Money laundering: prevention through customs cooperation

 

SUMMARY OF:

Regulation (EC) No 1889/2005 — controls of cash entering or leaving the EU

WHAT IS THE AIM OF THE REGULATION?

It complements the rules of Directive (EU) 2015/849 on prevention of the use of the financial system for the purpose of money laundering and terrorist financing within the EU.

KEY POINTS

Obligation to declare

• The regulation places an obligation on any individual entering or leaving the EU and carrying cash* of a value of €10,000 or more to declare that sum to the competent authorities*. The information provided must be correct and complete, otherwise the declaration is invalid.
• The declaration is provided in writing, orally or electronically, to be determined by the EU country, and must contain information on:
  • the declarant, including full name, date and place of birth and nationality;
  • the owner and the amount and nature of the cash;
  • the intended recipient of the cash;
  • the provenance and intended use of the cash.
• The information obtained, either from the declaration or as a result of controls, must be recorded and processed. It is made available to the authorities responsible for combating money laundering or terrorist financing in the EU country of entry or of exit. The information provided may be communicated to non-EU countries by the EU countries or by the European Commission, subject to the consent of the competent authorities. The national and EU rules on the transfer of personal data must be complied with.
• Professional secrecy covers all information which is by nature confidential or which is provided on a confidential basis. It must not be disclosed without the express permission of the person or authority providing it. However, the competent authorities may be obliged by law to disclose this information, for instance in connection with legal proceedings. In such a case, any disclosure or communication of information must fully comply with prevailing data protection legislation.

Checking compliance with the obligation to declare

• Officials of the competent authorities may check compliance with the obligation to declare by carrying out controls on individuals. This includes controls on the individuals themselves, their baggage and their means of transport. All controls must comply with national legislation in this area.
• In the event of failure to comply with the obligation to declare, cash may be detained by administrative decision in accordance with national legislation.
• The information obtained may be made available to other EU countries, in particular where there is evidence of illegal activities. In such cases, Regulation (EC) No 515/97 on mutual assistance between the administrative authorities of the EU countries and cooperation between the latter and the Commission to ensure the correct application of the law on customs and agricultural matters applies. Where there are indications that the financial interests of the EU are adversely affected, the information must also be transmitted to the Commission.
• Where it appears from the controls that an individual is entering or leaving the EU with sums of cash lower than €10,000 and where there is evidence of illegal activities associated with the movement of cash, that information may also be recorded and processed.

Penalties

By 15 June 2007, EU countries were required to introduce effective and proportionate penalties constituting a deterrent in the event of failure to comply with the obligation to declare.

FROM WHEN DOES THE REGULATION APPLY?

It has applied since 15 June 2007.

BACKGROUND

For more information, see:

• Cash controls (European Commission)

KEY TERMS

MAIN DOCUMENT

Regulation (EC) No 1889/2005 of the European Parliament and of the Council of 26 October 2005 on controls of cash entering or leaving the Community (OJ L 309, 25.11.2005, pp. 9–12)

RELATED DOCUMENTS

Council Regulation (EC) No 515/97 of 13 March 1997 on mutual assistance between the administrative authorities of the Member States and cooperation between the latter and the Commission to ensure the correct application of the law on customs and agricultural matters (OJ L 82, 22.3.1997, pp. 1–16)

Successive amendments to Regulation (EC) No 515/97 have been incorporated into the original document. This consolidated version is of documentary value only.

Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Regulation (EU) No 648/2012 of the European Parliament and of the Council, and repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive 2006/70/EC (OJ L 141, 5.6.2015, pp. 73-117)

See consolidated version.

Report from the Commission to the European Parliament and the Council on the assessment of the risks of money laundering and terrorist financing affecting the internal market and relating to cross-border activities (COM(2017) 340 final, 26.6.2017)

last update 06.12.2017