Definition of cash

The definition of cash in the Cash Control Regulation matches the definition used by the FATF for Recommendation 32 on cash couriers and includes:

Currency, i.e. banknotes and coins that are in circulation as a medium of exchange.

Bearer-negotiable instruments (BNI), including monetary instruments in bearer form such as travellers cheques;

Negotiable instruments (including cheques, promissory notes and money orders) that are either in bearer form, endorsed without restriction, made out to a fictitious payee, or otherwise in such form that title thereto passes upon delivery;

Incomplete instruments (including cheques, promissory notes and money orders) signed, but with the payee's name omitted;

As the Cash Control Regulation mirrors the definition of 'cash' used in the supra-national standard (FATF recommendation 32), gold, precious metals or stones, electronic cash cards and casino chips are not included in the definition of cash. These items are covered by Customs Code provisions.

The obligation to declare

The Cash Control Regulation establishes a uniform EU approach towards cash controls based on a mandatory declaration system.

If a natural person 64 entering or leaving the EU (including transiting) transports cash of a value of EUR 10 000 or more, he/she must declare these funds. It is the total value in EUR equivalent of all cash transported by the natural person that determines if the threshold of EUR 10 000 is exceeded.

The EUR 10 000 threshold is considered high enough not to burden the majority of travellers and traders with disproportionate administrative formalities.

However, when there are indications of illegal activities linked with movements of cash lower than EUR 10 000, the collecting and recording of information related to these movements is also authorised.

This provision was introduced in order to limit the practice of "smurfing", the act of carrying amounts lower than the threshold with the intention to escape the obligation to declare. Smurfing is often related to money laundering, terrorist financing, fraud or other financial crimes and should therefore be monitored by the competent authorities.

Designation of powers of the competent authorities 65

In order to ensure compliance with the obligation to declare, the national competent authorities are empowered to:

Request, accept, check and certify a cash declaration;

Check compliance with the obligation to declare;

Carry out controls on natural persons, their baggage and their means of transport

Recording and processing of information

Member States must record and process all information they obtain through declarations or controls, and make this information available to the national authorities competent for fighting money laundering and terrorist financing.

These authorities are designated as national Financial Intelligence Units (FIUs), central national units responsible for receiving and analysing information and suspicious transactions received from authorities or private sector operators, analysing them and if there are reasons to suspect that illicit activity may be going on, to notify the competent (judicial) authorities.

FIUs therefore play a key role in ensuring that the information collected through cash declarations and cash controls, is properly analysed and where appropriate, used effectively to investigate suspicions of money laundering and terrorist financing.

It should be noted that all information obtained through the Cash Control Regulation is confidential. All personal information must be dealt with in accordance with the relevant data protection provisions. Where considered necessary, rules for the classification of the information to guarantee the security of the data apply.

Exchange of information

Where there are indications that the sums of cash are related to any illegal activity associated with the movement of cash, exchange of information may take place with competent authorities in other Member States. Information adversely affecting the financial interests of the EU must also be transmitted to the Commission.

Under the framework of existing agreements on mutual administrative assistance, information obtained under the Cash Control Regulation may also be communicated to a third country, subject to compliance with relevant national and EU provisions on the transfer of personal data to third countries.

Penalties

Member States are required to provide for penalties against persons who fail to declare EUR 10 000 or more in cash when crossing EU external borders. The penalties resulting from such proceedings must be effective, dissuasive and proportionate to the offence 66 , so as to have a deterrent effect.

2.2.6.Control of cash movements within the European Union

The Cash Control Regulation does not cover cross-border movements of cash within the EU. Member States are however entitled to apply national measures to control cash movements within the EU, at their national borders and or on national territory, provided that such measures comply with Article 65 of Treaty on the Functioning of the European Union (TFEU).

Article 65 empowers MS to establish procedures for the declaration of cash movements for purposes of administrative or statistical information, or to take measures which are justified on grounds of public policy or public security, provided that the measures and procedures applied do not constitute a means of arbitrary discrimination or a disguised restriction on the free movement of capital.

16 Member States apply some form of cash controls at their borders with other Member States.

Source: Europol report 'Why is cash still King', op. cit., p. 25.

3.EVALUATION QUESTIONS

In order to structure the evaluation exercise, the current analysis sets out to answer a series of questions that will provide insight into the effects produced by the Cash Control Regulation, and to investigate to what extent it has made a contribution towards reaching the intended objectives (see section 2.2.4 above). The following questions address each of the five main evaluation criteria that the Commission’s Evaluation Guidelines recommend for consideration:

1.To what extent is the current scope of the Cash Control Regulation still relevant for preventing money laundering and terrorist financing? (relevance)

2.To what extent do the current provisions of the Cash Control Regulation guarantee proper control of cash movements to prevent money laundering/terrorist financing? What is the value added of acting at EU level? (effectiveness/EU added value)

3.Is the information collected in an easy and burden-free manner? To what extent is the information exchanged timely and accurately, with the national FIU and with other Member States and third countries? (efficiency)

4.How extensive is the information collected under the Cash Control Regulation and how useful is it for preventing money laundering/terrorist financing at national level/EU level? To what extent does it allow customs to gather all possible information to assist in the prevention of money laundering/terrorist financing? (effectiveness/utility)

5.To what extent are the current provisions of the Cash Control Regulation in line with the latest developments in the EU and at the international level to prevent money laundering /terrorist financing? (coherence)

4.METHOD/PROCESS FOLLOWED

4.1.Process/Methodology

The evaluation serves both a summative (i.e. focus on the effectiveness of the Cash Control Regulation in the EU by providing an objective assessment of its quality or value) and a formative purpose (i.e. facilitate learning in order to prepare for a new legislative proposal which could replace or up-date the current Cash Control Regulation).

Data collection

For the purpose of answering the evaluation questions, different sources of data have been used. An active effort was made in order to “triangulate” the data used throughout the analysis. This means that all findings presented in the evaluation are supported by evidence from different data sources. Any contradicting evidence has been weighed according to its strength and quality before reaching conclusions.

Desk research

A broad review of national, EU and international reports was conducted. The review covered a variety of policy and operational documents, evaluation/progress reports, economic data, court decisions etc. The list of sources can be found in Annex 1.

Statistical data

Regular statistics provided to the Commission by Member States on cash declarations and recordings (failures to declare or to declare correctly) since 2007, and on penalties, cash detentions, cash seizures and cash confiscations since 2010, have been analysed.

The 2010 Report on the implementation of the Cash Control Regulation

As per the requirement of Article 10 of the Cash Control Regulation, in August 2010 the Commission submitted a "Report on the implementation of the Cash Control Regulation" to the Council and the European Parliament (2010 Report).

Since the Cash Control Regulation had been in force for a short amount of time, the focus of the 2010 Report was mainly on assessing whether appropriate structures had been established and adequate procedures developed by Member States to allow for a uniform implementation of the Cash Control Regulation.

The 2010 report has been an important source of information for the current evaluation.

Questionnaires to Member States

In June 2014, a questionnaire (2014 Questionnaire) was sent to Member States in order to get an update on how they implemented the provisions of the Cash Control Regulation and to cover any missing gaps in data. The 2014 Questionnaire provides data on the general implementation of provisions, as well as the extent to which cash movements in post and freight were covered by the national legislations.

Answers to earlier questionnaires sent to Member States by the Commission were also taken into account as regards information not covered in the 2014 Questionnaire.

Furthermore, a new questionnaire on the exchange of information on cash declarations and results of cash controls (cash control information) for the purpose of fighting tax fraud and evasion (Tax Questionnaire) was sent to Member States in January 2015 and also informs sections of the evaluation.

Operational information from other sources

Useful data has been obtained through responses to information requests by relevant national and EU institutions that deal with the fight against money laundering and terrorist financing.

A number of national FIUs provided feedback on their use of cash control information. In addition, Europol (EU's law enforcement agency) agreed to provide examples of criminal investigations resulting from controls of cash by EU Member States.

4.2.Limitations – robustness of findings

Some limitations of the data used in this evaluation exist; they are stemming from:

Lack of complete statistics linking cash controls to criminal investigations and court decisions on money laundering or terrorist financing, as feedback is often not provided by the national FIUs to the competent authorities that collect the relevant information;

Variation in the amount and quality of information provided by the Member States in response to Commission's questionnaires and information requests, an example being the 2014 Questionnaire to which 4 Member States provided no answers and several Member States provided partial or incomplete answers;

Lack of first-hand observation/monitoring by the Commission of cash controls procedures and results in the Member States.

However, the evaluation analysis made efforts to overcome these limitations by relying on:

A significant number of examples of how cash controls have initiated criminal investigations on money laundering/terrorist financing and resulted in convictions by courts, as well some statistical data on the use of cash controls provided by several national FIUs;

Numerous discussions with Member States' cash control experts at the plenary meetings of the Cash Control Coordination Group (CCCG) which take place several times a year, as well as ad-hoc project groups on cash control issues, which provide an opportunity for Member States to exchange detailed information on their procedures and practices and complement the data provided via official information requests;

Regular and complete statistical data provided by Member States according to Commission's guidelines and standard templates, which enable a detailed insight into the practical implementation of the main provisions of the Cash Control Regulation.

5.IMPLEMENTATION STATE OF PLAY (RESULTS)

The implementation of the Cash Control Regulation by the Member States is monitored by the European Commission mainly through:

Collecting and analysing the statistics on cash declarations and recordings (failures to declare correctly) as well as on penalties imposed, sent regularly by all the Member States on a voluntary basis.

Communication with cash control experts in the Member States:

oAt plenary meetings of the CCCG, an expert group set up by the Commission which meets several times a year to discuss pertinent cash control issues;

oBy setting-up smaller project groups of experts to deal with ad-hoc projects related to cash controls.

Taking note of mutual evaluations by the FATF (or MONEYVAL) of EU Member States, with the focus on recommendations relating to their systems of cash controls.

Obtaining information from the Member States by way of Commission questionnaires on cash controls.

The following sections will provide an overview of the current state of the implementation of the Cash Control Regulation by looking at its main provisions and illustrating:

How each provision should be interpreted and applied by the competent authorities in the Member States;

Where relevant, an overview of implementation efforts since the introduction of the Cash Control Regulation;

The current state of play in relation to the implementation of each provision.

5.1.Definition of cash

As foreseen in the Cash Control Regulation, all Member States follow the definition of cash established by the FATF which refers to financial and monetary instruments whose value can be transferred from one person to another, i.e. whose origin and destination are anonymous or which can be endorsed and transferred successively by several recipients.

Several Member States also have national provisions similar to the obligation to declare cash as regards gold and/or precious metals and stones (Austria (on its territory), Bulgaria, Cyprus, the Czech Republic, Germany, Italy and Poland). In addition, Germany has national provisions to declare electronic money.

5.2.Obligation to declare

Competent authorities of the Member States have to ensure the necessary organisational facilities are in place at the points of EU entry and exit, including airport transit zones, so that natural persons can fulfil their obligation to declare.

This should be achieved by guiding the natural person via communication material to the relevant customs control posts or other equivalent technical facilities (on-line declaration possibility), where the declaration forms are readily available. Sufficient staffing of the customs control posts/technical facilities at the external borders of the EU should be ensured and staff should have the authority and technical competence to accept declarations.

5.2.1.Raising awareness on the obligation to declare

The Cash Control Regulation does not lay down any awareness-raising measures. Nevertheless, the Commission has stimulated Member States to undertake initiatives in order to inform the public of their obligations and has undertaken specific actions since the coming into force of the Regulation.

Current state of play

In order to harmonise the communication on cash controls, common communication material is developed by the European Commission. Such material has been either made directly available, or provided in the form of templates that can be used by Member States, and includes: cash control leaflets, posters, advertorials, alternative advertising (suitcases), animated clips, roll-ups, internet banners, web pages etc. Similar tools are also issued at the national level.

In May 2014, the Commission asked the Member States to report on whether they had started using updated cash control communication templates, designed and provided by the Commission to ensure a uniform EU visual identity of communication actions.

Most of the Member States reported not yet using the templates but nevertheless continue to use the material previously directly provided by the Commission.

The Commission emphasised that a uniform EU-wide communication on cash control was crucial and passengers should be adequately informed at points of entry and exit, as well as via internet, in a consistent manner. The Member States were advised to use the External Communication Network, the Commission's platform for coordination of communication activities, to raise specific issues and obtain support in ensuring that a uniform EU message on cash declaration obligation reaches passengers.

5.2.2.Place to declare

The declaration has to be completed and lodged with the competent authorities at the point through which the natural person is entering or leaving the EU.

The 2010 report showed that for air transit 67 passengers, the obligation to declare cash at the first point of entering or the last port of leaving the EU was difficult to comply with due to the variations in airport transit infrastructure. There were few or different facilities provided for declaring cash in transit zones and there was often not enough time between flights.

A Project Group of Member States experts analysed the transit issue in 2011 and concluded that an amendment to the Cash Control Regulation would not provide a solution to the practical problems encountered, as the combined use of the Cash Control Regulation and the implementing provisions of the EU Customs Code formed a sufficient base to perform controls.

This was confirmed by an opinion of the European Commission' Legal Service, which indicated that transit was only one method of entering or leaving the EU, and terms entering and leaving were already specified in Article 3 and should be interpreted literally.

Current state of play

Following the conclusion of the 2011 Project Group of Member States' cash experts that non-legislative measures were more appropriate for transit passengers, the Commission updated the Handbook of Guidelines on Cash Control to include more/better references to transit and made available the updated version to all Member States.

The introduction of a new transit-specific CDF 68 was not considered necessary due to the introduction of a new general EU-CDF, which is applicable for transit passengers as well.

The recent discussions at plenary meetings of the CCCG however indicate that a number of Member States continue to experience practical problems with cash declarations and controls in relation to transit passengers.

5.2.3.Methods to declare

The Cash Control Regulation does not prescribe the method of the declaration. As a result the declaration can be presented in written, oral or electronic form depending on the requirements laid down by national legislation. The minimum information to be provided includes:

The declarant (name, date and place of birth, nationality, etc.);

The owner of the cash;

The intended recipient of the cash;

Description of the cash (nature, amount, currency);

Provenance and intended use of the cash;

The transport route;

The means of transport.

The acceptance of the declaration should include at the minimum a check on:

The readability of the data (in combination with a check on the acceptability of the form used and the language used to complete the data); and

The completeness of the declaration (the minimum required boxes are completed);

The identity of the natural person that submits the cash declaration (the data to identify the declarant as completed on the declaration form should conform to the passport or travel documents the natural person can provide as proof of his/her identity).

Any further control action on the validity of the data in the declaration is not required by the Cash Control Regulation. As a result, an accepted declaration never proves the legal status, the origin or destination of the funds and can never be accepted as a substitute for verifying the source of funds.

The competent authorities should nevertheless carry out a reasonable number of random and/or targeted controls and investigations to ensure that natural persons respect not only the completeness but also the correctness of the cash declarations presented.

Most Member States had opted to require written declarations. Only three Member States allowed for an oral declaration, which would then be written up by a customs officer. Three Member States also allowed for electronic declarations to be lodged (one only for professional cash couriers).

In almost all Member States, cash declarations could be completed in the official languages of the country in which one had to declare, and also in English. Some Member States accepted and allowed the cash declaration form to be completed in other widely spoken EU languages.

The initial implementation phase showed that making use of a common declaration form would be an important contribution to improve the (electronic) exchange of information on cash declarations. Furthermore it would also enhance the understanding by international travellers on what is expected from them, thus improving compliance with the requirements.

For that purpose, a European Common Declaration Form (EU-CDF) was developed in collaboration between the Member States Experts and the Commission services in the CCCG framework. This process was initiated in 2008 and the current form is regularly reviewed in order to determine if it still meets current needs.

