Documents considered by the Committee on 15 September 2010 - European Scrutiny Committee Contents

14   Cross-border road transport of euros




COM(10) 376




+ ADDs1-6

COM(10) 377

+ ADDs 1-6

Draft Regulation extending the scope of Regulation XX on the professional cross-border transportation of euro cash by road between euro-area Member States

Draft Regulation on the professional cross-border transportation of euro cash by road between euro-area Member States

Commission staff working documents: impact assessment and summary of impact assessment

Legal base(a)  Article 352 TFEU; EP consent; unanimity

(b)  Article 133 TFEU; co-decision; QMV

Document originated14 July 2010
Deposited in Parliament2 August 2010
DepartmentHome Office
Basis of considerationEM of 12 August 2010
Previous Committee ReportNone, but see (30685) 10875/09: HC 19-xxii (2008-09), chapter 11 (1 July 2009)
To be discussed in CouncilNo date set
Committee's assessmentLegally and politically important
Committee's decisionNot cleared; further information requested


14.1  The euro was launched on 1 January 1999 and euro banknotes and coins were introduced for cash payments on 1 January 2002. There are currently 16 EU Member States which have adopted the euro as their official currency and which together comprise the euro area.[60] The UK and Denmark both have an opt-out which exempts them from participation in the euro. The remaining nine Member States have not yet met the conditions for adopting the euro and are referred to as "Member States with a derogation."[61]

14.2  In 2009 the Commission published a White Paper which highlighted the difficulties faced by professional cash-in-transit (CIT) companies in transporting euro banknotes and coins by road between Member States. The White Paper included a draft of common EU rules designed to remove obstacles to the professional transportation of euros by road between euro area Member States. The previous Committee considered the White Paper in July 2009 and noted that the then Government and British and EU associations representing the cash-in-transit industry had considerable reservations about the Commission's proposals, largely based on their cost and complexity.[62]

The draft Regulations

14.3  Following publication of its 2009 White Paper, the Commission established an expert group comprising representatives from euro area Member States to help formulate proposals to facilitate the free circulation of euro cash within the euro area. Document (b) sets out common rules for the cross-border transportation of euro cash by road between euro area Member States which, according to the Commission, reflect a high degree of consensus within the expert group. Document (a) makes provision for the common rules to be extended automatically to a Member State with a derogation at the same time as the Council decides to lift its derogation, thereby enabling it to adopt the euro as its currency and join the euro area.

14.4  The legal base for document (b) is Article 133 of the Treaty on the Functioning of the European Union (TFEU) which provides for the adoption of measures "necessary for the use of the euro as the single currency". This Article is included in Title VIII of Part Three of the TFEU concerning economic and monetary policy, under the chapter on monetary policy. The purpose of this chapter is to establish the objectives, tasks and governance of the European System of Central Banks (ESCB — comprising the European Central Bank and national central banks); regulate the issuing of euro banknotes and coins; and provide the necessary powers to adopt measures for the use of the euro as the single currency.

14.5  Article 133 TFEU does not apply to the UK by virtue of its opt-out from the euro. Measures based on Article 133 TFEU are adopted by a qualified majority of those Member States whose currency is the euro. This means that the UK and ten other Member States that have not adopted the euro as their currency would not participate in the vote in Council and the draft Regulation would not apply to them. The effect of document (a), however, would be to extend the scope of application of document (b) to the UK or any other non-euro Member State if it decided to join the euro at a later date.

14.6  The legal base for document (a) is Article 352 TFEU which provides for action by the Union "if necessary, within the framework of the policies defined by the Treaties, to attain one of the objectives set out in the Treaties, and the Treaties have not provided the necessary powers". Proposals based on Article 352 TFEU must be adopted by unanimity in the Council and require the EP's consent. Moreover, under the Lisbon Treaty, the Commission is required to draw the attention of national parliaments to any proposal based on Article 352 TFEU.

14.7  The Commission's explanatory memorandum accompanying document (b) says that the CIT market is currently divided along national lines because of regulatory differences affecting whether firearms may be carried and on what conditions, the design and protection of CIT vehicles, staffing and training requirements, the provision of information to the police, and licensing rules. These differences make it difficult for commercial banks and large retailers to enter into a contract with a CIT company based in another Member State, even though it may be more efficient and cost-effective to do so.

