EUROPEAN COMMISSION

Brussels, 5.2.2013

SWD(2013) 19 final

Part 1/2

COMMISSION STAFF WORKING PAPER

IMPACT ASSESSMENT

accompanying the document

PROPOSAL FOR A DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

ON THE PROTECTION OF THE EURO AND OTHER CURRENCIES AGAINST COUNTERFEITING BY CRIMINAL LAW, AND REPLACING COUNCIL FRAMEWORK DECISION 2000/383/JHA

{COM(2013) 42 final}
{SWD(2013) 20 final}

COMMISSION STAFF WORKING PAPER

IMPACT ASSESSMENT

accompanying the document

PROPOSAL FOR A DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

ON THE PROTECTION OF THE EURO AND OTHER CURRENCIES AGAINST COUNTERFEITING BY CRIMINAL LAW, AND REPLACING COUNCIL FRAMEWORK DECISION 2000/383/JHA

CONTENT

1.Introduction

2.Current Legislation and consultation of interested parties

2.1.Legal and policy context

2.2.The level of implementation of the Framework Decision: current state of play

2.3.The views of stakeholders on the way forward

2.4. Chronology of the Impact Assessment

3.Problem definition

3.1.The scale of euro counterfeiting

3.2.Weaknesses of the framework for the protection of the euro

3.3. How would counterfeiting activities evolve in the baseline scenario?

3.4. Does the EU have the power to act?

4.Objectives

5.Policy options and their impact

5.1.Discarded policy options

5.2.Description of considered policy options

5.3.Impact analysis of considered policy options

6.Comparative assessment of policy options

7.The preferred option

8.Monitoring and evaluation

1.Introduction

Counterfeiting of currencies remains a concern throughout the European Union. Counterfeits harm citizens and businesses that are not reimbursed for counterfeits even if received in good faith. It also decreases the acceptability of notes and coins.

Counterfeiting of the euro is of special concern as the euro is the single currency shared by the 17 Member States of the euro area in use for 330 million people in this area. 1 It is also used at a large scale in international trading transactions and serves as important reserve currency for third countries. Today the euro is the second most important international currency world-wide. This Impact Assessment will therefore concentrate on the euro. However the counterfeiting is a major problem also for other currencies circulating in the European Union as demonstrated by the statistics in Annex 4. The problems identified in relation to the euro can be therefore considered of a general nature and valid also for other currencies.

The euro continues to be a target of organised crime groups active in the forgery of money. 2  The worldwide importance of the euro means that it is particularly open to the risk of counterfeiting on a transnational scale. Based on the findings of Interpol, these organised crime groups are involved in currency counterfeiting in the majority of cases. 3 This has led to a financial damage of at least 500 million euro since the introduction of the euro in 2002. Data from the European Central Bank show peaks in the number of counterfeit notes during the period 2009 – 2010 and another peak in the second half of 2011. Furthermore, the European Technical and Scientific Centre (ETSC) 4 reports a continuous discovery of new types of counterfeit euro coins. This data demonstrates that the threat of euro counterfeiting is a continuous and constant one. Europol considers that there is a long-term trend towards an increase in the crime level and notes that the criminal threat remains serious. 5  These developments and the continuous discovery each year of illegal printeries and mints also suggest that the protection of the euro against counterfeiting should be improved.

What is the scope of the analysis?

2.Current Legislation and consultation of interested parties 

2.1.Legal and policy context 

To protect the euro and other currencies against counterfeiting in the euro area and beyond, EU laws aim at ensuring efficient coordination of anti-counterfeiting measures between national law enforcement and judicial authorities and criminal penalties for counterfeiters.

2.1.1.Legislative framework

Following the ratification of the International Convention for the Suppression of Counterfeiting Currency agreed on 20 April 1929 6 , a certain degree of approximation of national legislation against counterfeiting of currency has since taken place. 

Framework Decision 2000/383/JHA on increasing protection by criminal penalties and other sanctions against counterfeiting in connection with the introduction of the euro 7  aims at supplementing, on the territory of European Union, the provisions of the Geneva Convention of 1929. The Framework Decision covers the euro, the national currencies of Member States outside the euro area as well as any other currency which is legal tender. It identifies practices which are to be regarded as punishable in addition to the actual act of counterfeiting currency, such as distribution. For these offences, the Framework Decision requires effective, proportionate and dissuasive penalties. The Framework Decision established a minimum level of maximum penalty of imprisonment of at least eight years for the main offence of currency counterfeiting. In addition, it contains provisions on jurisdiction and on the liability of legal persons. The Framework Decision was amended by Framework Decision 2001/888/JHA of 6 December 2001 8 , which introduced a provision on mutual recognition of convictions for the purpose of recognizing "repeat offences".

The Framework Decision is part of a larger legal framework consisting also of administrative and training measures:

Council Regulation (EC) No 974/98 of 3 May 1998 on the introduction of the euro 9 . Article 12 of this regulation obliges the Member States which have adopted the  euro to ensure adequate sanctions against counterfeiting and falsification of euro notes and coins; 

Council Regulation (EC) No 1338/2001 of 28 June 2001 laying down measures necessary for the protection of the euro against counterfeiting, updated through Council Regulation 44/2009 of 18 December 2008. It regulates how euro notes and coins can be uttered in such a manner as to protect them against counterfeiting. Furthermore, issues such as gathering and accessing technical and statistical data relating to the counterfeit notes and coins, the examination of counterfeit notes and coins by the National Analysis Centres and obligations of credit institutions and centralisation of information at national level are addressed;

Decision of the European Central Bank of 16 September 2010 on the authenticity and fitness checking and recirculation of euro notes (ECB/2010/14);

Regulation (EU) No 1210/2010 of the European Parliament and of the Council of
15 December 2010 concerning authentication of euro coins and handling of euro coins unfit for circulation 10 ;

Council Regulation (EC) No 2182/2004 of 6 December 2004 concerning medals and tokens similar to euro coins, amended by Council regulation (EC) No 46/2009 of
18 December 2008;

Targeted actions for exchange, assistance and training of law enforcement agents to establish closer professional ties for a more efficient fight against euro counterfeiting are financed by the Union through the Pericles programme, which was established by Council Decision 2001/923/EC of 17 December 2001 11 .

The Commission Communication "Towards an EU Criminal Policy: Ensuring the effective implementation of EU policies through criminal law" is an important policy compass for future criminal law instruments to be developed on the basis of the Lisbon Treaty. The Communication refers explicitly to the protection of the euro against counterfeiting through criminal law in order to strengthen the public’s trust in the security of means of payment. 12

2.1.2. Actors

At European level, responsibilities on preventing and fighting counterfeiting are shared between the European Commission, the European Central Bank, Europol and Eurojust:

–In the Commission, the European Anti-Fraud Office (OLAF) prepares with the Directorate General of Justice legislative initiatives and organises and finances training and technical assistance to the Member States and manages the ETSC, the centre for technical analysis of new types of counterfeit coins.

–The European Central Bank (ECB) performs a technical analysis of new types of counterfeit euro notes, stores the technical and statistical data on counterfeit notes and coins in a central database and disseminates them to all those involved in combating counterfeiting.

–Europol as the Central Office for combating euro counterfeiting supports the Member States’ law enforcement services in preventing and combating euro counterfeiting by facilitating the exchange of information and providing operational and strategic analysis

–Eurojust facilitates investigations and prosecutions between competent authorities in Member States, as well as the execution of international mutual legal assistance and the implementation of extradition requests.

At international level, Interpol facilitates and assist cross border police cooperation through secure global police communication services, operational data services and databases for operational issues.

2.2.The level of implementation of the Framework Decision: current state of play

The Commission has evaluated the implementation of the Framework Decision in three reports 13 (see Annex 1).

A questionnaire on the implementation of the Framework Decision and questions on a potential way forward were sent to the Member States in December 2011 and to the members of the Euro Counterfeiting Experts Group (ECEG) 14 in January 2012 asking Member States to report on the additional measures adopted since the third report concerning the implementation of the Framework Decision into national law, in particular on the issues which were flagged in 2007. 

Annex 2 contains an overview of the replies from the Members States to the questionnaire. The evaluation of the replies indicates that Member States have, with minor exceptions, implemented the Framework Decision correctly.

The few shortcomings concern the transposition of the provisions on sanction levels and on the liability of and sanctioning of legal persons 15  as follows: One Member State set out a maximum penalty of five years for counterfeiting coins instead of eight years. In another Member State's legislation there is no explicit provision of the criminal offence of counterfeiting of currency by use of legal facilities or materials. The legislation of the same Member State does not contain fines as sanctions for legal persons. Yet another Member State does not provide for the liability of legal persons.

2.3.The views of stakeholders on the way forward 

Consultation of the stakeholders started at the 58th Euro Counterfeiting Expert Group (ECEG) meeting on 10 November 2011 and continued during subsequent ECEG meetings. Experts and specialists 16 were further consulted at The Hague Conference which took place from 23 – 25 November 2011. A questionnaire on the implementation of the Framework Decision was sent to Member States on 20 December 2011. The results of the questionnaire and a possible way forward were discussed further at the 59th ECEG meeting on 14 March and the 60th meeting on 13 June 2012. The European Central Bank (ECB) as well as Europol participated in this process and provided their input, also through direct contributions to the Commission. 

From all the consultations carried out it can be concluded that there is a general support for new legislation that would bring added value in specific areas that need improvement.

In their replies to the questionnaire the stakeholders considered that the existing legal framework is sufficient while others welcomed reinforcement of the legal framework by criminal law measures provided that it adds value, for instance to practitioners. During the Hague Conference the Member States experts welcomed the initiative of the Commission to reinforce the protection of the euro against counterfeiting by means of criminal law taking advantage of the entry into force of the Lisbon Treaty.

In the framework of the ECEG meetings the Member States experts showed support for a Directive covering investigative techniques and the transmission of seized counterfeits during judicial proceedings. Concerns were expressed regarding introduction of minimum sanctions for reasons of proportionality, for instance in minor cases and for reasons of changes necessary in the national criminal codes.

The ECB expressed strong support for reinforcing the criminal law framework, in particular by strengthening and harmonising the sanctions, including by setting standards for minimum sanctions. The ECB also supported new provisions on the release of counterfeits during judicial proceedings since such a provision would considerably improve prevention.

For a detailed overview of the views of the stakeholders on the way forward see Annex 3.

2.4. Chronology of the Impact Assessment

2.4.1.Internal consultation

An Interservice Steering Group was created composed of representatives from the Directorate-General for Justice, OLAF, the Secretariat-General, the Legal Service and all affected services (DG ECFIN, DG HOME, DG MARKT). ISSG meetings were held on 20 January, on 16 March 2012 and on 26 June 2012. At the meetings and in subsequent communication with individual DGs, comprehensive feedback was received which has been taken into account throughout this report.

2.4.2.The Impact Assessment Board

The Commission's Impact Assessment Board met on 5 September 2012.

The comments of the Impact Assessment Board as to the strengthening of the problem definition were addressed as follows: the state of implementation of the Framework Decision and the underlying implementation and transposition problems were specified and the diverging stakeholders' and Member States' views on the need for action were presented more in detail. As to the baseline scenario, it was projected how counterfeiting activities would evolve if no legislative action would be taken. The policy options were better described and a clear distinction was made between their content and impact. A chapter on discarded policy options was added. The analysis of proportionality, particularly as regards the possible effects of the policy options on national legal systems were better explained and the compliance costs for all actors involved quantified more in detail.

3.Problem definition

3.1.The scale of euro counterfeiting

Counterfeiting continues to be a threat to currency and in the EU mainly to the euro. The table below shows a continuously high and substantial level of counterfeiting throughout the years since the introduction of the euro. 17

According to data assembled by the ECB 19 , the total established financial damage of counterfeited euro registered in Europe since the introduction of the euro in 2002 amounts to more than 500 million euro.  According to a recent bi-annual report from the ECB, 310 000 counterfeit euro notes with a total value of around 15 million euro were withdrawn from circulation in the second half of 2011 20 , and the financial damage for the first half of 2012 seems to reach some 13 million euro. 21   A greyzone remains, as these figures only cover those notes which were detected and seized.

Europol (OCTA 2011 22 ) indicates that there is a long-term trend towards an increase in the crime level and notes that the criminal threat remains serious and that it is likely that the crime rate will rise considerably if law enforcement reduces its pro-active approach against the continuously upcoming new techniques of euro counterfeiting. The ETSC Annual Report 23 shows a sharp increase in the number of sophisticated counterfeit coins and indicates that still a significant number of illegal mints are operating which could point to a lack of deterrence of the sanction system put in place in the Member States and/or insufficient enforcement and prevention (see Annex 4). 

