Keywords
Summary

Keywords

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Free movement of capital and freedom of payments ° Restrictions on capital movements ° National rules making physical transfers of money subject generally to authorization ° Not permissible ° Justified by the option contained in Article 73c of the Treaty ° No ° Possibility for individuals to rely on the corresponding provisions

(EC Treaty, Arts 73b(1), 73c and 73d(1)(b))

Summary

Articles 73b(1) and 73d(1)(b) of the Treaty, which prohibit restrictions on movements of capital between Member States and between Member States and non-member countries, on the one hand, and authorizing Member States to take all requisite measures to prevent infringements of national law and regulations, on the other, preclude national rules which make the export of coins, banknotes or bearer cheques generally subject to prior authorization but do not by contrast preclude a transaction of that nature being made conditional on a prior declaration.

Although the measures authorized by Article 73d(1)(b) include those designed to ensure effective fiscal supervision and to prevent illegal activities such as tax evasion, money laundering, drug trafficking and terrorism, the requirement of an authorization is not necessary for those purposes, which may be achieved by measures less restrictive of the free movement of capital. It is sufficient, rather than requiring an authorization, which has the effect of subjecting the free movement of capital to the discretion of the administrative authorities and is thus capable of making that freedom illusory, to set up an adequate system requiring a declaration indicating the nature of the operation envisaged and the identity of the declarant, which would require the competent authorities to proceed with a rapid examination of the declaration and enable them, if necessary, to carry out in due time the investigations found to be necessary to determine whether capital was being unlawfully transferred and to impose the requisite penalties if national legislation was being contravened, a course which would not suspend the operation concerned but would nevertheless enable the national authorities to carry out, in order to uphold public policy, effective supervision to prevent infringements of national law and regulations.

Moreover, rules requiring an authorization as a general principle do not fall within the scope of Article 73c(1) of the Treaty, which authorizes, subject to certain conditions, restrictions on movements of capital between Member States and non-member countries where they involve direct investment, establishment, the provision of financial services or the admission of securities to capital markets because, on the one hand, the physical export of means of payment cannot itself be regarded as a capital movement of that kind, and on the other hand the rules apply to all exports of means of payment, including those which do not, in the non-member countries, involve such operations.

Article 73b(1), in conjunction with Articles 73c and 73d(1)(b), may be relied on before national courts and may render inapplicable national rules inconsistent therewith.