Explanatory Memorandum to COM(2013)42 - Protection of the euro and other currencies against counterfeiting by criminal law - Main contents
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| dossier | COM(2013)42 - Protection of the euro and other currencies against counterfeiting by criminal law. |
|---|---|
| source | COM(2013)42  |
| date | 05-02-2013 |
Counterfeiting of the euro and other currencies remains a concern throughout the European Union. It is of fundamental importance to ensure trust and confidence in the authenticity of notes and coins for citizens, companies and financial institutions. 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 due to the importance of the euro. The euro is the single currency shared by the 17 Member States of the euro area and in use for the 330 million people living in this area. It is also used at a large scale in international trading transactions and serves as important reserve currency for third countries. The value of euro notes circulating worldwide, that is to say almost 913 billion euro in January 2013, is roughly the same as that of US dollar bills. Around one quarter of that value circulates outside the euro area, notably in neighboring regions[1]. Today the euro is the second most important international currency world-wide.
The euro continues to be a target of organised crime groups active in the forgery of money. Counterfeiting of the euro has led to a financial damage of at least EUR 500 million since the introduction of the euro in 2002. Data from the European Central Bank (ECB) show peaks in the number of counterfeit notes during the period 2009 – 2010 and two other peaks in the second half of 2011[2] and of 2012[3]. The ECB notes an increase of 11.6% as regards the quantity recovered in the second half of 2012 compared with the previous months. The Annual Report 2011 i of the European Technical and Scientific Centre (ETSC) points to a continuous discovery of new types of counterfeit euro coins and a sharp increase in the number of sophisticated counterfeit coins. 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]. Europol's assessment is confirmed by recent large-scale seizures of counterfeit euro notes and coins and the continuous dismantling of illegal print shops and mints each year[6].
These developments show that the existing measures against counterfeiting have not reached the necessary level of dissuasion and therefore require improving the protection against counterfeiting. In particular, considerable differences exist with respect to the levels of sanctions which are applicable in the Member States to the main forms of counterfeiting, i.e. the production and distribution of counterfeit currency.[7] Whereas the minimum level of maximum penalty for producing counterfeits was harmonised in the year 2000 at a level of eight years imprisonment, 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 or legal provisions only provide for fines, whereas the minimum sanction in others is as high as ten years imprisonment. These differences impair cross-border law enforcement and judicial cooperation[8]. Furthermore, data collected in the framework of a study of the European Counterfeiting Experts Group[9] indicate that a high number of illegal print shops were discovered in the last nine years in those Member States which have no minimum sanctions in place or only have fines for currency counterfeiting as their minimum sanctions which suggests that counterfeiters make use of forum shopping. Finally, the current lack of a minimum and maximum level of sanctions for distribution offences constitutes a dangerous threat with respect to the distribution within the European Union of counterfeit notes produced in third countries, as illustrated by the considerable number of print shops dismantled in third countries (e.g. Colombia and Peru) and the related seizure of large amounts of counterfeit euros and other currencies ready to be exported to or distributed in the European Union. It can therefore be concluded that the current size of differences in the sanction systems of the Member States have a negative impact on the protection of the euro and other currencies against counterfeiting by criminal law measures.
The current level of sanctions is one of the reasons for insufficient deterrence and uneven protection across the European Union 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. Since in practice the minimum standard for the maximum penalty is rarely imposed, a minimum penalty can be considered as more dissuasive and of great practical value for the protection of the euro. For those who are tempted to counterfeit the euro, it will be the knowledge of the possible sanctions which will deter them; the difference of being sentenced to imprisonment for a certain minimum duration instead of a fine, for example, is obvious. Thus, the minimum sanctions contribute to a consistent EU wide system for the protection of the euro.
The euro is the single currency of the economic and monetary union established by the European Union. It is thus a truly European common 'good' that should be protected in a consistent manner across the European Union, in particular by setting a minimum level of penalties for serious cases of production and distribution offences.
The European Union and the Member States should provide for comprehensive protection of the euro and combat offences against the euro on a common basis. Following the International Convention for the Suppression of Counterfeiting Currency ('Geneva Convention')[10] and its principle of non-discrimination of other currencies foreseen in Article 5, all currencies will profit from this increased protection of the euro.