There are indications that counterfeiting is often done in an organised way by organised crime groups that can rely on important capacities for counterfeiting 24 . For organised crime groups, currency counterfeiting is potentially a very lucrative criminal market, which yields very important financial benefits.

3.2.Weaknesses of the framework for the protection of the euro 

There are a number of instruments to protect the euro, such as the legal framework on authentication of euro notes and coins, awareness raising and training through the Pericles Programme and the general Union framework for strengthening judicial and police cooperation.

The legal framework for authentication ensures that circulating euro notes and coins are authentic. To this end, credit institutions, other payment service providers and other economic agents involved in the processing and distribution of notes and coins are under obligation to check the authenticity of the euro notes and coins they receive before they put them back into circulation. Recently the implementation rules for the authentication obligation, set out separately for notes and coins, have been updated. 25

The Pericles Programme funds exchanges, assistances and training for authorities, banks and others involved in combating euro counterfeiting – both in the euro area, in EU countries outside the euro area and in third countries. In previous years, Pericles has funded training seminars, workshops and conferences, staff exchanges, operational cross-border activities, scientific studies and the development of technical support tools and educational materials. The Commission has adopted a proposal for the renewal of the Pericles Programme for the period of 2014 – 2020 (Pericles 2020).

Both measures are expected to have a positive effect on the number of prevented and detected counterfeits.

It is important that the protection provided by criminal law keeps up with these developments to ensure adequate and efficient protection.

Concerning the extent to which criminal law can address the issue of protection against counterfeiting, existing EU legislation has shown to have some weaknesses as identified by the Commission's evaluation of the current framework. As will be demonstrated below it does not create a sufficient basis to prevent, investigate and sanction in a consistent manner throughout the Union. This hampers cooperation between Member States and makes it potentially attractive for criminals to move their activities to states considered to be more lenient in their reaction to counterfeiting of the euro.

As a result of the evaluation of the Commission on the basis of three Commission reports, a dedicated questionnaire on the state of implementation of the Framework Decision and a consultation of stakeholders at different experts' meetings, the following weaknesses have been identified:

the level of penalties;

differences in availability of efficient investigative techniques;

deficiencies in transmission of seized counterfeits for analysis to competent authorities during judicial proceedings.

3.2.1.Problem 1. The level of penalties for currency counterfeiting is not sufficiently dissuasive and effective 

Currency counterfeiting covers the conduct of fraudulent making or altering of currency ("production") and uttering of counterfeit currency, the import, export, transport, receiving or obtaining of counterfeit currency with a view to uttering ("distribution"). 26  All these offences are linked. All illicit activities start with the fraudulent making or altering of money and continue with its distribution.

Professional counterfeiters are criminals with an expertise in this field. Distributors of counterfeit currency are usually not limiting their expertise to euro counterfeits but distribute whatever illicit product is profitable on the market, for example drugs. It is confirmed by Interpol that professional distributors use almost identical distribution channels for currency counterfeiting on one hand and for drug trafficking and other typical organised crime offences on the other hand. 27  

3.2.1.1. Insufficient deterrence

To protect the euro and other currencies, it must be ensured that the penalties are deterrent in all Member States.

Potential and actual perpetrators too often find the risk of being caught, effectively sanctioned and their illegal proceeds recovered as too low to act as an effective deterrent as shown by the statistics throughout the report. The deterrent effect is lower in some Member States than in others. This is inappropriate for the protection of the European single currency. The fact that the euro is the single currency of the euro area Member States implies that the criminal act of euro counterfeiting causes the same harm to the euro area as a whole, irrespective of where it is perpetrated.

Though the European legislator set a minimum of eight years for the maximum sanction for production and required effective, proportionate and dissuasive criminal penalties for distribution in the Framework Decision 2000/383/JHA, the number of counterfeits did not considerably sink and remains at a substantial level.

A table of sanctions in place in the Member States as of summer 2011 can be found in Annex 5 to this report 28 . The table indicates that there are important differences between the sanctions foreseen in Member States.

As to maximum sanctions for production, all Member States respect the minimum limit of eight years, with the exception of one Member State where the maximum sentence provided for is five years (for coins) 29 . The range of the upper level of the sanction then varies between eight years and thirty years.

However, the situation concerning the minimum level of sanctions for currency counterfeiting is different. There are no minimum sanctions in place in some of the Member States, and the minimum sanction in others is as high as ten years imprisonment. According to the available information, the criminal codes of four Member States allow fines as their minimum sentences for both production and distribution, five Member States have no minimum penalties in place for both production and distribution and three more Member States do not have minimum sanctions for distribution.

The current level of sanctions is one of the reasons for insufficient deterrence and uneven protection across the European Uniton of its currency. The maximum level for criminal sanctions constitutes one tool for the prosecutors and judges to determine the sanction to be imposed on the criminal, but it remains incomplete without a set minimum level. The minimum sanctions contribute to a consistent EU wide system for the protection of the euro.

In practice, it will be the knowledge of the possible sanctions which will deter those who are tempted to begin counterfeiting the euro. The difference of being sentenced to imprisonment for a certain minimum duration instead of, e.g. getting away with a fine is obvious.

The current lack of a minimum and maximum level of sanctions for distribution offences is a further reason for insufficient deterrence with respect to the possible distribution within the EU of counterfeit notes produced in third countries, considering the number of dangerous printeries dismanteled in third countries (e.g. Columbia and Peru) and the consequent seizure of large amounts of counterfeit euros and other currencies ready to be exported to and distributed in the EU. 30  This represents a serious threat for the EU. The problem is not limited to notes. In 2011, the first mint for production of counterfeit euro coins was dismantelled in Colombia. 31  

Stakeholders confirmed that there is a serious gap in deterrence in relation to the offences of distribution. According to the ECB, deterrent sanctions for distribution are also very important. Organised criminal groups which produce most of the counterfeits recovered from circulation 32 seem to rely on an effective distribution network since the same counterfeits appear all over Europe. The importance of targeting the distribution channels is also proven by the fact that the disruption of a distribution channel by the law enforcement authorities has an immediately noticeable impact on the counterfeiting statistics. In contrast, the dismantling of an illegal printery by the law enforcement authorities does not seem to have a noticeable effect on the counterfeiting statistics which seems to indicate that the organised crime is able to substitute the closed printery with a new one rather quickly.

3.2.1.2. The risk of forum shopping

As follows from the text in section 3.2.1.1 above, there are important differences between the relevant criminal law sanctions in place in Member States. These create a situation where there is practically no coherent defence of the European currency from counterfeiting, and there is therefore a need for action to reverse this situation.

As organised crime groups with substantial resources are often strongly involved in currency counterfeiting, it will be easy for them to move their activities across the borders. These groups may often already have activities located in several Member States, which means that the risk of criminals moving to countries with a more lenient criminal law system is substantial (forum shopping).

Data collected by OLAF in the framework of an ECEG study 33 indicate that Member States which have no minimum sanctions in place or only have fines as their minimum sanctions had a high number of illegal printeries dismantled in the course of the last nine years, as the table below shows:

Number of illegal printeries dismantled in the period 2002 – 2011

These figures seem to suggest that Member States with low levels of sanctions tend to attract counterfeiters while other factors such as the effectiveness of crime detection by law enforcement also need to be taken into consideration.

No differences in law enforcement efforts between euro and non-euro Member States can be substantiated on the factual evidence.

The case below shows intelligent criminal logistics employed in euro counterfeiting. It suggests that the criminals chose their distribution channel wisely based on low penalties applicable in that country. Lithuania provides only for fines as the minimum sanction for distribution in its Criminal Code.

The more the other available tools for protecting the euro are performing and convergent, the more the discrepancy of sanctions will be an important factor taken into account by criminals when they choose the country in which to establish their illicit activities (the phenomenon of forum shopping). 34

3.2.1.3. Insufficient effectiveness of judicial cooperation

1) Diminished priority given to currency counterfeiting by law-enforcement agencies; mutual trust

The disparate level of sanctions may have a negative impact on judicial cooperation. If a Member State has low minimum sanctions in its criminal code, this could lead to low priority given by law enforcement and judicial authorities to investigate and prosecute currency counterfeiting cases. This can also have a negative impact for the cross border cooperation when another Member State asks for assistance, in terms of timely processing of the request. Disparities in sanction levels can be expected to benefit particularly strongly the most serious offenders, i.e. transnational organised crime groups which have operative bases in several Member States.

Stakeholders confirmed that cross-border cooperation can be affected by different levels of sanctions. For instance, according to the ECB the intensity of criminal investigations may to some extent depend on the public judgement of the criminal act within the legal sytem of a particular Member State. One relevant factor for the public judgement of a criminal offence is the level of the minimum sanction which varies considerably across the EU.

2) Reduced possibility to use the European Arrest Warrant (EAW)

The EAW has proved to be a successful mutual recognition instrument in practice 35 . Available statistics compiled for the years between 2005 and 2009 36 record 54689 EAWs issued and 11630 EAWs executed.

An EAW may be issued by a national judicial authority if the person, whose return is sought, is accused of an offence for which the maximum period of the penalty, according to the law of the issuing Member State, is at least one year in prison or if he or she has been sentenced to a prison term of at least four months. In the stage of prosecution, an EAW can be issued for a person accused of counterfeit production as the maximum period of this offence is at least eight years. However, in the post-sentence stage, not all sentences for counterfeit production make it possible to request an EAW, due to the lack of a minimum level of the sanction which may result in sentences of less than four months or a fine.

In the twelve Member States where only a fine or no minimum sanctions are foreseen for production or distribution, this can be the case. Figures on current issues of surrender in protection of EU single currency against counterfeiting are unavailable, in particular figures on how often European Arrest Warrants were refused. As the Member States authorities are aware of the current conditions for issuing a European Arrest Warrant, they do not request it for low sentences and do therefore not communicate problems in this respect. On the other hand, it can be deducted from the requirements for the content of the European Arrest Warrant that harmonised sanction levels facilitate execution of a warrant because they would avoid to a certain extent diverging interpretations of proportionality issues in the Member States concerned. 37   

3.2.2.Problem 2: Cross-border investigations and prosecutions may be unsuccessful due to cooperation problems resulting from differences in availability of efficient investigative tools.

In some EU Member States currency counterfeiting which is a typically organised crime activity is still not dealt with by means of investigative tools that are typically used for organised crime and transnational cases. This circumstance has a strong impact in the weakness of investigation and prosecution and leads to insufficient international cooperation between the Member States. On the basis of information available, Cyprus, Greece and Italy do not have some of the investigative techniques (telephone interceptions, tracking devises, controlled deliveries and undercover agents) at their disposal in currency counterfeiting cases. The absence of these techniques often prevents the identification of producers and others involved in the chain of fraudulent making of currency, once the person who has put counterfeits in circulation, has been identified. Moreover, once investigations on counterfeiting cases are started abroad with particular investigative techniques, it is not possible to continue them in the same way when they arrive in a Member State whose legislation lacks provisions on these techniques. In this case, this may not only cause delays or additional costs for investigations, but lead to discontinued investigations in relation to the source.

The lack of harmonised rules on the use of investigative tools in relation to currency counterfeiting is harmful for cross-border cooperation. Counterfeiting is often committed in two or more Member States in parallel, with production taking place in one Member State and distribution in another. The tools to detect these activities therefore need to be the same.

Cross-borders investigations are always linked to common classes. As stated in the case example, the minimum financial damage of each common class varies from 2 to 10 million euro (depending on the denomination). Therefore it is clear that the impossibility to continue an investigation due to the lack of homogeneous investigative tools has an important negative impact in terms of financial damage.

The stakeholder's survey, mentioned in section 2.2., confirmed the need which has been expressed at different expert forums on Police cooperation for several years: to have the investigative tools for the protection of the euro harmonized at the EU level. 40  This particular issue has been more extensively discussed recently at the International Euro Conference in Istanbul of June 2011, The Hague Conference of November 2011 and the ECEG meetings of November 2011 and March 2012. In the replies to the questionnaire on the implementation of the FD with regards to difficulties encountered in practice in relation to cross-border cooperation, the experts of some Member States (Italy, Czech Republic, France) flagged again the issue of alignment of the investigative techniques in the Member States in particular regarding certain special investigative techniques such as the use of an informant, undercover agents and controlled delivery. 

3.2.3.Problem 3: Delay in adjustment of machines for detecting counterfeits resulting from deficiencies in transmission of seized euro counterfeits for analysis to competent authorities during judicial proceedings

On the basis of the EU authentication provisions specific measures apply to detect euro counterfeits in circulation. Credit institutions, other payment service providers and other economic agents involved in the processing and distribution of euro notes and coins are under obligation to check the authenticity of the euro notes and coins they receive before they put them back into circulation by means of banknote handling machines, coin-processing machines or trained personnel.

