C-358/93

On 10 November 1992 the defendant, Mr Bordessa, arrived by motor vehicle at the Gerona frontier crossing, travelling towards France. After the usual 'nothing to declare', Article 4(1) of Royal Decree 1816/91 · gov­ the Spanish customs officials nevertheless erning economic transactions with other inspected the vehicle, where they discovered countries requires that, before exporting — hidden in various ways — banknotes banknotes whose value is in excess of speci­ worth a total of nearly PTA 50 million. Fur­ fied amounts, a declaration must be made or ther investigations carried out on the spot prior administrative authorization obtained. disclosed that Mr Bordessa was exporting The national court has doubts regarding the the money on behalf of third parties and for compatibility of those obligations with Arti­ a consideration. Nothing more was ascer­ cles 30 and 59 of the Treaty and Articles tained with regard to the destination of the 1 and 4 of Council Directive 88/361/EEC of money.

* Original language: Italian. 2 — OJ 1988 L 178, p. 5: the Directive concerns the implementa­ tion of Article 67 before amendments in the matter were 1 — As amended by Royal Decree 42/93. made by the Treaty of Maastricht.

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OPINION OF MR TESAURO —JOINED CASES C-358/93 AND C-416/93

In the absence of the relevant administrative Royal Decree 1816 of 20 December 1991 on authorization required under Spanish law for economic transactions with other countries. the export of banknotes of a value in excess of PTA 5 million, the customs officials immediately confiscated the cash and arrested Mr Bordessa.

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tions on movements of capital taking place Member States were required to ensure the between persons resident in Member States. transposition of the Directive no later than To facilitate application of this Directive, 1 July 1990 (Article 6(1)). However, in capital movements shall be classified in respect of certain capital movements, Spain accordance with the Nomenclature in Annex was allowed an extended period. More spe­ 1. cifically, pursuant to Article 6(2) of, in con­ junction with Annex IV to, the Directive, Spain was authorized to postpone until 31 December 1992 the liberalization inter alia of precisely the form of physical import and export of means of payment which con­ cerns us here.

(...)

The first and second questions when the capital is intended for the purchase of goods or as payment for services.

7. In order to answer the questions concern­ ing the compatibility of the domestic legisla­ tion at issue with Community provisions on the movement of goods and services, I think The orders for reference make it clear, how­ I need only make a few brief observations. ever, that in the case before us it is common Since the two questions cover common ground that the transfers in question are not ground, it seems to me appropriate to con­ related to any trade in goods or services. The sider them together. matter must therefore be examined only in the light of the rules on the free movement of capital contained in the Treaty or in the relevant provisions of secondary law, with­ out there being any need to take Articles 30 and 59 into consideration.

I would first of all point out that the facts which gave rise to the proceedings before In any case, it will clearly be for the national this Court took place before 31 December court — guided also by the general princi­ 1992 and therefore before the end of the ples of its own legal system — to establish (extended) period prescribed for the transpo­ the consequences which the interpretation of sition of the Directive in Spain. It might Community law will have for the present accordingly seem unnecessary to provide the case, especially with regard to the subsequent national court with an interpretation of pro­ decriminalization of the offence with which visions whose application, in relation to the the defendant is charged. State in question, was not obligatory at the time when the matters complained of occurred.

Nevertheless the Directive reserved to the also been repeatedly confirmed through the Member States the right to adopt (or main­ interpretation which the Court has given to tain) all requisite measures to prevent that directive. It is of course true that the infringements of their laws and regulations Court's rulings were given in a legal context (the first part of the first paragraph of Article which existed before the adoption of the 4) and expressly authorized them to lay Directive now under consideration and down procedures for the declaration of capi­ which is therefore now obsolete. However, a tal movements 'for purposes of administra­ different interpretation of Article 4 of the tive or statistical information' (the second Directive would be incompatible with the part of the first paragraph of Article 4). system as a whole and, what is more, in view Lastly, the Directive states that the applica­ also of the fact that the wording of the cor­ tion of those measures or procedures may responding provision in the earlier directive not, however, have the effect of impeding is similar in all respects, unjustified. capital movements carried out in accordance with Community law (the second paragraph of Article 4).