The Geneva Convention lays down rules to ensure that severe criminal penalties and other sanctions can be imposed for counterfeiting offences. It also contains rules on jurisdiction and cooperation. Following the ratification of the Geneva Convention agreed on 20 April 1929, a certain degree of approximation of national legislation against counterfeiting of currency has since taken place.
Council Framework Decision 2000/383/JHA on increasing protection by criminal penalties and other sanctions against counterfeiting in connection with the introduction of the euro[11] aims at supplementing, on the territory of European Union, the provisions of the Geneva Convention of 1929. It identifies practices which are to be regarded as punishable in addition to the actual act of counterfeiting, such as distribution. For these offences, the Framework Decision requires effective, proportionate and dissuasive penalties. In addition, it contains provisions on jurisdiction and on the liability of legal persons. The Framework Decision was amended by Council Framework Decision 2001/888/JHA of 6 December 2001[12], which introduced a provision on mutual recognition of convictions for the purpose of recognizing 'repeat offences'.
Member States were obliged to transpose Council Framework Decision 2000/383/JHA by 29 May 2001 and Council Framework Decision 2001/888/JHA by 31 December 2002. The Commission has assessed their implementation in three reports[13]. Despite the development of an EU acquis in this area, certain shortcomings have become visible. Although all Member States have, with minor exceptions, formally implemented the Framework Decision correctly, Member States have adopted diverging rules and consequently often diverging levels of protection and practices within their national legal systems.
The Framework Decision is part of a comprehensive 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[14]. It obliges the Member States of the euro area 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[15], updated through Council Regulation 44/2009 of 18 December 2008[16]. 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. Council Regulation (EC) No 1339/2001 of 28 June 2011[17] extended the effects of Regulation (EC) No 1338/2001 to those Member States which have not adopted the euro as their single currency;
· Decision of the European Central Bank of 16 September 2010 on the authenticity and fitness checking and recirculation of euro notes (ECB/2010/14)[18];
· 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[19];
· Council Regulation (EC) No 2182/2004 of 6 December 2004 concerning medals and tokens similar to euro coins[20], amended by Council regulation (EC) No 46/2009 of 18 December 2008[21];
· Council Decision 2005/511/JHA of 12 July 2005 on protecting the euro against counterfeiting, by designating Europol as the Central Office for combating euro counterfeiting[22];
· Council Decision 2002/187/JHA of 28 February 2002 setting up Eurojust with a view to reinforcing the fight against serious crime[23] by stimulating and improving coordination and cooperation between competent judicial authorities of the Member States also in the field of counterfeiting of the euro;
· 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[24].
Contents
- RESULTS OF CONSULTATIONS WITH THE INTERESTED PARTIES AND IMPACT ASSESSMENTS
- LEGAL ELEMENTS OF THE PROPOSAL
- BUDGETARY IMPLICATION
- 1.1. General context
- 1.2. Legal context
- 1.2.1. Criminal law
- 1.2.2. Further Union provisions in this area
- 2.1. Consultations with interested parties
- 2.2. Impact Assessment
- 3.1. The legal basis
- 3.2. Subsidiarity, proportionality and the respect for fundamental rights
- 3.3. Choice of instruments
- 3.4. Specific provisions
The Commission has consulted specialist stakeholders on a number of occasions. The consultation of the stakeholders started at the 58th Euro Counterfeiting Expert Group[25] (ECEG) meeting on 10 November 2011 and continued during subsequent ECEG meetings. Experts and specialists[26] were further consulted at The Hague Conference which took place from 23 to 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 at the 59th ECEG meeting on 14 March and the 60th meeting on 13 June 2012. The ECB as well as Europol participated in this process and provided their input, also through direct contributions to the Commission.
From the consultation it can be concluded that stakeholders consider it necessary to provide added value to the practitioners for the protection of the euro and other currencies by criminal law measures. Two concrete proposals were received in relation to the improvement of procedural criminal law: a proposal to align the investigative techniques such as controlled delivery, under-cover agents; and a proposal to introduce provisions obliging judicial authorities to transmit samples of seized counterfeit currency for technical analysis for the purpose of detecting further counterfeits in circulation.