The identification of counterfeit euro notes and coins is centralised at the National Analysis Centres (NAC) and, respectively, the Coin National Analysis Centres (CNAC) which are designated or established in accordance with Art. 4 and 5 of Council Regulation 1338/2001.

Seized counterfeit notes and coins are indispensable for:

(N)adjusting banknote handling machines and coin-processing machines to recognise the new types of counterfeits and to reject them (large quantities of counterfeits are necessary for that because they are damaged after a couple of uses);

(I)training purposes;

(II)deeper forensic analyses.

Currently there is no obligation to transmit seized euro counterfeits during judicial proceedings. The transmission practices vary from Member State to Member State, many times depending on the individual assessment of the judge dealing with the case. In practice, in some cases the judicial authorities refuse transferring samples of counterfeit euro notes and coins for analysis prior to the end of the criminal proceedings even if such transfer would be possible taking into account the quantity of seized counterfeits. The transfer of such counterfeits after the end of the criminal proceedings is of limited value. There are often considerable delays, sometimes years, before the note handling and coin processing machines used by financial institutions can be adjusted and staff trained. In principle all the financial institutions who are subjected to the obligation to authenticate 41 are affected and by extension all the users of the euro. Even if only one Member State fails to transfer counterfeits for analysis to strengthen the prevention, users in other Member States can suffer as a result

The machines used as well as trained staff involved in authentication are therefore unable to recognize the newest types of counterfeits which have appeared on the market and have been seized by national authorities and therefore the prevention is weakened. As the following case example shows it can lead to impossibility to prevent a damage that could have been avoided.

Both ECB and the Member States indicated the lack of harmonised obligation to transmit seized counterfeits during judicial proceedings for analysis and further detection of counterfeits. This issue has been raised during Seminar on Judicial Issues and Criminal Proceedings in relation to the Protection of the euro in November 2009. During the ECEG meetings the Member States' experts showed support for a directive covering the release of counterfeits during judicial proceedings.     

3.3. How would counterfeiting activities evolve in the baseline scenario?

Under the current framework continued, one might expect a complete implementation by all Member States in the medium term of the provisions of the Framework Decision, following targeted monitoring actions by the Commission. For example, the liability of legal persons as required by Articles 8 and 9 might be improved in five Member States 42 . A better implementation of the existing provisions of the Framework decision could also be achieved by making this legal framework better known to law enforcement practitioners through the Pericles programme. Though being a useful instrument for training and technical support, the Pericles programme does not have a deterrent effect on criminals; neither can it replace national law enforcement efforts.

The prevention and detection of counterfeits coming into or already in circulation is enhanced by the recently improved legal instruments on authentication 43 . These instruments can make the uttering of counterfeits, especially of new classes, more difficult if the authentication measurers are applied at an early stage. The instruments will not be able to decrease the production of counterfeits as such. One could even expect, if the production is not sufficiently deterred, an increased export of counterfeits to third countries which do not apply these authentication measures.

In the long run, stronger EU rules on the confiscation of assets in relation to the proceeds of several offences, including counterfeiting could provide a deterrent effect and thus reduce counterfeiting activities. An improvement of the legislation as proposed by the Commission 44  seeks to attack the financial incentive which drives crime, but aims mainly to protect the licit economy against criminal infiltration and corruption and to return criminal profit. This initiative alone would however not be sufficiently deterrent as confiscation in general only occurs following a conviction. Moreover its deterrent effect will be limited if criminal better hide their assets or displace them, resulting in a net capital flight of criminal money out of the EU.

The improvements mentioned above would not comprehensively address the problems described in this report. Since the problems identified are of legal nature they require a clear and strong legal action.

In particular the problem of deterrence would not sufficiently be addressed due to a lack of insufficient levels of sanctions. The continuous threat of counterfeiting underpinned by the statistics of the ECB would probably remain constant or increase. The long-term trend towards an increase in the level of crime in relation to counterfeiting, signalled by Europol, most probably will not be mitigated. The risk of the use of legal facilities for producing "counterfeits" might also increase, due to the aggravated economic crises.

Furthermore the problems identified above in relation to cross-border investigations would not be solved since not all Member States would be able to use investigation tools for serious counterfeiting offences with a transnational character.

No solution would be presented for the problem of the release of counterfeits during judicial proceedings. Therefore risk that counterfeits remain in circulation due to a lack of timely authentication will remain.

3.4. Does the EU have the power to act?

3.4.1.The legal basis

The Treaty of Lisbon contains provisions to strengthen the EU criminal law framework. 45  Article 83 (1) TFEU stipulates that minimum rules may be adopted by means of a directive concerning the definition of criminal offences and sanctions in the areas of particularly serious crime with a cross-border dimension resulting from the nature or impact of such offences or from a special need to combat them on a common basis. 46   Counterfeiting of means of payment is explicitly mentioned in Article 83 (1) TFEU as such an area of particularly serious crime. The legal basis would cover also issues such as the use of investigative tools and the use of counterfeits for prevention purposes, to the extent that the proposed actions are necessary to make the criminal law framework function.

Article 83(2) could also be considered as a legal basis, since the criminal law protection of the euro is a necessary feature of the Union policy on the common European currency, but the principle of lex specialis would in any case imply that the most specific legal basis would be used, in this case Article 83(1) should be relied on.

Article 83 (1) TFEU limits the choice of legal instruments to a Directive.

3.4.2.Subsidiarity: Why the EU is better placed to take action than Member States

It is essential to ensure that effective and efficient criminal law measures protect the euro and any other currency whose circulation is legally authorised in an appropriate way in all Member States.

Only the EU is in a position to develop binding common legislation with effect throughout the Member States, and thus to create a legal framework which would contribute to overcoming the weaknesses of the current situation as described in section 3.2.1. The EU should also comply with the principle of non-discrimination between domestic and foreign currency in relation to criminal sanctions established by the Geneva Convention and taken over by the Framework Decision.

The euro is from its nature of single Union currency a core European interest, which needs to be protected in a manner similar to the financial interests of the Union 47 . In this sense, counterfeiting of the euro poses a genuine problem for the Union and for its institutions. This pan-European dimension requires that counterfeiting is fought in a similar manner and that criminals encounter equivalent sanctions, wherever in the European Union the crime is committed.

Considering the position of the euro as a pan-European currency, the protection of the euro must by nature be ensured at EU-level. As such, the euro is even more "EU-centred" than a field subject to the harmonisation of rules in the Member States. The rules on protection of the euro may be compared in form and substance to rules on the EU institutions', bodies', offices' and agencies' self-protection, such as in terms of physical or IT-security. As a result, they cannot reasonably be dealt with by the Member States alone.

Any criminal law measure needs to be carefully assessed and designed in view of its possible effects on the protection of fundamental rights. This report will include such an assessment.

4.Objectives 

5.Policy options and their impact

5.1.Discarded policy options

5.1.1.Soft law and awarennes raising

The Commission could take various actions aiming at harmonising the legal practices in Member States on a voluntary basis. The elaboration of EU recommendations on national practices as regards sanctions could be considered in this context. This action could be accompanyied by awareness raising through dedicated expert meetings organised directly by the Commission or with the use of EU funding in view of facilitating the exchange of information and best practices as regards sanctions, law enforcement and prevention. The general efforts to strengthen the mechanisms for mutual legal assistance and mutual recognition would continue.

This option was discarded since soft law is already being extensively used through the Pericles Programme, but is not sufficient to bring solutions to the problems identified for which an adecuate legal basis is necessary. It helps to raise the awareness of law enforcement and judicial authorities but has no direct effect to deter criminals to counterfeit.

5.1.2.A Directive to replace the 2000 Framework Decision with only formal changes (Pure "Lisbonisation" 48 ) 

A Directive could be prepared on the basis of Article 83 (1) TFEU with the same substantive content of the Frameowork Decision. The legal form of a Directive would strenghten the direct and indirect monitoring powers of the Commission.

This option was discarded since the same effect would be obtained with the status quo by the expiry of the transitional period as from 1 December 2014 (in accordance with Protocol 36 to the Treaty of Lisbon).

5.1.3.A Directive to replace the 2000 Framework Decision including a merger with related instruments on counterfeiting and fraud with other means of payment than notes and coins 

The content of this option is inspired by practitioners' suggestion to address counterfeiting of notes and coins together with counterfeiting of other means of payment like bank or credit cards. Indeed, the Framework Decision on non-cash means of payment 49 and potential new initiatives on fraud are closely related to currency counterfeiting from a content perspective, and a common legal instrument would bring more transparency of legal instruments and visibility.

This option was discarded since this initiative would require a detailed analysis of national systems, which could take serveral years to conduct. The feasability of the option is at this point uncertain. Moreover it would not provide a short-term solution for the counterfeiting threat as identified in previous chapter.

5.2.Description of considered  policy options 

This impact assessment considers three policy options:

Policy Option 1 – Retention of status quo 

No action would be taken at EU level other than that the one foreseen by the existing framework, i.e. normal continuation of implementation efforts of the Framework Decision, as well as awareness-raising, training and advice activities for specialised investigators and prosecutors. The Pericles programme would continue to provide funding for exchange of information and best practices, training and prevention programmes. In addition to this, the general efforts to strengthen the mechanisms for mutual legal exchange of information would continue. The monitoring of the implementation of the rules in the Framework Decision would be automatically strengthend as from 1 December 2014 (in accordance with Protocol 36 to the Treaty of Lisbon). From this date, the full enforcability of the Framework Decision will be ensured through the possibility of launching an infringement procedure.

Policy Option 2 - A Directive to replace the 2000 Framework Decision and to introduce provisions on investigative tools and the transmission of seized counterfeits

This policy option takes over the content of the current Framework Decision and replaces is by a Directive which also foresees cross-border law enforcement cooperation, in particular with regards to investigative tools and rules on detection of counterfeits, in particular with regards to technical analysis of counterfeits, in response to problems 2 and 3.

Investigative tools

Member States which currently do not allow for using the investigative tools in counterfeiting investigations (such as undercover agents and controlled deliveries) would be obliged to provide for this possibility to address the problem of unsuccessful cross-border investigations. This would imply that all the Member States would be able to fight counterfeiting by means of the tools already used in organised crime or serious crime cases. This issue would be addressed through a general provision on investigative techniques which already exists for other crimes comparable with its seriousness to the currency counterfeiting.

Transmission of seized counterfeits

The national authorities would be obliged to ensure that samples of seized counterfeits of the euro are transmitted to the National Analysis Centres (NACs) and Coin National Analysis Centres (CNACs) for analysis and detection, including during judicial proceedings, to strengthen the prevention. If the transmission is not possible for the risk of compromising the evidence an access should be granted. 50  

Policy Option 3 - A Directive to replace the 2000 Framework Decision and to introduce provisions on the minimum and maximum level of criminal sanctions, investigative tools and the transmission of seized counterfeits

This policy option includes the content of Policy option 2 (investigative tools and transmission of counterfeits) supplemented by a minimum and maximum level of sanctions for production and distribution of counterfeits (compared to currently only a maximum sanction for production).

Currency counterfeiting is due to its seriousness a crime traditionally subject to high levels of penalties for which our societal values justify a strong punishment by minimum imprisonment. In Art. 83 of the Lisbon Treaty, the counterfeiting of means of payment is explicitly listed among particularly serious crimes with a cross-border dimension for which minimum rules concerning sanctions can be adopted by means of a Directive. The penalties for these crimes need to have a sufficient deterrent effect and constitute an effective mean to combat the crime.

In the following text only the additional item of minimum and maximum sanctions for production and distribution will be considered. For investigative tools and for preventive measures reference is made to Policy Option 2.

Minimum level of sanctions for production and distribution

The Member States would be obliged to introduce a minimum sanction of at least six months of imprisonment for production and distribution, which are interlinked and cause the problems identified above. The proposal does not include a minimum level of penalty for the offences relating to the instruments for currency counterfeiting, since these can be considered as preparatory acts for the actual counterfeiting. This choice is justified by the principle of the proportionality of the proposed measure.

The minimum sanction level of six months is considered as the lowest (and thus most proportionate) possible figure which, subject to a proportionality check by the issuing judicial authorities, still allows a practical prospect of permitting surrender among EU Member States under the European Arrest Warrant 51 , which is particularly relevant for the often cross-border type of currency counterfeiting cases. Under this instrument, only penalties higher than four months can trigger surrender, which – taking into account mandatory sentencing reductions available in some Member States depending on circumstances 52 – leads to a normal minimum level of six months for the system to work in all cases of convictions for currency counterfeiting cases.  

