Explanatory Memorandum to COM(1998)395-2 - A framework for action on combatting fraud and counterfeiting of non- cash means of payment

Please note

This page contains a limited version of this dossier in the EU Monitor.

Commentary of the articles

1.

Article 1


Article 1 contains definitions of terms used in the Joint Action. These definitions are without prejudice to more specific definitions in the Member States.

1. Paragraphs 1 and 2 contain core definitions for the Joint Action. Paragraph 1 defines ‘Ynon-cash) payment instrument" as described under point 1 before, i.e. including all payment instruments with the exception of bank notes and coins.

2. Paragraph 2 defines “payment transaction" as any transaction for obtaining of money or value, making or receiving of payment in respect of goods, services and any other thing of value and/or the issuing of an order involving transfer of funds , through a payment instrument.

3. The definitions include software and are linked to Article 2 (k) which lists prohibited activities related to device-making equipment.

4. The definition of “legal person" is taken from the Second Protocol to the Convention on the protection of the European Communities' financial interests1 .

5. “money laundering" is defined as in the Council Directive 91/308/EEC' of 10 June 1991 on the prevention of the use of the financial system for the purpose of money laundering

6. The term “nationaF is to be understood in accordance with declarations made by Member States to Article 6(1) (b) of the European Convention on Extradition of 13 December 1957. The Extradition Convention will apply to serious cases under this Joint Action as referred to in Article 3.3.a.

Article 2

Article 2 describes the behaviour which the joint action proposes should be incriminated in ail Member States, if it is not yet the case, and made subject to the provisions set out in Articles 3,4, 5 and 6. The behaviour listed in Art. 2 do not cover mere breaches of contractual obligations.

a) typically corresponds to the theft of cheques or cards;

b) covers, e.g. the creation of completely false cards, as well as the forging of existing ones;

c) corresponds to the selling, transmitting, etc., of payment instruments, false or falsified, as well as of genuine instruments, but without authorisation of the legitimate holder;

2.

d) covers the knowing possession of a payment instruments falling under (a) or (b)


e) targets the actual use of a payment instrument falling under (a) or (b);

f) deals with the case where a merchant or a service provider knowingly accept a payment made under the circumstances described under (e);

g) addresses cases where for instance genuine card identification data are used without the authorisation of the legitimate holder to make a payment by phone;

h) covers the case where completely false data are used for the same purpose; it is not to be understood as prohibiting pseudonyms as identification by the legitimate holder;

i) concerns the situation where, for instance, the information circulated within the processing system are intentionally modified so as to direct the order to the benefit of an account, other than the legitimate beneficiary of the order;

j) deals with the case where identification data are transmitted to a person who is not entitled to that information and would or could use them to obtain value or pecuniary advantage;

k) relates to the means for preparing or carrying on one of the criminal behaviours described before;

l) covers the case for instance of possession of specially designed holograms or papers for printing cheques;

m) extends incrimination to anyone who would assist or instigate any of the behaviours previously described or who knowingly benefits therefrom.

Article 3

1. This article requires Member States to review their existing law and practice with a view to ensuring that the measures set out in paragraphs 1 to 7 are achieved.

2. Paragraph 1 provides that the list of behaviour set out in Article 2 should be classified as criminal offences.

3. Paragraph 2 provides that legal persons should be liable for the offences envisaged by paragraphs 1 and 5, committed for their benefit by any person, acting either individually or as a part of the organ of the legal person in accordance with the modalities of national law. This text is modeled on Article 3 of the Second protocol to the Convention on the protection of the European Communities' financial interests but it has been modified so that it does not have the requirement that the person committing the offence should have a leading position in the organisation and does not include liability arising out of lack of supervision or control.

4. 7 puts an onus on Member States to provide for appropriate punishment of offence: . Insofar natural persons are concerned, the provisions are modeled on provisions contained in the Convert iicn on the protection of the European Communities' financial interests, the Pronnol to that Convention and the Convention on the fight against corruption involving officials of the European Communities or officials of the Member States of the EU. Penalties must be effective, proportionate and dissuasive.12

In complying with this riding , the Member States have some discretion in determining the nature and severity of the penalties which may be provided for. These need not always necessarily involve deprivation of liberty. Fines might be imposed in addition or as an alternative to imprisonment.