 Current state of play

The competent authorities of 24 Member States require the use of the EU-CDF and have accommodated it to include a national flag, references to national legislation and where applicable, intra EU cash controls procedures.

4 Member States have not yet implemented the EU-CDF:

The United Kingdom (UK) has approved the EU-CDF but is still using the old stock of national cash declaration forms until these are depleted;

Spain is waiting for the adoption of national regulation related to IT system requirements, implementation is expected in January 2016;

Italy is waiting for a decision by the Ministry of Finance in relation to the cost of the required IT solution (estimate of timing not given);

France does not use the EU-CDF due to national legislation provisions.

Spain and France offer the possibility of submitting a (currently national) cash declaration form online. 7 Member States offer the possibility to fill in the EU-CDF form online and then print it for submission in paper form, while 4 Member States are currently developing IT solutions for the EU-CDF.

5.2.4.Statistics on cash declarations/recordings

There is no explicit requirement in the Cash Control Regulation for Member States to provide statistics to the Commission. However, in the technical working group on cash controls to prepare the original proposal for the Cash Control Regulation, the Member States agreed that the collection of statistics on cash controls would be an important element in the follow-up of an effective implementation of the Cash Control Regulation.

Current state of play

Since 15 June 2007, when the Cash Control Regulation became applicable, all Member States have been sending in statistics on the cash declarations submitted and control results obtained to the Commission. Incorrect cash declarations or findings as a result of controls are referred to as "recordings" in the statistics.

The Commission, with support of Member States' cash control experts, has developed a Guide for Cash Control Statistics, which is annexed to the Handbook of Guidelines on Cash Controls and provides detailed guidance to the Member States on how to complete the standard Excel spreadsheet.

The statistics demonstrate that cash declarations are processed and controls are carried out on passengers, the luggage and the means of transport, by all Member States. However, there are significant differences in the levels of declarations submitted and controls results reported by different Member States.

These results will be presented and discussed in section 6.

5.3.Designation of powers of the competent authorities

Article 4 of the Cash Control Regulation provides the legal basis for competent authorities to carry out controls on natural persons, their baggage and their means of transport in accordance with national legislation.

Controls according to the Cash Control Regulation should include:

Control on the obligation to declare - check whether a natural person entering or leaving the EU (including transiting) and carrying cash of a value of EUR 10 000 or more has fulfilled his/her obligation to declare.

Control of natural persons - upon request the declarant is obliged to submit his/her identity papers in order to prove his/her identity; in cases of possible concealing of cash by persons, they may be subject to a ‘personal search’ depending on national legislation.

Control of the baggage - check the baggage of the natural persons concerned; officials should ensure to check or gather information on all baggage of a natural person (hand and hold baggage), both during targeted controls as well as during random checks.

Control of the means of transport and cargo - check whether natural persons entering or leaving the EU carry cash in their means of transport; this includes the possibility to search vehicles, containers in the vehicle or within the structure and fabric of the vehicle.

To ensure a comprehensive control approach for cash entering or leaving the EU, controls should take place on all transport modes (maritime, road, rail, air), and should be targeted based on risk analysis and include a random element.

The following control techniques should be used:

Risk management;

Questioning and procedures at the border;

Use of special (detection) equipment;

Advance passenger information (API) – data concerning passengers and flight details provided by the carrier prior to the start of travel;

Common and national databases;

Exchange of information with other Member States and third countries, including information specific to passengers in transit;

Cooperation and coordination with law enforcement authorities;

Feedback from the FIU.

In the event of failure to comply with the obligation to declare, cash may be detained by an administrative decision in accordance with the conditions laid down under the national legislation. Cash should be detained where there are indications of money laundering or terrorist financing and/or where there is a need to gather further relevant information on a cash border movement. For example, cash can be detained to determine the value of the cash transported and/or to await further declaration information to be provided by the passenger.

The competent authority should record the detained cash and gather evidence to assist with the investigation, taking into account the links to wider criminality e.g. drug trafficking, money laundering, terrorist financing etc. The information should be made available to the authorities responsible for combating money laundering and terrorist financing in the Member State where the information is collected, and to the Commission.

Current state of play

Currently all Member States perform controls of cash movements at the external borders, even though the numbers and types of controls differ between Member States, depending on national circumstances and priorities.

All Member States reported performing controls, including physical verifications, of cash movements at the external borders, focusing on the submitted declarations, passengers, luggage and the means of transport. Nearly all Member States made use of scanning equipment, while the use of trained sniffer dogs for cash controls was reported by 4 Member States.

12 Member States reported on the use of a specific national strategy related to cash controls, while others reported on the use of risk analysis criteria for cash control in the main points of entrance and exit. 17 Member States indicated they applied risk profiling for cash control and 18 made use of intelligence alerts on cash controls, either by receiving and/or issuing these kinds of alerts. 4 Member States reported that they organised national joint targeting actions with other competent authorities.

16 Member States reported that they applied specific controls on movements of sums of cash under the threshold of 10 000 € where there are indications of illegal activities associated with the movement of cash, commonly referred to as smurfing. This possibility is provided for by article 5.2 of the Cash Control Regulation.

The discussions at the plenary meetings of CCCG indicate that the overall levels and types of controls remain similar to those reported in 2010. Nevertheless, recent discussions of the CCCG reveal that more Member States are introducing sniffer dogs for cash controls.

Risk management techniques continue to be used but they depend on national access by customs authorities to API or national PNR.. The Commission has been working with the Member States to develop and implement a Common Risk Management Framework, which is also applicable for cash controls.

A resource already established to identify and analyse the risk within the EU is the Risk Information Form (RIF) module within the electronic EU Customs Risk Management System (CRMS). The aim of RIF is to exchange risk information to raise the awareness of the relevant competent authorities with regard to a potential irregularity or concealment trend. This exchange of information can be done very quickly and enables customs authorities to be informed rapidly about a potential risk.

As such, the RIF is a simple and effective tool to raise awareness of new risks and support the national implementation of risk analysis at the external borders on cash control. It enables competent authorities to provide to, or receive from, other Member States information on identified routes, flights, ships, concealment methods that are considered high-risk because of known or possible links to money laundering, terrorist financing or other illicit financial transactions.

Common EU risk indicators have also been established in order to improve the vigilance to the physical movement and transportation of cash, and have been disseminated to the Member States as guidance. Where a link between particular risk indicators and any natural person, means of transport etc. is established, competent authorities carry out additional verification and check the compliance with the Cash Control Regulation.

Since 2010, all Member States have been providing yearly statistics on the sanctions imposed on natural persons in cases where controls of cash at the external EU border identify a failure to meet the obligation to declare or indicate a link to illegal activity. These include penalties, cash detentions, cash seizures and cash confiscations.

5.4.Recording and processing of information

The information collected from cash controls must be recorded in a specific database and processed by the competent authorities in a timely and effective manner. This information must be made available to the FIU of the Member State, in the manner established by national regulations.

The first objective of the Cash Control Regulation is that customs authorities make all the cash-declaration related data available to their national FIU for the assembly, analysis and investigation of information that might indicate money laundering, terrorist financing or other illegal activity.

The information that customs authorities must make available to the FIU includes:

Details from cash declarations;

Details concerning cash not declared, incorrect declarations and incomplete declarations;

Facts established during cash controls carried out on natural persons, their baggage and their means of transport that provoke suspicions on money laundering and terrorist financing;

Any other facts related to movements of cash which provoke suspicions of money laundering or terrorist financing;

Details concerning cash detained;

Any additional information which could be useful in accordance with the procedures established by national legislation.

Data collected in the case of smurfing may also be recorded, processed and made available to the FIU, including a detailed description of particular suspicions and circumstances of the case.

In 2010, all Member States reported that they registered information on cash declarations. Half of the Member States registered this information in an automated central database, which was in most cases a stand-alone database at central level sometimes directly accessible for the national FIU, while for 2 Member States it was actually held by the national FIU. In most cases, the information registered was not directly retrievable by other competent authorities such as the national FIU. The Member States that reported not having automated registration of cash declarations, most commonly referred to the use of excel files or a local database.

25 Member States reported that they registered and processed the information obtained from the controls of cash carried out. One Member State reported not to file this type of information despite article 5 of the Cash Control Regulation explicitly requiring Member States to do so. One Member State notified that only the irregularities detected were registered and another registered only the results of thorough controls.

21 Member States made all information on cash declarations spontaneously available to their national FIU. Only 3 Member States reported to make this information available on demand, whereas 2 Member States provided only information on suspicious cases to the national FIU.

The information was made available to the FIU via official letter or immediate access to the database of cash declarations. Periodicity of providing this information varied from immediate transmission via direct access to the databases, to daily, weekly, monthly or quarterly bases. Some Member States reported faster procedures to inform national FIU's when the information related to the detection of a suspicious cash movement.

Current state of play

All Member States register information on cash declarations and results of cash controls. The methods in which this information is registered still vary and reflect the descriptions provided in the 2010 report. This is due to the organisational differences of the national competent authorities.

In response to the 2014 Questionnaire, 20 Member States answered questions on providing registered information to national FIUs.

The results showed that, out of the 20 respondents, 18 Member States provide both regular cash declaration data and data linked to potential money laundering or terrorist financing activities to national FIUs. Greece reported only providing information linked to money laundering/terrorist financing, while Latvia referred to providing only operational data. 8 Member States also reported providing data related to tax fraud/evasion to their national FIUs.

The information is provided to FIUs in a number of ways based on national legislation and procedures, which include the use of databases, IT systems, secure internet networks etc.

5.5.Exchange of Information 

The exchange of information in the area of cash controls is an important tool for better targeting controls and supporting money laundering/terrorist financing investigations.

5.5.1.Exchange of information with other Member States.

Under Art. 6 of the Cash Control Regulation, the information obtained from cash declarations and results of cash controls may be exchanged with other Member States' competent authorities in cases where there are indications that the sums of cash are related to any illegal activity associated with the movement of the money;

A number of provisions in other EU legislation complement Art. 6 of the Cash Control Regulation regarding information exchange:

Council Regulation (EC) No 2913/92 of 12 October 1992 establishing the Community Customs Code;

Council Directive 2011/16/EU of 15 February 2011 on administrative cooperation in the field of taxation and repealing Directive 77/799/EEC amended by Council Directive 2014/107/EU of 9 December 2014 as regards mandatory automatic exchange of information in the field of taxation;

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 (Mutual Assistance Regulation);

Council Decision 2000/642/JHA of 17 October 2000 concerning arrangements for cooperation between financial intelligence units of the Member States in respect of exchanging information.

In addition, the Naples II Convention is used by Member States to exchange cash control information at the prosecution/conviction stage.

In summary:

Currently, the Regulation only mentions the exchange of information where there are indications of illicit activities but there is no legal basis for the exchange between Member States of regular cash declaration data voluntarily submitted by natural persons.

Exchange of information with third countries.

With regards to the exchange of cash control information with third countries, Article 7 of the Cash Control Regulation provides that information can be exchanged under the framework of existing agreements on mutual administrative assistance. No detailed quantitative information is available on information exchange with third countries but from Member States national experts comments it seems that such exchange rarely takes place.

The exchange of cash control information between Member States and third countries includes exchange of personal data and Member States must ensure compliance with the national laws implementing the Data Protection Directive 95/46EC. Where the Commission's IT systems are used to exchange such information, the Commission must ensure compliance with Regulation 45/2001 on the protection of individuals with regard to the processing of personal data by the Community institutions and bodies and on the free movement of such data.

5.5.2.Means for information exchange.

The following common databases and means of information exchange are available to Member States:

RIF (Risk Information Form) system – as described in section 5.3

oManaged by Commission's Directorate-General for Taxation and Customs Community(DG TAXUD);

oA RIF should raise the awareness of the customs control offices and national risk analysis centres with regard to a potential irregularity/risk related to movements of cash across EU external borders;

oFor example, a RIF can be prepared following a finding of an irregularity (for example an incorrect declaration or finding of concealed undeclared cash), giving information on the technique used to find the irregularity (e.g. use of cash sniffer dogs or pre-analysis of routing information);

oA RIF can also be prepared to disseminate risk trends (for example with regard to unusual routing or method of concealment of cash) observed in a Member State that can be of relevance to other Member States;

oAs it is directly available in most customs control points, it permits rapid, direct and secure exchange of information;

oThe RIF system can be used to target a limited group of users (e.g. risks addressed to airports only), or to all members of the RIF system;

oThe applicable legal basis currently does not allow storing personal data, such as names, dates of birth, personal numbers (identity card/passport number) etc. obtained through cash controls.

oThe system is meant to be used reciprocally, e.g. the risks found should be recorded into the system but, at the same time, information from the system should be used, for example, for risk analysis in the field of cash controls.

FIDE (Files Identification Database)

oManaged by the European Anti-Fraud Office (OLAF);

oAn EU-wide index of investigation records generated by Member States' customs and other investigation authorities for administrative purposes and for purposes of criminal investigations and prosecutions in the customs area;

oInformation related to investigations has to be introduced into the system by the Member States (including personal data), so that the system can be used to verify whether a person (or business) has been subject of a criminal or administrative investigation in one of the Member States;

oIn the area of cash controls, FIDE can be used:

Where there are indications that the sums of cash are related to any illegal activity associated with the movement of cash,

Where there is non-compliance with the Cash Control Regulation (a criminal background, such as money laundering or intent, is not required),

When a person is suspected to have split transports of cash into sums below the threshold and there are indications of illegal activity concerning these cash movements (smurfing).

CIS (Customs Information System)

oManaged by OLAF;

oA database in which information is stored for the purposes of "discreet surveillance", "specific controls", "sighting and reporting", "operational analysis" and “strategic analysis;

oCIS is a personal data - processing system which aims to assist in preventing, investigating and prosecuting operations which are in breach of customs legislation;

oIn the area of cash controls, CIS can be used as follows:

To store information on cash detained, seized or confiscated in a Member State

To prevent, investigate and prosecute operations which do not comply with the Cash Control Regulation (CIS can be used to monitor persons crossing the internal borders of the Member State with the intention of crossing the external borders of the EU without complying with the obligation to declare).

24H and Central contact points

oIn a number of cases communications may be made by telephone, fax or e-mail in order to share precise and quick ad-hoc information;

oIn order to facilitate such exchanges for competent officers in the area of cash controls, lists of 24-hour and central contact points have been established;

oThe 24h contact points are to be used when immediate ad-hoc exchange of information is needed, while central contact points are to be used for policy and other operational issues;

oMember States can also add to this list direct contact details of relevant major airports/ports/road border posts to facilitate the exchange of urgent operational information.

Agreements on cooperation

oThe EU has signed customs cooperation and mutual administrative assistance agreements (with Canada, China, Hong Kong, India, Japan, Korea and US) which provide for the possibility of information exchange with third countries.

oThe EU also has Partnership and Co-operation Agreements with a number of countries, including Russia and Ukraine, which cover customs co-operation and include a protocol on mutual administrative assistance.

Working meetings

oParticipation in working groups and regular working meetings at national and international level helps improve cooperation concerning exchange of experience, presentation and introduction of new requirements, difficulties with cash controls, elaboration of procedures and control measures etc.;

oAt the level of Commission, cash control experts from Member States have the opportunity to participate in the work of:

Cash Controls Coordination Group (CCCG), which meets several times a year to discuss issues related to the control of cash movements at external EU borders,

Project Groups convened on an ad-hoc basis to elaborate solutions to practical problems related to the implementation of the Cash Control Regulation in the EU.

Statistical information – as described in section 5.2.4.

oThe statistics submitted by the Member States are summarised by the Commission and contribute to the collection of information on cash movements across the EU border and provide a good basis for risk analysis. This statistical information however is rather a quantitative approach and further improvement is required with information on the origin and destination of cash movements (with results from random and targeted controls as well as of cases for which there is a pending decision from Justice). It will enable FIUs and/or other competent authorities to map clearly the cash movements around the world. Such information is undoubtedly important for risk analysis purposes.

o

Joint operations

oParticipation in joint operations (national, regional or international) and reports on their results offer the opportunity to achieve significant results in a short period of time and based on regular exchange of information.

