Central Bank of Malta Bernadette Muscat A COMMUNITY STRATEGY TO PROTECT THE EURO Implementation of Legislation on Authentication And Suggestions for the Future The Maltese Legislative Scenario Delivered by Bernadette Muscat Central Bank of Malta 1 December 2009 Ministry of Economy and Finance, Italy - Rome 30.11.2009/01.12.2009 PERICLES PROGRAMME - Central Means of Payment Antifraud Office (UCAMP)
Principal legislative sources on authentication: Central Bank of Malta Act, 1968 establishes counterfeiting as a criminal offence CBM Directive No 10 of 27 October 2008 on the Banknote Recycling Framework Council Regulation 1338/2001 on the protection of the euro against counterfeiting Commission Recommendation of 27 May 2005 concerning authentication of euro coins and handling of euro coins unfit for circulation
A. Central Bank of Malta Act Establishes a number of criminal offences punishable by imprisonment and/or penalties: Counterfeiting or possession of counterfeit currency or being in possession of material used for the production of counterfeit currency Making illegal use of legal materials to produce currency Mutilation/defacement of notes and debasement/melting of coins Importation or distribution of medals and tokens similar to euro coins not in conformity with legal requisites
CBM Act Other Provisions Any person in possession of suspected counterfeit currency must deliver it immediately to the Bank During criminal proceedings a court cannot order the destruction of counterfeit currency without consulting the Bank Establishes the Counterfeit Surveillance Unit within the Bank to perform functions of NAC and CNAC under Reg. 1338
B. CBM Directive No 10 implementing the ECB s Banknote Recycling Framework Binding legal act issued under enabling powers granted by CBM Act Scope: to ensure the integrity and preservation of euro banknotes in circulation Addressees: credit institutions and professional cash handlers Professional cash handlers include: Establishments whose professional activity consists in exchanging notes and coins of different currencies, & Retailers and other economic agents engaged in the sorting and distribution of notes to the public by ATMs
CBM Directive No 10 Main Principles Requirement of authenticity and fitness checks of banknotes put into circulation by customer-operated machines tested in accordance with the Eurosystem s common test procedures. Banknotes suspected of being counterfeit or which have not been checked (either mechanically or manually by trained staff) must be delivered to the Bank.
CBM Directive No 10 Other Provisions Notification of banknote recycling machines prior to installation Addressees are responsible for cash handling activities carried out via service companies Bank s right to request information Bank s right to carry out system cheques Force majeure exception
Effective Dates From 1 January 2009 Notification of machines prior to installation Bank s right to request information From 1 January 2010 All other rights and obligations CBM Act proposed to be amended to provide for sanctions (penalties) Imminent publication of Handbook on manual sorting for professional cash handlers.
SUGGESTIONS FOR THE FUTURE A. The ECB s Banknote Recycling Framework Adopted by the ECB s Governing Council, required to be implemented by central banks by end 2006 Not a legal act in terms of the ESCB/ECB Statute hence, no clear legal principles and is not an act of legal harmonisation Given some legal force by the amended Article 6 of Reg. 1338
The ECB s Banknote Recycling Framework Competence of ECB to take measures to protect the integrity of euro banknotes is a necessary corollary of its exclusive competence to issue euro banknotes (Art. 106(1) Treaty, Art. 16 ESCB/ECB Statute) ECB proposal to issue a Decision binding on the addressees of Art. 6, Reg. 1338, laying down procedures for authenticity checks It is not foreseen to have binding effect on manufacturers & resellers who are not covered by Art. 6 Expected to update the current BRF which has, or is being, implemented in the euro area
B. Proposal for a Council Regulation on authentication and handling of euro coins To apply to the higher denominations of euro coins (2 euro, 1 euro, 50 cent) Once a machine has passed a detection test, no need to have it tested again when used by other institutions Introduce alternate test for checking machines either 10% of total number of machines or ⅓ of volume of coins Transition period of 2 years from date of adoption
Thank you.