The article does, however, require Member States to provide for penalties involving deprivation of liberty, which can give rise to extradition, in the most serious cases. It will be for the Member States to decide what criteria determine the seriousness of an offence in the light of their respective legal traditions.

As far as legal persons are concerned, in some jurisdictions the concept of criminal liability of legal persons does not exist. This fact is recognised in Article 4 of the Second Protocol to the Convention on the protection of the European Communities' financial interests and that Article is the model used for this provision but sanctions more appropriate foi offences involving Community and national officials have not been included in this text. The requirement is for effective, proportionate and dissuasive sanctions, the minimum obligation is to impose criminal or non-criminal fines.

5. As not all Member States have vet ratified the 1990 European Convention on Laundering, Search, Seizure and Confiscation of the proceeds from crime, paragraph 4 requires Member States to take the necessary measures to make possible the seizure and confiscation or removal of the instruments and proceeds of the offences envisaged by paragraph 1 and money laundering or property the value of which corresponds to such proceeds. Instruments, proceeds or other property seized or confiscated should be dealt with in accordance with national law.

6. The money laundering provisions of the 1990 European Convention is applied to predicate offences in accordance with declarations made by parties to dial Convention. The EC Directive is limited to proceeds derived from drug trafficking offences at present although the Directive may in future be extended to all serious crime. Paragraph 5 establishes money laundering related to the proceeds of the offences envisaged by this joint action as a criminal offence. Money-1 aundering is defined in Article 1 in accordance with Council Directive 91/308/EEC of 10 June 1991.

7. The international nature of fraud to non-cash means (O'payment means that to combat it effectively rules on jurisdiction and on extradition need to be clear and to be as progressive as national legal systems will allow to guard against persons evading prosecution. Lor that reason the provisions in this paragraph are modelled on provisions used for forms of crime with particular international dimensions. The models used are the jurisdiction provisions of the Convention on the protection of the European Communities' financial interests, the Protocol to that Convention and the Convention on the fight against Corruption involving officials of the Communities or officials of Member States of the European Union.

8. Paragraph 6 establishes a series of criteria conferring jurisdiction to prosecute cases involving the offences covered by the Joint Action on national enforcement and judicial authorities.

A Member State shall establish its jurisdiction in two situations:

- where the offence is committed in whole or in part in its territory, irrespective of the status or the nationality of the person involved (territoriality principle)

- where the offender is a national (active personality principle). The criteria of their status means that jurisdiction can be established regardless of the lax locus delicti. It is up to Member States to prosecute for offences committed abroad. Phis is particularly important for Member States which do not extradite their own nationals.

However, as not all Member States’ legal traditions recognise extraterritorial jurisdiction. Member States may, subject to the obligation under paragraph 7, limit their jurisdictions to the first of these two situations. In addition if they do not do so they can still make the jurisdiction rule in the second situation subject to specific situations or conditions.

9. Paragraph 7 takes account of the fact that some Member States do not extradite their nationals and seeks to ensure that persons alleged to have committed fraud to non-cash means of payment do not evade prosecution because extradition is refused in principle on nationality grounds.

A Member State which does not extradite its own nationals must take the necessary measures to establish its jurisdiction over the offences concerned when committed by its own nationals outside its territory. The offences may have been committed in another Member State or in a third country. In such circumstances the requested Member State must submit the case to its legal authorities for the purpose of prosecution. The provision is not intended to affect national rules regarding criminal proceedings. The requesting Member State must transmit the files, information and exhibits relating to the offence to the Member State which is to prosecute the offence. The requesting Member State shall be informed of the prosecution initiated and of its outcome.

