Controls on cash entering and leaving the EU: European Council adopts regulation
The European Council adopted yesterday, 2 October, regulation aimed at improving controls on cash entering or leaving the Union. This follows an agreement reached with the European Parliament in June. Terrorist financing, money laundering, tax evasion and other criminal activities need to be tracked and eliminated. The new regulation provides us with the necessary tools to be more efficient in tackling such threats.
About this measure, Hartwig Löger, Austrian Federal Minister for Finance, has said that “the regulation will improve the existing system of controls on cash entering or leaving the EU. It means that the latest developments in international standards on combating money laundering and terrorism financing developed by the Financial Action Task Force (FATF) will be reflected in EU legislation”.
In practical terms, the new regulation extends the definition of cash to cover not only banknotes but also other instruments or highly liquid commodities such as cheques, traveller’s cheques, prepaid cards and gold. The regulation is also extended to cover cash that is sent by post, freight or courier shipment.
The new legislation extends the obligation of any citizen entering or leaving the EU and carrying cash to a value of €10 000 or more to declare it to the customs authorities. The declaration will be required irrespective of whether travelers are carrying the cash in person, in their luggage or means of transport. At the request of the authorities they will have to make it available to be checked.
If the cash is sent by other means (“unaccompanied cash”), the relevant authorities will have the power to ask the sender or the recipient to make a disclosure declaration. The authorities will be able to carry out controls on any consignments, packages or means of transport which may contain unaccompanied cash.
Member states will exchange information where there are indications that cash is related to criminal activity which could adversely affect the financial interests of the EU. This information will also be transmitted to the European Commission.
The new regulation will not prevent member states from providing additional national controls on movements of cash within the Union under their national law, provided that these controls are in accordance with the Union’s basic freedoms.
The Council and the European Parliament now need to sign the adopted regulation. The signed text will be published in the EU Official Journal and will enter into force on the twentieth day following that of its publication.
Background
Current rules on the movement of cash in and out of the EU (Cash Controls Regulation -regulation 1889/2005) have applied since 15 June 2007 and are an integral part of the EU’s Anti Money Laundering and Terrorist Financing framework. The new regulation updates these rules and complements the EU’s legal framework for the prevention of money laundering and terrorist financing set out in directive 2015/849.
The existing rules require travelers entering or leaving the EU to declare cash amounting to €10 000 or more (or its equivalent) to customs authorities. The new legislation extends these obligations. New rules are needed because terrorists and criminals have managed to find ways to circumvent the rules on cash controls. Criminal organisations whose illicit activities generate large volumes of cash must be prevented from taking advantage of loopholes in the current system to move and launder their money.
