Bank of Luxembourg Regulation 2021/No. 31 of 7 December 2021 on controls to ensure compliance with provisions applicable to the re-circulation of euro monetary signs

BANQUE CENTRALE DU LUXEMBOURG
Bank of Luxembourg Regulation 2021/No. 31 of 7 December 2021 on controls to ensure compliance with provisions applicable to the re-circulation of euro monetary signs.

The Management of the Bank of Luxembourg,

Having regard to the Treaty on the Functioning of the European Union and in particular Articles 128(1) and 128(2);

Having regard to the Statute of the European System of Central Banks and of the European Central Bank, and in particular Articles 12.1 and 16;

Having regard to Article 108bis of the Constitution;

Having regard to Council Regulation (EC) No 1338/2001 of 28 June 2001 laying down measures necessary for the protection of the euro against counterfeiting, as amended by Council Regulation (EC) No 44/2009 of 18 December 2008;

Having regard to Regulation (EU) No 1210/2010 of the European Parliament and of the Council of 15 December 2010 concerning the authentication of euro coins and the handling of euro coins unfit for circulation;

Having regard to Decision of the European Central Bank of 16 September 2010 on the verification of authenticity and quality and on the re-circulation of euro banknotes (ECB/2010/14), as amended by Decision (EU) 2019/2195 of the European Central Bank of 5 December 2019 (ECB/2019/39);

Having regard to the Guideline of the European Technical and Scientific Centre on the implementation of Regulation (EU) No 1210/2010 of the European Parliament and of the Council of 15 December 2010 concerning the authentication of euro coins and the handling of euro coins unfit for circulation (October 2019);

Having regard to the opinions of the European Central Bank of 23 September 2019 and 25 May 2021;

Having regard to the opinion of the Bank of Luxembourg of 4 February 2021;

Having regard to the Law of 21 July 2021 amending: 1° the Penal Code; 2° the amended Law of 20 April 1977 on the operation of games of chance and betting on sporting events; 3° the amended Law of 5 April 1993 on the financial sector; 4° the amended Law of 23 December 1998 on the monetary status and the Bank of Luxembourg; 5° the amended Law of 12 November 2002 on private security and surveillance activities; 6° the amended Law of 10 November 2009 on payment services; with a view to implementing Council Regulation (EC) No 44/2009 of 18 December 2008 amending Council Regulation (EC) No 1338/2001 of 28 June 2001 laying down measures necessary for the protection of the euro against counterfeiting and Regulation (EU) No 1210/2010 of the European Parliament and of the Council of 15 December 2010 concerning the authentication of euro coins and the handling of euro coins unfit for circulation;

Having regard to the Law of 23 December 1998 on the monetary status and the Bank of Luxembourg, as last amended by the Law of 21 July 2021, in particular Articles 34(1), 18(2) and 20-1;

Considering the following:

(1) Considering Article 34(1) of the amended Law of 23 December 1998 on the monetary status and the Bank of Luxembourg, which provides that "Within the limits of its powers and missions, the Central Bank has the power to issue regulations. The regulations of the Central Bank are published in the Mémorial.";

(2) Considering that pursuant to Article 18(2) of the aforementioned Law of 23 December 1998, as amended by the aforementioned Law of 21 July 2021, "The Central Bank is the competent authority to ensure compliance with the provisions of Council Regulation (EC) No 1338/2001 of 28 June 2001 laying down measures necessary for the protection of the euro against counterfeiting, as amended by Council Regulation (EC) No 44/2009 of 18 December 2008, of Regulation (EU) No 1210/2010 of the European Parliament and of the Council of 15 December 2010 concerning the authentication of euro coins and the handling of euro coins unfit for circulation, as well as measures taken for their implementation, including Decision ECB/2010/14 of the European Central Bank of 16 September 2010 on the verification of authenticity and quality and on the re-circulation of euro banknotes".

(3) Considering that in the context of fulfilling its missions as a competent authority, the BCL is entrusted with the following control powers:
(a) to conduct announced or unannounced inquiries, inspections and expert assessments, on-site or otherwise, at establishments; (b) to test machines, where applicable with the assistance of one or more agents, employees or representatives of the manufacturer or seller of the machines; (c) to collect, upon reimbursement, samples of euro banknotes and coins processed in order to verify them in its own premises; (d) to examine procedures relating to the use and control of banknote and coin processing equipment, the handling of verified banknotes and coins, and the manual verification of authenticity and quality; (e) to take on-site knowledge of and make copies of any document, file and record; (f) to have access to any computer system; (g) to verify the ability of establishments to authenticate euro banknotes and coins; (h) to issue an injunction ordering the natural or legal person concerned to cease the conduct in question and to refrain from repeating it. If its injunctions are not complied with, the Central Bank may impose a penalty payment.