Current state of play

The most recent information on the exchange of cash control information was collected via the Commission's 2014 Questionnaire. The questionnaire primarily focused on finding out whether Member States make available the information collected at their external borders to other Member States and third countries, rather than whether they receive such information in return.

This information is complemented by references to previous questionnaires and analyses to minimise any gaps in data.

In relation to the exchange of cash control information (by customs authorities) with other Member States:

16 Member States exchange information with customs authorities of other Member States, 8 Member States do not, others have not provided an answer;

3 Member States exchange information with tax authorities of other Member States, 16 Member States do not, others have not provided an answer;

5 Member States exchange information with other authorities of other Member States, but do not specify which authorities;

4 Member States confirm that they don't directly exchange cash control information with any authorities in other Member States.

In relation to the exchange of cash control information (by customs authorities) with third countries:

12 Member States exchange information with customs authorities of third countries, 6 Member States do not, others have not provided an answer;

2 Member States exchange information with tax authorities of third countries, 14 Member States do not, others have not provided an answer;

2 Member States exchange information related to money laundering and terrorist financing with other authorities of third countries, but do not specify which authorities;

Member States which exchange information with third countries, do so on the basis of bilateral agreements with relevant countries;

2 Member States confirm that they don't directly exchange cash control information with any authorities in third countries.

In addition, available information on the exchange with other Member States and third countries shows that:

Reasons for not exchanging information include: exchange is the responsibility of the national FIU (2 Member States), no requests for information have been received (2 Member States);

The type of information exchanged also varies significantly and includes: regular cash declaration data, data linked to money laundering or terrorist financing, data linked to tax fraud/evasion, risk information and data on cash seizures;

Member States exchange information using a wide range of means, from official letters to common databases and email and telephone communication;

The results of the 2014 Questionnaire show that 21 Member States use at least one of the common databases (RIF, FIDE, CIS) or 24H contact points. However, at the CCCG plenary meeting in January 2013, the Commission informed the Member States that, although almost all had all reported making use of the common databases (RIF, FIDE, CIS) for information purposes, only 9 Member States had uploaded cases in RIF, only 12 had uploaded cases in CIS and only 8 had uploaded cases in FIDE.

The majority of Member states actively participate in and contribute to the work of the CCCG, and nominate experts to take part in ad-hoc Project Groups set up by the Commission. In addition, several Member States have organised national or joint cash controls operations, and participate in international joint operations, such as the Joint Customs Police Operations "Athena", which target cash couriering, including criminal investigations in cases where EU and Member States’ laws on the declaration and transportation of large amounts of cash are violated.

All Member States provide regular statistics to the Commission on cash declarations and results of cash controls (recordings), as well as penalties, cash detentions, cash seizures and cash confiscations imposed in cases where cash controls identify a failure to meet the obligation to declare or indications of illegal activity.

5.6.Penalties

According to Article 9 of the Cash Control Regulation, each Member State must introduce penalties for cases of failure to comply with the obligation to declare. Such penalties applied by each Member State must be prescribed in the national legislation and, in line with the FATF Recommendation 32, should be effective, proportionate and dissuasive.

A failure to comply with the obligation to declare should be treated as an administrative offence and/or as a criminal offence. Penalties may be monetary or may include forfeiture or expropriation of the detained cash.

Criminal penalties are established by national regulations and added to administrative penalties. In serious cases, they can include expatriation of the person committing the offence from a Member State, as well as refusal to enter the territory of a Member State (if the national legislation enables such a sanction), or in case of suspicion of serious infringement of the law or of terrorist financing, an arrest of the person concerned.

An imposed penalty should be:

Effective - e.g. in case an amount is not declared by a particular person repeatedly punishment should be punitive, compared to a person making a similar offence obviously unintentionally just because of lack of awareness of the regulations.

Proportionate - e.g. it should correspond to the relevance of the infringement of the law, so that the amount of the fine should depend on relevant circumstances, such as the amount of undeclared cash, the person’s cash control history and any other relevant circumstances (the person is a traveller, a professional courier etc.)

Dissuasive - e.g. it should point out consequences a person may face in case he/she intends to fail to comply with the obligation to declare; such penalties should dissuade a person from committing further illicit activities.

Current state of play

All Member States have introduced systems of penalties to deal with failures by natural persons of meeting the obligation to declare amounts of cash of 10,000 EUR or more when entering or leaving the EU through their national borders.

However, the types and levels of imposed penalties differ significantly between Member States 69 . Discussions at CCCG meetings confirm that Member States have very different interpretations of the meaning of terms "effective", "proportionate" and "dissuasive", resulting in substantial variation of treatment of natural persons who failed to declare.

For illustrative purposes only, the table below provides an anonymised overview of the penalties applied in a limited number of Member States which had been contacted. The table also shows whether mitigating or aggravating circumstances are taken into account. The left column shows the minimum penalty (before taking into account particular circumstances, if applicable) levied in case of failure to declare (either as a % of the undeclared sum or a fixed fine). The same reasoning applies to the 'Max penalty' column. Lastly, the right hand columns indicate if mitigating or aggravating circumstances particular to the case are taken into account when determining the penalty. Jurisdictions who do not take into account such circumstances consider failure to declare a 'strict liability' 70 offence.

Table 1 – Penalties applied by Member States for failure to declare

Source: Responses to Commission questionnaire sent to the Member States in 2014.

3 Member States have not introduced administrative penalties but treat the failure to comply with the obligation to declare as criminal offence.

6.ANSWERS TO THE EVALUATION QUESTIONS

6.1.To what extent is the current scope of the Cash Control Regulation still relevant for preventing money laundering/terrorist financing?

In order to analyse the relevance of the current scope of the Cash Control Regulation, firstly the sustained use of cash as a convenient and anonymous means of payment will be briefly touched upon, secondly statistical data provided by the Member States will be analysed to paint a quantitative picture of the current situation. Thirdly, it will be shown that cash controls contribute to the fight against Money-laundering and Terrorist Finance which both remain important phenomena that need to be tackled.

In recent times, cash has lost the status of the main means of payment in the EU, with non-cash payment methods such as debit/credit cards and e-payment taking over. Other relevant innovations that have experienced growth in the EU include pre-paid cards and virtual currencies.

However, despite such growth in the volumes of non-cash transactions and new types of payment methods, the graph below illustrates the global increase in value of various denominations of Euro notes in circulation between 2002-2014. 71

In the Eurozone, the amount of cash in circulation per inhabitant nearly doubled between 2002 and 2011. 72

There are several causes of the increase in the use of cash as means of payment, but the one that calls for strong cash controls at EU's external borders is that cash largely remains an anonymous and easy to value means of payment, indicating that there is a risk of criminals and terrorists using cash to avoid increasingly stringent AML/CFT rules in the financial sector. 73

6.1.1.Statistics on cash declarations and cash controls

The voluntary statistics provided by the Member States to the Commission show that more than 120 000 voluntarily declared cash declarations by natural persons are recorded at the EU borders by customs every year, totalling around 60-70 billion EUR in cash annually. Customs also report cash results on around 10 000 random and targeted customs controls per year.

The diagrams below show the accumulated statistics on cash declarations and recordings from July 2007 (Q3 2007) to December 2014 (Q4 2014).

Diagram 1 – Number of cash declarations from Q3 2007 to Q4 2014 74

Diagram 2 – Number of recordings 75 from Q3 2007 to Q4 2014

Diagram 3 – Value of cash declarations in EUR from Q3 2007 to Q4 2014

Diagram 4 – Value of recordings in EUR from Q3 2007 to Q4 2014

While the data in the diagrams needs to be interpreted with caution 76 , and it must be kept in mind that the data for 2007 cover only Q3 and Q4 for all diagrams shown, diagram 1 shows a sustained, high level of cash declarations over the years. Diagram 2 shows a significant increase in the number of recordings at the EU border in recent years, while diagrams 3 & 4 illustrate a less marked increase in the amounts of cash declared or recorded in the same period. 

It is difficult to pinpoint the exact combination of reasons behind these trends based on the available data. Possible factors include higher numbers of travellers in general, more frequent controls by customs authorities, cash being used as an alternative means of payment due to increased regulation in the financial sector etc.

Relevance / Effectiveness of cash controls as a tool to prevent money laundering and terrorism financing

It is often difficult to link a conviction for money laundering or terrorist financing to a customs control on cash, due to lack of feedback from law enforcement agencies and/or FIUs to customs authorities that provided the information, as well as the fact that cash controls frequently form only part of the evidence in a particular case.

In response to the Commission's 2014 Questionnaire, only 8 Member States provided examples (not complete statistics) on investigations/convictions that can be attributed to the implementation of the Cash Control Regulation between 2011 and 2013:

Austria – 36 convictions (type of offence not specified);

Bulgaria – 72 convictions for money laundering;

Estonia – 58 convictions for money laundering

France – 176 judicial enquiries for money laundering (69 related to narcotics), out of which customs authorities can confirm 11 convictions (results of most investigations unknown or investigations still on-going);

Germany – 6 convictions for money laundering and 2 for other illegal activities;

Greece – 3 pending court cases on money laundering charges;

Lithuania – 17 convictions for other illegal activities;

Malta – 11 convictions (type of offence not specified);

The Netherlands – 105 cases (2013) of money laundering prosecutions.

Other Member States either do not have available statistics, have not recorded any investigations/convictions or have not provided an answer.

At the meeting of the EU FIU Platform (an expert group set up by the Commission to bring together Member States' FIUs and help them coordinate with each other) in Brussels on 18 November 2014, DG TAXUD asked the FIUs to provide information on how they use the information on cash declarations/controls made available to them by the customs authorities of their Member State.

14 FIUs provided their responses by email (without differentiating between the cash controls at internal and external EU borders):

6 FIUs emphasised the significant value of cash control data in money laundering/terrorist financing investigations,

1 FIU (Sweden) reported that cash control data generally does not lead to significant results in relation to AML/CFT investigations;

4 FIUs described the procedures relating to receiving and processing the cash control data;

3 FIU provided additional statistics on the use of cash control data:

oHungary – received 55 cash declarations in 2014 based on suspicion of money laundering,

oLatvia – sent 8 cash declarations in 2011 and 3 cash declarations in 2014 to national police authorities for further investigation,

oThe Netherlands - 256 criminal investigations were initiated in 2014 as a result of suspicious cash declarations or absence of cash declarations;

3 FIUs provided examples of investigations resulting from cash controls.

These examples, in addition to those obtained from the customs authorities of Member States in response to Commission's 2014 Questionnaire, complement the limited statistical information presented above and demonstrate further the usefulness of information obtained through cash controls for subsequent investigations.

A selection of relevant examples is presented below, including results of controls at EU's internal borders as they also illustrate the value of cash controls for reaching AML/CFT objectives.

Example 1 – Terrorist financing investigation (Belgium)

Over a period of three consecutive days, three different individuals declared a total amount of 90 000 EUR in cash to customs officials at the airport in Zaventem. The funds were said to originate from a non-profit organisation (NPO) in Germany as part of humanitarian aid for Burundi, Benin and Zimbabwe. All three couriers were Belgian nationals and had been living in Belgium for a long time.

All three individuals had bank accounts to which money was transferred from a Belgian coordinating body of a radical Islamic organisation. Over a period of one year, a total amount of nearly 20 000 EUR had been withdrawn in cash. Around 10 000 EUR was transferred to Turkey.

According to the German FIU, the NPO was one of the largest Islamic organisations in Germany and was said to be linked with an organisation that had been banned in Germany for allegedly supporting a terrorist group. All board members of this organisation also played a major role in the NPO. Information from the Belgian intelligence services indicated that all three individuals were known to be involved in local branches of a radical Islamic organisation.

Given the conflicts in the African countries for which the cash was intended, the potential links with a banned organisation and its links with a terrorist group, it was deemed probable that at least part of these funds would have been used to support terrorist activities, and that the individuals involved had been used as cash couriers to provide financial support for terrorist activities.

Example 2 – Money laundering investigation (Slovenia)

Slovenian customs performed a routine control of a person leaving Slovenia to Croatia (before joining EU) in a car. Passenger raised suspicion since he was a Serbian national traveling alone, in possession of a Portuguese passport and driving a car owned by third person with Italian registration plates.

During the control, Customs discovered a bag on the rear seat, which included 400 banknotes of 20 EUR, more than 400 banknotes of 100 EUR and more than 8 000 banknotes of 50 EUR, totalling more than 500 000 EUR.

The passenger claimed that the money related to the proceeds of his second-hand car sales business in Portugal. Since the passenger had not made a declaration and the origin of cash was considered suspicious, the cash was seized and a suspicious transaction report (STR) was sent to the Slovenian FIU.

The FIU notified the Police and the Public Prosecutor of the suspicion of money laundering derived from drug trafficking (relatively small denominations are red flags for cash derived from street sales of drugs). The FIU then proceeded to collect more information on the origin of cash from Portugal and Italy, and although neither drug trafficking nor money laundering could be proven, the cash was not returned as insufficient information was provided regarding the car-sales business in Portugal.

After some time, the FIU was notified that the person was in an Italian prison following a conviction on drug trafficking. As a result, the outcome of the criminal procedure in Slovenia is uncertain. However, the customs authorities have seized the entire consignment of undeclared cash according to national regulation.

6.1.2.Usefulness of cash controls in the fight against tax fraud/evasion

It should be noted that cash controls have also led to findings of art-robbery, corruption, arms smuggling, cyber-crime and tax fraud.

In particular, based on discussions at recent CCCG meetings as well as the answers provided by the Member States to a number of recent questionnaires, identified instances of cash smuggling (transporting cash across EU borders while intentionally not declaring or incorrectly declaring the relevant amount) are often linked to tax evasion or tax fraud.

In March 2014, FATF launched a study on Money Laundering through the Physical Transportation of Cash. All Member States, as members of the FATF or its regional body, the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL) were asked to respond to the questionnaire.

While the analysis of all the responses to the questionnaire is still on-going at the FATF level, 26 Member States have made available their responses to the Commission for the purpose of this evaluation. In response to the question on the offences with which smuggled cash at their borders is associated with, 13 Member States listed tax fraud/evasion, making it the most frequent response followed by other types of fraud, drugs trafficking, human and arms trafficking etc.

Since the decision by banks in Switzerland 77 , Luxembourg, Liechtenstein and Monaco to loosen the rules of secrecy governing accounts held by foreigners, the number of instances of undeclared cash associated with tax related offences being discovered through cash controls has increased even further. Individuals who had previously not declared accounts held in these countries to the tax authorities in their country of residence now faced the risk of the financial institutions disclosing these accounts on their behalf. Many therefore resorted to withdrawing their money in cash and moving it elsewhere. 78

In their response to the Commission's 2014 Questionnaire, 18 Member States provided information on the exchange of information between their national customs and tax authorities:

10 Member States reported exchanging all cash control data between national customs and tax authorities;

3 Member States reported exchanging only cash control data linked to potential tax evasion/fraud offences between national customs and tax authorities;

5 Member States reported that their customs authorities do not exchange any cash control data with national tax authorities;

Furthermore, 11 out of 18 Member States supported the proposal to add a provision in the Cash Control Regulation that would explicitly allow the recording, processing and exchanging of cash control information for the purpose of fighting tax fraud/evasion. 2 Member States encouraged further legal analysis but offered a positive view of the proposal, while 5 Member States did not support the addition of such a provision as they consider that sufficient legal basis already exists.

The proposal has also been supported by the majority of Member States' tax experts, who recognised the usefulness of information available on cash declarations and obtained through cash controls.

