Criminal penalties for counterfeiting the euro

The importance and the widespread use of the euro, the second most traded currency in the world, make it particularly vulnerable to counterfeiting. Indeed, the EU’s currency has been continually targeted by fraudsters. And in the majority of cases brought to light, they have been part of organised crime groups. Since 2002, 20 illegal mints have been discovered in Europe: ten in Italy, two each in Spain and Portugal and one in each of Austria, Bulgaria, Belgium, Greece, Hungary, and Poland. According to the European Central Bank (ECB), the total financial damage associa­ted with counterfeit euros identified in Europe since 2002 amounts to at least €500 million.

Recent trends

In January 2013, the ECB reported that 531 000 counterfeit banknotes had been found in circulation in 2012. It concluded that the proportion of counterfeits remained very low given the number of genuine euro notes in circulation (on average 14.9 billion during the second half of 2012). As in previous years, the €20 and €50 denomination notes were the most concerned (42.5 and 40.0 per cent respectively).

The majority of counterfeit euro banknotes recovered in the second half of 2012 (97.5%) were detected in euro area countries. Around 2% were found in other Member States (MS) and 0.5% in other parts of the world (e.g. in Peru).

In contrast, in the trend for euro coins, the last year saw a 17% rise in the number of counterfeits withdrawn from circulation in comparison with 2011. This means that at least one in every 100 000 coins was counterfeit, given that 16.5 billion genuine euro coins were in circulation. The two euro denomination was the most affected (two in three counterfeit coins detected).

The 1929 International Convention for the Suppres­sion of Counterfeiting Currency (Geneva Convention) was the first international act which provided for criminal penalties for counterfeiting offences. This widely accepted convention was the basis for the EU law applicable to euro counterfeiting.

In 2000, Council Framework Decision 2000/383/JHA (FD) was adopted in order to supplement and facilitate the application of the Geneva Convention in the EU.

The FD requires that MS impose effective, proportionate and dissuasive criminal penal­ties for the following “general offences”:

• Fraudulent making or altering of currency (counter­feiting)
• Putting counterfeit cur­ren­cy into circu­la­tion
• Exporting and trans­por­ting it, and
• Making and posses­sing counterfeiting equip­ment and ma­te­rials.

The FD also provides that the maximum penalty for counterfeiting must be at least eight years’ impri­son­ment. Furthermore, it includes provisions on juris­dic­tion over the above offences, as well as on the liability of legal per­sons.

The FD is complemen­ted by a range of other EU legal instruments. These regulate issues such as technical mea­su­­res for authentication of euro notes and coins, the collection and analysis of rele­vant techni­cal and statistical data, and cooperation in the fight against counter­fei­ting between the bodies operating at various levels (national, EU and interna­tional).

Towards the proposal

Whereas the FD has been implemented by all MS, there are still significant differences between laws and their application across the EU. These relate in particular to the level of applicable sanctions (e.g. a minimum sanction of ten years imprisonment in one country contrasted with a fine in another). This, according to the Commission, has already led to counterfeiters favouring less severe jurisdictions (“forum shopping”).

Following the Lisbon Treaty, Article 83(1) TFEU grants the Parliament and the Council the power to adopt directives setting minimum rules with respect to the definition of offences and sanctions for par­ticu­lar­ly serious crime with a cross-border dimen­­sion. This provi­sion provides the legal base for the new Commission proposal.

The main elements of the proposal

The proposed Directive builds on the 2000 FD, maintaining most of its pro­visions while inclu­ding additional ele­ments.

In line with the principle of non-discrimination en­­shri­ned in the Geneva Convention, the Direc­tive would extend the in­crea­sed protection of the euro to all curren­cies.

It provides that a minimum penalty of at least six months’ im­prison­ment should be introduced for serious cases of production and distribution of counterfeit currency. Moreover, a maximum penalty for distribution would be introduced and aligned with the penalty set by the FD for production (eight years’ imprisonment).

The Directive would also oblige MS to make investigative tools used to combat organised or other serious crime (e.g. the interception of communications) available for combating counter­feiting.

Finally, the obligation would be introduced for judicial authorities to permit the examination of counterfeits without delay by the so-called national analysis centres and national coin analysis centres. At present, some judicial authorities refuse to transfer counterfeit euros for analysis until a criminal procedure is complete.

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