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European Union: Provisional Agreement to Control Illicit Cash Flows in and out of the EU

(June 8, 2018) On May 23, 2018, the Council of the European Union (Council) and the European Parliament reached a provisional agreement on measures to control illicit cash flows in and out of the European Union (EU), in particular a revision of the Cash Controls Regulation (CRC). (European Commission Press Release IP/18/3867, Security Union: Commission Welcomes Agreement on Its Proposal to Tackle Illicit Cash Flows (May 23, 2018), European Commission website; Proposal for a Regulation of the European Parliament and of the Council on Controls on Cash Entering or Leaving the Union and Repealing Regulation (EC) No 1889/2005, COM (2016) 825 final (Dec. 21, 2016), EUR-Lex website.)

Content of the Agreement

Currently, a person entering or leaving the EU carrying cash equal to or exceeding €10,000 (about US$11,679) must declare the cash and make it available for control. However, this control mechanism has been frequently circumvented by criminals by shipping cash via mail or freight or by carrying highly liquid commodities that can be easily converted into cash. (COM (2016) 825 final, supra, at 2 & 4.) The revision of the CRC therefore extends the disclosure obligation to unaccompanied cash sent in postal parcels or freight consignments and amends the definition of “cash.” (Id. art. 2, para. 1(a), art. 4.) Cash is now defined as comprising currency, bearer-negotiable instruments, commodities used as highly liquid stores of value, and certain types of prepaid cards. The new categories are further described in Annex I to the amended CRC. The Commission is authorized to adopt delegated acts to amend the annex and add additional components to the definition of cash. (Id. art. 14.)

Furthermore, if the custom authorities have reason to suspect that an amount of cash that is below the threshold of €10,000 is related to a criminal activity such as money laundering, terrorism financing, or fiscal crimes, they are allowed to take appropriate actions, in particular detain the cash temporarily. (Id. arts. 6, 7.) Any temporary detention of cash must be justified by special circumstances and be subject to an effective remedy in law. (Id. art. 7, para. 2.) Details, in particular the maximum detention period, must be laid down by the Member States in national legislation. (Id. art. 7, para. 3.)

Finally, the amended CRC Regulation aims to improve the information exchange between the competent authorities of the Member States and with the Commission. (Id. art. 9.)

Next Steps

The amended Cash Controls Regulation must be formally adopted by the Council and the Parliament and will enter into force on the twentieth day following its publication in the Official Journal. (Id. art. 20.) The Regulation complements other EU legislative instruments in the area of combating money laundering and terrorist financing, among others the Fourth Anti-Money Laundering Directive (AMLD). (Id. at 2; Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the Prevention of the Use of the Financial System for the Purposes of Money Laundering or Terrorist Financing, Amending Regulation (EU) No 648/2012 of the European Parliament and of the Council, and Repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive 2006/70/EC (Fourth AMLD), O.J. (L 141) 73).