(4) Considering that credit institutions and other professionals handling banknotes only re-circulate ("recycle") euro banknotes for their clients when these have been verified as to their authenticity and fitness for re-circulation, and withdraw counterfeit or suspected counterfeit banknotes, as well as banknotes unfit for re-circulation, from circulation.

(5) Considering that credit institutions and other professionals handling coins only re-circulate ("recycle") euro coins for their clients when these have been verified as to their authenticity, and withdraw counterfeit or suspected counterfeit coins from circulation.

(6) Considering that the control of these activities aims to ensure rapid detection of counterfeits and a high-quality stock of cash in circulation.

(7) Given that the new Article 20-1(2) of the organic Law of 23 December 1998 provides that the Bank of Luxembourg shall fix by regulation the procedures for the controls it carries out.

HAS ADOPTED THIS REGULATION:

Article 1: Definitions

1. The terms;

• "credit institutions";
• "payment service providers", and
• "counterfeit banknotes" and "counterfeit coins"
  have the meaning given to them in Council Regulation (EC) No 1338/2001 of 28 June 2001 laying down measures necessary for the protection of the euro against counterfeiting, as amended by Council Regulation (EC) No 44/2009 of 18 December 2008.

2. For the purposes of this Regulation, the following shall be understood as:

• "re-circulation": the act consisting, for establishments required to handle cash, of re-circulating, directly or indirectly, euro banknotes or coins, which they have received either from the public, as payment or as a deposit into a bank account, or from another establishment required to handle cash;
• "monetary signs": banknotes and coins denominated in euros;
• "monetary sign processing equipment": a machine for public use or used by establishments for the processing of monetary signs for the purpose of their re-circulation.

Article 2: Scope of Application

This Regulation applies to credit institutions and, within the limits of their payment activity, to other payment service providers, as well as to any other economic agent participating in the processing and delivery to the public of banknotes and coins in the Grand Duchy of Luxembourg (hereinafter referred to as "establishments") including:

• establishments whose activity consists of exchanging banknotes or coins of different currencies, such as currency exchange offices,
• cash-in-transit companies,
• other economic agents, such as merchants and casinos, participating on an ancillary basis in the processing and delivery to the public of banknotes by means of automated teller machines (banknote dispensers), within the limits of these ancillary activities.

Article 3: Controls regarding the application of principles relating to monetary sign processing activities for the purpose of their re-circulation

1. For euro banknotes, the BCL carries out the controls provided for in Article 20-1(1) of the amended Law of 23 December 1998 on the monetary status and the Bank of Luxembourg with regard to the principles laid down by Council Regulation (EC) No 1338/2001 of 28 June 2001 laying down measures necessary for the protection of the euro against counterfeiting, as amended by Council Regulation (EC) No 44/2009 of 18 December 2008, and by the Decision of the European Central Bank of 16 September 2010 on the verification of authenticity and quality and on the re-circulation of euro banknotes (ECB/2010/14), as amended by Decision (EU) 2019/2195 of the European Central Bank of 5 December 2019 (ECB/2019/39).

2. For euro coins, the BCL carries out the controls provided for in Article 20-1(1) of the amended Law of 23 December 1998 on the monetary status and the Bank of Luxembourg with regard to the principles laid down by Council Regulation (EC) No 1338/2001 of 28 June 2001 laying down measures necessary for the protection of the euro against counterfeiting, as amended by Council Regulation (EC) No 44/2009 of 18 December 2008, by Regulation (EU) No 1210/2010 of the European Parliament and of the Council of 15 December 2010 concerning the authentication of euro coins and the handling of euro coins unfit for circulation, and by the Guideline of the European Technical and Scientific Centre on the implementation of Regulation (EU) No 1210/2010 of the European Parliament and of the Council of 15 December 2010 concerning the authentication of euro coins and the handling of euro coins unfit for circulation.