Furthermore it would be odd if, unlike the other three freedoms guaranteed by the Treaty, the free movement of capital enjoyed total immunity from supervision, to the extent that Member States were deprived of 12. Plainly, the principle of free movement the right to adopt measures designed to of capital is to be coupled with a supervisory attain objectives which — provided that power of the Member States for the purpose those measures are proportionate to the aim of attaining specific objectives: the monitor­ pursued by the Directive — the Directive ing of tax-related matters, prudential super­ itself recognizes as being worthy of protec­ vision of financial institutions and compi­ tion. lation of administrative or statistical information, as well as, generally speaking, compliance with national laws and regula­ tions.

not in harmony with those governing the Far from introducing a new exception to the common market as a whole. principle of the free movement of capital, Article 73d does nothing other than confirm the interpretation of the law as it previously stood, which could already be deduced from the Directive and in particular from the first paragraph of Article 4. In those circum­ stances, it would therefore seem to be going On that point, it should further be noted too far to envisage applying the relevant pro­ that the Court has affirmed the legitimacy of visions of the Treaty of Maastricht to the restrictions on the movement of capital when present case. they result indirectly from restrictions on 9 other fundamental freedoms. That provides further confirmation that, in so far as move­ ments of capital may be subject to limita­ tions by reason of (legitimate) restrictions on the freedom with which they are associated, it must a fortiori be possible for them to be 15. Having regard to the foregoing consider­ subject to restrictions justified on grounds of ations, the compatibility with Article 4 of the public policy. Directive of a requirement to make a decla­ ration or obtain authorization in respect of the export of banknotes should therefore be appraised by reference to the proportionality test, which is familiar in the context of bar­ riers to trade in general. It will therefore be necessary, in accordance with the principles 14. With regard to Articles 73b and 73d of of what is by now settled case-law, 10 to the Treaty, as amended at Maastricht, it establish whether the measures imposed by should be noted that the wording of those the legislation at issue are in fact necessary in articles corresponds almost literally to that order to attain the objectives pursued, or of Article 1 and the first paragraph of Article whether those objectives might just as effec­ 4 of the Directive, save for the fact that Arti­ tively be attained by measures less restrictive cle 73d(l)(b) expressly lists among the mea­ of intra-Community trade. sures which Member States have the right to adopt those 'which are justified on grounds of public policy or public security'.

value greater than PTA 1 million, are not merely constitute an obstacle, but ultimately only expressly contemplated in Article 4 of contradicts the very idea of the free move­ the Directive, but are also perfectly adapted ment of capital. to the supervisory objective pursued in that provision. Although obligatory and to be made in advance, such a declaration does not entail the suspension of the operation to which it refers, which may be carried out independently of the approval of the compe­ 18. As early as its judgment in Luisi and tent national authority. However, if the need Carbone, the Court, ruling on the limits arises, that authority will always be able to placed by Community law on the power set in motion the necessary investigations which the Member States are expressly whenever suspicions arise regarding the ori­ acknowledged as having to verify the nature gin or the destination of the capital, or and genuineness of liberalized capital move­ regarding the possible infringement of any ments, confirmed that controls introduced other law (criminal, fiscal or other) which is for that purpose could be considered legiti­ considered to be applicable. mate only if they were carried out in such a manner as not to subject the capital transfer to 'the discretion of the administrative 11 authorities'.

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19. In the matter of the free movement of The Spanish Government maintains that, goods the Court has also often had occasion where transfers of vast sums of money are to rule on the requirement to obtain autho­ concerned, a requirement to obtain prior rization (even where this would be granted authorization is justified for reasons relating promptly and automatically). Such a require­ to the fight against crimes often associated ment is nevertheless regarded as not permis­ with such transfers, such as money launder­ sible, in particular because 'a system re­ ing, drug trafficking, tax evasion and terror­ quiring the issue of an administrative ism — that is to say, therefore, on grounds of authorization necessarily involves the exer­ public policy. The Spanish Government fur­ cise of a certain degree of discretion and cre­ ther considers that the measure in question is ates legal uncertainty for traders'. The Court proportionate, since it is necessary for the went on to add that the objective pursued attainment of the objective pursued, having could be attained if the authorities had con­ regard to the general scope and the impor­ fined themselves 'to obtaining the informa­ tance of that objective. tion which is of use to them, for example, by means of declarations signed by the import­ ers, accompanied if necessary by the appro­ 14 priate certificates'.