Maximum level of sanctions for distribution

The Member States would be obliged to introduce the same minimum level for the maximum sanction that applies already for production also for distribution. These offences are interlinked and cause the problems identified above. The proposal does not include a maximum level of penalty for the offences relating to the instruments for counterfeiting currency, since these can be considered as preparatory acts for the actual counterfeiting. This choice is justified by the principle of the proportionality of the proposed measure.

The maximum sanction level of eight years is currently requested for the production of counterfeit currency. Eighteen Member States apply in their national law the same minimum maximum level for the offence of production and the offence of uttering and related offences. Only the following nine Member States distinguish between these offences: France, Austria, Bulgaria, Greece, Italy, Luxemburg, Poland, Netherlands and Portugal. The maximum level in these Member States ranges between four years to twenty years in Belgium, Greece and Slovakia. Only Austria, Italy, Luxemburg, the Netherlands and Portugal have a minimum maximum level of less than eight years.

5.3.Impact analysis of considered policy options

In accordance with the Communication from the Commission on the Strategy for the effective implementation of the Charter of Fundamental Rights by the European Union 53 , this Impact Assessment Report also examines the impact on the Fundamental Rights of the options proposed, in particular in the light of the 'fundamental rights check list' presented in the Communication. Mainly the right to liberty (Article 6), the respect for private and family life (Article 7), the freedom to choose an occupation (Article 15), the freedom to conduct a business (Article 16), the right to property (Article 17), the right to a fair trial (Article 47), the presumption of innocence and the right of defence (Article 48), the principles of legality and proportionality of criminal offences (Article 49), the right not to be tried and punished twice (Article 50) are concerned by criminal law measures for the protection of the euro and other currencies. As will be described for each option individually, all the policy options affect fundamental rights as set out in the Charter.

5.3.1.Policy option 1: Retention of the status quo including automatic "Lisbonisation" of the Framework Decision on the basis of the Protocol no. 36

Impact as regards meeting the objectives

This policy option does not meet any of the specific objectives.

The problem of deterrence would not be addressed due to a lack of insufficient levels of sanctions. Furthermore the problems identified above in relation to cross border investigations would not be solved since not all Member States would be able to use investigation tools for serious counterfeiting offences with a transnational character. No solution would be presented for the problem of the release of counterfeits during judicial proceedings and therefore the risk of counterfeits remaining in circulation due to a lack of timely authentication might increase.

Impacts as regards compliance costs

This option of retaining the status quo would not cause any compliance costs.

Impacts on fundamental rights

The impact on fundamental rights would not change compared to the current situation. The Court of Justice could be asked by national courts of all Member States to interpret the EU rules in the light of the Charter, and the Commission would be able to launch an infringement procedure. This would strenghthen the protection of the fundamental rights.

Awareness raising activities would have a positive impact as more targeted application of the Directive's provisions and consequently better targeted investigations would not lead to unlawful and unnecessary limitations of the right to liberty and security or right to property. Better knowledge of the application of the rights under the Charter when the Convention is being applied could also strenghthen the protection of the persons concerned against the unlawful interventions of State authorities. Specific training of prosecutors and investigators could enhance their abilitity to correctly assess the nature of the criminal offence and thus safeguard the principle of legality and proportionality of criminal offences. Their training could also limit the unnecessary interventions into the right of property or freedom to conduct bussiness and freedom to choose an occupation.

Stakeholders' views

The questionnaire survey indicated that a majority of Member States experts consider that the current legal framework is in principle sufficient, but are in favour of actions to strengthen implementation of existing provisions. Some of these Member States see as a better option to improve the implementation of the existing provisions in practice as well as the general framework of mutual legal assistance, mutual recognition instruments which can be applied also in cases of suspected currency counterfeiting. Some Member States find that it would, in most cases, be better to make the current system more known to practitioners in order to improve the practice and ensure that current legislation achieves its full potential than to adopt new rules.

Other stakeholders, like the ECB, consider the status quo to be inadequate.

5.3.2.Policy option 2: A Directive to replace the 2000 Framework Decision and to introduce provisions on investigative tools and the transmission of seized counterfeits

Investigative tools

Impact as regards meeting the objectives

Introduction of the missing investigative tools in some Member States will decrease the number of unsuccessful cross-border investigations involving those Member States. This will have particular impact on prevention of counterfeiting in Italy which is traditionally a production country. Substantial losses like those indicated in the case example in section 3.2.2. will be avoided.

The introduction of common investigative techniques would require the adaptation of the national legislation in those few Member States which do not currently have such techniques for currency counterfeiting offences (Cyprus, Greece and Italy). The measure suggested would extend the existing investigate measures for organised crime or other areas of serious crime (such as drug trafficking, money laundering, child exploitation and trafficking in human beings) to currency counterfeiting offences.

Impacts as regards compliance costs

The costs for the Member States with regard to the investigative tools would be limited to the modification of the national law of three Member States (Cyprus, Greece and Italy) to extend the investigative techniques available for other types of serious crime to the crime of currency counterfeiting. In practice small costs related to technical equipment, such as copying the wire-tapping software on more devices, are to be expected. 

Impacts on fundamental rights

In addition to the assessment carried out for option 1, the introduction of new investigative techniques might have an additional impact on the right to liberty and security, the respect of private and family life, the protection of personal data (phone tapping), the right to an effective remedy and to a fair trial, the presumption of innocence and the right of defence in cases where such evidence is used in a trial. Sufficient safeguards must be taken as to the conditions under which new investigative techniques can be used and as to the conditions under which the evidence can be treated in the later criminal proceedings.

In accordance with Article 52(1) of the Charter, any limitation on the exercise of the rights and freedoms recognised by this Charter must be provided for by law and respect the essence of those rights and freedoms. Subject to the principle of proportionality, limitations may be made only if they are necessary and genuinely meet objectives of general interest recognised by the Union or the need to protect the rights and freedoms of others.

In this respect, more efficient investigative techniques could positively affect the protection of right to liberty and security and respect for private and family life of third parties. The counterfeit currency can easily enter into circulation and be used by an innocent person without his or her knowledge. Such a person might then be held liable or subject to investigation when the counterfeited currency is discovered. Moreover counterfeited currency will be seized and not replaced and the innocent person's right to property will be impacted.

The special investigative techniques would contribute to preventing and combating currency counterfeiting and its negative consequences on the safeguard of the fundamental interests outlined above. Subject to the principles of necessity and proportionality, these are legitimate and sufficiently important objectives which could justify limitations on the right to private and family life. Concerning the defendant's rights, the risk of violation can be avoided through safeguards and careful drafting of the legislative texts as well as proper implementation and application by Member States. It should in particular be noted that the measure suggested would not introduce any new investigative measures in Member States, but only make existing measures applicable to currency counterfeiting offences. Existing fundamental rights safeguards at the national level would thus automatically be extended to counterfeiting.

Stakeholders' views

Experts and specialists consulted during The Hague Conference in November 2011, indicated the opportunity to expand the investigative methodologies, within those legislative system that still do not have these, with the introduction among other things of controlled deliveries and undercover agents. The investigative tools similar to those adopted in combating money laundering and drug trafficking should be used for the protection of the euro and other currencies against counterfeiting.

In their replies to the questionnaire on the potential way forward, the Czech Republic, France and Italy made proposals in relation to the alignment of the investigative techniques such as controlled delivery, under-cover agent, etc. came up again.

During the ECEG meetings its members further showed support for the proposal to harmonize the investigative techniques.

Transmission of seized counterfeits

Impact as regards meeting the objectives

A more coherent approach by the national courts during court proceedings on the transmission of euro counterfeits would be achieved which would result in strengthened prevention thanks to timely adjustments of machines and training of personnel on new types of counterfeits.

Judicial authorities may be reluctant to apply this obligation in practice because they may consider that the transmission of counterfeits would have a negative impact on the principle of fair trial in terms of evidence. In order to minimize this negative impact, the transmission of counterfeits would have to be accompanied by a general clause to safeguard the judicial proceedings.

The national authorities would need to implement the obligation to transfer counterfeits during the judicial proceedings in a way which does not prevent the use of suspected counterfeits as evidence in criminal proceedings. This proposal will lead to a modification of the procedural criminal law in the Member States which do not transmit seized counterfeits for analytical purposes during judiciary proceedings.

Impact on compliance costs

The implementation of the obligation to transmit seized counterfeits by courts before the end of the trial for technical analysis purposes may cause low costs for national authorities, such as for secure judicial delivery or dedicated office space for the local analysis. However, these costs would only apply to those Member States which do not yet transmit the counterfeits during criminal proceedings to the national analysis centres. This includes at least Greece, Italy and Poland.

Impact on fundamental rights

As regards the impact of this proposal on fundamental rights, particular attention should be paid to the right to a fair trial (Article 47 EU Charter), considering that the seized counterfeit notes and coins are used or retained as evidence in criminal proceedings.

In order to improve the protection of the euro against counterfeiting while ensuring the respect of that fundamental right, transfer of notes and coins for examination during the trial should not go beyond what is necessary in order to achieve the objective pursued, and always take into account the quantity of seized counterfeits. Therefore, the impact on fundamental rights should be minimised by rules aimed at making sure that the transfer will not be required in case of a low quantity of counterfeits, the quantity requested is limited to what is necessary for the pursued objective and there is no risk of altering evidence which is necessary for the trial.

Stakeholders' views

In the consultation through the questionnaire sent to the ECEG experts and the discussions in the ECEG, some ECEG members proposed a further harmonisation of the framework for the transmission of seized counterfeits during the criminal proceedings for technical purposes, to ensure an effective protection of the euro against counterfeiting.

Also the ECB welcomed the proposal for a further harmonisation of the rules on the transmission of seized counterfeits by courts before the end of the criminal trial.

5.3.3.Policy option 3: A Directive to replace the 2000 Framework Decision and to introduce provisions on the minimum and maximum level of criminal sanctions, investigative tools and the transmission of seized counterfeits 

In the following text only the additional item of minimum and maximum sanctions for production and distribution will be considered. For investigative tools and for preventive measures reference is made to section 5.3.2. . Impacts in relation to the other provisions are identical to those in policy option 2.

Minimum level of sanctions for production and distribution

Impact as regards meeting the objectives

Introducing a minimum sanction of at least six months of imprisonment for production and distribution of counterfeit currency will have a beneficial deterrent effect in the nine Member States where there is no minimum sanction for production or the minimum sanction is a fine; and in the 12 Member States where there is no minimum sanction for distribution or where the minimum sanction is a fine.

The introduction of minimum sanctions will guarantee a certain consistency across the EU 55 in terms of the minimum penalties and sanctions that apply in any Member State for a given type of offence. This will constitute an important step towards strenghtening protection of the single European currency and would considerably reduce the possibility of existence of "save havens" in Europe. Of course there is a risk that production capacities will be moved outside Europe. For this reason, the EU is already counterbalancing the threat of counterefeiting coming from third countries by other measures, such as awarness raising and training in the framework of the Pericles Strategy. Special trainings are being held in South America and on the EU Eastern border which are the areas mainly affected by euro counterfeiting outside Europe.

Introducing this minimum sanction would solve as well several problems linked to effectiveness. It would guarantee a possibility to use when necessary the European Arrest Warrant which is highly relevant for the often cross-border type of currency counterfeiting cases.

This minimum level would ensure that the crime of counterfeiting would be considered equally serious and therefore be given better priority by national law enforcement and judicial authorities in all Member States which in turn would help eliminate delays in the cross-border cooperation and also provide national prosecutors with a stronger rationale to prosecute.

The proposed six months level of the minimum sanction is considered as the lowest possible which creates a deterrent effect, allows the use of the EAW and ensures consistency of the sanctions system across the Member States.

Impact on Member States’ legislation

The minimum sanction for production and distribution of counterfeit currency requires adaptations of the criminal codes of some Member States. This proposal will have a significant impact on the legal systems of the Member States which have no minimum sanctions (Cyprus, Denmark, France, Sweden and the United Kingdom for both production and distribution and Austria, Bulgaria and Portugal for distribution) or have fines as their minimum sanctions (Estonia, Ireland, Lithuania and the Netherlands). Considering that existing minimum sanctions levels are already relativly high in most Member States, the effect in practice on the sanction levels is likely to be limited to those Member States that have a particularly low level of minimum sanctions and thus the intrusive effect into national law is not considerable.

