Controls of cash movements: Implementation Appraisal

21-12-2016

Regulation 1889/2005 complements the existing rules on combatting money laundering and terrorist financing. It creates an obligation to provide a cash declaration for anybody crossing EU borders with more than €10 000 in cash. Although the reports and research have shown that the regulation, in its current state, does not require a thorough review, several shortcomings that limit its powers and hamper its full harmonisation were identified. These shortcomings include, for instance, the fact that the regulation does not cover cash sent by post or freight; that Member States’ authorities cannot temporarily impound sub-threshold amounts of cash; or that sanctions for breaches of this cash declaration obligation differ among the Member States. These open issues not only limit harmonisation among the Member States, but also hamper practical application of the regulation in the field to combat money laundering and terrorist financing. On several occasions, the European Parliament and the Council have expressed the need to update current legislation and strengthen the existing rules. The European Economic and Social Committee also highlighted the need for better rules to combat money laundering. The European Commission’s intention to tackle the shortcomings of the regulation identified is thus a welcome step.

Regulation 1889/2005 complements the existing rules on combatting money laundering and terrorist financing. It creates an obligation to provide a cash declaration for anybody crossing EU borders with more than €10 000 in cash. Although the reports and research have shown that the regulation, in its current state, does not require a thorough review, several shortcomings that limit its powers and hamper its full harmonisation were identified. These shortcomings include, for instance, the fact that the regulation does not cover cash sent by post or freight; that Member States’ authorities cannot temporarily impound sub-threshold amounts of cash; or that sanctions for breaches of this cash declaration obligation differ among the Member States. These open issues not only limit harmonisation among the Member States, but also hamper practical application of the regulation in the field to combat money laundering and terrorist financing. On several occasions, the European Parliament and the Council have expressed the need to update current legislation and strengthen the existing rules. The European Economic and Social Committee also highlighted the need for better rules to combat money laundering. The European Commission’s intention to tackle the shortcomings of the regulation identified is thus a welcome step.