stitute in practice an ineffective form of pro­ financial system for the purpose of money tection, since an obligation of that nature is laundering ('the anti-laundering directive'), principally directed at potential criminals, which however concerns only transactions who are the very persons most likely to which take place with the assistance of finan­ ignore it. Even if, for argument's sake, I were cial agencies and is therefore irrelevant to the willing to accept that premiss, I do not see case now before the Court, pursues objec­ why such persons should be more disposed tives similar to those which we have been to comply with a requirement to complete a considering: to prevent infringements of the request for authorization than with the laws of Member States without thereby pre­ requirement to fill out a declaration, espe­ venting or, in any event, hindering legitimate cially as such a request would automatically transactions. On the contrary, it is quite clear entail prior investigations to which those that the premiss underlying the anti- individuals might understandably be even laundering directive is the complete freedom more reluctant to expose themselves. of capital transfers. However, that directive confines itself to requiring that, when con­ ducting transactions exceeding certain thresholds, credit and financial institutions obtain proper identification of their custom­ ers. The suspension of capital transfers is authorized (or indeed required) only in so 23. Nor, in that respect, do I attach much far as the institutions concerned know or importance to the fact that under the Spanish suspect that those transactions relate to system failure to comply with the require­ money laundering. ment to make a declaration leads to a simple administrative sanction whereas breach of the obligation to obtain an authorization, inasmuch as it constitutes a criminal offence, attracts a criminal penalty. The objective to which Article 4 of the Directive refers, namely to enable the administrative author­ ities to verify the 'genuineness' of the transac­ tion in question (and to take further steps where there are suspicions), remains ade­ quately assured even by means of a simple declaration, the request for prior authoriza­ tion offering no further advantage. Secondly, the deterrent effect of a criminal penalty 25. In short, there are only two possibilities: could usefully be linked to the breach of the either the transfer of cash is legitimate and obligation to make a declaration, a possibil­ unconnected with criminal offences of any ity which has not been shown to be imprac­ kind, or the transfer of cash is the instrument ticable. for committing or represents the proceeds of a criminal offence. In both cases the admin­ istrative authorities will be able to undertake an investigation to ascertain the existence of possible criminal offences, and only need to have been adequately informed beforehand

26. Nor is anything to be gained by object­ 27. The last doubt raised by the national ing that capital transfers are permitted with­ court forms a corollary to the question out any restriction when they are carried out which has just been discussed and concerns through a bank. In the first place, it is com­ the direct effect of the provisions examined mon knowledge that in those circumstances above. the transfer is subject to the bank's commis­ sion which may make the transaction more costly and possibly lead to its rejection as an option. Secondly, of decisive importance is the fact that the Directive makes no distinc­ tion between transfers of means of payment according to the mode of transfer. As has As is known, the provisions of a directive been emphasized on several occasions, the have direct effect and may therefore be relied principle of liberalization is laid down in upon by individuals before the national general terms. This means that all cases of courts if, so far as their substance is con­ restriction must be expressly provided for in cerned, they are sufficiently precise and 16 advance. In the Community legal system, the unconditional. The next prerequisite is days when everything not expressly permit­ that the directive has not been transposed (or ted was forbidden are gone. Nowadays it is correctly transposed) within the period pre­ the very opposite principle that prevails. scribed.

It is quite clear that the obligation under In short, I believe that a system of compul­ which the Member States are placed by Arti- sory authorization applied generally to the transfer of banknotes constitutes an imper­ missible restriction on the free movement of capital. A restriction of that nature is not 16 — Among the numerous judgments, see those in Case 8/81 Becker [19821 ECR 53 and in Joined Cases C-6/90 and absolutely necessary for the attainment of C-9/90 Francovichand Others[1991] ECR 1-5357.

To summarize, as from the date of expiry of the period prescribed for transposition (a date which, I repeat, was put back for some States, including Spain), Articles 1 and 4 of 28. Furthermore, the conclusion just put the Directive may be relied upon by individu­ forward is entirely in line with, and even car­ als concerned for the purpose of contesting ries a stage further, the Court's decision in the application of any provision of domestic Casati. u It is true that in that judgment the law which conflicts with those articles.

17 — See the judgment in Case 203/80 Casati [1981] ECR 2595. 18 — See judgment in Casati, cited above, para. 11.

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29. I therefore propose that the Court give the following answers to the questions submitted to it by the Juzgado Central for a preliminary ruling:

(1) Articles 30 and 59 of the Treaty are not applicable to capital movements unconnected with trade in goods or services.