Article 9 of the Council Directive 2011/16/EU of 15 February 2011 on administrative cooperation in the field of taxation (Tax Directive) provides the legal basis for spontaneous exchange of cash control information between tax authorities of different Member States (customs can also designate liaison departments or competent officials for this purpose) that is foreseeably relevant to the administration and enforcement of the domestic laws of the Member States concerning taxes (VAT, customs duties and excise duties being excluded).

However, only the Netherlands and Lithuania referred to using the Tax Directive as the appropriate legal base for the exchange of cash control information with the tax authorities of other Member States in their responses to the 2014 Questionnaire. Considering the evident and significant differences in the level and legal/administrative set-up of the exchange of cash control information between customs and tax authorities at national and EU level, the Commission asked the Member States for more detailed information in relation to their national legislative frameworks and internal procedures.

In January 2015, a questionnaire addressed to both cash control and tax experts requesting joint answers, was sent to Member States. Replies from all Member States have been received and some of the relevant findings can be summarised as follows:

In 15 Member States customs and tax authorities are part of the of the same administration;

20 Member States have a national legal basis for the provision of information on cash movements by the customs authorities to national tax authorities, with 17 making use of this legal basis and 13 positively evaluating the exchange process;

Out of the 8 Member States that do not have such a legal basis, 6 noted that the Cash Control Regulation should explicitly provide a legal basis for the exchange of cash control information for tax purposes (including at national level);

5 Member States have a national legal basis for the provision of cash control information by the customs authorities to the tax authorities of other Member States, with 3 doing being able to do so directly and 2 indirectly via national tax authorities;

Out of the 23 Member states that do not have such a legal basis, 14 consider that the Tax Directive provides a sufficient legal basis for the exchange of cash control information with the tax authorities of other Member States (even though only a few customs authorities report using it), while 8 consider that the current EU legislative framework does not allow such exchange;

26 Member States consider that exchange of cash control information for tax purposes is justified and necessary for the following reasons: fighting tax fraud/evasion (22), enhancing tax compliance (5), recovering tax debts (6), use in risk analysis as evidence of wealth (2), prevention of money laundering (2);

Several Member States provided figures illustrating the usefulness of cash control information for initiating or supporting tax investigations:

oGreece reported 78 cash control cases submitted for further tax investigation (with tax discrepancies found in 28 cases 19 ongoing investigations) just in 2013;

oPortugal confirmed the usefulness of cash control information for the detection of tax debtors and commencing recovery proceedings;

oIn the Netherlands, the extra collected tax on the basis of exchanged cash control information amounted to 1 100 000 EUR in 2014;

On the other hand, the usefulness of cash control information has so far not been noted to such an extent in Hungary, or is recognized specifically in the context of VAT fraud in Austria.

6.1.3.Cross-border cash movements in post and freight

In 2013, the FATF Interpretative Note on Recommendation 32 on cash couriers made clear that the obligation to establish a control system on cash should cover cash moved through all modes of transport, including post and freight.

However, the Cash Control Regulation applies only to natural persons (including professional cash couriers 79 ) carrying cash across the EU external borders. Cash movements through post and freight (i.e. not accompanied by a natural person) are not included.

The Community Customs Code and/or national legislation generally apply for the movements of cash in post and freight at the Member States' borders. This means that, in most Member States, cash has to be declared on a customs declaration form for a particular parcel, container etc.

However, the information required on the customs declaration form is significantly less comprehensive than the data required on the EU-CDF and does not include the desired level of detail required for AML/CTF purposes (e.g. owner of cash, provenance and intended use of cash).

Although customs authorities have the competence to carry out further controls on cash discovered during regular controls on goods based on the Community Customs Code, there are no specifically designed provisions in the Community Customs Code for controls on cash, neither for a systematic exchange of information on cash with the national FIU in order to prevent money laundering and terrorist financing.

As cash is generally treated in accordance with customs procedures for any other good, it is also difficult for Member States to impose effective, proportionate and dissuasive penalties to prevent money laundering and terrorist financing.

On the other hand, operational work by the Member States and information gathering and analysis by the Commission have resulted in a number of reports on findings of bulk cash in post and freight:

Project Pecunia (the Netherlands) - cash flows in air cargo (Oct 2009 – Mar 2010)

oTotal value of cash declared in the control period amounted to approximately 1,85 billion EUR, with a significant amount relating to cash transfers between banks;

oNo undeclared cash was discovered but many consignments raised suspicions (e.g. shoddy packaging, new banknotes, 500 EUR banknotes, unknown recipient/sender/owner, strange combination of currencies etc.);

Operation Bingo (France) - cash movements in post and freight (Nov-Dec 2014)

oMonitoring and information gathering operation at Charles de Gaulle Airport (freight area) with the same goals as Project Pecunia;

o90 detections of transported means of payment (9 million EUR in value) were made, predominantly in express freight;

oNo undeclared means of payment were discovered but a detection linked to tax evasion and counterfeit notes (20 000 EUR) linked to drug trafficking were found;

oThe lack of national and EU (Cash Control Regulation) legal basis prevented the French customs to make further inquiries regarding detections.

FATF Questionnaire on Money Laundering through Physical Transportation of Cash (2014)

oA significant number of Member States indicated finding suspicious consignments of cash sent in parcel or freight;

Commission Questionnaire as part of the Report of the Project Group "To support the Commission in preparing the assessment report to the Council" (2011):

oOverall large variation in the extent to which sending cash in post or freight consignments was authorised and which restrictions apply.;

oVariation in national legal implementation of UPC for sending cash leads to divergent approach

o2014 follow-up confirmed findings and issues

oSome (limited in number) cases of cash smuggling in post or freight were reported by Member States

It should also be noted that, while Germany has reported separate instances of cash being discovered in post and freight, it did not detect any cash when conducting Operation Pylon, a 3-day operation focusing on express cargo at two relevant airport cargo hubs - Cologne-Bonn and Leipzig-Halle.

Although 11 000 parcels and document shipments were selected by customs and controlled, mostly by using mobile scanning units and cash dogs (5% were also opened and inspected physically), no detections were made.

The above demonstrates that although there are indications of substantial amounts of cash in post and freight being moved across borders, authorities experience difficulties in getting a full grasp on the issue, notably due to divergent legal provisions and a lack of clarity on the formalities to be complied with. Without a specific control system on cash moved by post and freight across EU external borders, the likelihood of regularly finding cash moved in this manner, reporting it to the national FIU and dealing with it effectively to prevent money laundering and terrorist financing is significantly diminished.

In this context it is relevant to add that after the adoption of the Cash Control Regulation, the FATF issued an interpretative note to its Special Recommendation IX 80 on cash couriers, clarifying that the Special Recommendation applies to any cross-border movement, not only to cash carried by natural persons.

6.1.4.Conclusion

The EU AML/CFT framework certainly benefits from a control system on cash movements at the EU external border. As the regulatory framework in the financial sector has become more stringent, the controls of cross-border cash movements play an even more important role in limiting the extent to which cash is used by criminals as an alternative means of payment enabling them to stay outside the scope of the financial sector's regulatory framework.

The regular statistics on cash declarations and recordings provided by the Member States indicate that large amounts of cash continue to be moved by natural persons across the EU external borders, and that cash controls on natural persons are needed to ensure that these cash movements are not related to criminal or terrorist activities.

Although limited, statistical data and case descriptions provided by Member States in relation to investigations and court judgements on money laundering and terrorist financing cases resulting from or using cash controls information demonstrate the relevance of the EU system of cash controls and the contribution of the Cash Control Regulation towards the achievement of EU's AML/CFT objectives.

In addition, cash controls have proven to be very useful in the fight against tax fraud and evasion in some Member State even though the Cash Control Regulation does not explicitly provide that cash control information may be processed and exchanged for tax related purposes.

However, although based on a small number of targeting operations and random controls, findings of large amounts of cash being moved across the EU external border by post and freight emphasise a weakness of the Cash Control Regulation in relation to its main objective.

As its provisions do not impose an obligation to declare, nor designate powers to control the movements of cash amounts of 10 000 EUR or more by post or freight, and since only a few Member States have such national legislation, the Cash Control Regulation does not address the risk of money laundering or terrorist financing cash being moved across EU borders in post and freight. Thus it can be concluded that the Regulation is still of high relevance in the current environment, but the existing scope does not fully cover all the risks for preventing money laundering and terrorism financing.

6.2.To what extent do the current legal provisions of the Cash Control Regulation guarantee proper control of cash movements to prevent money laundering/terrorist financing?

In order to judge the effectiveness of the current legal provisions of the cash controls regulation, firstly the definition of cash and its ease of implementation along with remarks made by Member States regarding problems will be touched upon, secondly the declarative process is investigated along with statistics regarding implementation results in various Member States.

It should be borne in mind that the statistics and results which were already mentioned under point 7.1 where the relevance of the cash control regulation was analysed also should be considered but are not duplicated under this section for reasons of brevity and in order to avoid useless duplication.

Thirdly, the implementation in the Member States will be considered along with the question of whether competent authorities dispose of sufficient powers to adequately implement the legal provisions along with the powers of those authorities to use and transfer the declarative and infraction data collected.

Lastly, attention will be paid to the raising of public awareness regarding the obligation to declare and to the penalties imposed for non declaration as both elements have significant bearing on the overall effectiveness. In order for a legal provision to be respected, it should firstly be known, secondly, non-respect should be discouraged through appropriate penalties.

6.2.1.Definition of cash

The Cash Control Regulation clearly defines the payment instruments considered to be cash and thereby provides clarity and consistency with regards to the subject of controls and assists in the selection of control methods (e.g. dogs trained to sniff banknotes).

A few Member States have in recent years voiced an opinion that the definition of cash should be expanded to include additional payment instruments such as gold and other precious metals (as well as e-money, casino chips etc.).

However, upon joint analysis by the Commission and Member States of the advantages and disadvantages of including gold and other precious goods under the definition of cash in 2011, it was concluded that, as the existing definition follows that used by the FATF and the majority of Member States did not support expanding it, the definition of cash as per the Cash Control Regulation – currency and bearer-negotiable instruments, should not be amended.

The following disadvantages of expanding the current definition of cash were identified as part of the analysis:

It is difficult to draw a line on where to stop when considering the widening of the definition as there will always be new instruments that could require inclusion; the minority of Member States in favour of widening the definition have different viewpoints on what should be covered (gold and precious metals, stones, stored value cards etc.).

There is at present no tendency at international level to widen the scope of the cash definition; widening the definition at the Commission's own initiative would create a divergent approach from FATF and its members on AML/CFT;

The implementation of a wider definition would entail extra staff and administrative costs for the customs authorities.

6.2.2.Obligation to declare

Although the statistics on cash declarations/recordings in Member States should be interpreted cautiously and there are indications of diversity in the level of controls in Member States, the obligation for natural persons to declare cash amounts of 10 000 EUR as well as the examples of cash control results, contribute to the development and application of consistent and effective controls of cash moved by travellers across the EU external border.

Raising awareness

Communication actions by the Commission and the Member States have significantly contributed to the awareness by travellers of the obligation to declare cash (the 2011 information campaign reached 60% of target audience and markedly increased the number of voluntary declarations).

However, only 4 Member States report monitoring the results of the communication campaigns and no Member States use monitoring tools to measure the efficiency or effectiveness of the campaigns.

Some Member States also see the need for including an obligation to raise awareness on cash controls in the Cash Control Regulation, as this would ease contacts with relevant authorities (e.g. airports) to display the awareness raising material.

Place to declare

Some Member States report that practical problems continue in relation to accepting cash declarations and performing cash controls in airport transit areas, despite the guidance provided by the Commission so far, and consider that an amendment to the Cash Control Regulation would be necessary to improve the current situation.

Methods to declare

As part of the Commission's 2014 Questionnaire, Member States' feedback was requested on the use of the EU-CDF since its introduction:

The feedback from the 24 Member States that responded to the questionnaire was overwhelmingly positive, both with regards to the practicality of use for the competent authorities and the simplification and consistency offered to travellers;

The sole criticism related to minor practical issues, such as the size of boxes to be filled in and the clarity of explanations on the form;

A few Member States suggested that the format of the EU-CDF should be included in the Cash Control Regulation, making it obligatory and ensuring consistent use in the EU.

Statistics on declarations/recordings

Although the statistics show that all Member States apply the Cash Control Regulation at their external EU borders, there are also significant differences in the numbers of declarations accepted and controls performed between Member States 81 .

Diagram 5 – Total number declarations (Q3 2007 – Q4 2014) by Member State

Diagram 6 - Total number of recordings (Q3 2007 – Q4 2014) by Member State

Diagram 7 – Ratio of total number recordings per declarations (Q3 2007 – Q4 2014) by Member State

Diagram 8 – Total EUR amount of declarations (Q3 2007 – Q4 2014) by Member State

Remark for diagram 8: Data for Germany truncated to maintain legibility. The total for DE was > 300 billion EUR.

Diagram 9 - Total EUR amount of recordings (Q3 2007 – Q4 2014) by Member State

6.2.3.Designation of powers to competent authorities

Based on available data and Member States opinions, the Cash Control Regulation designates adequate powers to customs officers to perform proper control of cash movements at the external borders of the EU.

However, as shown by diagrams 6 and 9 above, the majority of the total recordings are accounted for by a handful of Member States. While some of the differences may be accounted for by national circumstances (levels of cross-border trade, existence of external land borders, number of ports/airports, levels of passenger traffic etc.), the figures clearly indicate significant differences between Member States with regards to the implementation of cash controls at EU external borders.

A lack of closer monitoring by Commission services does not allow for regular detection and follow-up of particular differences in control approaches between Member States, which would in turn allow for adjustments to ensure uniform implementation of the control approaches considered as optimal.     

6.2.4.Processing and recording of information

The requirement to record, process and make available cash control data to national FIUs is met by Member States, even though the relevant procedures vary based on national legislation and administrative set-up in each Member States.

The information on cash controls obtained by national FIUs results in a significant number of investigations coordinated by the FIUs, as well as in court convictions on money laundering and other criminal activities, as demonstrated by the statistical information and examples presented in section 6.1.2.

As the Cash Control Regulation does not explicitly provide for cash information to be recorded, processed and exchanged for the purpose of fighting tax fraud and evasion, only the customs authorities of some Member States exchange such information with the national tax authorities or tax authorities of another Member State.

6.2.5.Exchange of information

Article 6 of the Cash Control Regulation contributes to proper control of cash movements by allowing exchange of cash control information for the purpose of money laundering, terrorist financing or other criminal investigations.

However, it also hinders better targeting of cash controls by not allowing for the exchange of regular cash declaration data between Member States that would enable global data analysis to detect new trends. This conclusion is in line with some of the objectives of the Commission Communication on Customs Risk Management 82 , calling for a comprehensive analysis of the data necessary for the different authorities involved in risk analysis (customs, investigation and prosecution) and the respective roles of these authorities both at national and EU (28 MS) level.

Article 7 of the Cash Control Regulation also contributes to proper control of cash movements by allowing exchange of cash control information with third countries under certain conditions (e.g. meeting data protection requirements). Such exchange is generally based on bilateral agreements between Member States and third countries.

A limited number of examples where information exchange of cash controls has led to or assisted money laundering or terrorist financing investigations have been provided by Member States. These include:

Example 1

Around 1 million EUR was seized at Brussels National Airport after Belgian Customs received a tip from French Customs on two passengers leaving for Lebanon.

The control on the passengers was performed together with the Belgian police, during which 980 000 EUR of undeclared cash was found in checked-in luggage. The Police also controlled the passengers just before boarding the plane and found 19 700 EUR of undeclared cash in their hand luggage. The case was further investigated by the Belgian Police.

Example 2

A joint investigation of police and customs authorities in Berlin led to the discovery of 89 000 USD which were forwarded from the United States (US) to Germany by post.

