Home page Special Topics Controls of cash entering or leaving the European Union – Regulation (EC) No 1889/2005

Controls of cash entering or leaving the European Union – Regulation (EC) No 1889/2005

Both EU and national legislation have introduced the principle of the obligatory declaration of the cash carried by any natural person entering or leaving the European Union. Besides the above mentioned principle, it is crucial to mention and clarify the existent obligations of cash declaration applied within the Member States of the European Union. 

Pursuant to the provisions of Regulation (EC) No 1889/2005 of the European Parliament and the Council on controls of cash entering or leaving the Community and more specifically to Article 3: “Any natural person entering or leaving the Community and carrying cash of a value of EUR 10.000 or more shall declare that sum to the competent authorities of the Member State through which he is entering or leaving the Community in accordance with this Regulation” (i.e. principle of obligatory declaration).   

Within the harmonized Greek Customs legislation and according to the provision of Law 2960/22.11.2001 – Official Government Gazette A 265/22.11.2001, the Customs authorities are competent to check the cash carried by any natural person entering or leaving the European Union. The natural person shall sign and submit a solemn declaration and request for a certified copy. Let it be stressed out that the obligation to declare shall not have been fulfilled if the information provided is incorrect or incomplete. 

At this point, the significant definition of “cash” must be clarified. For the purposes of Regulation (EC) No 1889/2005, “cash” means: 

(a) bearer-negotiable instruments including monetary instruments in bearer form such as travellers cheques, negotiable instruments (including cheques, promissory notes and money orders) that are either in bearer form, endorsed without restriction, made out to a fictitious payee, or otherwise in such form that title thereto passes upon delivery and incomplete instruments (including cheques, promissory notes and money orders) signed, but with the payee's name omitted; 

(b) currency (banknotes and coins that are in circulation as a medium of exchange). 
Gold or other precious stones that are used as a medium of exchange do not lie within the aforementioned definition.  

The purpose of Regulation (EC) No 1889/2005 and the introduction of the principle of obligatory declaration are to prevent the use of the financial system for money laundering and to prevent the financing of terrorism. The heterogeneity of Member States’ legislation and the different levels of control are detrimental to the proper functioning of the internal market. It is therefore necessary to harmonize key elements at Community level in order to ensure an equivalent level of control over movements of cash entering or crossing the EU border. This obligatory declaration allows the competent authorities to collect information on movements of liquid assets, which are eventually transmitted to other authorities for the prevention and/or suppression of money laundering.

Non-compliance and breach of the obligation to declare results in an administrative fine, based both on Regulation (EC) No 1889/2005 (Articles 3,4 and 9) and on the Greek legislation. Greek law and in particular Article 147 of the Customs Code (Law 2960/2001), as amended and in force, clearly stipulates that "For the failure to submit a declaration of cash in accordance with Article 3 of Regulation (EC) No 1889/2005, the imposed fine amounts to the 25% of the undeclared amount. The above fine is also imposed in cases of inaccurate or incomplete declaration of the information provided". In addition, in the event of non-compliance with the obligation to declare Article 3 of this Regulation, the competent Customs Authority may, by special decision, seize for a maximum of three (3) months (any extension thereof being possible by a public prosecutor's order or other action of the National Anti-Money Laundering Authority) the remaining 75% of the undeclared cash, in order to carry out relevant research in the framework of the fight against money laundering activities.

In any case that the competent authorities proceed to seize the undeclared amount, a copy of the declaration submitted incompletely or inaccurately, as well as a copy of the order is forwarded to the National Anti-Money Laundering Authority for further investigation. Where no such money laundering arises from the search, the amount of cash that is not withheld as a financial penalty shall be released by decision of the Head of the Customs Authority. However, when the investigation results in money laundering, the case is referred to the competent prosecution authority and the detained cash is transferred to the Depositary and Loan Fund by the competent customs authority.

Remedies and litigation measures to protect a natural person against the decision to seize and detain cash

In the event of a breach of the obligation to declare cash, an act of offense shall be drawn up, stating, inter alia, the type and value of the cash and the administrative sanctions provided for in paragraph 8 of article 147 of Law 2960/2001. The act is signed by the relevant customs officers and is considered by the competent supervisor. Subsequently, an imputation order is issued for the imposition of the fine.

The customs authorities shall collect the fine by deducting the amount from the cash and the deadline for the appeal and the exercise thereof shall not suspend the collection of the fine.

Remedy/Litigation:

The auditee/natural person may bring an action against that imputation act.

Matter of court jurisdiction:

In respect of litigation referring to customs disputes in general, if the claim does not exceed one hundred and fifty thousand (150.000) euros, the action shall be brought before the Single Member Court of First Instance. If the claim exceeds one hundred and fifty thousand (150.000) euros, the action shall be brought before the Court of Appeal.  

Term:

The action shall be filed within thirty (30) days of the lawful service of the act or in any other case, after the auditee has proven to be fully aware of its contents. If the person entitled to appeal resides abroad, the time limit is set at ninety (90) days.