Article 4

1’he purpose of Article 4 is to provide for co-operation between public and private bodies and bodies involved in the control of payment systems and the authorities responsible for investigation and punishment of the offences envisaged by the Joint Action. Each Member State must take the necessary measures, while respecting its own internal law, to ensure that the bodies concerned advise the relevant authorities where there is reasonable ground for suspecting that an offence has been committed as well as providing all reasonable information and, if appropriate take part as experts in the procedures. This article is modeled on the provisions of the Joint Action concerning action to combat trafficking in human beings and sexual exploitation of children13.

Article 5

The purpose of this provision is to clarify that each Member State must ensure that the obligations as they arise from Directive 95/46/EC on the protection of individuals with regard to the processing of personal data and on the free movement of such data are also met in relation to the processing of personal data provided for in this Joint Action. The possibility of exchange of personal data arises in particular in Article 4. The proposed wording is made pending a forthcoming general discussion of the issue of data protection in Title VI matters.

Article 6

1. The purpose of this Article is to augment instruments on international co-operation to which Member States are a party and which will apply to this Joint Action.

International co-operation between judicial authorities in criminal matters is mainly effected by providing mutual legal assistance and through extradition arrangements.

Mutual Assistance arrangements are contained in a number of bi-lateral and multilateral agreements , notably the 1959 European Convention on Mutual Assistance and its 1978 Protocol, the 1990 Convention on the Schengen Agreement and the Benelux Treaty. EU Member States are at present working on a draft European Convention and a Protocol to supplement the provisions of the 1959 European Convention on Mutual Assistance and its Protocol.

Extradition arrangements are provided in the 1957 European Convention on Extradition and its protocols as well as in the Schengen Convention and the Benelux Treaty. Member States adopted in 1995 a EU Convention on Simplified Extradition Procedures which provides for a simplified procedure for persons who consent to extradition. A Convention signed in 1996 relating to Extradition further improves the conditions applying to extradition between Member States. Both these instruments will enter into force following completion of the national ratification procedures.

Other EU instruments agreed, or planned to deal with organised crime will impact on the fight against fraud to non-cash means of payment. Examples are the Joint Action on the establishment of a Judicial Network to facilitate judicial co-operation between Member States and the Joint Action making it a criminal offence to participate in a criminal organisation.

2. Paragraph 1 requires Member States to afford each other the widest measure of mutual assistance in respect of investigation, prosecution and carrying out the punishment imposed, relating to offences provided for in this Joint Action.

4. Paragraph 3 puts an onus on Member States to ensure that information concerning the offences envisaged by the Joint Action, as well as information on persons convicted of such offences and information useful for investigation and prosecutions is organised in such a way that it is accessible for effective use and exchange with other Member States. This provision is modeled on a similar provision in the Joint Action concerning action to combat trafficking in human beings and sexual exploitation of children4.

Article 7

This is a standard article which refers to the follow-up and commitment for the implementation of this Joint Action. It establishes that the Council will assess on the basis of a report made by the Commission on the fulfillment by Member States of their obligations by the end of 2000.

JOINT ACTION

adopted by the Council

on the basis of Article K. 3 of the Treaty on European Union on fraud and counterfeiting of non-cash means of payment

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on European Union, and in particular Article K.3 (2) (b) thereof,

Having regard to the report of the High-Level Group on Organised Crime, approved by the Amsterdam European Council on 16 and 17 June 1997, and in particular Recommendation N° 18 of the Action Plan;

Considering that fraud and counterfeiting of non-cash means of payment often operate on an international scale;

Considering other instruments agreed by the Council such as the Joint Action establishing the European Judicial Network and the Joint Action on making it a criminal offence to participate in a criminal organisation in the Member States of the European Union will also assist in the fight against fraud of non-cash means of payment;

Recognising the importance of the work developed by various international organisations (i.e. the Council of Europe, the G8, the OECD, Interpol and the UN);

Whereas the Council considers that the seriousness and development of certain forms of fraud regarding non-cash means of payment require comprehensive solutions including both repressive measures and preventive strategies based on a sharing of responsibilities amongst the payment system industry, the individual users and the authorities;

Whereas the Commission submitted a Communication entitled “A framework for action combating fraud and counterfeit of non-cash means of payment” which advocates a Union Policy covering both preventive and repressive aspects of the problem;

Whereas this Joint Action is one element of such comprehensive approach;

Whereas in order to achieve approximation of legislation incriminating fraud and counterfeiting of non-cash means of payment, a clear legal instrument is needed;

HAS ADOPTED THIS JOINT ACTION:

3.