Perpetrators, which were unknown at the time, had sent 5 postal packages containing electric devices to various beneficiaries in Berlin. Cash in the form of 100 USD banknotes was hidden in the electrical devices.

After an exchange of information with the US authorities, it was possible to link the cash to a group of criminals which had acquired more than 4 million USD through criminal activities, mainly fraud and cybercrime.

However, no Member States report using the provisions of the Cash Control Regulation to exchange cash control data with other Member States or third countries for tax purposes, although tax fraud and evasion fall under the definition of illegal activity and tax fraud is recognised as a predicate offence for money laundering.

Considering the potential contribution information exchange can make to money laundering, terrorist financing and even tax fraud/evasion investigations, as well as risk analysis and targeting of controls by customs authorities, the current legal framework and procedures don't encourage the utilisation of the full potential of information exchange on cash controls between Member States.

6.2.6.Penalties

Penalties imposed by the Member States contribute to proper control of cash movements by signalling to natural persons the disadvantages of failing to meet the declaration obligation and reducing the reward/risk ratio of failing to declare.

However, significant differences 83 in types and levels of penalties, visible in Member States' yearly statistics, may potentially reduce their effectiveness at EU level and lead to unequal treatment of citizens. In addition, these differences may increase the risk of "customs shopping" whereby cash smugglers choose to cross the EU border where the penalties are the lowest 84 . 

Several Member States are currently involved in judicial proceedings following legal actions brought by natural persons over the level of penalties imposed. In addition, a number of Member States have so far received comments as part of FATF's mutual evaluations that their penalties were not effective, proportionate or dissuasive.

6.2.7.Conclusion

One of the Union's tasks is the promotion of harmonious, balanced and sustainable development of economic activities throughout the Union by establishing a common market and an economic and monetary union. To that end the internal market comprises an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured. Disparities in legislation are detrimental to the proper functioning of the internal market and the equal treatment of citizens. The basic elements should therefore be 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 Member States' competence to provide for intra-community controls on cash, provided these are in accordance with the provisions of Art. 63, TFEU.

Overall, the provisions of the Cash Control Regulation enable proper controls of cash movements by natural persons at EU external borders and remain relevant for the fight against money laundering and terrorist financing.

However, it is clear that the controls are not implemented by the Member States in a fully uniform way.

In addition, significant improvements in relation to using the exchange of cash control information to improve the effectiveness of cash controls and contribute even more to money laundering, terrorist financing and tax fraud/evasion investigations can be made based on a comprehensive analysis of the data necessary for the different authorities involved (customs, investigation, prosecution) and their respective roles both at national and EU level.

Finally, the fact that penalties imposed for a failure to declare differ significantly between Member States may result in inconsistent communication to EU citizens on the matter. Depending on the itinerary one chooses to take, exiting or entering the EU via one Member State rather than another can have radically different consequences in terms of the penalty which is applied in case of non-declaration. While the severity of the penalty may not be the only driver, this situation may increase the risk of customs shopping and unequal treatment of EU citizens.

6.3.Is the information collected in an easy and burden-free manner? To what extent is the information exchanged timely and accurately, with the national FIU and with other Member States and third countries?

As described in section 5.4, all Member States have set up systems and procedures to register and process cash control information.

The Commission does not dispose of validated quantitative information regarding the administrative burden associated with filing a cash controls declaration; however:

The voluntary use in most Member States of the EU-CDF presents a highly harmonised interface which makes filling in the document easier in cases where persons regularly have to file declarations while entering or leaving through different Member States.

The level of detail and data elements which are collected from travellers pursuant to the Cash Controls Regulation are in line with what is specified in FATF recommendation 32 and its interpretative note.

The form and information collected are comparable in type and complexity with what is collected in many third countries 85 .

On the occasion of meetings with national experts, the EU-CDF is regularly scrutinised and discussion takes place on possible modifications. The present structure of the form is supported by a large majority of Member States.

The exchange of information with national FIUs takes place in all Member States but the procedures differ according to the type of information (even though the Cash Control Regulation clearly specifies the type of information that should be made available), as well as timing and method of exchange, which are based on national legislation.

The information received directly from FIUs, as presented in section 6.1.2, confirms that FIUs indeed receive or have access to cash control information for analysis and investigation purposes.

While most Member States practice some type of information exchange with other Member States, the legal bases, methods and frequency differ significantly as shown in section 5.5.

However, it should also be noted that the Member States' use of the Commission's existing information databases applicable to cash control information (RIF, CIS, FIDE) is considered less than satisfactory.

Member States have provided very limited feedback regarding the reasons for not using the available databases to a larger extent. Some suggested that their national risk analysis centres do not input risk information related to cash controls into the RIF database on a regular basis. One Member State referred to the limitations of the RIF database in relation to the possibility of uploading personal data, while another Member State considered the CIS database to be too complex and not sufficiently adapted for uploading cash control information.

In their responses to the 2014 Questionnaire, in relation to the exchange of information with other Member States:    

5 Member States reported that they had satisfactory procedures for information exchange;

Other Member States stated the need for a specific and clear legal base for the exchange of information (including for tax purposes and cash movements by post and freight) and better cooperation and uniform implementation among Member States;

Member States informed that the main hindrances to further formalisation of information exchange include data protection issues and a lack of legal base, with some Member States suggesting that the Cash Control Regulation should be amended to allow the exchange of regular cash declaration information, including for the purpose of fighting tax fraud and evasion.

As part of the 2014 Questionnaire, Member States also provided information in relation to the exchange of information with third countries:

6 Member States reported that they had satisfactory formal procedures for information exchange;

2 Member States informed that the exchanges of cash information with third countries are the responsibility of the national FIU;

Other Member States stated the need for bilateral agreements and clear legal base in the Cash Control Regulation, including in relation to cash movements in post and freight;

Member States informed that the main hindrances to further formalisation of information exchange include differences in data protection rules, exclusive FIU competence and need for bilateral agreements and better cooperation between Member States;

Out of the Member States which exchange information with third countries:

o5 were satisfied with the efficiency and effectiveness of their procedures for information exchange with third countries;

oOthers reported that exchange took place only upon request, there was a small number of cases of information exchange, the exchanges were not registered and/or were made by FIUs which often did not provide feedback;

Member States which do not exchange information with third countries reported the following reasons: no legal base, no requests so far, personal data protection issues, exclusive FIU competence;

6 Member States plan to exchange information with third countries in the future if there is an EU legal base and based on future bilateral agreements;

No Member States reported issues regarding the timeliness and correctness of exchanged cash information.

6.3.1.Conclusion

Overall, the evidence collected shows that basic cash control information is collected regularly without undue administrative burden. It is made available to the national FIU in a manner regulated by national legislation and exchanged with other Member States and third countries within the existing legal framework which limits the exchange of all cash declaration information (e.g. indication of illegal activity or usefulness for risk analysis has to be established before exchange with another Member State can take place).

6.4.How extensive is the information collected under the Cash Control Regulation and how useful is it for preventing money laundering/terrorist financing at national level/EU level? To what extent does the regulation allow customs to gather all possible information to assist in the prevention of money laundering/terrorist financing?

The information collected under the Cash Control Regulation includes information provided on the EU-CDF (outlined in section 5.2.3) and the results of cash controls. Member States may also request data from other Member States in order to obtain additional information relevant to their investigations.

As shown in previous sections, the information collected by customs authorities often plays an important role in investigations of money laundering or terrorist financing.

The procedures in place for the recording and processing of data, as well the designated powers of competent officials to request additional information as a result of controls, ensure that extensive and accurate information is provided to other national authorities or other Member States.

However, even though other legal bases in addition to the Cash Control Regulation are also used (e.g. Community Customs Code for the exchange of risk information), there is no legal basis to freely exchange all regular (daily, non-suspicious and voluntary) cash control information between Member States.

The benefits of exchanging regular cash declaration information between Member States would include:

The customs authority in the Member State where the cash declaration is submitted or control performed would not have to make a judgement on the existence of a legal basis for spontaneous exchange with another Member State, removing the risk of potentially useful information not being exchanged;

Investigations of money laundering and terrorist financing operations (which are mostly transnational in nature) would benefit from access to all cash control data collected across the EU, enabling easier tracking of relevant cash movements to/from the EU. This would include access to information on cash declarations that did not raise immediate suspicion at the time of submission (therefore not exchanged with other Member States and difficult to identify/obtain under the current provisions of Article 6 of the Cash Control Regulation), but become relevant at later stage (e.g. in order to determine the origin and point of entry of illicit cash discovered in the EU);

Since information on a person's previous failures to meet the obligation to declare or to prove legitimate origin of cash carried when crossing external EU borders elsewhere, is often not available to the Member State whose external EU border this person subsequently crosses, free exchange of/access to all cash controls information at EU level would make it easier for the customs authorities to identify such individuals and adjust their controls accordingly (e.g. search of luggage, request for additional proof of legitimacy etc.);

A significant increase in the amount of cash controls data available to customs authorities of Member States would benefit their data analysis and risk profiling efforts, enabling better targeting of controls based on data on routings, cash smuggling methods, successful controls in other Member States etc.

Due to the fact that the main purpose of cash controls is to prevent money laundering and terrorist financing, the collaboration between customs, FIUs and other law enforcement authorities is of major importance. It is a necessary link to ensure the usefulness of cash control data in meeting AML/CFT efforts.

Furthermore, in response to Commission's Tax Questionnaire, the customs and tax experts of a few Member States have jointly suggested that a requirement to provide the tax residence of the owner of cash should be added to the EU-CDF.

This would ensure that, when exchanged for tax purposes (information foreseeably relevant to the administration and enforcement of the tax domestic laws of Member States, including the fight against tax fraud and tax evasion), cash declaration information would be exchanged with tax authorities of the correct Member States (provided the information is correct, which should be verified by the relevant tax authority).

6.4.1.Conclusion

The cash control information currently collected and exchanged by customs authorities, both with other national authorities and other Member States, is extensive and makes a valuable contribution towards the fight against money laundering and terrorist financing.

However, availability of regular cash declaration information would enable that better decisions are made by appropriate officials based on a more complete body of cash control information, resulting in better targeting and more effective cash controls at the EU external borders.

6.5.To what extent are the current provisions of the Cash Control Regulation in line with the latest developments in the EU and at the international level (FATF) to prevent money laundering /terrorist financing?

The Cash Control Regulation is an integral part of the EU's AML/CFT framework, complementing the controls that apply to the transfers of capital through the formal financial sector 86 through the implementation of control measures on cash physically transported across external borders by natural persons and implements FATF Recommendation 32 on cash couriers in the EU. 

The following provisions of the Cash Control Regulation exactly or closely follow FATF Recommendation 32 and/or relevant FATF methodology:

Definition of cash;

Obligation to declare for natural persons carrying cash of 10 000 EUR 87 or more across external EU borders;

Designation of powers to competent authorities;

Recording and processing of cash control information;

Requirement to impose effective, proportionate and dissuasive penalties for failures to meet the obligation to declare;

The following aspects/provisions of the Cash Control Regulation do not entirely follow FATF Recommendation 32 and/or relevant FATF methodology:

Exchange of information between Member States;

oFATF has recognised the EU a supranational authority, which means that there should exist free exchange of cash information within its territory;

Exchange of information with third countries;

oFATF encourages high levels of information exchange as a tool for fighting money laundering and terrorist financing;

Movements of cash in post and freight should be regulated as per the FATF Interpretative to Recommendation 32;

Lack of approximation 88 of penalties to ensure they are effective, proportionate and dissuasive across the EU. 

6.5.1.Conclusion

The current provisions of the Regulation are mostly in line with the latest international developments; However, in order for the Commission, as an FATF member, to fully comply with its Recommendation 32 on cash couriers, which is also the global standard, it has to regulate movements of cash in post in freight across its external borders, as well as enable free exchange of cash control information between Member States.

The latter is especially important considering the recognition of the EU as a supranational organisation for evaluation purposes by the FATF.

7.CONCLUSIONS

Overall, the EU AML/CFT framework certainly benefits from a control system on cash movements at the EU external border. As the regulatory framework in the financial sector has become more stringent, the controls of cross-border cash movements play an even more important role in limiting the extent to which cash is used by criminals as an alternative means of payment enabling them stay outside the scope of the financial sector's regulatory framework.

The regular statistics on cash declarations and recordings provided by the Member States indicate that large amounts of cash continue to be moved by natural persons across the EU external borders, and that cash controls on natural persons are needed to ensure that these cash movements are not related to criminal or terrorist activities.

Although limited, statistical data and case descriptions provided by Member States in relation to investigations and court judgements on money laundering and terrorist financing cases resulting from or using cash controls information demonstrate the usefulness of the EU system of cash controls and the contribution of the Cash Control Regulation towards the achievement of EU's AML/CFT objectives. In addition, cash controls have proven to be very useful in the fight against tax fraud and evasion in some Member State even though the Cash Control Regulation does not explicitly provide that cash control information may be processed and exchanged for tax related purposes.

However, although based on a small number of targeting operations and random controls, findings of large amounts of cash being moved across the EU external border by post and freight emphasise a weakness of the Cash Control Regulation in relation to its main objective. As its provisions do not impose an obligation to declare, nor designate powers to control the movements of cash amounts of 10 000 EUR or more by post or freight, and since only a few Member States have such national legislation, the Cash Control Regulation does not address the risk of money laundering or terrorist financing cash being moved across EU borders in post and freight.

The provisions of the Cash Control Regulation enable proper controls of cash movements by natural persons at EU external borders and remain relevant for the fight against money laundering and terrorist financing. However, it is clear that the controls are not implemented by the Member States in a fully uniform way.

In addition, significant improvements in relation to using the exchange of cash control information to improve the effectiveness of cash controls and contribute even more to money laundering, terrorist financing and tax fraud/evasion investigations can be made based on a comprehensive analysis of the data necessary for the different authorities involved (customs, investigation, prosecution) and their respective roles both at national and EU level.

The fact that penalties imposed for a failure to declare differ significantly between Member States may result in inconsistent communication to EU citizens on the matter. The existing differences in penalties regimes result in wide variations in the level of penalties to which the public is exposed in case of failure to declare, depending solely on the Member State through which they enter or leave the EU. The lack of approximation may increase the risk of customs shopping.

Basic cash control information is collected regularly without undue administrative burden. It is made available to the national FIU in a manner regulated by national legislation and exchanged with other Member States and third countries within the existing legal framework which limits the exchange of all cash declaration information (e.g. indication of illegal activity or usefulness for risk analysis has to be established before exchange with another Member State can take place).

The cash control information currently collected and exchanged by customs authorities, both with other national authorities and other Member States, is extensive and makes a valuable contribution towards the fight against money laundering and terrorist financing. However, availability of regular cash declaration information would enable that better decisions are made by appropriate officials based on a more complete body of cash control information, resulting in better targeting and more effective cash controls at the EU external borders.

Finally, In order for the Commission to fully comply with FATF's Recommendation 32 on cash couriers, it has to regulate movements of cash in post in freight across its external borders, as well as enable free exchange of cash control information between Member States.

8.RECOMMENDATIONS

Main recommendations :

Consider including cash movements by mail and freight at EU external borders within the scope of the Regulation;

Consider widening and harmonising the possibilities for information exchange between Member States:

a.By including all cash control information (including non-suspicious voluntary declarations),

b.By setting clear procedures and providing effective tools for the exchange of information.

Consider to explicitly provide for the possibility of using cash declaration information for tax purposes, including the fight against tax fraud and evasion;

Consider a level of approximation of cash control penalties applied by Member States at EU external borders.