14.8  The proposals in document (b) are intended to mitigate the impact of different national regulatory requirements by establishing common rules applicable only to CIT companies wishing to transport euros by road from their Member State of origin to another Member State within the euro area. The main elements are as follows:

  • CIT companies would be required to obtain a CIT cross-border licence in their Member State of origin ("the granting authority") and comply with the common rules set out in the draft Regulation as well as national rules in a number of sensitive areas (for example, on firearms) ;
  • Cross-border transportation of euros would only be carried out between 6:00 and 22:00 hours and the CIT vehicle would have to return to its Member State of origin within the same day;
  • CIT security staff would have to satisfy a number of requirements relating to their health and suitability for the job, training and language skills;
  • The carriage of firearms would be governed by the law of the Member State in which the CIT company was operating (so, for example, armed CIT staff entering another Member State which prohibits the carriage of firearms would be required to place firearms in a weapons strong-box);
  • Vehicles used to transport euro banknotes and coins would have to meet the specifications set out in the draft Regulation; and
  • CIT staff involved in transporting euros to another (host) Member State would be entitled to payment at the minimum rate applicable in the host State (on a daily rate) where this exceeds the rate of pay in their Member State of origin.

14.9  The Commission justifies EU action in relation to document (b) on the grounds that Article 133 TFEU imposes a "duty to take the necessary measures to ensure the free and efficient circulation of euro cash since the current situation creates obstacles to the cross-border transport of the euro and thus to its use".[63] According to the Commission, Member States' failure to conclude bilateral or multilateral agreements with each other to facilitate cross-border movements suggests that EU action is the only practicable way of reconciling divergent national rules, while also taking into account the future enlargement of the euro area, and so complies with the principle of subsidiarity. Limiting the scope of the draft Regulation to cross-border transportation of euros (and thus excluding transportation within a single Member State) also ensures that it complies with the principle of proportionality.

14.10  As regards document (a), the Commission justifies the use of Article 352 TFEU on the grounds that EU action is necessary in order to facilitate a smooth changeover to the euro for those Member States that have not yet adopted the euro as their currency but may do so in the future.

The Government's view

14.11  In her Explanatory Memorandum of 12 August 2010, the Minister of State for Security and Counter-Terrorism at the Home Office (Baroness Neville-Jones) says that UK law already includes a licensing requirement for UK contractors who wish to transport cash or valuables within the UK. The draft Regulations would create an additional cross-border licensing requirement for those CIT companies seeking to transport euros from one euro Member State to another. Neither of the proposals would apply to the UK unless and until the UK were to decide to join the euro and so there would be no immediate legal, policy or financial implications for the UK.

14.12  As regards document (b), the Minister says that the Government "believes that the overall aims of the Regulation — increasing financial freedom for the good of the economy, while maintaining professional standards and the safety of the public — are sound."[64] However, the Minister continues as follows:

"If the proposals were ever to apply to the UK we believe that they would be complex and difficult to implement effectively. We also believe that there are risks to licensing by individual national 'granting authorities' which could leave the receiving State with an obligation to accept foreign cash transports. For example, in one State CIT companies may have a weaker internal checking infrastructure but rely on staff carrying firearms. If they had to forego firearms they might present a risk in another State which had a stronger internal infrastructure.

"With regard to firearms, we would also have concerns about firearms brought into the country (by CIT staff) — which is prohibited under UK law. While the arrangements would require firearms to be kept in a remotely locked box while the CIT staff are in the territory of a Member State whose domestic law prohibits the carrying of forearms in these circumstances, we would have concerns about this arrangement were the Regulations ever to apply to the UK. Applications for the private possession of firearms for the protection of large sums of money are, as a rule, refused on the grounds that they are not an acceptable means of protection."[65]

14.13  The Minister highlights further elements of the draft Regulations which would be likely to cause difficulties for the UK. These include possible additional responsibilities for the police in tracking or escorting CIT vehicles, new costs for industry (for example, a minimum of 200 initial hours of training are required for CIT companies operating across borders, whereas a UK licence requires a minimum of 35 hours), special requirements for vehicle equipment and for the possession and carriage of firearms. The Minister tells us that the British Security Industry Association (BSIA) has commented on the Commission's draft proposals and expressed a number of concerns. For example, BSIA suggested that the rules on firearms would be likely to breach UK restrictions on the possession and importation of firearms and that the costs of compliance could be extensive, requiring significant investment in CIT vehicles and in training CIT crews.