For the purposes of this Joint Action, and without prejudice to more specific definitions in the


Member States’ legislation,

1. ”(non-cash) payment instrument” shall mean an instrument with the exception of legal tender (i.e. bank notes and coins) enabling, alone or in conjunction with another (payment) instrument, the legitimate holder/payer, to obtain money or value, to make or receive payments in respect of goods, services or any other thing of value, to issue an order or message requesting or otherwise authorising the transfer of funds (in the form of a monetary claim on a party) to the order of a payee;

2. "payment transaction” shall mean obtaining of money or value, making or receiving of payments in respect of goods, services or any other thing of value, and/or the issuing of an order or message requesting or otherwise authorising the transfer of funds (in the form of a monetary claim on a party) to the order of a payee, through a payment instrument;

3. ’’device-making equipment ” shall mean any equipment (including software) designed or adapted for the access, manufacture or alteration of any, or part of any, payment instrument or payment transaction and shall include equipment designed or adapted to change or alter any information or data carried on or in any payment instrument or payment transaction;

4. ’’legalperson ” shall mean any entity having such status under the applicable law, except for States or other public bodies in the exercise of State authority and for public international organisations;

5. ’’money laundering” shall mean the conduct as defined in the third indent of Article 1 of Council Directive 91/308/EEC of 10 June 1991 on the prevention of the use of the financial system for the purpose of money laundering.

6. ’’national” of a Member State shall be construed in accordance with any declaration made by that State under Article 6(1) (b) of the European Convention on Extradition of 13 December 1957.

4.

In order to combat fraud and counterfeit of non-cash payment instruments and payment


transactions, each Member State undertakes to review their relevant national laws concerning

the measures set out in Articles 3, 4, 5 and 6 relating to the following types of behaviour:

a) misappropriation of a payment instrument;

b) counterfeiting or falsification of a payment instrument;

c) knowingly handling, unauthorised by the holder, of a payment instrument;

d) knowingly possessing a misappropriated, counterfeited or falsified payment instrument;

e) knowingly using a misappropriated, counterfeited or falsified payment instrument;

f) knowingly accepting a payment made under the circumstances covered by the previous indent;

g) knowingly unauthorised use of identification data for initiating or processing a payment transaction;

h) knowingly using fictitious identification data for initiating or processing a payment transaction;

i) manipulation of relevant data including account information, or other identification data, for initiating or processing a payment transaction;

j) unauthorised transmission of identification data for initiating or processing a payment transaction;

k) unauthorised making, handling, possession or use of device making equipment for the purpose of:

• manufacturing or altering any payment instrument or part thereof;

• initiating or processing payment transaction, or

• changing or altering any information or data carried on, or in, any payment instrument or transaction;

l) knowingly unauthorised possession of an element or part of a payment instrument;

m) involvement as accessory or instigator in, or knowingly obtaining of value or pecuniary advantage derived from any of the behaviours described above involving a criminal intention.

Each Member State shall review existing law and practice with a view to providing that:

1. The types of behaviour set out in Article 2 are classified as criminal offences.

2. Legal persons can be held liable for the offences provided for in paragraphs 1 and 5 committed for their benefit by any person, acting either individually or as part of an organ of the legal person in accordance with modalities to be defined in the national law of the Member State.

3. The penalties for these offences and for intentional participation in or attempt to commit them should:

a) insofar as natural persons are concerned, be effective, proportionate and dissuasive criminal sanctions including, at least in serious cases, custodial penalties involving deprivation of liberty which can give rise to extradition;

b) insofar as legal persons are concerned, be effective, proportionate and dissuasive sanctions which shall include criminal or non-criminal fines.