Article 4: Exceptions to the application of principles relating to euro banknote processing activities for the purpose of their re-circulation

Establishments wishing to benefit from the exceptions provided for in Article 7 of the Decision of the European Central Bank of 16 September 2010 on the verification of authenticity and quality and on the re-circulation of euro banknotes (ECB/2010/14), as amended by Decision (EU) 2019/2195 of the European Central Bank of 5 December 2019 (ECB/2019/39), must request authorization from the BCL by letter sent to the address mentioned on the BCL website. In their letter, establishments set out the arguments underpinning such a request and provide the corresponding supporting documents.

Article 5: Prior notification of euro monetary sign processing equipment

Establishments that decide to install euro monetary sign processing equipment must inform the BCL at least one month before the commissioning of this equipment.

Establishments carry out this prior notification by completing the reference data declaration form available on the BCL website, which they transmit by letter.

Article 6: Outsourcing of monetary sign processing activities for the purpose of their re-circulation

Establishments that decide to outsource their monetary sign processing activities for the purpose of their re-circulation to other professionals required to handle monetary signs must inform the BCL at least one month before the effective date of the outsourcing. They must inform the BCL by letter and transmit a copy of the outsourcing contract for monetary sign processing activities for the purpose of their re-circulation.

The outsourcing of monetary sign processing activities for the purpose of their re-circulation does not in any way reduce the responsibility of the establishment that has outsourced said activities.

Article 7: Handing over of counterfeit banknotes and coins or suspected as such

Counterfeit banknotes and counterfeit coins or suspected as such, identified in application of the obligations laid down in Article 6 of Council Regulation (EC) No 1338/2001 of 28 June 2001 laying down measures necessary for the protection of the euro against counterfeiting, as amended by Council Regulation (EC) No 44/2009 of 18 December 2008, must be handed over to the BCL within a maximum period of 20 working days according to the procedures set out below:

• for establishments that have the status of counterparty within the meaning of the general conditions of the BCL's operations, the handover is carried out in accordance with the procedures of Annex 2 of said general conditions;
• for other establishments, the handover is carried out by registered mail accompanied by deposit slips for counterfeit banknotes and counterfeit coins respectively. The models of deposit slips and the address to which this handover must be made are available on the BCL website.

Article 8: Collection of Information

To ensure the control missions carried out by the BCL pursuant to paragraph 1 of Article 20-1 of its organic law and in order to be able to permanently evaluate the quality of euro monetary signs in circulation, the BCL collects the information set out in Article 9 and supplements it with information gathered during inspections carried out pursuant to Article 10. The BCL may request clarifications or explanations regarding the information provided. These data are used by the BCL solely for the purpose of exercising its missions and are treated confidentially.

Article 9: Remote Monitoring

1. Establishments provide the BCL twice a year (end of February and end of August) with reference data and operational data relating to their activities of processing euro monetary signs for the purpose of their re-circulation.

2. Reference data include information relating to establishments, monetary sign processing equipment in service, internal procedures applicable to monetary sign processing activities for the purpose of their re-circulation, and the list of monetary sign dispensing machines in operation.

3. Operational data include information relating to volumes of monetary signs:

• processed by monetary sign processing equipment;
• re-circulated;
• deemed unfit for re-circulation.

4. These data must be transmitted to the BCL using the electronic file templates and email address indicated on the BCL website. The BCL may request other operational data useful for the accomplishment of its control missions.

Article 10: On-site Inspection

1. An on-site inspection is carried out at least once a year. The BCL determines the number of on-site inspections it intends to carry out at each establishment based on the number of processing machines that the establishment has put into production and the volume processed by these machines.

2. Each on-site inspection is in principle announced.

3. The on-site inspection is carried out in the presence of at least two BCL agents. The establishment ensures the presence of the persons responsible for monetary sign processing activities.

4. The establishment ensures that a technician capable of adjusting the monetary sign processing machines is present.

5. In the event that an announced on-site inspection cannot be carried out, the establishment must inform the BCL at least 48 hours in advance.

Article 11: Entry into Force and Repeal

This Regulation enters into force on the day of its publication and repeals on the same day BCL Circular 2003/179 of 8 May 2003 on the obligation to withdraw and transmit euro banknotes or coins that are counterfeit or suspected as such.

Article 12: Publication

This Regulation is published in the Official Journal of the Grand Duchy of Luxembourg and on the BCL website (www.bcl.lu).

BANQUE CENTRALE DU LUXEMBOURG
The Management