updated
on a continuous basis.

It is necessary to define common standards of exchange and fixed periods for
communications via an e-mail network. The technology of the AFIS mail network which
has been used successfully for more than a decade with regard to SCENT (Secure
Enforcement Network) by the authorities in the Member States and the services in the
Commission responsible for the fight against fraud in the customs and agricultural areas,
constitutes in this regard an interesting method for the rapid exchange of information.

The database must be user-friendly offering direct access to updated material for
operations.

The system must, as far as possible, be compatible with existing systems in the Member
States and the Europol system. The Commission system must also be adapted to the
kr.hiiiques and working practices of national investigation services. Rules governing
access need to be drawn _up._ The system will be continuously fed with information and
updated for technical, operational and strategic purposes. It will make it easy to bring
together information from various sources and provide an overview. It will also enable
effective operations to be conducted in real time and coordinated throughout the
Community, thereby eliminating in particular the risk of investigation services
unwittingly duplicating their inquiries.

Organising the various components of a reporting system will, over and above the use of
the national frameworks, require an appropriate legal framework to be established at the
Community level. The requirements have been clearly identified through the work of the
expert groups. There will have to be a set of Community rules creating the legal
framework needed for the compiling and exchange of information between authorities
responsible for protecting the single currency against counterfeiting.

The existing body of Community law and practice in relation to protecting financial
interests, which lays down a series of rules for defining concepts and compiling and
exchanging information, constitutes a useful framework of reference. [11] There is already
an information system covering all areas of the budget. It includes on the one hand the
Community's Irene data base, which contains sensitive data about cases of fraud and
irregularity notified by the Member States. The Member States do not have access to it
at this stage. In the area of mutual assistance between the customs authorities in the
member States and the Commission (EC reg. no. 515/97), on the other hand, there is the
customs information system, CIS, a user-friendly data base which is constantly being
updated and to which the Member States and the Commission have access. Run by the
Commission, it also contains sensitive data covered by the rules on the protection of such
data.

In the same context, it will be noted that title V of EC Council Regulation no. 515/97 of
13 March 1997 concerning mutual assistance between the administrative authorities of
the member States and cooperation between the latter and the Commission to ensure the
sound application of customs and agricultural regulations, offers the possibility of storing
lor the purposes of prevention, detection and prosecution of irregularities in the customs
field including those linked to counterfeiting of the euro, useful information in the CIS
(Customs Information System) central database. The CIS offers moreover the advantage
of being able to integrate electronic imagery which is indispensable in combating
counterfeiting.

**14** Existing regulations for the various budgetary fields: Council Regulation (EEQ Euratom) No 1552/89
(OJ L 155, 7,6.1989), as amended by Council Regulation (EEC, Euratom) No 1355/96 (OJ L 175,
13.7.1996), for own resources; Council Regulation (EEC) No 729/70 (OJ L 94, 28.4.1970), Council
Regulation (EEC) No 4045/89 (OJ L 388, 31.12.1989), Council Regulation (EEC) No 595/91
(OJ L 67, 14.3.1991), for EAGGF-Guarantee; Regulation (EEC) No 4253/88 (OJ L 374, 31.12.1988),
Commission Regulations (EC) No 1681/94 (Structural Funds, OJ L 178, 12.7.1994) and No 1831/94
(Cohesion Fund, OJ 191, 27.7.1994); Council Regulation (EC) No 515/97 (mutual assistance, OJ
L 82, 22.3.1997, previously Council Regulation (EEC) No 1468/81 (OJ L 144, 2.6.1981)).

Provisions can also be invoked to oblige the central bank and financial institutions to block and then
seize counterfeit money and notify the p lice and, where appropriate, the central bank.