Impact as regards compliance costs

The introduction of a common minimum sanction in the national laws would have low costs of changing legislation for ten 56 Member States that would have to change their national law to introduce a minimum sanction of at least six months for production and/or distribution. These Member States may also incur some additional criminal justice system costs, such as imprisonment costs associated with more punitive custodial sentences. The average amount spent per day of detention of a person in penal institutions varies considerably from Member State to Member State (from 2.29 € in Bulgaria to 240 € in Sweden). 57

Impact on fundamental rights

The introduction of stronger or more coherent criminal sanctions will have direct and indirect effects on fundamental rights (right to liberty, respect of private and family life, freedom to choose an occupation and conduct a business, right to property, principles of legality and proportionality of criminal offences and penalties). Harmonisation of minimum sanctions should however allow the Member States to impose sanctions below the minimum thresholds, in accordance with the general rules and principles of national criminal law on the application and execution of sentences, depending on the concrete circumstances in each individual case (e.g. for juveniles and minor cases), in order to provide a safeguard for Article 49 of the EU Charter of fundamental rights. Harmonisation of minimum sanctions would also contribute to more equal treatement of people affected by the Directive. The higher deterrent effect would also lead to less counterfeits in circulation and consequently a lower impact on the right to property of those who are in good faith in possession of counterfeit currency.

Stakeholders' views

The opinion of the experts and specialists consulted during The Hague Conference, organised by OLAF, the ECB and Europol in November 2011, is that important differences existing between the legal frameworks can create real problems in cross-border cooperation against counterfeiting of the euro and other currencies. The experts agreed with the principle that the harmonization of criminal law rules against counterfeiting would add value and harmonized criminal sanctions and criminal offences would facilitate the judicial cooperation between the authorities of Member States. Particularly, some experts called for the introduction of common EU minimum sanctions, and others pointed at the risk of forum shopping, as criminals may choose to focus their criminal activities to Member States with less severe sanctions, due to the lack of harmonization of criminal sanctions.

Member States’ experts expressed concerns within the ECEG group meeting that the introduction of minimum sanctions could have an interfering impact on general principles of national legal systems.

The ECB voiced its support for further harmonisation of the level of penalties by introducing minimum sanctions. From the ECB’s perspective, the fact that the euro is the single currency of the euro area Member States implies that the criminal act of euro counterfeiting must necessarily be considered to cause the same harm irrespective of where it is perpetrated and would therefore merit the same degree of punishment. The ECB considers in particular minimum minimum sanctions necessary to ensure effective deterrence in the EU. According to the ECB the introduction of minimum sanctions would help countering the risk that consumer have concerns about the sufficient protection of cash and that they will lose their confidence in notes and coins. It will thus help preventing that consumers fear to receive counterfeit notes and coins and that they prefer other means of payment instead of cash, which could have an impact on trade.

Also Europol expressed its support for the introduction of minimum sanctions.

Maximum level of sanctions for distribution

Impact as regards meeting the objectives

The introduction of maximum sanctions will increase the consistency across the EU in terms of the maximum penalties and sanctions that apply in any Member State for a given type of offence. This will constitute an important step towards strenghtening the protection of the single European currency and would considerably reduce the possibility of existence of "save havens" in Europe.

This common maximum level would ensure that the crime of counterfeiting would be considered equally serious and therefore be given better priority by national law enforcement and judicial authorities in all Member States which in turn would help eliminate delays in the cross-border cooperation and also provide national prosecutors with a stronger rationale to prosecute.

The introduction of a common minimum maximum level for distribution would hit organised crime where it is vulnerable. Organised crime seems to rely on an effective distribution network because counterfeits of relevant classes appear all over Europe. The disruption of distribution channels has an immediate, noticeable impact on the counterfeiting statistics.

The proposed level of the maximum sanction of at least eight years is considered as the lowest possible which creates a deterrent effect. It would ensure consistency of the sanctions system across the Member States.

Impact on Member States’ legislation

Introducing a maximum sanction of at least eight years of imprisonment also for distribution will have a deterrent effect in the following five Member States where the maximum sanction is less than eight years: Austria, Italy, Luxemburg, Portugal and the Netherlands. Member States which fixed a higher maximum level of sanction will remain free to keep it and thus the intrusive effect into national law would not exceed the objectives pursued.

Impact as regards compliance costs

The introduction of a minimum level for the maximum sanction to the existing prohibition of making counterfeit currency in the national laws would have small costs of changing legislation for five Member Sates which do not have at least eight years as the minimum maximum sanction in their current national legislation for distribution. However, compared to the introduction of a common minimum level of sanctions, this measure will not create additional costs.

Impact on fundamental rights

The introduction of stronger or more coherent criminal sanctions will have direct and indirect effects on fundamental rights (right to liberty, respect of private and family life, freedom to choose an occupation and conduct a business, right to property, principles of legality and proportionality of criminal offences and penalties). The higher deterrent effect would also lead to less counterfeits in circulation and consequently a lower impact on the right to property of those who are in good faith in possesion of counterfeit currency.

Stakeholders' views

The opinion of the experts and specialists consulted during the 2011 The Hague Conference, stressed that important differences existing between the legal frameworks can create real problems in cross-border cooperation against counterfeiting of the euro and other currencies. The Member States experts agreed to the principle that the harmonisation of criminal law rules against counterfeiting would add value. Harmonised criminal sanction provisions would facilitate the work with, for example, rogatory letters. Indeed, harmonised criminal sanctions and offences would facilitate the judicial cooperation between the authorities of Member States.

The ECEG members expressed concerns about the necessary changes in the criminal codes, for instance in France. Concerns were also raised by some representatives of Member States in the ECEG that a minimum sanction could be inappropriate in minor cases.

The ECB fully supports further harmonisation of the level of penalties by introducing minimum sanctions, given that the euro is the single European currency. According to the ECB the fact that euro counterfeiting can be sanctioned differently in each Member State is disquieting. While noting that although full harmonization of sentencing in Member States is not realistic taking into account the procedural limitations, minimum sanctions could be an important step.

The ECB considers that the same minimum and maximum level of sanctions should be introduced for all types of counterfeiting offences or at least for those concerning the production and the distribution. In its view, deterrent sanctions for any form of distribution are of particular importance.

6.Comparative assessment of policy options

The table below sets out a comparison of the relative rating of the three policy options as described in the section 5 against the specific objectives as defined in section 4. The policy options are classified according to their potential to meet the objectives defined in section 4, with two checkmarks (++) indicating highest relative potential.

7.The preferred option 

The analysis in this Impact Assessment shows the benefits of strenghtening the protection of the euro and other currencies against counterfeting beyond the provisions of the current Framework Decision.

Policy option 2 would be effective in relation to the specific objectives C and D by decreasing the number of unsuccesful cross-border investigations and by increasing prevention by a timely application of authentication procedures.

Policy option 3 would be significantly more effective in comparison to Policy option 2 in achieving the objectives to appropriately increase effectiveness and deterrence in relation to production and distribution of counterfeits, eliminate incentives for forum shopping in some Member States, reduce delays in processing cooperation requests and increase the possibility to use the EAW (objectives A and B). Thus it would achieve all the specific objectives.

Non-legislative actions related to training, exchange of information best practices in the same areas will continue and be strengthened.

8.monitoring and evaluation

Providing for a robust monitoring and evaluation mechanism is crucial to ensure that the rights envisaged in the Directive are complied with in practice as well as in legislation. The Directive should stipulate that Member States should report on the effective implementation. Besides quantitative data provided by Member States, other possible sources of qualitative information on compliance will be gathered from the Justice Forum, OLAF and Eurojust.

Moreover, the Commission envisages carrying out a specific empirical study with emphasis on data collection one to three years after the transposition of the Directive. In order to gain in-depth quantitative and qualitative insights into the effectiveness of the proposal, this study will analyse the following relevant indicators corresponding to the specific objectives:

For the objective A: change in the number of sentences of imprisonment issued;

For the objective B : change in the number of cross-border investigations;

For the objective C: number of EAW executed;

For the objective D: change in the number of counterfeited notes and coins seized in circulation.

The data would enable the Commission to evaluate the actual compliance in Member States not only with this legislation, but also in relation to the respect for the rights, freedoms and principles enshrined in the EU Charter of Fundamental Rights.

The Commission will use the platform of the ECEG experts meetings to monitor on a regular basis the implementation of the Directive.

Once the transposition period of the Directive has expired, the Commission would perform the necessary transposition checks and, if need be, launch infringement procedures in accordance with the TFEU.

(1) Total figure of genuine notes in circulation in first half of 2012 amounts to 14.6 billion.

(2) Europol Organised Crime Threat Assessment 2011 (OCTA 2011)

(3) According to an Interpol presentation in the framework of the 3rd Euro North-East Meeting of European Counterfeiting Experts.

(4) European Technical and Scientific Centre (ETSC) carries out technical analysis and an annual report on the situation as regards counterfeiting (the ETSC is based on Article 1 of Commission Decision C (2004) 4290 of 29 October 2004).

(5) Europol Organised Crime Threat Assessment 2011 (OCTA 2011)

(6) The Convention has been ratified by 26 Member States. Malta has not (yet) ratified.

(7) OJ L 140 of 14 June 2000, p. 1.

(8) OJ L 329 of 14 December 2001, p. 3.

(9)  OJ L 139, 11.5.1998, p.1.

(10) For historical and political reasons the responsibility for the conception of legal instruments on notes and coins is divided respectively between ECB and the Commission/OLAF.

(11) For an update on the programme, see proposal for a Regulation of The European Parliament and of The Council establishing an exchange, assistance and training programme for the protection of the euro against counterfeiting (COM(2011)0913) final. 

(12) COM(2011)573 final.

(13)  The first report adopted in December 2001, COM(2001) 771 final; the second report in September 2003, COM(2003) 532 final; the third report in September 2007, COM(2007) 524 final.

(14) The ECEG is provided for in Regulation (EC) 1338/2001 and is composed of experts from Member States, ECB, Europol and OLAF/ETSC.

(15) See third report of September 2007, COM (2007) 524 final.

(16) Representatives from law enforcement agencies, judicial authorities, Central Banks and Mints.

(17) Table on dollar counterfeiting statistics can be found in Annex 4.

(18)  ECB annual Report 2011

(19)  Report of the ECB of June 2012, see Annex 4.

(20) Press release from ECB of 16 January 2012, http://www.ecb.int/press/pr/date/2012/html/pr120116.en.html.

(21)  Total figure of genuine notes in circulation in first half of 2012 amounts to 14.6 billion

(22)   https://www.europol.europa.eu/sites/default/files/publications/octa2011.pdf ; correspondence between ECB and the Commission has confirmed it.

(23)  The Protection of Euro Coins in 2011. Situation as regards euro coins counterfeiting and the activities of the European Technical and Scientific Centre (ETSC) based on Article 4 of Commission Decision C (2004) 4290 of 29 October 2004.

(24) See OCTA 2011 and discussions at the ECEG meeting of March 2012.

(25)

Decision of the European Central Bank of 16 September 2010 on the authenticity and fitness checking and recirculation of euro notes (ECB/2010/14) and Regulation (EU) No 1210/2010 of the European Parliament and of the Council of 15 December 2010 concerning authentication of euro coins and handling of euro coins unfit for circulation.

(26) Art. 3 (1) (a), (b) and (c) of the Framework Decision.

(27) Interpol presentation in the framework of the 3rd Euro North-East Meeting of European Counterfeiting Experts: Like the US dollar, the counterfeiting of the euro, as an international currency, has demonstrated to be an activity of organised crimes groups moving around the world.

(28)  The table is based on information gathered by the German Bundesbank.

(29) Hungary envisages amending their Criminal Code in order to comply with the maximum term of imprisonment of the Framework Decision.

(30) According to the Europol Reports on Euro counterfeiting of 2009, 2010 and 2011 five important printeries were dismantled and a value of 5 million euro was seized in Colombia and Peru.

(31) See press release available at http://ec.europa.eu/anti_fraud/media-corner/events-calendar/events/2012/events20123028_01_en.htm.

(32) According to the ECB statistics, 70% of all euro counterfeits recovered from circulation have been produced by 10 distinctly identifiable sources within 50 km radius of the city of Naples.

(33) The study focused on the following 15 Member States: BG, DE, DK, EL, ES, FI, FR, HU, IT, LV, NL, PL, PT, RO and SE.

(34)  Given that the obligation of financial institutions to authenticate euro notes and euro coins in circulation by financial institutions is relatively new and is expected to have an important impact on the phenomenon, the system for the protection of the euro will gradually become more performing following this recent achievement and the differences in sanctions will then gain in weight. The implementation rules for the authentication procedure, set out separately for the notes and coins, entered into force in 2010 and their application is obligatory only since 1 January 2011 and 1 January 2012, respectively.