Secondary issues for consideration:

Consider streamlining the cash declaration exchange process as it pertains to FIUs;

Consider modifying the definition of cash to also include gold and precious stones;

Consider the development of a mechanism to ensure a sufficient and equal level of implementation in the Member States

l

Annex 3.    Report on the outcome of the Public Consultation on the review of Regulation (EC) Nr. 1889/2005 on controls of cash entering or leaving the Community

Table of Contents

1.    Introduction    

2.    Setting the scope and defining objectives    

2.1Identification of key policy areas susceptible to possible improvement for which stakeholder input is relevant.

2.2Identification of stakeholders

2.3Selection of the consultation instrument

3.    The consultation    

3.1Concept

3.2Question methodology

3.3Consultation methodology

3.4Timeframe

3.5Limitations

4.    Consultation results    

4.1Number of contributions received.

4.2The respondents.

4.3The questions and answers provided.

4.3.1    Question 1    

4.3.2    Question 2.    

4.3.3    Question 3.    

4.3.4    Question 4.    

4.3.5    Question 5    

4.3.6    Follow-up question to question 5.    

4.3.7    Question 6    

4.3.8    Follow up question to question 6.    

4.3.9    Question 7    

4.3.10    Question 8    

4.3.11    Follow-up question to question 8    

4.3.12    Question 9    

5.Annexes and additional information.

1.Introduction

Regulation 1889/2005 on the controls of cash entering and leaving the Community came into force in 2007. It establishes a framework in line with the present FATF recommendation 32 on cash couriers. It imposes, inter alia, an obligation for physical persons entering or leaving the European Union who carry cash or cash-equivalents of 10 000 Euro or more to file a declaration with customs or other competent authorities. It enables competent authorities to temporarily hold the cash in case of non-declaration or incorrect declaration pending further investigation and possible confiscation/forfeiture after judiciary intervention. It provides for the possibility of sharing information with competent authorities in other Member States, with the Commission or with third countries under certain circumstances. Finally, the Regulation imposes Member States to provide for penalties in case of non-declaration, even if after investigation there are no indications of illicit activity. Regulation 1889/2005 does not apply to natural persons carrying cash or cash equivalents between two Member States.

Pursuant to Article 10 of Regulation 1889/2005, the Commission submitted a report to the Council and the European Parliament on the application of the Regulation in 2010. The report concluded that generally, the Regulation is meeting its objective and adequately transposes FATF recommendation 32 in EU law. However, possible improvements in several areas were mentioned.

Discussions with Member State experts in cash controls on the implementation of the Regulation as well as international developments lead the Commission to believe that there may be a scope for improvement in the regulatory framework and/or the implementation procedures.

In order to judge the desirability of potential actions and policy options and to obtain new insights, the Commission Services initiated a public consultation to receive the views of stakeholders on the possible action to be taken to address the identified gaps.

2.Setting the scope and defining objectives

2.1Identification of key policy areas susceptible to possible improvement for which stakeholder input is relevant.

Based on input provided by the 2010 report by the Commission to the European Parliament and the Council, feedback from national experts and the outcome of an ex-post evaluation on the implementation which was conducted as part of the review process for Regulation 1889/2005, the following key areas susceptible to modification and for which stakeholder input was required were identified:

1.Cash shipped in post and freight shipments

2.Exchange of cash declaration information between competent authorities

3.Use of cash declaration data for taxation purposes

4.Allowing authorities to act upon and detain amounts lower than the ordinary declaration threshold in case of suspicious circumstances

5.Awareness-raising of the public

6.Enlarging the definition of ‘cash’

7.Harmonization of administrative penalties

2.2Identification of stakeholders

Input gained from the 2010 evaluation report, the review roadmap, feedback from national experts and statistical data regarding declarations filed and infractions recorded allowed for the identification of the following categories of stakeholders:

1.Private persons carrying cash on their person, in their luggage or conveyance or shipping/receiving shipped cash

2.Companies or entities involved in shipping cash (courier companies, financial institutions, shipping companies, the official mail services)

3.Professional associations and interest representatives

4.Public authorities

2.3Selection of the consultation instrument

Considering the wide range of stakeholders and the technical nature of certain questions, it was decided to develop an open public consultation based on the ‘EU Survey’ template which was going to be available via the internet after publication via ‘My Voice in Europe’ and could be completed by any interested party. The use of the EUSurvey template allows for the introduction of certain dynamic elements such as not showing sub-options in case respondents indicated that they did not have a view on or did not wish to answer a previous, more general question. At the same time it allows a certain extent of input validation and easy analysis of results.

3.The consultation

3.1Concept

The consultation was conceived as a multi-page document where an introduction was given about the subject, information was provided about the consultation itself as well as background documents (links to legislation and international norms).

Subsequently there were sections on

1.Identification of respondent (stakeholder category, personal data, authorization to seek contact and/or publish the contribution etc).

2.Technical questions regarding policy areas for which input was sought

3.A final section where any opinions on any subject not queried in the previous questions could be expressed by the respondent if he/she thought this relevant.

3.2Question methodology

After a brief introduction to the question, the questions were asked in a ‘closed/multiple choice’ format with the choices corresponding to the major policy options under consideration. In each instance an option corresponding to a baseline (no change vs. current situation) scenario was proposed. Providing an answer to each question except for the final one was mandatory and checked via input validation. In order not to restrict answers to policy alternatives that were envisaged by the Commission or to overburden respondents who might feel very strongly about one aspect but hold no opinion on other topics, the following provisions were made:

It was possible to select ‘Don’t know / no opinion’ with each question.

After each question, an optionally-fillable free text field asked 'Please tell us WHY you selected this option'; it was explained to contributors that knowing the reasoning behind their choice would facilitate understanding and interpretation of the results.

With each question an option was provided where the respondent could select ‘Other’ as answer and formulate an own contribution in a free text field (unrestricted length).

Certain main questions were of a highly technical nature. In order not to overburden respondents, follow-up questions to these were only shown if a respondent provided any other answer than ‘No opinion/don’t know’.

A final question at the conclusion of the survey invited respondents to provide any remarks on topics that were not previously addressed in the survey but which they considered relevant for the review process.

3.3Consultation methodology

The open public consultation was developed using the ‘EU Survey’ template and published on the ‘My voice in Europe’ webpage in three language versions in order to ensure a good public reach/expenditure ratio: English, French, German.

An introduction to the publication in the same three languages on the DG Taxud webpage was also published, with a direct link to the online consultation document.

Additional publicity measures:

Publication on ‘My voice in Europe’ triggers an automatic alert to any registered entity, more specifically the interest representatives. Moreover, the consultation is visible to the public via the ‘My voice in Europe’ webpage.

DG Taxud sent out a Twitter message regarding the publication of the consultation.

Web search engine providers were notified about the consultation. A Google/
Bing search on ‘cash controls consultation’ and related queries resulted in a list of search results with the consultation survey on number one.

The consultation was announced to meetings of the ‘Cash Controls Experts Group’, the ‘FIU-platform meeting’ and the ‘Risk Analysis Experts Group’ accompanied by an invitation to provide input either in a private capacity or as public authority.

3.4Timeframe

The consultation ran from February 28, 2015 until and including May 31st, 2015, for a total of 14 weeks.

3.5Limitations

Any public consultation is subject to a number of limitations, some inherent to the process, others to the methodology chosen. Some of these limitations as they pertain to this consultation are:

The results of this public consultation cannot in any way be interpreted as correctly representing overall public opinion. Representativeness cannot be achieved without rigorous definition of the queried group, both qualitatively and quantitatively. Achieving these objectives through an open public survey is not possible.

Despite selecting the languages in which the consultation was held in function of reaching as wide an audience as possible while keeping costs under control, this measure excludes a significant number of potential contributors.

The format chosen (internet survey) precludes participation by persons who do not have access to this medium.

Potential for manipulation: although we do not have any indication of this happening, it cannot be rigorously excluded that attempts were made to steer answers in a certain direction. Reasonable measures (use of 'Captcha' technology) were taken to prevent automatic form submission.

Nevertheless, despite the limitations associated with the consultation mechanism chosen, we believe that on balance the concept allowed us to reach a substantial part of the population and gain valuable insights into the opinions of the respondents.

4.Consultation results

4.1Number of contributions received.

In total, 31 contributions were received via the online application. In addition, 4 contributions were received via e-mail sent to the functional mailbox associated with the consultation. After consultation of the 4 contributors and obtaining their approval, their contributions (which strictly followed the online template structure) were encoded so as to allow analysis.

A total of two contributions were eliminated from consideration, one due to the nature of the responses (the term ‘test’ filled into each field, no contact name or address given) and one consisting of a reply which was saved as 'draft' but not submitted and for which the contact person did not reply to a mail in which it was explained that he had to formally submit the draft document or explicitly allow us to do so on his behalf.

4.2The respondents.

The majority of respondents indicated that they were doing so in a capacity of individual, private citizens. The number of contributions by public authorities (3 Member States, one local public authority) was rather limited, as was participation from the private sector. Two out of three interest representatives were registered as such and provided their identification number.

Finally, although 90% of respondents (n=32) agreed to the publication of their contribution, only 40% (n=14) consented to the publication of their name and personal data.

4.3The questions and answers provided.

In what follows an overview will be provided of the questions as they were asked in the consultation document itself, followed by the answers per policy option. Where ‘other’ was selected or additional comments were made, these will be mentioned explicitly.

4.3.1Question 1

40% of respondents favor an approach where the competent authorities have the right to request additional information from the sender in case cash is sent through mail/courier company/in freight.

In addition, 31.43% are in favor of a system where a mandatory cash declaration would have to be filed in addition to the regular customs declaration, thereby imposing an extra administrative burden. An additional 11.43% of respondents are in favor of filing a mandatory extra declaration but would mitigate the administrative burden by providing for an exemption for financial institutions as well as for companies acting strictly as a transporter of cash.

In the ‘why did you provide this answer?' field associated with this question, representative remarks were:

‘There really is no good reasons for transfer of large cash amounts in the 21st century.’ (sic).

Choices for Option B (disclosure obligation) or option D (additional declaration but with exemptions for financial institutions and transporters) were mainly motivated by respondents acknowledging that additional controls are in their opinion required but no extra administrative burden should be imposed (‘Good balance between adequate control and limitation of paperwork').

Some respondents who opted for option ‘C’ (mandatory extra declaration in addition to the customs declaration) motivated their choice by pointing out that the customs declaration itself does not contain all pertinent information and that filing an additional declaration was an acceptable burden ('A separate declaration would make things simplier and clearer.') (sic).

It should be noted that only a small minority of respondents favored maintaining option A (to maintain the present legislative framework: only an obligation to declare by natural persons carrying 10 000 EUR or more).

4.3.2Question 2.

An absolute majority (51%, n=18) of respondents are in favor of using a standardized form, the format of which should be specified in the legislation. Another 28.6% of respondents are in favor of maintaining the present system, where the large majority of Member States use the same form but without there being binding legislation to do so.

In the ‘why did you provide this answer' field associated with this question, some representative remarks were:

-‘One same approach in all countries is better'.

-‘1 EU, 1 form’.

-‘If the present system works there is no need to impose it by law'

-A remark made by a couple of contributors was that Member States should have the option of customizing the form to take into account additional information regarding domestic cash controls or national legislation’.

4.3.3Question 3.

Compared to the baseline scenario in current legislation (A), which obtained support from 11.5% (n=4) of respondents, there seems to be a clear majority of 72.28% (n=26) respondents in favor of increasing the sharing of information regarding declarations or infractions between Member States. The opinion is evenly split between respondents who want to make the sharing of all declaration data mandatory by legislation and respondents who only want to impose the sharing of information about infractions.

In the ‘why did you select this answer' field associated with this question, some remarks were:

-‘I cannot believe this was not yet possible, with the IT systems that exist'.

-‘There is one legal basis, it makes sense that all information is shared.’.

-‘Respect the privacy of declarants who follow the law’.

-‘This is the only effective way to ensure transparency and tackle fraud’.

4.3.4Question 4.

A clear absolute majority of 74% (n=26) of respondents are of the opinion that in cases where authorities have indications of illicit activities associated with the cash in question or with the movement, they should be empowered to temporarily detain the cash in question even in case the amount is lower than the threshold value.

However, it should be noted that many of those respondents further elaborated upon their opinion with the qualification that the temporary detention should under no circumstances be arbitrary and that some guidelines need to be laid down in order to better describe what type of element can be considered as indicative of illegal activity.

Additionally, some other elements which were mentioned in the comments to the question:

-‘To prevent circumvention of the rule. It should however be clear that the indications have to be sufficiently clear and objective’.

-‘This already exists in the UK under national legislation and works very well.’

-‘Indications of illegal activities" is too low a bar. In extermis this could lead to a pensioner's purse being emptied simply on the basis of a vague ‘suspicion’. (sic).

4.3.5Question 5

A large majority of almost 83% (n=29) of respondents are in favor of the facilitation of cash control information between Member States and within one Member States between various authorities for tax purposes.

Additionally, some other elements which were mentioned in the comments to the question:

-‘Because there are more tax dodgers than terrorists but they also undermine society'.

-‘Fight against tax fraud should be a priority in Europe.'

-‘Not at this level (10 000 EUR), risk of divergent and discriminatory treatment among Member States’.

-'Too high administrative burden'

4.3.6Follow-up question to question 5.

Important remark: The following question was shown only in case any other answer than ‘No opinion/don’t know’ or ‘No’ was provided to question 5. The percentages mentioned are relative to the original group who answered question 5, hence do not add up to 100%.

A small minority of respondents favor maintaining the present status quo where the sharing of information of declaration data for tax purposes should be left to national legislation.

Of the approximately 75% (n=26) of respondents who are in favor of further steps to facilitate the exchange of declaration data for taxation purposes in the Member State in question or between Member States, opinions are almost split (40% vs 34%) on whether all available information (declarations + infractions) should mandatorily be shared or if the mandatory sharing of information should be restricted to data regarding infractions, with the sharing of regular declaration data being left to national legislation modalities.

Considered in combination with the answers provided to the previous question there does seem to be a clear will to further facilitate and develop the sharing of declaration or infraction data for taxation purposes.

4.3.7Question 6

An absolute majority of 57% (n=20) of respondents supports a policy option where it would be made mandatory for Member States to inform the public about their duty to declare. An additional 20% (n=7) considers that an explicit reference should be made about awareness raising in the legislation but that this should be on the basis of a recommendation to the Member States, not an obligation. Maintaining the current framework where no mention about awareness raising is made in the legislation is supported by 11.5% (n=4) of respondents.

Additionally, some other elements which were mentioned in the comments to the answer given:

‘Because a law is obeyed if it is known and then there is no excuse about ignoranz.' (sic)

‘people have to respect the law but they need to know it first'

‘Unnecessary additional expenditure should be avoided. The issue is currently well understood by travellers’

‘Ignorance can never be a defence but people have to explicitly be made aware of their duty to declare.'(sic).

4.3.8Follow up question to question 6.

Important remark: The following question was shown only in case any other answer than ‘No opinion/don’t know’ or ‘No’ was provided to question 6. The percentages mentioned are relative to the original group who answered question 6 , hence do not add up to 100%.

An absolute majority of respondents are in favor of a harmonized approach across Member States. Arguments offered in support mostly revolved around the idea that, as the legislation is harmonized in the EU, so should campaigns for awareness raising be harmonized. Respondents were of the opinion that this would improve comprehension and recognition of the information, regardless of the Member State of entry or exit.

The respondents who answered negatively were of the opinion that Member States should be free to determine the way in which this is achieved.

Optionally, respondents were offered the possibility to explain HOW such harmonized campaigns could in their opinion best be realized. Some answers provided were:

'Ads in airports, on the internet, folders, information provided by plane/boat operators....'

'It could be achieved via an international graphic design contest.'

'By delegating responsibility for those campaigns to the EC - surely Commission is capable of running one campaign'

'By internet ads on travel sites, ads on airplanes/ships. In airport.'