These are models which have stood the test of time and should serve as the basis for the
Community rules, which should cover all the following areas:

they should define all the activities which go together to make up currency
counterfeiting and falsification to allow for a homogenous exchange of information; [15 ]

the Member States must be required to pass on all relevant information concerning
counterfeiting and forgery of the euro;

a computerised system comprising an e-mail network and a central data base, with
direct access for the national authorities, should be set up. The purpose of the system,
which would be updated regularly, would be to prevent, detect and prosecute currency
counterfeiting; it should therefore contain strategic, operational and appropriate legal
data. It will have to be a user-friendly, interactive system with direct access for the
authorities empowered to use it;

there must be rules governing the arrangements for exchanges of information (and
access to data bases) with Community or Union bodies, international organisations
(Interpol) and non-member countries. Different terms of access may be laid down
depending on what the various authorities are there to do. It is useful to recall that by
virtue of article 29, paragraph 3 of EC Council Regulation no. 515/97 of 13 March
1997, it may be decided, on a proposal from the Commission, to allow international or
regional organizations (e.g. Buropol) access to the CIS data bases as long as a protocol
has been concluded in parallel with these organizations.

there must be rules governing protection for personal data, which may be based on the
arrangements laid down in Council Regulation (Euratom, EC) No 2185/96 on
protecting the Communities' financial interests against fraud and other irregularities. [16 ]

The Treaty of Amsterdam (particularly Article 286 EC) enshrines these principles and
entrenches the application of the Community rules on data protection in the
Commission;

- commercial banks and financial institutions should be obliged to report any instances
of fraud they detect to the competent authorities, on pain of administrative penalties
where appropriate; [17 ]

15 Mow necessary and useful such an approach is has been proved in relation to the protection of
financial interests, where the information, communication on administrative cooperation and mutual
assistance system relies on the concept of irregularity as defined in Article 1 of Council Regulation
(EEC) No 2988/95 (OJ L 312, 23.12.95). The Member States assign responsibility for implementing
the information system, administrative cooperation and mutual assistance to the appropriate national
authorities.

See also Council Regulation (EC) No 3295/94 laying down measures to prohibit the release for free
circulation, export, re-export or entry for a suspensive procedure of counterfeit and pirated goods
(OJ L 341, 22.12.94), which gives a definition of counterfeit or pirated goods, _inter alia_ to facilitate
the exchange of information and co-operation between national customs authorities and the
Commission.

16 OJL 292, 15.11.1996. See also Council Regulation (EC) No 515/97 cited above.

**17** Taking more effective measures at this level will make it easier to detect forgery at an early stage.
Although preventative, such measures make enforcement more effective in that they can be very

**9**

5. ('OOPKKATU)N

The change from protecting national interests to protecting a Community interest requires
national bodies to cooperate and coordinate their activities with the help of Union

institutions and bodies.

In all countries the production of counterfeit money has always been considered a
criminal act that strikes at the very heart of a State. An International Convention for the
Suppression of Counterfeiting Currency of 1929, advocates the setting up of specialised
centralised structures to prevent and combat this form of unlawful activity. [18] These
specialised structures are supposed to contact each other directly and notify information
concerning counterfeiting.

(iiven the introduction of the curt), it is important to develop the existing networks by
strengthening them. An essential element would be to offer administrative and
operational support at Commission level. Such a Community structure would ensure
communication and cooperation with liaison offices in the Member States and the
authorities responsible for issuing the notes and coins, as well as with Europol and ICPO
Interpol.

This cooperation will improve the level of strategic and operational analysis and will
strengthen the means of combating counterfeiting, particularly with common strategies.

The effectiveness of ground operations generally depends on the reliability of
information, the speed with which those responsible can exchange information and the
quality of cooperation between the authorities.

There is no denying the need to extend cooperation, building on the loyalty and trust of

the services.

The Member States already have structures in place. All that remains is to draw up the
legal framework to enable the necessary organisational adjustments to be made at Union
level and to create the conditions for close, effective and regular cooperation between the

various national Ibices themselves and the relevant Union institutions and bodies.

The regulatory provisions will have to include

- the relevant national authorities, the Commission, Europol and the ECB must be
required to cooperate with and assist each other; [19 ]

- there must be rules governing cooperation and mutual administrative assistance
between the Community and non-member countries (special clauses in association,

useful instruments for fast and effective enforcement by enabling information to be passed on rapidly
to the competent authorities as far upstream as possible or closer to the original offence. Regular
returns of information to the agencies concerned'might encourage them lo improve and develop their
early warning systems.

