What are the current rules governing movements of cash in and out of the European Union?
Current rules on the movement of cash in and out of the EU, known as the 'Cash Controls Regulation', apply since 2007 and are an integral part of the EU's Anti Money Laundering (AML) and Terrorist Financing (TF) framework.
Under this legislation, travellers entering or leaving the EU are legally obliged to declare amounts of cash valued at €10,000 or more (or its equivalent in other currencies or bearer negotiable instruments) to customs authorities.
The information collected from cash declarations is made available to national Financial Intelligence Units (FIUs) which collect, analyse and investigate all the data received to prevent money laundering and to establish links between certain financial transactions and illegal activities.
How do terrorists and illegal organisations take advantage of these rules?
Overall, the current rules perform well. At the same time, new challenges do need to be dealt with.
Recent events have shown that terrorists have managed to find ways to circumvent the rules on cash controls. For example, cash sent through the post or in a parcel is subject only to standard customs declarations which provide less information to the authorities than specific cash declarations.
National authorities have also seen that certain precious high-value commodities such as gold are now being used to escape the obligation to declare, since gold is not considered 'cash' under existing rules. For example, French customs authorities found non-declared cash and gold worth €9.2 million in postal parcels and freight packages during an investigation at Roissy Airport in 2015.
Criminal organisations whose illicit activities generate large volumes of cash should not be able to take advantage of loopholes in the current system to move and launder their money.
What changes are foreseen in today's proposal?
Recent international developments and extensive consultations with Member States and interested parties have led to the conclusion that there is considerable scope for improving the rules by:
- tightening cash controls on cash and precious commodities valued at €10,000 or more which are sent through postal parcels or in freight consignments;
- extending the definition of 'cash' to gold and other high-value commodities, as well as prepaid payment cards which are not linked to a financial account;
- creating a simplified and more robust mechanism for the exchange of information between national customs authorities and FIUs;
- enabling competent authorities to act on amounts lower than €10,000 of cash entering or leaving the Union when there are indications that the cash is related to criminal activity.
What kinds of payment instruments will be included in the future definition of cash?
Current rules cover only cash and its equivalent in other currencies, or bearer negotiable instruments such as bonds, shares, traveller's cheques.
The proposed legislation divides cash into four main categories:
- bearer-negotiable instruments (eg. bonds, shares, traveller's cheques);
- commodities used as highly liquid stores of value (eg. gold bars) and;
- pre-paid payment cards not linked to a financial account.
What changes are proposed for information exchange between Member States on cash control?
Customs authorities and FIUs act as hubs for the analysis of data used in the fight against money-laundering and terrorist finance and between customs authorities in different Member States. Today's proposal establishes the principles of data exchange that should take place between those authorities.
The technical system for the exchange of information will be determined by a study and in close collaboration with Member States throughout 2017.
What are the next steps?
The proposal will be sent to the Council and the European Parliament and will follow the ordinary legislative procedure. The Commission is confident that the Maltese Council Presidency will quickly start discussions on the proposal and that an agreement can be reached in 2017.