4.3.9Question 7

The consultation document explains that the current definition of ‘cash’ as used in Regulation 1889/2005 follows the international standards. However, it is not inconceivable that criminal groups could attempt to escape the obligation to declare by converting cash into other goods that can easily be carried yet do not have to be declared via a cash declaration (though they might be subject to a normal customs declaration).

From the answer it seems that while most respondents favor not modifying the definition (48.57%, n=17) , a large minority of 37.14% (n=13) is in favor of expanding the definition.

Additionally, some other elements which were mentioned in the comments to the question:

‘The definition of ‘cash’ should stick to international standards’

‘Enlarging the definition is easy, but where does one stop? What to include, what not to include?’

'It would be best to keep this in line with international standards'

 ‘Yes, the definition should be enlarged, but only if this can happen on international level’.

The respondents who answered ‘Yes’ to the question concerning expanding the definition of cash were asked an additional question: ‘Please explain briefly why you answered ‘YES’ and tell us which elements (which goods, commodities etc) should, in your opinion, be included in the new definition’.

Answers to this optional question include:

‘Only legally obtained travelers checques and bank drafts should be eliminated. By that I mean elements which can be proved as having been obtained through legal means.’(sic).

‘It is difficult to adequately define but all high value and liquid assets should be included so certainly gold and jewels should be included'.

In past, the Czech AML legislation included obligation to declare commodities of high value, such as precious metals or stones, in the value of EUR 10,000 or higher. Based on recommendation of the European Commission that such items are covered by customs legislation, we have changed national legislation and repealed the provisions concerning obligation to declare commodities of high value, such as precious metals or stones. Movement of mentioned goods cross borders of EU is monitored by customs declarations.

4.3.10Question 8

There is no absolute majority in favor of establishing harmonized penalties for the failure to declare. It was explicitly mentioned in the questionnaire that these penalties would be intended to deal with the failure to declare only and have no relation with the licit or illicit origin or destination of the cash.

Nevertheless, the largest group of respondents (45.71%, n=16) are in favor some initiative to harmonize the penalties regime to some extent, with a minority of 25.71% (n=9) being opposed to harmonization initiatives and a slightly larger group of 28.57% (n=10) holding no strong opinion either way.

In the ‘why did you select this answer' field associated with this question, some remarks were:

'member states should not have their independence compromised in this area.'

'A harmonizing would lead to an equal procedure in EU, but I think it is up to the MS national legislation.'

'National competence of the individual states'

4.3.11    Follow-up question to question 8

Important remark: Answering the following question was optional. It was displayed only in case question 8 was answered with 'Yes' .

Please explain below how, in your opinion, this could be achieved.

Some answers provided:

'At least minimum and maximum sanctions should be provided'

'Plain level field concerns require an effective harmonization'(sic)

' If the same rules apply all over the EU, the penalty (at least for non-declaration) should also be equal'

'Devise a common set of rules to treat non-declaration and enshrine these in legislation'

From the feedback provided it seems that concerns about equal treatment of persons in the same situation, regardless of the Member State of entry or exit is the driving force behind the opinion that harmonization of penalties should be considered.

4.3.12    Question 9

The question was conceived as an open-ended, facultative text field of unlimited length. Only three responses were received, as the question is intended to cover any aspects not treated by other questions but which were deemed relevant by the contributors we represent the answers in full (translated to English where required). One lengthy contribution dealt largely with intra-community and national measures concerning cash payments which fall outside the scope of the review and the questionnaire. It has been substantially redacted for reasons of brevity and relevance.

' Consider a differentiated cash limit. Lower cash limit for bringing cash in (perhaps 5000 Euro), reducing the ability to fund illegal activity within the EU and encouraging greater use of electronic means.'

Abbreviated and redacted comment: Respondent remarked that in their sector (purchase and sale of new and second hand vehicles) in many cases the buyers are African businessmen operating in conditions where the local banking system is neither as transparent nor as performant as in the EU, as a consequence many transactions are paid for in cash, which might cause problems regarding the legislation.

'France supports the legal recognition of the concept of 'community of interests' in EU legislation as far as the obligation to declare is concerned. This notion allows to add up and consider as one amount sums carried by two persons that are linked by kinship or professionally. The notion allows to consider that, once a common interest is established, whether this be through kinship (parents with underage children), marriage (married or through legal partnership) the threshold of 10 000 EUR be applied to the community and not to each individual considered separately. When they travel together, spouses would then be individually obliged to declare sums carried that are equal to or greater than 10 000 EUR even if each of them carries less than 10 000 EUR. This 'common interest' notion would extend to other couples than spouses: employer and employees, employees of the same company travelling together using the same means of transport.'

5.    Annexes and additional information.

Information regarding this public consultation as published on the webpage of DG Taxud can be accessed here: http://ec.europa.eu/taxation_customs/common/consultations/customs/cash_2015_02_en.htm The full consultation document can be accessed as a .pdf-file from the link above, as can the background documents.

The detailed results of the consultation with individual replies (where permitted by the authors) can be accessed here: [link to be inserted]

Annex 4. Procedural information

This annex presents the procedural information concerning the process to prepare the impact assessment report and the related initiative.

1. Lead DG, Agenda Planning and Work Programme

The cash controls impact assessment was prepared under the lead of Directorate General for Taxation and Customs Union. Within the Agenda Planning of the European Commission, the project is referred to under item 2016/TAXUD/001. In the 2016 Action Plan to strengthen the fight against terrorist financing , the Commission committed to put forward a legislative proposal against illicit cash movements at the latest by 4th quarter 2016. 

2. Organisation and Timing

Work on the revision of the Cash Controls Regulation started in September 2014, with the evaluation of the Regulation. These works were followed by the impact assessment which was kicked off in April 2016.

An Inter-services Steering Group assisted DG Taxation and Customs Union in the preparation of this Impact Assessment report. The Steering Group was set up in September 2014 and included colleagues from DG Migration and Home Affairs (HOME), DG Financial Stability, Financial Services and Capital Markets Union (FISMA), DG Economic and Financial Affairs (ECFIN), - DG Internal Market, Industry, Entrepreneurship and SME's (GROW), the European Anti-fraud Office (OLAF), DG Justice and Consumers (JUST), the Legal Service and the Secretariat-General.

The Steering Group met on five occasions between September 2014 and October 2016. The last meeting of the Steering Group took place on the 26th of October 2016. At each occasion, the members of the Steering Group were given the opportunity to provide comments in writing on the draft versions of the documents presented.

3. Consultation of the Regulatory Scrutiny Board

The Impact Assessment report was reviewed by the Regulatory Scrutiny Board on the 12th of October 2016. A positive opinion was issued. Based on the Board's recommendations, the Impact Assessment has been revised in accordance with the following points:

4. External Expertise

DG Taxation and Customs Union made use of the expertise provided by Member States' national experts who implement the Regulation. This interaction was both ad hoc and structural, with 2 annual meetings of the 'Cash Controls Working Group' held under the aegis of the Customs 2020 programme. However, no separate external study has been carried out for the purpose of this impact assessment.

Annex 5. Who is affected by the initiative and how

The objective of this annex is to set out the practical implications of the initiative for the actors that will be impacted by this initiative: natural persons, economic operators and public authorities.

Natural persons carrying cash across the external EU borders will continue to remain subject to the current provisions. However, in case they will be carrying also gold, in the shape and form described by the revised Regulation, they will have to declare it, or risk being sanctioned according to the national laws of the Member State where they are required to declare.

Natural persons or economic operators who send cash or gold through post or freight will not be affected significantly given that the Regulation provides for a disclosure system. In practice this will mean that only the suspicious parcels or shipments will be selected by the authorities, and the burden to declare will only fall on a limited number of cases, depending on the intensity of controls decided by the authorities. In certain cases the obligation to declare could lead to an obligation to make both a customs declaration and a cash controls declaration.

Competent authorities (in most cases these are the custom authorities of the Member States) will have to allocate extra resources for controls. The burden for the administrations will most importantly be more work on risk analysis to try to target the right consignments, some level of extra controls and administration regarding the request for a declaration. As an international norm imposes controls on any type of cross-external border movement, this form of control would be the least intrusive one to comply with the international standard. This would require resource allocation by competent authorities and hence a burden.

Each Member State authority will have to provide their respective national Financial Intelligence Unit (FIU) with access to a database which contains all the cash controls declaration information. Dependent on the technical system chosen, the administrative burden would be borne by the authorities who encode the information and maintain the IT system. However, as the present situation already requires coding the information and making it available to FIU, the additional burden should be marginal in most Member States. The largest cost would be setting up an IT-system, with a recurrent hardware cost and staff costs. Such harmonisation may generate economies of scale. The administrative burden for FIUs would be much smaller with this option.

In the case of sub-threshold amounts, the Regulation would allow competent authorities to temporarily detain the cash in accordance with national legislation if they judge that indications of criminal activity (predicate offences to money laundering or terrorist finance) are present. Essentially this would lead to costs of administration and of the security arrangements associated with physically storing the cash. The number of cases where action is taken specifically based on this provision is expected to be low as the mechanism is conceived as a 'catch all' instrument, to be used if no legislation outside the cash control regulation allows (temporary) detention of the cash. Under present legislation competent authorities already have the option to temporarily detain higher than threshold amounts of cash in case these were not declared and there are indications of illicit activities, hence the necessary infrastructure will already be present. The impact on the owner/carrier of the cash of sub-threshold amounts may however be substantial in the event that the FIU decides there were no grounds for suspicion and decide that the owner/carrier is to be refunded. In an extreme scenario this could mean having to travel in order to retake possession of his/her money.

The obligation for competent authorities to use a harmonised declaration form would impact three Member States who currently do not use it and who would have to change their declaration forms and face a one-time burden. However these costs would be offset by the benefits in terms of information exchange and standardisation that a harmonised approach would provide.

Annex 6. Fundamental rights and exchange of information

Exchange of information

1.    Introduction

Under Regulation 1889/2005, five major theoretical 'information flows' can be identified and should be clearly distinguished and borne in mind for what follows:

a) The making available of information to the FIU: all information collected by the competent authorities (declarations, infractions, indications of illegal activity) is made available to the FIU of that Member State.

b) Information collected by competent authorities in one Member State and communicated to fiscal authorities in that same Member State.

c) Information collected by competent authorities in one Member State and which is made available to other competent authorities in another Member State.

d) Information collected by a competent authority in a Member State which is made available to a third country.

e) Information collected by a competent authority in a Member State and which is made available to the Commission.

In practice information flows d) and e) do not pose any significant problems at this point and b) is discarded for legal reasons as explained in section 2.2.2. These will not be considered in this document.

As described in the evaluation of the cash control regulation and under point 2.2 of the problem description in the impact assessment, there are a number of problems associated with items a) and c).

This annex will examine those items, provide additional information that would be out of the scope of the Impact Assessment document itself but is essential to understanding the issue, the policy options examined and the choices made.

It shall be clearly established for each type of information flow:

a) who these 'competent authorities' authorities are;

b) what type of information shall be exchanged;

c) under which circumstances;

d) for what purpose;

e) according to what procedure;

f) how respecting personal data protection provisions and fundamental rights are evaluated and balanced with the legitimate interests of society as a whole, given the overall objective of the CCR.

Further, it will briefly describe the mechanics of such data-exchange.

2. Making available information to the FIU.

Article 5 of regulation 1889/2005 specifies:

1. The information obtained under Article 3 and/or Article 4 shall be recorded and processed by the competent authorities of the Member State referred to in Article 3(1) and shall be made available to the authorities referred to in Article 6(1) of Directive 91/308/EEC of that Member State.

2. Where it appears from the controls provided for in Article 4 that a natural person is entering or leaving the Community with sums of cash lower than the threshold fixed in Article 3 and where there are indications of illegal activities associated with the movement of cash, as referred to in Directive 91/308/EEC, that information, the full name, date and place of birth and nationality of that person and details of the means of transport used may also be recorded and processed

The reference to Directive 91/308/EEC is to be construed as a reference to the Anti-Money Laundering Directive which currently applies. 89 For the sake of brevity it shall be referred to as ‘AMLD4’.

The Financial Intelligence Units (FIU) are entities established based on recommendations of the Financial Action Task Force (FATF) which the EU has committed itself to. In the EU legal order, the establishment of the FIUs is organised through AMLD4. The FIU is established on Member State level, it is intended as the hub element that receives and analyses information 90 from a variety of sources in order to assess whether or not there are grounds to suspect ML/TF. If such suspicions are present, the FIU may notify competent (judicial) authorities that may subsequently start an investigation.

The functioning of the FIU is subject to strict conditions of data confidentiality. Extremely simplified, the FIU is an independent entity which receives information from sources that would not be able to pass this data directly to other authorities, collates this data, analyses it and then determines if there are grounds for suspicion and further action. Only in the latter case will the FIU contact other authorities, hence it acts as a filter for the information provided.

It has been established that next to abuse of the financial system, cross border movements of cash are another major element in ML/TF. The CCR covers this aspect and imposes a declarative obligation and other formalities. The CCR states explicitly in its objectives that (Article 1):

1. This Regulation complements the provisions of Directive 91/308/EEC concerning transactions through financial and credit institutions and certain professions by laying down harmonised rules for the control, by the competent authorities, of cash entering or leaving the Community.

It follows that the intended objective of the CCR has to be considered within the framework of the fight against ML/TF, like the AMLD.

In order for the FIU to perform its role, it is indispensable that it also has access to cash control declarations and infraction / suspicious activity data. It can then take this into account and compare it with information received from other sources in order to screen for activities related to AML/TF.

In the context of the CCR, the competent authorities are (Article 2):

‘competent authorities’ means the customs authorities of the Member States or any other authorities empowered by Member States to apply this Regulation;

With this are meant the authorities who record and process cash control declarations and perform controls on passengers, their luggage and means of transport in order to detect if cash above the declaration threshold is carried. In the vast majority of cases this will be the customs authorities, not e.g. the tax authorities, even if tax authorities and customs both operate under one entity such as a Ministry of Finance.

Those competent authorities have to ‘make available’ the information mentioned to the FIU.

The impact assessment proposes to more clearly define that ‘make available’ implies recording and processing the information followed by actively giving the FIU access to the information stored in an secured electronic system, not merely by providing access to physical declaration forms stored in a room.

Considering the purpose for which the declarative information is collected (AML/TF), the function of the FIU and the safeguards built in to the legislation governing the functioning of the FIU, appropriate safeguards exist to guarantee respect for fundamental rights and data protection, while the proportionality of the measure is clear.

3. Information collected by competent authorities in one Member State and which is made available to other competent authorities in another Member State.

In most cases this will concern the exchange of information from a customs authority in one Member State to a Customs Authority in another Member State.

The exchange of such information is useful where it might help customs with the detection of potential infractors, such as in the case of persons who have already failed to declare in another Member State.

For customs authorities, it is important to be able to determine transactional risk and, from that, the appropriate level of controls. It is not important to have full time access to all information on all declarations that were made in the Member State of control and of other Member States but it is highly relevant –from the perspective of determining whether or not a declaration is truthful or if additional controls are required- to have access to a system which might inform them, given input of the name of a person or the identity document reference, if this person is known in another Member State for infractions against the obligation to declare or if the person makes recurring declarations on a regular basis in various Member States. A solution exists (cf. infra, Match3 technology) which makes this possible without the bulk exchange of personal data which is systematically accessible.

For the purposes of information exchange (or rather 'information availability' ) between customs authorities, the appropriate contact points for customs administrations of a Member State would be the designated national contact point for the application of Regulation 515/97 on customs mutual administrative assistance.

Considered in conjunction with a technological approach such as explained below, this allows authorities quick access to relevant data while simultaneously safeguarding fundamental rights of the individual.