18 Convention signed in Geneva on 20 April 1929. League of Nations, Compendium of treaties,
Vol.CXIlNo2623,p.371.

**19** On the basis of the existing regulations; see footnote 14.

**10**

cooperation or partnership agreements between the Community and non-member
countries);

a special forum should be set up for effective joint consultations involving the national
authorities and the European institutions and bodies;

a clarification of the operational assistance role of the Commission based on article 7
of protocol no 2 on protection of financial interests as well as the role ol" Europol on
the basis of the new provisions of title VI, article 30, ed al, of the Treaty of

Amsterdam.

_6._ PROTECTION UNDER CRIMINAL LAW/APPROXIMATION OF NATIONAL LAWS:

CRIMINAL LIABILITY, PENALTIES, MUTUAL ASSISTANCE IN LEGAL MATTERS

In parallel with the drafting of the whole regulatory apparatus (defining terms, compiling
information, exchange of information, cooperation, etc.), the question of a criminal law
aspect relating to the definition of offences, penalties [20] and mutual assistance in legal
matters will also be worked out with a view to achieving the target of equivalent
protection throughout the Union.

The'questions of the definition of the victim, victims' rights and the representation of
victims in legal proceedings under criminal law, which at present are regulated by each
body of national law separately, must be given consideration so that a solution
appropriate to the monetary interests of the Communities can be found.

Definition of offences

As there are different legal systems, particularly as regards substantive criminal law,
what must be done first is to bring the definitions of specific offences of moneycounterfeiting more closely into line with each other.

This question has already arisen in the same terms in relation to defining moneylaundering when the Community directive was being drafted, [21] defining irregularity for
the purposes of the regulation on protecting the Community's financial interests and, in
particular, defining fraud for the convention on protection under criminal law for the
Community's financial interests.

The reason for pursuing this objective is that the Member States on their own, when
confronted with criminal activities which damage the Community's interests, are not able
to provide a consistent level of protection throughout the Community. Establishing
generally accepted definitions will make it easier to process information, establish
international cooperation in matters under the criminal law and apply penalties.

It should be stressed that there needs to be a generally accepted definition of the criminal
offences associated with all the activities contributing to currency counterfeiting

20 Council Regulation (EC) No 974/98 on the introduction of the euro merely stipulates that the Member
States will lay down appropriate penalties against money counterfeiting and forgery.

21 Council Directive 91/308/EEC of 10 June 1991; Council Regulation (EC) No 2988/95 of
18 December 1995, OJ L 312, 23.12.1995; Convention of 26 July 1995, OJ C 316, 27.11.1995.

**11**

involving banknotes and coins. Acts committed in the fabrication of counterfeit currency
or those which lead up to it, take place in tandem with it or follow on from it must be
described uniformly, with due regard for technical advances in photocopying and digital
reproduction. The effectiveness and consistency of a system of protection which should
be al the same level throughout the Community will depend on accurate identification of
the elements which make up an offence. The definition in the Geneva Convention of
20 April 1929 makes a useful starting-point.

Deterrent penalties

A preliminary survey by the EMI found that maximum penalties varied considerably
from one Member State to another, which does nothing to further the objective of
ensuring equivalent protection throughout the EMU area. The situation needs to be given
thought so that there can be a uniform level of deterrence

Experience in the field of protecting the Community's financial interests, and the results
obtained, could be a basis. A specific offence concerning currency counterfeiting
activities based on the generally accepted definition of counterfeiting of the euro referred
to above could be established as a first stage, followed at the Union level by the laying
down of a minimum penalty threshold; this would obviously reduce the risks associated
with there being areas where penalties are less strict.

Mutual assistance injudicial matters

There must be provision for mutual assistance injudicial matters, to ensure that offences
are prosecuted effectively and uniformly throughout the European Union. Here again,
the Geneva Convention guidelines on judicial cooperation in combating counterfeiting
could be a useful frame of reference for further thinking and the launching of the
requisite initiatives. [22 ]

The terms on which judicial cooperation in protecting the euro is to take place must be
defined, going beyond the draft convention on mutual assistance in judicial matters
which is being negotiated at present, particularly in relation to recognition and the seizure
of evidence, the role of the Commission and the ECB in assisting the national authorities
and direct judicial assistance.