(35)  Report from the Commission to the European Parliament and the Council on the implementation since 2007 of the Council Framework Decision of 13 June 2002 on the European arrest warrant and the surrender procedures between Member States, COM (2011)175.

(36) Council 9005/5/06 COPEN 52; 11371/5/07 COPEN 106; 10330/2/08 COPEN 116; 9743/4/09 COPEN 87; 7551/7/10 COPEN 64.

(37)   Council Framework Decision of 13 June 2002 on the European arrest warrant and the surrender procedures between Member States (2002/584/JHA), Article 8 (1)(f), which requires information on "the penalty imposed, if there is a final judgment, or the prescribed scale of penalties for the offence under the law of the issuing Member State".

(38)  A Class is a group of counterfeits having matching technical characteristics. Before any counterfeits are grouped and linked to the same class, there must be proven evidence that they originate from the same source. Two main types of classes can be distinguished: Local classes and Common classes. The two main types of classes can have variants (subclass) corresponding to modification of and/or improvements in production technique within a single class. The identifier of a class is known as the Class Indicative. Every part (digits and letters) of the indicative represents a certain value so that the "Class Indicative" itself describes the class clearly and non-ambiguously. The class indicative of both, the Common and Local classes reflect the following information: whether the class is common or local (EU or ISO-codes of all relevant countries); series (A series); the denomination (it will reflect the value of the notes); the technology used (P for print); the sequential number; the variant (optional). Example: EU A 0100 P00007 (shortened 100P7), 7th common class of printed counterfeit notes of the 100 euro.

(39)

Most important illegal printeries discovered in Italy: 

- 30.05.2006 in Castel Volturno (Napoli), printery dismantled, 500.000 notes belonging to class 50P5 and class 20P2 seized (potential damage of more than 12 million);

- 26.10.2007 in Lusciano (Caserta), printery dismantled, 275.260 notes belonging to class 20P2 seized (potential damage of more than 5 million);

- 27.07.2009 in Gricignano d'Aversa (Napoli), printery dismantled, 150.000 notes belonging to class 50P30 seized (potential damage of more than 7 million);

- 11.08.2010 in Ponticelli (Napoli), printery dismantled, 100.000 notes belonging to class 50P5 seized (potential damage of more than 5 million).

(40) The topic was included already on the agenda of Euro South-East Conference, meeting of European counterfeiting experts, Prague, 4 - 8. July 2005

(41) See Regulations 1338/2001, 1210/2010 and the ECB decision of 16.09.2010, mentioned in section 2.1.

(42) See Annex 1: for more details on the state of play of the Framework Decision.

(43)  See Regulations 1338/2001, 1210/2010 and the ECB decision of 16.09.2010, mentioned in section 2.1.

(44) Proposal for a Directive on the freezing and confiscation of proceeds of crime in the European Union of 12 march 2012, COM(2012)85 final.

(45) See the Communication of 20 September 2011 "Towards an EU Criminal Policy: Ensuring the effective implementation of EU policies through criminal law ", COM(2011) 573 final

(46)  Denmark is not participating in newly adopted measures on substantive criminal law, while the United Kingdom and Ireland only participate in the adoption and application of specific instruments after a decision to "opt in".

(47)

See Communication from the Commission of 26.5.2011 "On the protection of the financial interests of the European Union by criminal law and by administrative investigations - An integrated policy to safeguard taxpayers' money (COM(2011) 293 final), and the Proposal for a Directive of the European Parliament and of the Council on the fight against fraud to the Union's financial interests by means of criminal law, COM(2012) 363 final.

(48)

The removal of the old third pillar introduces the possibility of infringement procedures in this area, which could be launched by the Commission to enforce EU law. Given the five year transition period stipulated in Protocol no. 36 to the TFEU, the impact of this change may sometimes take slightly longer to be felt in its entirety. However, the Commission has the possibility to speed up matters in selected areas by "Lisbonising" some of the old third pillar instruments. The EU can adopt under Article 83 of the Treaty on the Functioning of the European Union (TFEU, or Lisbon Treaty) directives with minimum rules on EU criminal law for different crimes. Measures can be adopted under Article 83(1) TFEU concerning a list of explicitly listed ten offences (the so-called “Euro crimes”) which refers to -inter alia- counterfeiting of means of payment.

(49) On the basis of Articles 4 and 5 of Regulation 1338/2001 the ECB and ETSC are involved at a later stage. The Regulation provides an obligation of the NACs and CNACs to send every new type of suspected counterfeit note to the ECB and every new type of suspected counterfeit coin to the ETSC.

(50)  Framework Decision 2002/584/JHA, Art. 2(1).

(51)  E.g. §49(1) no. 2 of the German criminal code.

(52)   http://ec.europa.eu/justice/news/intro/doc/com_2010_573_4_en.pdf.

(53)  Compliance costs refer to costs to Member State authorities and EU budget in implementing the policy option.

(54)

 Denmark is not participating in newly adopted measures on substantive criminal law, while the United Kingdom and Ireland only participate in the adoption and application of specific instruments after a decision to "opt in".

(55) In case the UK and Ireland would opt in, the number would increase to twelve.

(56) According to the Council of Europe Annual Penal Statistics – Space I – Survey 2010, available at: http://www3.unil.ch/wpmu/space/files/2011/02/SPACE-1_2010_English.pdf

(57) In case the UK and Ireland would opt in, the number would increase to fourteen.

(58) Austria, Portugal and the Netherlands being the Member State which would have to adapt both the maximum and the minimum level of sanction

EUROPEAN COMMISSION

Brussels, 5.2.2013

SWD(2013) 19 final

Part 2/2

COMMISSION STAFF WORKING DOCUMENT

Annexes to the Impact Assessment

Accompanying the document

PROPOSAL FOR A DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

ON THE PROTECTION OF THE EURO AND OTHER CURRENCIES AGAINST COUNTERFEITING BY CRIMINAL LAW, AND REPLACING COUNCIL FRAMEWORK DECISION 2000/383/JHA

{COM(2013) 42 final}
{SWD(2013) 20 final}

ANNEX 1

Evaluation of the implementation in Member States of the Council Framework Decision 2000/383/JHA of 29 May 2000 on increasing protection by criminal penalties and other sanctions against counterfeiting in connection with the introduction of the euro

Summary of the evaluation reports of the Commission on the implementation of the Framework Decision 2000/383/JHA

Member States are under the obligation to comply with the Framework Decision 2000/383/JHA (the Framework Decision) by 29 May 2001. Following this date, the Commission has assessed the implementation of the Framework Decision in three successive reports.

Under Article 11(2) of the Framework Decision the Commission adopted on 13 December 2001 a report on its implementation which set out in detail the various transposition requirements and the way in which each Member State had complied with those requirements 1 . In its conclusions on the report, the Council recognised that the Framework Decision had largely served its purpose. It nevertheless called on the Commission to draw up a second report containing the additional information still to be provided by Member States. On 3 September 2003 the Commission adopted the second report 2 . At its meeting on October 2004, the Council took note of this second report and, in view of the enlargement of the European Union, called on the Commission to prepare a third report on the implementation of the Framework Decision, including Article 9a on the recognition of previous convictions.

On 17 September 2007 the Commission adopted a third report 3  (hereafter: the Third report). This report assessed the state of play of transposal of the Framework Decision in the 15 Member States in the light of the conclusions of the second report, as well as the legislative situation in the 12 new Member States. It contains a detailed evaluation of the implementation of the Framework Decision by the 27 Member States. The information that the Commission received from the Member States regarding the measures of transposition of the obligations under the Framework Decision was very variable as regards comprehensiveness. The report was nonetheless drawn up on the basis of that information, supplemented by public sources where this was necessary and possible.

The Third report concluded in general that the transposition of the Framework Decision was "satisfactory overall, despite some failures to transpose. The offences and penalties proposed in the Framework Decision have indeed been incorporated into the Member States' legislation. The euro is therefore protected by the efficient and effective measures called for by the Framework Decision. The Framework Decision has therefore achieved its objective and only the adoption of a small number of national measures is required for the implementation to be complete."

More specifically, this report concluded that the Framework Decision has achieved its objectives in the most important areas as follows: "The fraudulent making or altering of currency, as well as the fraudulent uttering of currency, constitute infringements under the laws of all the Member States. The import, export and transport of counterfeit currency are also expressly sanctioned in most Member States. Some legal systems criminalise such acts by way of the concepts of transport or possession. Although varied, the penalties laid down to punish these criminal acts comply with the criteria laid down in the Framework Decision, except in the case of two Member States. In addition, most Member States have introduced the principle of the liability of legal persons. The legislation of most Member States makes provision for final convictions handed down in another Member State to be taken into account for repeat offences."

Despite this satisfactory overall conclusion of the third report, it was also noted that not all the Member States have incorporated all the provisions of the Framework Decision into national law, and identified some shortcomings in transposing the Framework Decision. The Thrid report pointed at some failures to fully transpose in particular the provisions on sanctions levels in some Member States. The report, in conjunction with other data, also pointed out important disparities among Member States in terms of sanctions provided by national legislation.

The amendments to the national laws of the Member States needed for transposition of the Framework Decision to be complete were mentioned in the point 5.2 of the third report as follows:

Article 2

Slovenia has to ratify the International Convention for the Suppression of Counterfeiting Currency, concluded in Geneva on 20 April 1929.

Article 3

Estonia and Slovenia must make the transport, import and export of counterfeit currency criminal offences in their national law.

The fraudulent making and receipt of instruments intended for the counterfeiting of currency must be made criminal offences in the legislation of Estonia and Poland.

Article 4

The counterfeiting of currency by use of legal facilities or materials must be made a criminal offence in the legislation of Spain.

Article 5

The counterfeiting of currency not issued but designated for circulation must be made a criminal offence in the legislation of the Czech Republic and Slovenia.

Article 6

Hungary's legislation must provide for a maximum term of imprisonment of at least eight years for counterfeiting coins.

Estonia's legislation must provide for a maximum term of imprisonment of at least eight years, regardless of whether the offence is a repeat offence or a large-scale counterfeiting operation.

Articles 8 and 9

The authorities of the Czech Republic, Slovakia and the United Kingdom must take the measures necessary to introduce the principle of liability of legal persons in order to comply with Articles 8 and 9 of the Framework Decision.

The legislation of Spain and Luxembourg must introduce fines as sanctions in cases where legal persons are liable.

Article 9a

The legislation of Greece, Luxembourg and Poland must provide for recognition of convictions handed down in another Member State for establishing repeat offences.

Communication of further information required by the Third report

In addition, the third report stated also that the authorities in the Member States below should send the Commission information regarding the implementation of the provisions of the Framework Decision specified in the point 5.3 of the report:

Bulgaria

Criminalisation of counterfeiting of currency not issued (Article 5), liability of legal persons (Articles 8 and 9) and international repeat offences (Article 9a).

Estonia

Criminalisation of counterfeiting of currency by use of legal facilities (Article 4) and criminalisation of counterfeiting of currency not issued (Article 5).

Ireland

International repeat offences (Article 9a).

Hungary

Criminalisation of counterfeiting of currency not issued (Article 5).

Malta

Ratification of the Geneva Convention, provision for the jurisdiction of national courts in accordance with Article 7, liability of legal persons (Articles 8 and 9) and international repeat offences (Article 9a).

Portugal

Liability of legal persons (Articles 8 and 9).

Romania

Criminalisation of counterfeiting of currency by use of legal facilities (Article 4), criminalisation of counterfeiting of currency not issued (Article 5), liability of legal persons (Articles 8 and 9) and international repeat offences (Article 9a).

Finland

International repeat offences (Article 9a).

The authorities of the United Kingdom must inform the Commission about international repeat offences (Article 9a) and the application of the Framework Decision to Gibraltar.

The level of implementation of the Framework Decision: current state of play

A questionnaire on the implementation of the Framework Decision was sent to the Member States in December 2011 and to the members of the Euro Counterfeiting Experts Group (ECEG) in January 2012 with a deadline to reply by end of January 2012 (later extended to 7 February). The Member States were asked to report on the additional measures adopted since 2006 concerning the implementation of the Framework Decision into national law, in view of addressing the issues which were raised in the 2007 report. A table with an overview of the replies of the Members States to the questionnaire is in the Annex 2.

Analysis

Based on the responses to the questionnaire, the initial assessment is that the implementation of the Framework Decision by the MS has advanced. The necessary improvements were made in the implementation of the Framework Decision in comparison with the 3rd report. 15 MS have reported on progress made in terms of improvements required by the conclusions of the 3rd Report. However, some failures to fully transpose in particular the provisions on sanctions levels and the liability of legal persons and sanctions for legal persons in some Member States as pointed out by the 3rd report appear to subsist or the information relevant to the implementation of certain provisions has not been provided in the replies to the questionnaire in certain cases, as highlighted below.