4.    Technology for data exchange.

The appropriate means to manage the various data flows is to be determined through a study.

In this context it should be remarked that the FIU's already use established technology to transfer information between Member States through FIU.net 91 .

FIU.net is based on the principle of distributed data storage where each Member State keeps control of his own data but shares an encrypted but searchable 'filter' with other Member States. Member State 'B' may perform a search on the name, identity document number or a combination of factors in this filter and if a result is found, this will mark as a 'hit' in the system, indicate which Member State holds the information but not per definition automatically make this available. Availability is controlled by the Member State holding the data. Regarding the 'making available' of cash control declaration data between customs authorities in different Member States, such a system holds promise.

Further, this would have the added benefit of building on existing technology and potentially ensure interoperability with FIU systems.

Regarding the data provision to FIU's the most appropriate system (subject to confirmation by technical specialists) might be a harmonised database that allows for the encoding of cash control declarations / infraction / suspicious activity data, which is made available to the FIU of the Member State in question and then integrated in the FIU's secure system for analysis.

Lastly, data exchange tools and modalities for the exchange of data between fiscal authorities in one Member State and their counterparts in another Member State are described in Directive (EU) 2011/16.

(1) Council Directive 91/308/EEC of 10 June 1991 on prevention of the use of the financial system for the purpose of money laundering. Later As of May 20, 2015, 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, ('4th Anti-Money Laundering Directive') was adopted. It is currently being transposed into national legislation by Member States, who have until June 26th, 2017 to implement its provisions. Hereinafter referred to as AMLD.

(2) http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:32005R1889   

(3) http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52013SC0021&from=EN & 4 Definition as used in the Impact Assessment accompanying the Proposal for a Directive of the European Parliament and of the Council on the prevention of the use of the financial system for the purpose of money laundering, including terrorist financing, pp. 8-9, to be consulted at:  

(4) OJ L 141, 05.06.2015, p. 73.

(5) OJ L 345, 8.12.2006, p. 1.

(6) OJ L 319, 5.12.2007, p. 1.

(7) OJ L 344, 28.12.2001, p. 70.

(8) OJ L 139, 29.5.2002, p. 9.

(9) http://www.fatf-gafi.org Information about the FAFT, its recommendations and all related documents is available on the public web- pages of the FATF:  

(10) As in most Member States the national customs authorities are competent authorities for the implementation of the Cash Control Regulation, the terms 'competent authorities' and 'customs authorities' are used interchangeably in the evaluation, depending on context.

(11) Offence refers to the mere failure to declare and is not related to any underlying illicit activity concerning the money.

(12) http://eur-lex.europa.eu/legal-content/en/TXT/HTML/?uri=CELEX:52016DC0050&from=EN   

(13) Annex 1 of the Action Plan presents the timeline for the proposals.

(14) Annex 2 Evaluation report and the Commission Action Plan

(15) Annex 3: Summary report of the public consultation

(16) FATF-Report 'Money laundering through the physical transportation of cash'  , October 2015, p. 4

(17) One Member State reported exports and imports of cash in freight consignments (19th plenary meeting of the Cash Controls Working Group) of respectively 20 and 25 billion Euro for 2015, citing concerns about the origin and intended purpose of the operations due to specific circumstances regarding the movements.

(18) http://www.fatf-gafi.org/media/fatf/documents/reports/money-laundering-through-transportation-cash.pdf FATF report 'Money Laundering Through the Physical Transportation of Cash'  

(19) 21 out of 28 Member States provide either direct access to their database to the FIU or periodically transmit the declaration data to the FIU. The other 7 Member States either provide access on demand to electronic data, provide access to the physical declaration forms or only make available information concerning infraction. Cf. the Evaluation report of the Cash Control Regulation.

(20) What is meant by 'access to' depends on how 'make available' is implemented by the Member State in question.

(21) Recital (56) of Directive (EU) 2015/849: 'The exchange of information on cases identified by FIUs as possibly involving tax crimes should be without prejudice to the exchange of information in the field of taxation in accordance with Council Directive 2011/16/EU or in accordance with international standards on the exchange of information and administrative cooperation in tax matters.'

(22) See Annex 2 - Evaluation report of the Cash Control Regulation for more details.

(23) Cf. Annex 3

(24) http://www.fatf-gafi.org/media/fatf/documents/recommendations/International%20BPP%20Detecting%20and%20Preventing%20illicit%20cross-border%20transportation%20SR%20IX%20%20COVER%202012.pdf FATF Guidance Document 'International best practices Detecting and preventing the cross-border transportation of cash and bearer negotiable instruments', 19 February 2010, p. 12, accessible at  

(25) Contribution provided by France to the Public Consultation on the Review of Regulation (EC) Nr. 1889/2005 on controls of cash entering or leaving the Community, operation 'Bingo' which was conducted in November-December of 2014 detected gold bullion, cheques and prepaid cards to the amount of 9.2 Mio Euro, sent in parcels and freight. However, it was not possible to isolate the value of the gold.

(26) E.g. France, Germany.

(27) http://www.fatf-gafi.org/media/fatf/documents/reports/ML-TF-risks-vulnerabilities-associated-with-gold.pdf FATF report on Money Laundering and Terrorism Financing risks and vulnerabilities associated with gold  

(28) Questionnaire sent by DG Home in collaboration with DG Taxud, during June 2016. 42 replies were received from authorities in 27 Member States.

(29) For technical and organisational reasons it was impossible to establish a common quantitative definition of the notions 'high', 'medium' and 'low', the appreciation was hence qualitative and left to the appreciation of the individual respondents.

(30) See Europol report "Why cash is still king" https://www.europol.europa.eu/newsroom/news/cash-still-king-criminals-prefer-cash-for-money-laundering

(31) Judgment in Case C-255/14 (Chmielewsky vs. Nemzeti Adó- és Vámhivatal Dél-alföldi Regionális Vám- és Pénzügyőri Főigazgatósága) as well as the opinion of Advocate-general Wathelet.

(32) Article 17, Charter of Fundamental rights of the European Union.

(33) Data provided by Member States to the European Commission on voluntary basis and presented at the 19th plenary meeting of the Cash Controls Expert Working Group.

(34) http://ec.europa.eu/taxation_customs/customs/customs_controls/cash_controls/index_en.htm Accessible via the Directorate-general Taxation and Customs Union homepage at  

(35)  As reported by Member States national experts to the Commission.

(36) http://ec.europa.eu/taxation_customs/customs/customs_controls/cash_controls/index_en.htm Accessible via the Directorate-general Taxation and Customs Union homepage at  

(37) The figure of 10 000 detections under scenario 1 represent 10% of the amount of declarations made by natural persons. The figure of 10% is reasonable in light of the fact that most operators prohibit the shipping of large amounts of cash through their systems, hence it cannot be insured for losses.

(38) http://ec.europa.eu/eurostat/statistics-explained/index.php/Hourly_labour_costs   

(39) Internal average measured when persons unfamiliar with the process were requested to perform these actions, not statistically significant, for information purposes only.

(40) http://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:12012P/TXT&from=EN http://ec.europa.eu/justice/fundamental-rights/charter/index_en.htm The Charter of Fundamental Rights of the European Union can be consulted here: Additional information can be obtained here:  

(41)  For cash carried by natural persons crossing the external border, there are +-10% failures to declare, considered vs the total number of declarations. This is not the same as 10% of the controls performed which are positive, as no exact data are available concerning the controls performed that were ‘non-positive’ (persons carrying amounts lower than the threshold who were controlled). It is however certain that the total number of controls performed are higher than the declarations and detections reflected in the statistics.

(42)  Compliant as regards the obligation to declare, not necessarily compliant in the sense that no predicate offences to money laundering or terrorist finance are present, as it has been demonstrated in the BE-NL pilot project that for at least a substantial fraction of declarants who declared in a Member State other than their own, there were indications of potential ‘fiscal crime’.

(43)  Communication between DG Taxud and DG ECFIN regarding the existence and accessibility of a reliable database with a list of all ‘financial institutions’ worldwide.

(44)  It should be noted that the 'rating' of various options depicted in the table above is based on a 'reasonable effort' approach and not exact science as it involves the interpretation of many variables, most of which defy quantification. Further to this, it is impossible to objectively weigh the relative importance of the categories. The attribution of a weighting factor would only introduce a false sense of precise quantification. The reader should keep this in mind while evaluating the comparison tables

(45) Terrorism Finance Action Plan In the , as indicated before.

(46) CJEU case C-293/12 and C-594/12, paras. 54, 63, 64

(47)

   An approach also explored by the Financial Action Task Force: ‘Countries should also consider whether Recommendation 32 applies to certain prepaid access products, such as prepaid cards, that would qualify as bearer negotiable instruments.’, FATF Guidance for a risk-based approach: prepaid cards, mobile payments and internet-based payment providers, 2013, p. 16, Cf.    
http://www.fatf-gafi.org/media/fatf/documents/recommendations/Guidance-RBA-NPPS.pdf  

(48) Europol report "Why cash is still king" https://www.europol.europa.eu/newsroom/news/cash-still-king-criminals-prefer-cash-for-money-laundering

(49)  Judgment by the ECtJ in case C-255/14, op. cit. supra.

(50)  The three Member States who do not use the ‘standard’ form state as reasons a) a large stock of pre-printed ‘old’ forms which have to be used up first, b) an electronic declaration form which is submitted online and includes national elements and c) a form that combines cash control regulation elements with national elements.

(51) http://ec.europa.eu/taxation_customs/customs/customs_controls/cash_controls/how_to_declare_en.htm  Cf.  

(52) It should be mentioned that although the legislation does not provide for any obligation to inform the public nor are there any official guidelines, in practice a system has been developed between the Commission and the Member States which mitigates the impact of this situation, cf. below.

(53) Cf. Problem description under point 2.7.

(54)  Directive 2005/60/EC of the European Parliament and of the Council of 26 October 2005 on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing

(55) Definition as used in the Impact Assessment accompanying the Proposal Proposal for a Directive of the European Parliament and of the Council on the prevention of the use of the financial system for the purpose of money laundering, including terrorist financing, p. 8, to be consulted at: http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52013SC0021&from=EN

(56) Op. Cit. supra, p. 9

(57) As of May 20, 2015, 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, ('4th Anti-Money Laundering Directive') was adopted. It is currently being transposed into national legislation by Member States, who have until June 26th, 2017 to implement its provisions.

(58) http://register.consilium.europa.eu/doc/srv?l=EN&f=ST+14469+2005+REV+4  

(59) Information about the FAFT, its recommendations and all related documents is available on the public web- pages of the FATF: http://www.fatf-gafi.org

(60) In 2012, the FATF revised all recommendations. Recommendation 32 is an amendment of the former Special Recommendation IX which refers to cash controls.

(61) A “predicate offence” is an offence whose proceeds may become the subject of a money laundering offence, source: United Nations Office on Drugs and Crime.

(62)  The revision of the FATF Recommendations was adopted and published in February 2012, whereby Special Recommendation IX on cash couriers became FATF Recommendation 32 on cash couriers.

(63) The Regulation also applies to natural persons crossing the border as professional cash couriers, i.e. employees of cash-in-transit (security) companies that specialise in the physical transport of cash.

(64) As in most Member States the national customs authorities are competent authorities for the implementation of the Cash Control Regulation, the terms 'competent authorities' and 'customs authorities' are used interchangeably in the evaluation, depending on context.

(65) Offence refers to the mere failure to declare and is not related to any underlying illicit activity concerning the money.

(66) The term 'transit' as used here means either a movement from one third country to another via the territory of a Member State but without clearing immigration and customs controls or entering the EU via the territory of one Member State with an ultimate destination in another Member State or departing in one Member state to another Member State, from which the EU is exited.

(67) Common Declaration Form, a harmonised declaration form used by most Member States on a voluntary basis and elaborated in cooperation with the Commission, cf. infra.

(68) A questionnaire sent to Member States in August 2014 indicated that where pecuniary penalties are imposed, these ranged from zero (in cases where authorities took into account mitigating circumstances) to fines up to twice the undeclared amount. Some Member States levy a fixed amount fine, others a percentage of the sum undeclared or use an approach which takes into account the undeclared amount.

(69) Simply put, the notion of 'Strict liability' implies that no fault, negligence or intent needs to be established to assign responsibility for an infraction..

(70) Graph from the Europol 'Why is cash still King', report, o.c., p. 14, based on ECB statistical data available at: https://www.ecb.europa.eu/stats/money/euro/circulation/html/index.en.html

(71) http://www.ecb.europa.eu/stats/euro/circulation/html/index.en.html Idem World Payments Report 2013. Trend confirmed in ECB statistics on euro banknotes and coins in circulation: .

(72) Cf. 'Why is cash still King?', Europol report of 08 July 2015: https://www.europol.europa.eu/content/cash-still-king-criminals-prefer-cash-money-laundering

(73) Unless explicitly mentioned otherwise, all diagrams shown are based on anonymous statistical declaration data delivered quarterly to the Commission by Member States, then further analysed.

(74) A 'recording' is a declaration which was registered when the obligation to declare was not fulfilled, either following a customs control which detected non-declared cash or if a control showed that the declaration made was incomplete or incorrect (e.g. wrong amount)

(75) Illustrative for the caution required while interpreting the data is e.g. one single detection for a value of 1.1 billion EUR which accounts for the spike in value of recordings shown in diagram 4 for 2008

(76) In a 2014 report, PriceWaterhouseCoopers estimated total asset outflows from Swiss banks since the start of 'adverse' publicity regarding banking secrecy to be 350 billion USD, 250 billion of which are estimated to be 'final' repatriations. While the importance of cash in these asset outflows is undetermined it is reasonable to assume that individuals who wish to avoid detection by authorities in their home countries will tend to avoid transfers via the formal banking system. The full report can be consulted at: https://www.pwc.ch/user_content/editor/files/publ_bank/pwc_private_banking_switzerland_from_yesterday_to_the_day_after_tomorrow.pdf

(77) http://www.newsweek.com/2014/09/26/why-europes-super-rich-are-resorting-smuggling-cash-271540.html  

(78)  Meant are natural persons carrying or physically accompanying cash consignments on behalf of third parties in a remunerated capacity, not postal services, shipping companies etc.

(79) Subsequently renumbered, presently Recommendation 32.

(80) It should be noted that Croatia joined the EU in July 2013 and its total statistics are not comparable with other Member States, who have been providing statistics since July 2007.

(81) http://ec.europa.eu/taxation_customs/resources/documents/customs/customs_controls/risk_management/customs_eu/com_2012_793_en.pdf

(82) Cf. table listing comparative differences in penalties applied by Member States, p. 29.

(83) Other drivers related to the Cash Control Regulation may be the perceived differential in control probability between Member States, rather than the consequences of a control if this takes place.

(84) FATF recommendation report For comparison see , FinCen Form 105 which is used in the United States and can be compared with the EU-CDF in annex 2.

(85) The formal sector comprises, inter alia, wire transfers performed through financial institutions, controls on 'high risk' professions which mainly take place through the implementation in national legislation of the EU' ant-money laundering directives (cf. supra).

(86) FATF Recommendation 32 specifies a maximum threshold of 15 000 USD/EUR before control measures should apply. With 10 000 EUR, the EU is in line with the commonly applied threshold which hovers around 10 000 USD.

(87) It should be noted that the typical audience of the FATF are individual countries, the recommendation and interpretative note do not take into account the legal specificity of the EU as an entity in which circulation of capital and persons are in principle free but where certain areas remain the competency of the individual Member States.

(88) 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 which has entered into force and has to be transposed by the Member States by 26 May 2017.

(89) E.g. Suspicious Transaction Reports from financial institutions and other obliged entities or professions such as determined by the AMLD.

(90) Basic information is accessible on the site of Europol, who host the technology: https://www.europol.europa.eu/content/fiunet-financial-investigation-units