The ECB expressed strong support for reinforcing the criminal law framework, in particular by strengthening and harmonising the penalties, including by setting standards for minimum penalties.
The Commission conducted an impact assessment of policy alternatives, taking into account the consultations of the interested parties. After considering the possible options, the impact assessment concludes that the following solution would be preferred:
– maintenance of most of the provisions from Council Framework Decision 2000/383/JHA in a new proposal, with minor modifications, taking into account the Treaty of Lisbon;
– modification of the provisions on penalties by introducing a minimum penalty of six months for production and distribution of counterfeit currency and by introducing a maximum penalty of at least eight years for distribution;
– introduction of a new provision obliging Member States to provide for the possibility to use certain investigative tools;
– introduction of a new provision obliging Member States to ensure that the National Analysis Centres and the National Coin Analysis Centres can analyse euro counterfeits also during on-going judicial proceedings for the purpose of detecting further counterfeits.
The EU's competence to establish 'minimum rules 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' is set out in Article 83 (1) of the Treaty on the Functioning of the European Union (TFEU).
Counterfeiting of means of payment is explicitly mentioned in paragraph 1 of Article 83 TFEU as such an area of particularly serious crime.
It is considered that there is a need for EU action based on the following factors:
Counterfeiting of the euro poses a genuine problem for the Union and for its citizens, businesses and financial institutions. The fact that the euro is the single currency of the euro area implies that the offence of euro counterfeiting must necessarily be considered to cause the same harm everywhere in the euro area irrespective of where it is committed. This pan-European dimension requires that counterfeiting is fought in a similar manner and that criminals encounter equivalent penalties, wherever in the European Union the crime is committed.
This particular position of the euro, which is the single currency of the economic and monetary union established by the European Union and therefore a truly European 'good', requires that its protection must be ensured at EU level. As such, it is even more 'EU-centred' than a field subject to harmonisation of rules in the Member States.
Only the EU is in a position to develop binding 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.
According to Article 5 of the Geneva Convention, no distinction shall be made in the scale of punishment between acts relating to domestic currency on the one hand and to foreign currency on the other. Therefore, the increased protection of the euro should be extended to all currencies.
The proposed penalties are proportionate to the seriousness of the offences and the considerable impact of counterfeiting of the euro and other currencies on citizens and businesses. They are in line with the penalties currently provided for in the law of a majority of Member States. Since many Member States already provide for the concept of minimum penalties, it is appropriate and consistent that the concept of minimum penalties be used at Union level. In order to guarantee that the severity of penalties is not disproportionate to the criminal offence, a specific safeguard for cases of lower amounts of counterfeits is being proposed, i.e. one threshold below which a lower penalty of imprisonment can be imposed and another one below which also a fine can be imposed, unless the case features particularly serious circumstances. This could for instance be the case where the counterfeit money is discovered in circumstances that clearly suggest that higher amounts have been or were to be produced. The chosen thresholds need to be high enough to take account of minor cases, but at the same time low enough to guarantee a deterrent effect of the sanction and to take account of the importance of genuineness of banknotes and coins and the trust citizens have in them.
This Directive requires Member States to provide for, in their national law, the scale of penalties foreseen in Article 5, not going below the requested minimum levels. However, the general rules and principles of national criminal law on the application and execution of sentences in accordance with the concrete circumstances remain applicable. This includes general rules on the application of sentences to juveniles, in cases of attempt, of only supporting participation or where the perpetrator contributes to the discovery or to the prevention of serious offences. Concerning the execution of sentences, general principles as e.g. on suspended imprisonment, on alternatives to imprisonment (electronic surveillance) or on early release would continue to apply. In the individual cases, the courts will exercise their discretion taking into account all aggravating and mitigating circumstances within the applicable legal framework.
Any of the proposed criminal law measure was carefully assessed and designed in view of its possible effects on the protection of fundamental rights.