14.14  The Minister provides an analysis of the implications of the draft Regulations for fundamental rights, notably the freedom to conduct a business and the right to property, and concludes that "the Government considers that any impact on these rights is limited and justified by the overall objectives pursued by the Union" which are to facilitate the free circulation of the euro by removing existing regulatory barriers to the cross-border transportation of euros.[66]

14.15  The Minister indicates that, although the draft Regulations have no immediate financial implications, if they were to apply to the UK in the future, the costs for CIT companies wishing to apply for a CIT cross-border licence would appear to be significant.


14.16  We note the Minister's view that the draft Regulations would not have any immediate, legal, policy or financial implications for the UK as they would not apply to the UK unless and until the UK decided to join the euro. We are, however, concerned that the legal bases proposed by the Commission would mean that, if the UK were ever to decide to join the euro, the UK would be bound to implement common rules over which it had had little or no say. This is because the UK and other non-euro Member States would be excluded from participating in the vote in Council to adopt document (b) but the effect of document (a), which requires the unanimous support of all Member States, would be to extend the scope of application of document (b) to any Member State which adopts the euro as its currency in the future. We should therefore be grateful for the Minister's views on the following questions:

  • Is Article 133 TFEU the correct legal base for document (b)?

We accept that there will be circumstances in which euro area Member States will need to adopt measures for the use of the euro which will bind any future participants in the single currency. Article 133 TFEU specifies, however, that the adoption of such measures must be "necessary for the use of the euro as the single currency". The Commission does not adduce any evidence to indicate that differing regulatory regimes applicable to CIT companies have a detrimental impact on the use of the euro in those Member States which have adopted the single currency. The main justification for the Commission's proposals would seem, rather, to be a desire to facilitate the free circulation of euros between Member States within the euro area, and to achieve this by removing national restrictions on the ability of CIT companies to provide cross-border services. This would seem to fit more readily with the EU's internal market objectives than with EU monetary policy. We therefore ask the Minister to confirm whether there is a possibility that the proposals in document (b) would affect the free movement of goods and services in non-eurozone Member States; and, if there is, whether an internal market legal base should not be used instead of Article 133 TFEU so that all Member States can take part in the negotiation and adoption of the proposed Regulation.

  • Is Article 352 TFEU the correct legal base for document (a)?

The power conferred on the Union under this Article to take action where the Treaties have not provided the necessary powers is, in our view, to be used sparingly and must be fully justified. We note that the need to use this Article would not arise if the objectives of document (b) were to be regarded as internal market objectives. We therefore ask the Minister whether she is satisfied that the Commission has demonstrated a genuine need for Union action under Article 352 TFEU and that there are no other Treaty Articles which confer the necessary powers.

  • Do both documents comply with the principle of subsidiarity?

The Minister's Explanatory Memorandum appears to accept that EU action is justified in order to facilitate the free circulation of euro cash across national borders and to make provision for the future enlargement of the euro area. Article 5 of the Treaty on European Union (TEU) provides that action at EU level is justified only when the objectives of the proposed action cannot be sufficiently achieved by the Member States but can rather, by reason of the scale or effects, be better achieved at Union level. The Commission recognises in its explanatory memorandum that the CIT market is predominantly local in character and that any impediment to the free circulation of euros is mainly limited to border areas. We therefore ask the Minister to explain why she considers that the scale or effects of any impediment to the free circulation of euros are such as to warrant EU action of the nature proposed by the Commission.

14.17  Pending the Minister's replies to our questions, we shall keep both documents under scrutiny.

60   Participating Member States are Belgium, Germany, Ireland, Spain, France, Italy, Luxembourg, the Netherlands, Austria, Portugal and Finland (since 1999), Greece (2001), Slovenia (2007), Cyprus and Malta (2008) and Slovakia (2009).  Back

61   See Article 139 of the Treaty on the Functioning of the European Union. Back

62   (30685) 10875/09; see HC 19-xxii (2008-09), chapter 11 (1 July 2009). Back

63   Commission's explanatory memorandum on the legal aspects of the proposal, page 8. Back

64   Minister's Explanatory Memorandum, para 27. Back

65   Minister's Explanatory Memorandum, paras 28 and 29. Back

66   Minister's Explanatory Memorandum, para 17. Back

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