Ratification of the 1929 Convention – Article 2 – All Member States have ratified the 1929 Convention, except for Malta from which no information has been received.

General offences of counterfeiting of currency – Article 3 – It seems that the transport, import and export of counterfeit currency, as well as the fraudulent making, receiving or possession of instruments intended for the counterfeiting of currency, are sanctioned in all the Member States. Some legal systems criminalise such acts by the concepts of transport or possession.

Additional offences of counterfeiting of currency by use of legal facilities - Article 4 – Almost all the Member States punish the counterfeiting of currency using legal facilities within the meaning of Article 4 of Framework Decision. Nevertheless, a large number of Member States comply with this provision by prohibiting the counterfeiting of currency without reference to or distinction between the means used. In Spain's legislation there is no explicit provision of the criminal offence of counterfeiting of currency by use of legal facilities or materials. Estonia has not provided any information on this point. As stated in the third report, it is desirable for all Member States to adopt explicit provisions criminalising the counterfeiting of currency by use of legal facilities. The offence referred to in Article 4 can –in principle- only be committed by agents of the national authorities who have the right and possibility to use legal facilities. Under some legal systems, therefore, this conduct could also rank as abuse of authority by an official. As the offence clearly differs from counterfeiting, the penalties too might also differ. Although the non-differentiated nature of the national measures is satisfactory from the point of view of the transposition of Article 4 of the Framework Decision, explicit national penalties should be adopted for reasons of legal clarity.

Criminalization of counterfeiting of currency not issued but designated for circulation – Article 5 – The aim of this provision is to define the objective element in counterfeiting so that currency not yet issued may also be included. The provision is no longer fully effective in these cases: Slovenia has failed to transpose this article (the criminal acts in relation to currency not issued but designated for circulation could be sanctioned as fraud, and not as counterfeiting of currency), Romania has not transposed this article (counterfeiting of currency not issued could be punished only as a crime of swindling, and is not considered as the crime of currency counterfeiting). Bulgaria has not provided the relevant information about the implementation of this provision.

Penalties - Article 6 - Pursuant to Article 6(2), the offences of fraudulent making or altering of currency must be punishable by terms of imprisonment, the maximum being not less than eight years. Some Member States have implemented this article in complex ways, in which the punishment by terms of imprisonment not less than 8 years for fraudulent making or altering the currency might appear excessive. The legislation of Finland, Sweden and Lithuania includes a restrictive criterion regarding the seriousness of the offence for the application of the maximum penalty: the legislation of Finland and Sweden provides for a maximum penalty of at least eight years' imprisonment only for serious offences; the legislation of Lithuania provides for a maximum term of at least eight years (ten years in this precise instance) only for offences involving amounts that are "large" or "of considerable value"). Although this does not reduce the effectiveness of Article 6 of the Framework Decision, the competent national courts will pass the maximum sentence only in cases of serious offences. Hungary's legislation reserves the maximum penalty of more than eight years for the counterfeiting of banknotes, the counterfeiting of coins being considered a lesser offence and thus punishable by a maximum term of imprisonment of five years. The provision in Hungary for the maximum sentence of five years for counterfeiting coins does not comply with the maximum sanction of the Framework Decision. However, it appears that the new Hungarian penal code under codification includes a provision for a maximum term of imprisonment of at least eight years for counterfeiting coins, although the quantity or the value of money is not substantial, in order to comply with the criteria of the Framework Decision.

Jurisdiction – Article 7 - No information is available on this point as regards two Member States (Bulgaria and Romania).

Liability of legal persons and sanctions – Article 8 and 9 - The implementation of the principle of the liability of legal persons and the sanctions for legal persons was flagged in the 3rd report for several MS (10 MS): for instance, the legislation of the UK does not provide for the liability of legal persons and the legislation of Spain does not contain fines as sanctions in cases where legal persons are liable. Based on the replies provided in the questionnaire, it seems that 5 MS complied and rectified the situation (CZ, LUX, PT, RO and SK). Information on progress on this issue is still missing for 5 MS: BG and MT on the introduction of the liability of legal persons and sanctions for legal persons, ES on the introduction of fines as sanctions for legal persons, HU on sanctions for legal persons and UK on the introduction of the liability of legal persons.

International repeat offences – Article 9a – The legislation of most Member States makes provision for final convictions handed down in another Member State to be taken into account for repeat offences. The legislation of five Member States (Germany, Latvia, Lithuania, Slovenia and Sweden) does not explicitly mention foreign convictions but, in general, the convicted person's past without any specific distinction so as to cover convictions of all types. Although such legal provisions are not at variance with the requirements of the Framework Decision, legal certainty (which is taken into account when assessing effective transposition) would be increased if the legislation of such Member States were amended so that such convictions could be expressly mentioned as being constitutive of habitual criminality. The absence of an explicit reference to convictions handed down in another Member State could lead, in practice, to such convictions not being taken into account. Three Member States did not supply any relevant information on the transposition of this article into national law (Ireland, Romania, UK).

Territorial application – Article 10 - The United Kingdom authorities have not notified any progress with the draft legislation to implement the Framework Decision in Gibraltar.

Conclusions

The general level of implementation of the Framework Decision has advanced in comparison with the 3rd report.

However, the sanction provisions in the Framework Decision have been transposed in quite diverging ways in the Member States. The foreseen maximum penalties vary between eight and thirty years, and no minimum penalties or only fines are foreseen in a number of Member States. There are furthermore important divergences in the application in practice of the provisions of the Framework Decision. This raises concerns from an EU perspective, because a lack of harmonization of sanctions might lead to safe heavens for criminals.

ANNEX 2

1. Counterfeiting of the euro: Questionnaire to Member States' experts

Part I: The implementation of Framework Decision 2000/383/JHA

1) On the basis of the findings in the third implementation Report from the Commission (see Annex), please provide the Commission with information regarding additional measures relevant to the implementation of the Framework Decision in your Member State since 2006.

Part II: The way forward

2) In terms of protection with criminal sanctions, have you encountered any difficulties in practice, for instance in relation to cross border cooperation, that could be linked to discrepancies in the implementation of the Framework Decision's provisions in diverse Member States?

If yes, please describe shortly.

3) Do you think that the protection of the euro would benefit from new substantive criminal law provisions and or through actions to strengthen implementation of existing provisions?

_______________________________

Annex:

Third report from the Commission based on Article 11 of the Council Framework Decision of 29 May 2000 on increasing protection by criminal penalties and other sanctions against counterfeiting in connection with the introduction of the euro.

2. Table with an overview of the replies of the Members States to the questionnaire

ANNEX 3

Views of the stakeholders on the way forward

Member States experts (hereafter "MS") were involved in the consultation process both by means of a questionnaire and by means of formal and informal discussions in particular at the 2 nd International Conference on the Protection of the Euro against counterfeiting (The Hague Conference) in November 2011, and the meetings of the Euro Counterfeiting Experts Group (ECEG) 5 . The European Central Bank (ECB) as well as Europol participated in this process and provided their input, also through direct contributions to the Commission.

1. Questionnaire

A questionnaire on the implementation of the Framework Decision and some questions on a potential way forward was sent to the MS in December 2011 and to the members of the ECEG in January 2012 (see Annex 2). The second part of the questionnaire consisted of a consultation of the stakeholders on the possible way forward and was addressed to the MS (JHA Counsellors 6 ) and to the ECEG members. In the replies to the questionnaire, the stakeholders expressed the following views. 

Two fifths of MS experts consider that the current legal framework is sufficient or that there is no need for new substantive criminal law provisions.

One fifth of MS experts welcome in general actions to strengthen implementation of existing provisions; for instance, Finland and other Member States prefer to ensure a better implementation in practice of the existing provisions and the general framework of mutual legal assistance, as well as mutual recognition instruments which can be applied also in cases of suspected euro counterfeiting. Finland and other States in substance are of the opinion that it would, in most cases, be better to make the current system more known to practitioners in order to improve the practice and ensure that current legislation achieves its full potential than to introduce new rules.

Two fifths of MS experts welcome a reinforcing of the legal framework including changes providing added value by means of a directive.

Certain MS (Czech Republic and France) do not see a need for a new legal instrument, unless it will bring an added value. Cyprus proposed to extent the minimum for maximum sanctions, foreseen in Art. 6(2) to other offences referred to in Articles 3 and 4 (and not only to cover making and altering (referred to in Art. 3 (1)(a)). Italy flagged the problem of "penalty shopping" as the sanctions vary from MS to MS.

Two concrete proposals were received in relation to the improvement of procedural criminal law. The Czech Republic, France and Italy suggested considering an alignment of the investigative techniques such as controlled delivery, under-cover agents. Greece flagged the rules regarding the use of seized counterfeits for analysis purposes to prevent counterfeits to continue to circulate by adjusting machines which authenticate currency. Greece suggested therefore the introduction of provisions obliging courts to release seized counterfeit currency for technical purposes following expert analysis.

2. Discussions at The Hague Conference

Experts and specialists were consulted at the 2nd International Conference on the Protection of the Euro against counterfeiting, in The Hague, organised by OLAF, the European Central Bank (ECB) and Europol on 23 – 25 November 2011. Twelve workshops were conducted, oriented to law enforcement, legal, judicial and technical issues relating to the protection of the euro. Among the conclusions reached at the Conference, the need for further harmonization of national legal frameworks was highlighted with regard to both criminal and procedural law to support an effective protection of the euro against counterfeiting.

The descriptions of national laws given by the experts showed that there are important differences among the national legal frameworks. On the basis of the experience of the experts, these differences can create problems in cross-border cooperation against counterfeiting of the euro. The experts agreed to the principle that the harmonization of criminal law rules against counterfeiting would add value. Harmonized criminal sanction provisions and harmonised offence definitions would facilitate the work with, for example, rogatory letters. Indeed, harmonized criminal sanctions and offences would facilitate the judicial cooperation between the authorities of Member States. Particularly, some experts called for the introduction of common EU minimum sanctions, and others pointed at the risk of forum shopping, as criminals may choose to focus their illicit activities on Member States with less severe sanctions. Other Participants expressed the view that new substantive rules would probably not add much value now; instead, the priority should be to make sure that existing rules are fully implemented and that their application in practice is ensured. The Commission (DG JUST) noted that a proposal for a directive on criminal law to replace the 2000 Framework Decision would to a significant extent reply to the "better implementation need" identified by experts. A directive will namely make it –at least-possible to put in place a stronger mechanism for monitoring the implementation of EU law in Member States.

Some participating countries indicated that new legislation gives the opportunity to expand the investigative methodologies, within those legislative systems that still do not provide such means, like controlled deliveries and undercover agents. The investigative tools similar to those adopted in combating organized crime, drug trafficking and other serious crime cases, should be made available in all Member States for the protection of the euro against counterfeiting 7 .

Among the final conclusions reached at The Hague Conference, the following points were stated:

taking advantage of the entry into force of the Lisbon Treaty by replacing the Framework Decision 2000/383/JHA with a strengthened directive with criminal law measures against counterfeiting of the euro;

supporting more homogeneous application of the actual legislation, in particular with respect to penalties applied by national courts;

supporting harmonization of penal procedures within the EU, in particular with respect to the possible use of investigative tools, such as undercover agents, controlled deliveries, fictitious purchases;

increasing the use of technical assistance provided by competent authorities (such as NACs 8 , CNACs 9  and the European Technical and Scientific Centre (ETSC) 10 during all stages of investigations against euro coins counterfeiting; 

3. Discussions at the Euro Counterfeiting Experts Group (ECEG)

3.1. ECEG meeting of 10 November 2011

Criminal sanctions under the Lisbon Treaty were on the agenda of 58th ECEG meeting that took place on 10 November 2011. Experts were informed about the ongoing reflection within the Commission concerning criminal sanctions for the crime of counterfeiting under the Framework Decision in view of possibilities to strengthen the protection of the euro through a directive. It was noted that substantial differences exist between Member States with regard to the measures in place against the offence of counterfeiting, as well as in the effective implementation of sanctions, in terms of penalties actually handed down by national courts. A roundtable of the ECEG members revealed overall support of the review of the Framework Decision which should focus among other issues on the question of whether changes to sanctions could be useful. Also awareness-raising among prosecutors about criminal sanctions on counterfeiting was mentioned.