Report from the Commission to the European Parliament and the Council on the application of Regulation (EC) 1889/2005 on controls of cash entering or leaving the EU, pursuant to article 10 of this Regulation 

In addition to the above mentioned European legislation, questions and issues arise with regard to the national arrangements and measures for the cash declaration. Each Member State has the option of setting up mechanisms and systems for controlling the movement of cash, even if it is a transfer from or to another EU Member State.

The European Commission Report (12.08.2010) stated that the following Member States have adopted and applied such intra-Union cash checks (over € 10 000) at the border with other Member States: Belgium, Bulgaria, Cyprus, Denmark, Spain, France, Italy, Malta, Poland, Portugal, Germany. However, the following Member States have not adopted such intra-Union reporting mechanisms: Czech Republic, Estonia, Greece, Finland, Hungary, Latvia, Lithuania, Luxembourg, the Netherlands, Romania, Slovakia, Sweden and Slovenia. Consequently, the transfer of cash to and from the latter Member States is free as it is not subject to a reporting obligation or declaration.

In the same context, it should be underlined and noted that in respect of Greece and due to the recent legislative restrictions, the following rule applies: "The transfer of banknotes in euro or in foreign currency is permitted for up to the amount of euro two thousand (2.000) or the equivalent in foreign currency per person and per trip abroad. This restriction excludes permanent residents from abroad."

Recent Case Law:

According to the ECJ Decision in case C-17/16 Oussama El-Dakkak, Intercontinental SARL v Administration des douanes et droits indirects, the aforementioned obligation to declare cash in excess of ten thousand euros (€ 10,000) applies within international transit zones of airports located in the territory of the Member States of the European Union.

In particular, a natural person traveling from a non-member State of the European Union to a non-member State of the European Union, while passing through an airport located in a Member State of the European Union, is subject to that obligation of cash declaration.  

Airports are part of the territory of the Union and Regulation (EC) 1889/2005 does not exclude the applicability of the reporting obligation to the international transit zones of these airports.

The obligation to declare is intended to prevent, deter and eliminate the introduction of the proceeds of illegal activities into the financial system and to further legitimize them.

For this reason, the definition of the "natural person entering or leaving" by the Union is broadly interpreted to enhance the effectiveness of the mechanism provided for in the Regulation to control movements of cash entering or leaving the Union.

Proposal for a Regulation on controls of cash entering or leaving the Union and repealing Regulation (EC) 1889/2005

After assessing the degree of success and the fulfillment of the objectives of Regulation (EC) No 1889/2005, the Commission has concluded that, despite the overall satisfactory performance of the Regulation, some areas are problematic and should be strengthened in order to improve the functioning of the Regulation.

Specifically, this proposal aims at addressing and resolving the following issues:(A)

 A. The imperfect coverage of cross-border cash movements

Provision of a statement/notification of unaccompanied cash (such as cash sent in freight or parcel consignments).

B. Difficulties in the exchange of information between authorities

Provision of an active transmission of information to the relevant Financial Intelligence Units (FIUs) and the mandatory, rather than optional, exchange of data with competent authorities of other Member States for the transnational prevention of money laundering.

C. The impossibility for competent authorities to temporarily detain sub-threshold amounts

Provision for the possibility of temporarily detaining cash, either in the event of non-submission of the required declaration or non-disclosure or in case of indications of criminal activity, regardless of the amount.

D. The imperfect definition of "cash"

In line with international standards, cash is defined as "currency that is in circulation as a means of exchange, or bearer-negotiable instruments". However, cases have been highlighted in which criminals have made significant movements of highly liquid commodities such as gold to transfer value. It is also essential to take into account the rise of cybercrime, online frauds and illicit online market places, with a particular focus on prepaid payment instruments. It is necessary to extend the definition of cash to include these payment methods and thus cover the relevant legislative gap identified by the law enforcement agency.

E. Divergent penalties for non-declaration in Member States 

When this Regulation came into force, it imposed on the Member States the obligation to notify the Commission of the penalties imposed, without however providing for a corresponding obligation for any subsequent amendments. A new element is the obligation for Member States to keep the Commission informed of any amendments to the relevant provisions on sanctions - penalties following the entry into force of the Regulation.

F. Different implementation levels among Member States

Implementing powers are conferred on the Commission to lay down measures aimed at ensuring the uniform application of controls, inter alia by establishing models for reporting and notification forms and by drawing up technical rules for the exchange of information and the rules and the format for the provision by Member States to the Commission of anonymous statistical information on declarations and infractions.

Regulation (EC) No 1889/2005 on cash controls was adopted and implemented in order to harmonize the fundamental principle of the free movement of goods, persons, services and capital by preventing money laundering and terrorist financing within the single market and the economic and monetary union. Its results have been evaluated and the European institutions have begun the necessary steps to improve and harmonize the control framework.

Publication date: 15/5/2017