4. The necessary measures are taken to make possible the seizure and without prejudice to the rights of bona fide third parties, the confiscation or removal of the instruments and proceeds of the offences provided for in paragraph 1 and 5, for property the value of which corresponds to such proceeds. Any instruments, proceeds or other property seized or confiscated shall be dealt with in accordance with the national law of Member States.

5. Money laundering related to the proceeds of the offences provided for in paragraph 1 is established as a criminal offence.

6. It establishes its jurisdiction over the offences provided for in paragraphs 1 and 5 where:

a) the offence is committed in whole or in part within its territory;

b) the offender is one of its nationals.

Subject to the provisions of paragraph 7, any Member State may limit the application of its jurisdiction to the rules laid down in paragraph 6.a. A Member State which does not apply such a limitation may nevertheless apply its jurisdiction to the rules laid down in paragraph 6.b only in specific cases or conditions.

7. Where a Member State does not extradite its nationals it should establish its jurisdiction over the offences provided for in paragraphs 1 and 5 when committed by its own nationals outside its territory.

Each Member State shall, when one of its nationals is alleged to have committed in another Member State an offence established in accordance with paragraphs 1 and 5 and it does not extradite that person to that other Member State solely on the grounds of his nationality, submit the case to its competent authorities for the purpose of prosecution if appropriate. In order to enable prosecution to take place, the files, information and exhibits relating to the offence shall be transmitted in accordance with the procedures laid down in Article 6 of the European Convention on Extradition of 13 December 1957. The requesting Member State shall be informed of the prosecution initiated and of its outcome.

Article 4 - Co-operation from public and private services or bodies

Each Member State shall take the necessary measures to ensure that the public and private services and bodies involved in managing, monitoring and overseeing the payment systems, while respecting the internal law of the Member State, will co-operate with the authorities responsible for investigation and punishment of the offenses established by this Joint Action. In particular they should:

- advise those authorities on their own initiative, where there is reasonable ground for considering that one of these offences have been committed;

- provide those authorities with all useful information either on request or on their own initiative;

- if appropriate, take part in the procedures as experts.

Article 5 - Data Protection

Concerning the processing of personal data, this Joint Action shall be implemented so as to ensure a level of protection equivalent to the protection foreseen in the European Parliament and Council Directive 95/46/EC on the protection of individuals with regard to the processing of personal data and on the free movement of such data. Data should be used only for the purposes for which it has been transmitted.

1. In accordance with applicable conventions, multilateral or bilateral agreements or arrangements Member States shall afford each other the widest measure of mutual assistance in respect of proceedings relating to offences provides for in this Joint Action.

2. Where several Member States have jurisdiction in respect of offences envisaged by this Joint Action, these States shall consult one another with a view to co-ordinating their action in order to prosecute effectively.

3. Each Member State shall ensure that information concerning offences envisaged by this Joint Action as well as persons convicted of such offences and information which could be useful for investigations and prosecutions of such offences is organised in such a way that it is readily accessible and can be effectively used and exchanged with other Member States, subject to national law governing secrecy of proceedings.

Article 7 - Commitment and follow-up

1. Each Member State shall bring forward appropriate proposals to implement this Joint Action for consideration by the competent authorities with a view to their adoption.

2. The Council will assess, on the basis of a report made by the Commission, the fulfilment by Member States of their obligations under this Joint Action, by the end of 2000.

3. This Joint Action shall be published in the Official Journal.

4. It shall enter into force on the date of its publication.

rl $


Actions to prevent fraud from occurring

a) The payment system industry, as a whole, including network operators, are invited to

1) enhance the security intrinsic to the payment product on offer, the systems for the processing of transactions originated thereby, including the carrier network system,

2) upgrade the security of tools allowing for conditional & discriminatory access to the use of their payment products,

3) set up structures for exchange of information and learn from experience whilst also ensuring a high level of confidentiality and protecting the fundamental rights and freedoms of natural persons, and in particular their right to privacy.