3.2. ECEG meeting of 14 March 2012

Following the analysis of the replies to the questionnaire, further discussions took place at the 59th ECEG meeting on 14 March 2012. The experts were informed about the results of the questionnaire and the potential three issues to be included in the new directive: the availability of special investigation techniques, the release of seized counterfeits during court proceedings for technical purposes and the harmonization of minimum sanctions. A room document focusing on these issues was distributed and discussion took place. The ECEG members showed support for a directive covering investigative techniques and the release of counterfeits during judicial procedures. As to the introduction of minimum sanctions, concerns were expressed that the minimum sanctions would require a change of the whole criminal system, for example of the suspension conditions, and a complete revision of the Criminal Code, for instance in France. Concerns were also raised by some representatives of Member Sates in the ECEG that a minimum sanction could be inappropriate in minor cases.

The ECB voiced its support of further harmonization of minimum sanctions, given that the euro is the single European currency; the fact that euro counterfeiting can be sanctioned differently in each MS is disquieting. While noting that full harmonization of sentencing in Member States is not realistic taking into account the procedural limitations, minimum sanctions could be an important step. The ECB also supports the proposal on the release of seizures of counterfeits since it would considerably improve prevention (counterfeits could at an early stage be prevented to circulate).

Europol expressed its interest in the introduction of minimum sanctions and mentioned a pilot study on "forum shopping". Europol informed that it is among the goals of the social study pilot project to identify if foreign criminals choose a certain country due to low penalties ("forum shopping"). Europol briefed the group on the status of the pilot project social study which has been ongoing in the Netherlands. It noted that while the sample of criminals to interview is limited, the quality of the interviews is, however, quite good. The final results will be known in the near future.

An excerpt of the report on the 59th Meeting of the “Euro Counterfeiting Experts Group” of 14 March 2012 on this topic follows below:

"The Commission/OLAF opened the topic of possibly improving the protection of the euro through an improved legal framework afforded by the Lisbon Treaty, mentioning the opportunities to improve the harmonisation of the level of criminal sanctions and to reinforce monitoring procedure by the Commission and the Court of Justice. The Commission reported on the analysis of responses to a questionnaire sent to JHA counsellors and ECEG members. The discussion on the way forward essentially focused on three topics: investigation techniques, release of seized counterfeits for scientific and technical purposes and minimum sanctions.

About the sanctions policy, DG JUST stated that is currently an obligation of a minimum level of the maximum penalty in EU legislation adopted, such is the case in the Framework Decision 2000/383/JHA. Thus far in EU legislation there are no minimum sanctions. The consequences of the introduction of such provisions are unknown; this is the first discussion on minimum sanctions.

DG HOME is very interested in the discussion on minimum sanctions with regards penalties for organized crime in view of the experience with the most recent legal instruments adopted in this area. The confiscation package which has just been proposed by the Commission will be relevant for the discussion. Art. 83 TFEU gives the possibility to introduce "minimum rules" in some areas of legislation. A consideration of subsidiary and proportionality remain essential.

Voicing some concerns, the German expert explained that one of the problems with the minimum penalty is that it would undermine the systematic nature of their penal law. Germany usually has a minimum 1 year of imprisonment for counterfeiting offences and, as an exception, 2 years for offences committed by a group. In general practice, sentences of up to 2 years can be suspended. If the minimum should be raised, they would need to look at all offences and suspensions, and would not be able to examine counterfeiting in an isolated way. Criminal statistics show that over 80% of counterfeiting cases fall under minor violations, such as young people or people unaware of being in the possession of counterfeits, but professional perpetrators are caught much less frequently than amateurs. If a new minimum were to be accepted, Germany would need to overhaul the whole Penal Code.

The Dutch expert agreed that the introduction of minimum sanctions at EU level is not the way forward for minor violations committed by youth, but maybe for serious offences committed in an organized way by professionals disposing of illegal print shops or mints.

The Commission/OLAF explained that the existing provisions in the Framework Decision foresee a maximum penalty only for the main offence of producing counterfeited currency, thus making a distinction between the offences.

Malta also agreed with German and Dutch opinions. If Malta would have to change the minimum sanctions, this would necessitate a change of the Criminal Code and the whole criminal system. The representative noted that as in the case of Germany, someone can get a suspended sentence for a 2 years’ imprisonment.

The Italian expert considered the possibility of having minimum sanctions but at the same time highlighted the need to study carefully the situation of the minimum penalties existing in different countries before imposing a minimum sanction.

Regarding undercover operations and the release of seized counterfeits, Italy considers that an important EU initiative could be to harmonize common rules and standards with respect to investigative techniques. France also supported the proposals on the investigative techniques and the possibility to recover and analyse seized counterfeits for analysis before the end of a trial.

France noted that the introduction of minimum sanctions would need a general revision of their Penal Code, since France does not have minimum penalties in its criminal law. France further suggested considering the possibility to confiscate the criminal assets and procured equipment from the perpetrators as such an action would be more detrimental to a criminal compared to a few months imprisonment sentence."

4. ECB views

The ECB further supported the Commission’s initiative by means of a letter of 17 April 2012 addressed to DG OLAF and DG JUST and a further letter of 29 August 2012 addressed to DG JUST. In these letters it voices its support for further harmonisation of the level of penalties by introducing minimum minimum sanctions, applying the current minimum maximum sanctions also to the offence of distributing counterfeits and of the framework for the release of seized counterfeits. From ECB’s perspective, the fact that the euro is the single currency of the euro area Member States implies that the criminal act of euro counterfeiting must necessarily be considered to cause the same harm irrespective of where it is perpetuated.

The general rule of Article 6 of the Framework Decision leaves a lot of leeway to Member States with the consequence that the level of criminal sanctions for counterfeiting differs quite considerably from Member State to Member State: the minimum sanctions for the fraudulent making or altering of currency range from “no minimum” to 10 years and the minimum maximum sanctions range from 8 years (minimum imposed by the Framework Decision) to 30 years. Moreover the lack of harmonisation may lead to a “forum shopping” of perpetrators. Without the introduction of deterrent minimum sanctions, the ECB fears the risk that consumer will have doubts about the sufficient protection by sanctions and that they will lose their confidence in banknotes and coins. If consumers fear to receive counterfeit banknotes and coins, they might prefer other means of payment instead of cash, which could have an impact on trade.

As to the introduction of minimum minimum sanctions, the ECB states that they are necessary to ensure an effective deterrence in the EU; its absence in a number of MS would raise doubts whether the sanction in place are sufficient in terms of dissuasiveness. The ECB is aware that the introduction of minimum minimum sanctions would be a novelty for some Member States but this should not be an obstacle for a further harmonization of the legal framework under Article 83 of the TFEU. The concerns raised by the some representatives of Member States in the ECEG, namely that a minimum sanction could be inappropriate in "minor cases", could be addressed by an exception for minor cases.

According to the ECB, deterrent sanctions for distribution are also very important, in terms of minimum and maximum sanctions of a certain level. The ECB explains that organised crime, which produces most of the counterfeits recovered from circulation 11 , seems to rely on an effective distribution network since the same counterfeits appear all over Europe. The importance of targeting the distribution channels is also proven by the fact that the disruption of a distribution channel by the law enforcement authorities has an immediately noticeable impact on the counterfeiting statistics. In contrast, the dismantling of an illegal printery by the law enforcement authorities does not seem to have a noticeable effect on the counterfeiting statistics which seems to indicate that the organised crime is able to substitute the closed printery with a new one rather quickly.

The ECB is in favour to harmonize further the legal framework for the release of seized counterfeits by courts before the end of the criminal trial. As highlighted by the ECB at earlier occasions, the ECB and the national central banks (NCBs) should as a rule be entitled to receive samples of banknotes used or retained as evidence in criminal proceedings in a timely manner, to ensure an effective protection of the euro against counterfeiting. An exception to this general rule should only be made when a transfer during the criminal proceedings is impossible, taking into account the low quantity of seized counterfeits. In practice, the (judicial) authorities of some Member States still refuse transferring samples of counterfeit euro banknotes to the ECB and NCBs prior to the end of the criminal proceedings even if such transfer would be possible taking into account the quantity of seized banknotes. The transfer of such counterfeits after the end of criminal proceedings (which may take some time) is of limited value.

ANNEX 4

1.Status of euro banknote counterfeiting reported by the ECB at the 60th ECEG meeting in June 2012

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2.Counterfeit banknote common classes 12  reported by the ECB at the 59th ECEG meeting in March 2012

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3.Extract from ETSC Annual Report “The protection of euro coins in 2011”

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Visual and technical characteristics

The counterfeit coins are in general of a relatively good visual quality, particularly for stamped counterfeit coins. They are globally close to the dimensions and weight of genuine euro coins. Therefore, it is unlikely that the general public would recognise the counterfeits.

The electrical and magnetic parameters of counterfeits, which are particularly important for detection by vending and sorting machines, are usually quite different from genuine euro coins. Over the last few years, however, they have been increasingly approaching the technical properties of genuine euro coins.

Two recent examples are the following:

2-euro counterfeit type (common class 37) detected in circulation in 2009, whose technical characteristics are very similar to those of genuine coins;

1-euro class 37 detected in 2010, with some parameters within the specification.

In 2011, the quantities of these new classes increased sharply. Taking into account this evolution, a continuous effort must be made, for instance, by upgrading coin processing machines in order to detect the increasing number of sophisticated counterfeits.

2 euro

The technical properties of the counterfeit 2-euro coins found in circulation continued to improve in 2011. The proportion of counterfeits featuring an imitation of the slight magnetism of genuine coins reached 44%. The proportion of counterfeits with an electrical conductivity roughly in the vicinity of the one of 2-euro coins increased to 26%. The evolution since 2002 can be seen in the following table and chart.

Table 7: Percentage of counterfeits imitating technical properties of the 2-euro coins

Chart 8: Evolution of counterfeits imitating technical properties of the 2-euro coins

1 euro

The proportion of counterfeit 1-euro coins found in circulation featuring an imitation of the slight magnetism of genuine coins increased sharply in 2011. The proportion of counterfeits with electrical conductivity and magnetism close to the technical specification rose from 1% in 2010 to 16,5% in 2011.

The evolution since 2002 can be seen in the following table and chart.

Table 8: Percentage of counterfeits imitating technical properties of the 1-euro coins

Chart 9: Evolution of counterfeits imitating technical properties of the 1-euro coins

50 cent

The counterfeits of class 1, representing the majority of 50-eurocent counterfeits found in circulation, show a good quality visual appearance. Except for this class, the visual appearance of 50-eurocent counterfeits is still relatively poor, as compared to bicolour counterfeit coins. Stamped counterfeit 50-eurocent coins are usually made of brass. They are easily rejected by vending and sorting machines.

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4. Status of US Dollars counterfeiting as reported by Interpol at the Euro North-East Conference in April 2012 (Warsaw)

4a. Counterfeit US Dollars seized worldwide

4b. Value of counterfeit US Dollars seized in INTERPOL member countries in 2011 by Region, excluding the United States of America

ANNEX 5

Table with sanctions in place in the Member States 13  

ANNEX 6

Member States that need to change their legislation 14

* subject to opt-in

** 10 +5 but Austria, Portugal and the Netherlands being the Member State which would have to adapt both the maximum and the minimum level of sanction and therefore not counted twice

(1)  COM(2001) 771 final.

(2)  COM(2003) 532 final.

(3)  COM(2007) 524 final.

(4)  Council Framework Decision of 29 May 2000 on increasing protection by criminal penalties and other sanctions against counterfeiting in connection with the introduction of the euro.

(5) The ECEG is provided for in Regulation (EC) 1338/2001 and is composed of experts from , ECB, Europol and OLAF/ETSC

(6) The JHA Counsellors is a Council Group of representatives of the Member States administrations in the area of justice and home affairs.

(7)  The same need was identified by the Final Report of the International Conference in of June 2011, "A Community strategy to protect the euro".

(8) NACs are the national analysis centres for counterfeit euro notes referred to in Regulation 1338/2001, OJ L 181, 4.7.2001, p.6.

(9) CNACs are the coin national analysis centres referred to in Regulation 1338/2001, OJ L 181, 4.7.2001, p.6.

(10) The European Technical and Scientific Centre (ETSC) analyses and classifies counterfeit euro coins and assists national authorities. It is attached to the European Anti-Fraud Office OLAF, see Commission Decision 2005/37/EC of 29 October 2004.

(11) According to the ECB statistics, 70% of all euro counterfeits recovered from circulation have been produced by 10 distinctly identifiable sources within 50 km radius of the city of .

(12) Class: group of counterfeits having matching technical characteristics, therefore assumed to have the same origin.

(13)  German Bundesbank, April 2011

(14)  Established on the basis of the table of sanction in place by the German Bundesbank, April 2011, see Annex 5