The proposal is relevant to the following rights and principles of the EU Charter of Fundamental Rights (hereafter the Charter): the rights to liberty and family life (by possible imprisonment of convicted perpetrators), the freedom to choose an occupation and to conduct a business (by possible disqualifications of convicted perpetrators), the right to property (by possible shutting down of businesses having committed offences), the principle of legality and proportionality of criminal offences and penalties (because definitions for offences and the scale of penalties are set out), the right not to be tried twice (because of the possible interplay with administrative punitive sanctions). These interferences are justified because they serve to meet objectives of general interest recognised by the Union (see paragraph 1 of Article 52 of the Charter), and in particular to provide effective and deterring measures for the protection of the euro and other currencies. It has been carefully insured that the measures do not go beyond what is necessary to achieve this objective and are thus proportionate. In particular explicit safeguards in the instrument itself have been laid down, specifying the right to an effective remedy and to a fair trial, including the rights of the defence, ensuring an equivalent level of effective judicial protection by national courts. The requested penalties are proportionate in relation to the offences committed.
In order to set out criminal law provisions on the basis of paragraph 1 of Article 83 TFEU, a directive is the correct instrument.
Article 1: Subject matter – this provision gives a description of the scope and purpose of the proposal.
Article 2: Definitions – this provision sets out definitions which apply throughout the instrument.
Article 3: Offences – this provision defines the main offences to be criminalised by Member States and clarifies that certain circumstances of the perpetration of the offence fall under the scope.
Article 4: Incitement, Aiding and Abetting, Attempt – this provision is applicable to all offences mentioned above and requires Member States to criminalise all forms of preparation and participation. Criminal responsibility for attempt is included for the majority of offences.
Article 5: Penalties – this provision is applicable to all offences mentioned above in Article 3 and 4. It requires Member States to apply effective, proportionate and dissuasive penalties in line with jurisprudence of the Court of Justice. For more serious cases of the offences of production and distribution of counterfeit currency, it sets out a sanction of imprisonment within a range of at least six months and eight years for natural persons. The upper minimum ceiling of eight years is already provided for in the Framework Decision 2000/383/JHA for the offence of production.
Articles 6 and 7: Liability of and sanction types for legal persons – these provisions are applicable to all offences mentioned in Article 3 and 4. They require Member States to ensure liability of legal persons, while excluding that such liability is alternative to that of natural persons, and to apply effective, proportionate and dissuasive sanctions on legal persons, and they outline the possible sanctions.
Article 8: Jurisdiction – this provision is based on the principles of territoriality and personality. It is applicable to all offences mentioned in Articles 3 and 4. It requires jurisdiction of the judicial authorities which allow them to initiate investigations, pursue prosecutions and bring to judgment cases relating to currency counterfeiting. It obliges Member States whose currency is the euro to exercise universal jurisdiction on euro counterfeiting offences under certain conditions. In case of parallel proceedings, Council Framework Decision 2009/948/JHA[27] of 30 November 2009 on prevention and settlement of conflicts of exercise of jurisdiction in criminal proceedings promotes closer cooperation between the competent authorities. Following Council Decision 2002/187/JHA of 28 February 2002, the national member of Eurojust has to be informed of any case where conflicts of jurisdiction have arisen or are likely to arise. In addition, Article 8 of this Directive requests that Member States concentrate criminal proceedings in one Member State unless not appropriate.
Article 9: Investigative tools – the provision aims at ensuring that investigative tools which are provided for in national law for organised crime or other serious crime cases can also be used in cases of counterfeiting of currency.
Article 10: Obligation to transmit counterfeit euro notes and coins for analysis and detection of counterfeits – the provision requires from Member States to ensure that the National Analysis Centres and the National Coin Analysis Centres can analyse euro counterfeits also during on-going judicial proceedings for the purpose of detecting further counterfeits.
Article 11: Relation to the Geneva Convention – the provision requests that Member States are contracting parties of the International Geneva Convention of 20 April 1929.
Article 12: Replacement of Council Framework Decision 2000/383/JHA – this provision replaces the current provisions in the area of counterfeiting of currency in relation to Member States participating in this Directive.
Article 13: Transposition – the provision requires that the Member States transpose the Directive within 18 months after its entry into force. Member States have to communicate to the Commission the text of these provisions as well as future provisions in the field covered by this Directive. Member States are not required to transmit explanatory documents, because the Directive contains a limited number of legal obligations and concerns a delimited domain at national level.
Articles 14, 15 and 16 – contain further provisions on reporting by the Commission and review; entry into force and addressees.
This proposal has no budgetary implications for the budget of the European Union.