Since 2002, when euro notes and coins were introduced, numerous investigations have revealed the existence of illegal print shops and mints producing fakes, despite EU instruments to combat this. The Lisbon Treaty created new possibilities to fight counterfeiting of the euro through EU legislation. On this basis, the Commission proposed, in February 2013, a Directive using criminal law to protect the euro and other currencies against counterfeiting.
The scale of the problem
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.
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In contrast, in the trend for euro coins, the last year saw a 17% rise in the number of counterfeits withdrawn from circulation in comparison with 2011.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).
EU legal framework
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).
EU bodies involved
The Commission’s OLAF prepares – in concert with the Justice DG – legislative initiatives in this field. In 2004 the European Technical and Scientific Centre (ETSC) was established within OLAF to analyse and classify new types of counterfeit euro coins and coordinate technical actions to protect euro coins against counterfeiting. In addition, anti-counterfeiting activities at national level are co-financed through the “Pericles” programme 2002–2013.
The ECB is responsible for analysing counterfeit euro notes and storing technical and statistical data on counterfeit notes and coins. Moreover, it publishes information on euro banknote counterfeiting twice a year.
Europol, as the Central Office for Combating Euro Counterfeiting, supports MS’ law enforcement services by facilitating the exchange of intelligence and providing operational, strategic and forensic analysis.
Eurojust coordinates investigations and prosecutions and improves the cooperation between the competent national authorities, in particular by facilitating international mutual legal assistance.
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.