**7.** **SUPPORT FROM EXISTING INSTRUMENTS**

Potential synergies and the degree to which the Community framework, the institutions,
intergovernmental instruments and existing international organisations complement one
another must be accurately assessed. Work by the experts has shown that the existing
structures for international cooperation to combat counterfeiting can play an important
part, especially as regards relations with third countries where the euro is likely to
circulate or to act as an international transaction and reserve currency.

22 Extradition (Articles 8, 9, 10 and 16), direct transmission of letters rogatory between judicial
authorities (Article 16).

**12**

There must, therefore, be further exchanges of information on euro counterfeiting and
greater operational cooperation with every country in the world, particularly through the
relevant international bodies. There will be special clauses in cooperation agreements
between the Community and non-member countries supplementing such cooperation and
going into greater detail (see above).

The Europol Convention is to come into force in October 1998. [23] The Council may
unanimously decide to extend Europol's mandate to cover money counterfeiting. In that
way it could make its contribution to the war on organised transnational crime, in
cooperation with the Commission, the ECB and the Member States.

The protection of the euro will also have to be based on the other existing international
instruments, such as the Geneva Convention, [24] in order to protect the Community's
monetary interests outside the Union in all parts of the world. [25 ]

Interpol receives reports of international counterfeiting cases via a system of notification
from national Interpol units. It uses them to draw up annual statistics on the
counterfeiting of currencies circulating in other countries. So, in the same way as the
Member States in relation to their national currencies before the introduction of the euro,
Interpol should be able to help in the protection of the euro. Interpol will take the
existence of EMU into account and regard the Member States adopting the euro as a
single currency area.

**8.** **THE** **DEADLINES**

The measures described must be introduced in phase with the stages of EMU.

The ECB has decided to set up a technical data base

The Commission, in line with its customary approach and with the Council conclusions
of 19 May 1998, will prepare the establishment of the resources necessary for the
protection of the euro, before euro banknotes and coins start circulating on 1 January
2002. For this purpose, the Commission will:

**•** [press ahead together with the experts to complete its assessment of the situation and ]
of the requirements in terms of information and cooperation between the relevant
authorities;

put forward initiatives in the legislative sphere in particular to supplement the ECB's
work. The object of these initiatives will be:

23 OJ C 316, 27.11.1995. The entry into force of the Europol convention is subject to the adoption of a
number of instruments governing its operations. These are referred to in Article 45(4) of the
Convention and relate to such matters as the rules of procedure, staff regulations, financial regulation
and a Protocol on privileges and immunities. As there is such a wide range of them, it is not possible
to predict when the European Police Office will start operating.

24 Cf.note 19.

**25** Special clauses to step up cooperation can be incorporated into the agreements between the
Community and its non-member partner countries.

**13**

to set up an arrangement to facilitate exchanges of information and the
establishment of close and regular cooperation with a view to preventing and
combating currency counterfeiting;

to bring about the requisite approximation of rules and tighten up mutual legal
assistance in criminal matters, so as to ensure that action to suppress
counterfeiting is equivalent; [26 ]

- in the course of 1999, examine the possibility of launching a pilot training scheme to
define multiannual policy guidelines for everyone involved in the system for
preventing, detecting and suppressing currency counterfeiting, to run in tandem with
national vocational training policies. This action will allow guidelines to be
determined for a multiannual training policy.

The Commission believes there should be a sufficiently long trial period to test whether
the technical resources and structures to be put in place are practicable. It therefore
proposes that a time limit of not later than 2000 be set for the adoption of the legislative
instruments. This will allow the establishment and the running of the systems of
protection of the euro by 1 January 2001.

Legislative action by the Commission on judicial cooperation on the basis of the third pillar will first
require the entry into force of the Treaty of Amsterdam, which gives the Commission the right of
initiative.

**14**

#### **ISSN 0254-1475**

## COM(98) 474 final

# **DOCUMENTS**

### EN 09 10 01 06 Catalogue number : CB-CO-98-492-EN-C ISBN 92-78-38606-5

Office for Official Publications of the European Communities

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