Furthermore, the payment system industry is invited to

4) set up training programs primarily destined for financial institutions' own staff, as well as the development of the necessary capabilities for systematic reporting of criminal activities to enforcement agencies,

5) promote educational material directed at users of payment products (principally retailers and holders).

The Commission considers that the need for an early detection of criminal offences should in particular be taken into account by the industry when designing the payment instrument and the underlying systems (under 1 and 2). and declaring the (potential) fraud to the structures designed to this purpose (under 3).

Furthermore, to ensure a harmonious and pro-competitive development of the market for payment services, the Commission is of the opinion that attention should be paid to ensuring that actions under 1) and 2) do not lead to an unwarranted hindrance of competition and of the development of the Information Society as a whole, notably through practices amounting to restrictions on access to a system or on freedom to cross-border services, as well as by way of exclusivity arrangements.

h) Individual issuers as well as individual users (retailers and holders) are invited to

promote a reasonable and fair apportionment of responsibilities & liabilities between the various parties to a payment system (i.e. between issuer/holder; between acquirer/retailer), which favors:

compliance with terms and conditions governing issue, use and acceptance of a payment instrument,

the earliest possible notification procedure.

The Commission thinks that as a general policy goal, it must be a priority to ensure that individual users do not suffer as a consequence of crime occurring in respect of the use of a payment instrument and payment systems, unless it can be proven that they have taken part in the criminal activity. Moreover, in view of the technological aspects which are under the control of the participating (financial) institutions, the burden of proof should not be put on the holder.

Nevertheless, users should be informed concerning the security measures they have to respect, and they should assume, as citizens, a civic duty to participate actively against fraud, notably by the earliest possible notification of the anomalies they note, in particular in the information they receive subsequent to a transaction.

c) Authorities are invited to

- coordinate information gathering and awareness raising initiatives, which may include industry.14

- assist the industry, individual issuers and users in their efforts towards the achievement of a security environment. At EU level this will involve promoting the establishment across the Union of a supportive regulatory and non-regulato.ry framework. The Commission has already taken a number of initiatives to this effect.

At the Union level

The Commission stresses that as the existing Community regulatory framework is essentially aimed at creating a Single Market within which financial services, and in particular payment services, may freely circulate.

Furthermore, EC legislation in this field is mainly devoted to giving effective application to the Treaty provisions. This has been achieved by way of coordinating the provisions relating to the taking-up and pursuit of the business of financial institutions. These provisions have been supported by a number of specific provisions harmonizing the basic rules of prudential supervision.

A number Of spev*f:v Commission initiatives are aimed at an appropriate regulatory framework in the area covered by this Communication.

In this context, the Commission is currently working on a draft proposal which aims to ensure the financial integrity of issuers of electronic money ami thereby foster consumers’ confidence in this new' means of payment.

Furthermore, in the specific context of the Information Society and Electronic Commerce, the Commission has already recently adopted a number of measures including the proposal tor a directive on the legal protection of services based on. or consisting of, conditional access and the proposal tor a directive on electronic signatures. In addition, in the field of secure payment systems for electronic commerce, the Commission has co-funded several industry-wide R&D initiatives under various information and telecommunications technology programs15.

The Commission has already recently issued a Recommendation16 concerning transactions by electronic payment instruments and in particular the relationship between issuer and holder, thereby setting out the minimum transparency, responsibility, liability, and redress requirements. The Commission has undertaken to monitor its implementation until the end of 1998. If implementation is not found to be satisfactory, the Commission will propose a Directive in this domain.

Furthermore, the Commission has announced that it also intends to modernise and update an earlier 1987 Recommendation* with a view to establishing a clear framework for the relationship between acquirers and acceptors in respect of electronic payment instruments. In this context, the Commission may take into consideration the possibility of applying particular conditions to the collection of payment cards so as to take into account the absence or repetition of fraud. This would contribute to reducing the risk factor of the payment instrument and the underlying system.

