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Brussels, 17 September 2010
Questions and Answers on Cash Controls at EU Customs
What are the existing EU tools to fight money laundering and terrorism financing?
A series of measures are in place at EU level to prevent money laundering and terrorism financing, in particular the Anti-Money Laundering Directive of 2005 . Other legislation is in place to ensure that payers can be identified during the transfer of funds, and provisions are also laid down to regulate the cooperation between Financial Intelligence Units in EU Member States, allowing for the tracing, freezing, seizing and confiscation of instruments used and the proceeds of crime. A complementary strategy adopted in 2005 also points at measures to improve the fight against terrorist financing, and this includes controls on high value cash movements to and from the EU.
What rules are in place at EU-level regarding the declaration of cash?
The Anti-Money Laundering Directive (2005/60/EC) sets up an EU mechanism to prevent money laundering by monitoring transactions through credit and financial institutions and certain types of professions.
In order to avoid the above provisions being undermined by the movement of high value amounts in cash, an EU Regulation called the 'Cash Controls Regulation' on the movement of cash entering or leaving the EU was adopted in 2005. Under this legislation, travellers entering or leaving the EU are legally obliged to declare any amounts of cash that they are carrying that have a value of €10 000 or more. Data from suspicious cash declarations is made available to the national Financial Intelligence Units that collect, analyse and investigate all data received to prevent money laundering. The information from the Cash Controls Regulation, along with data gathered on the basis of other legislation, helps to establish links between certain financial transactions and illegal activities.
Why are cash declarations legislated for at EU level?
Within the EU's Internal Market, goods, persons, services and capital must be able to move freely, and introducing national rules for cash control would have created obstacles. Therefore, cash controls are 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 national measures for administrative or statistical purposes, or national measures justified on grounds of public security.
Why has the Commission produced an evaluation report on cash controls?
Under Regulation 1889/2005 on controls of cash entering or leaving the EU, the Commission is required to report to the European Parliament and Council on the implementation and functioning of this legislation, four years after its entry into force. The report evaluates the procedures in place to implement the cash declaration obligations and controls, as well as of the processing, recording and accessibility of information gathered by the national Financial Intelligence Units in the fight against money laundering and terrorism financing. It also evaluates the penalty systems in place and the exchange of information between Member States, third countries and the Commission.
What are the conclusions of this evaluation report?
The report concludes that the recent implementation of the Cash Control Regulation is generally satisfactory. Member States have organised themselves in a way that ensures that passengers comply with their cash declaration obligations. It also concludes that cash declarations are properly processed and controls are carried out on passengers, luggage and transport vessels. Member States have also have put in place a penalty system and/or cash detention system for cases of non-compliance with the cash declaration requirements. Information gained from the cash declaration system is made available to the national Financial Intelligence Units, and exchanged with other Member States, the Commission and third countries when necessary.
What are the weaknesses outlined in this report?
The report notes differences between Member States when it comes to the gathering of cash declarations and the controls performed. The Commission therefore recommends that further work is done to ensure a more harmonised application of the rules across the EU. In a few Member States, shortcomings have been detected in the recording, processing and accessibility of control information and in the introduction of national penalties. Those Member States should take the necessary action to ensure that the EU legislation on cash controls is properly implemented, and the Commission will continue to follow this situation very closely.
What are the Commission's suggestions?
The report suggests that some adjustments to the cash control Regulation could be considered, in order to further enhance the effectiveness of the controls. For example, improvements could be made to address the practical difficulties that some Member States have when controlling transit passengers. The Commission also suggested to harmonise declaration forms or to insert a compulsory requirement to raise awareness on the obligation to declare cash. The Commission also acknowledges that further harmonisation could also be achieved through the exchange of best practices, detailed guidance notes and technical agreements.
This report as well as suggestions for revising these rules will be discussed at the Council in October 2010.
What are the differences in cash declaration statistics between Member States?
Some Member States report high numbers of cash declarations and/or detected irregularities while others report much more moderate numbers. For full details per Member State, see Annex 1.
Why are there differences in cash statistics between Member States?
The situation varies amongst Member States. For example, some Member States have no land borders or few direct flights with non-EU countries. In such cases, few cash declarations are to be expected. Others have considerable direct flights or borders with non-EU countries, so their statistics are higher. However, the Commission acknowledges that some differences between Member States are not necessarily justified by these economic or geographical differences and should be remedied. This is why the Commission will monitor the situation in the Member States in order to ensure a harmonised application of the regulation across the EU.
What are the provisions for cash controls at international level?
At international level, a gradual strengthening and reinforcement of anti-money laundering and terrorism financing measures is envisaged. The Financial Action Task Force (FATF), the international policy body in charge of the fight against money laundering and terrorism financing that was established by the G7 Summit in 1989, is constantly upgrading its anti-money laundering and terrorism financing framework.
Do the statistics on cash movements include intra EU movements?
The cash statistics in the report only relate to cash movements dealt with by Customs at the EU's external borders. Some national cash statistics include both cash declarations at the internal borders (between EU Member States) and at the external borders.
Are passengers sufficiently aware of their obligation to declare cash?
The Commission and Member States have undertaken several awareness raising actions on the obligation to declare cash of 10 000 euro or more when entering or leaving the EU. Since 2009, the Commission has made 1 million multilingual leaflets (including Hindi, Farsi and Vietnamese) and 12000 posters in all EU languages available.
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Summary statistics of cash declarations and cash detections
- all Member States -
Q3 2007 – Q2 2009
Figures and graphics available in PDF and WORD PROCESSED
Source: Evaluation report of the Cash Control Regulation