16


n.r


The corresponding Community regulatory framework

The present annex briefly summarizes the key elements of Community law making up the regulatory framework within which financial, and in particular payment services, are offered, mediated and used.

The primary source of law is the EC Treaty. Firstly, as an indispensable precondition for the integration of domestic financial markets and, thereby, a Single Market for financial services, articles 73b to 73g of the EC Treaty introduce the regime of free movement of capital and payments within the Community and in respect of third countries. Secondly, articles 52 (freedom of establishment) and 59 (freedom to provide services) of the Treaty are cornerstones of the Single Market edifice for financial services in that they enable firms respectively to set up (and be authorized) in one Member State, under the supervision of that Member State’s authorities, as well as to freely provide services throughout the Community under the single authorization of the Member State of establishment.

The secondary source of law in the Held of financial services is embodied in the layer of Community legislation devoted to giving effective application to the Treaty provisions recalled.

This has first and foremost been achieved by way of coordinating the provisions relating to the taking-up and pursuit of the business of financial institutions, notably those of credit institutions, investment firms and insurance undertakings. These provisions have been accompanied and supported by a number of specific provisions harmonizing the basic rules of prudential supervision.

Amongst the directives in the field of financial services is a Council Directive on the prevention of the use of the financial system for the purpose of money launderingg. Based on the recognition that money laundering is often carried out in an international context, so that the criminal origin of the funds and its proceeds may be better disguised, the directive sets the basis for international co-ordination of a non-penal nature, placing a number of requirements on Member States: notably, a requirement to prohibit money laundering, requirements on credit and financial institutions to identify their customers and to record transactions exceeding certain amounts, requirements on institutions to examine and report any transactions which they regard as likely to be related to money laundering, and a requirement that authorities responsible for combating this phenomenon co-operate with credit and financial institutions and their supervisory authorities.

” Council Directive of 10 June 1991; OJ L 166/77 of 28.6.91.

17

Although the financial services directives are targeted primarily at the financial seivice sector, they are also concerned with the rights and interests of consumers. They contain certain provisions that safeguard consumers’ rights to correct and complete information, protect their legal interest and provide access to means of redress.

Recently, pressure has been building up to reinforce the concept that the single market for financial services is not just for business. In May 1996 the Commission decided to issue a Green Paper on Financial services: meeting consumers ’ expectations to have a comprehensive debate on consumer policy in financial services. On 26 June 1997, the Commission adopted a follow-up Communication on Financial services: enhancing consumer confidenceI(). The Communication announces a series of forthcoming initiatives, some of which have already been launched (e.g. an extension of the recommendation on new means of payment) or are in the process of being launched, including a future proposal on distance contracts for financial services.

ISSN 0254-1475

COM(98) 395 final
DOCUMENTS

EN

09 10

Catalogue number : CB-CO-98-432-EN-C

ISBN 92-78-37888-7

5.

Office for Official Publications of the European Communities L-2985 Luxembourg


1

Action Plan to Combat Organised Crime, adopted by the Council on 28 April 1997, OJ C 251, 97/C 251/01, 15 August 1997.

2

: The Commission is presently preparing a Green Paper on the fight against counterfeiting and piracy in the

Internal Market, which aims to protect intellectual property rights whilst allowing the proper functioning of Internal Market.

3

This means in particular that Art. 35 of the consolidated version of the Treaty on European Union will apply,

4

which provides that the Court of Justice shall have jurisdiction to give preliminary rulings on the validity and interpretation of Framework Decisions, subject to declarations made by the Member States. It also provides for

5

6.

the possibility of submission of statements of case or written observations to the Court and gives the Court


6

7.

jurisdiction to review the legality of Framework Decisions and to rule on disputes between Member States on


7

8.

the interpretation of Framework Decisions where such disputes cannot be settled by the Council within 6


8

months of having been referred to it by one of its Members.

9

1,1 Dial! Joint Action adopted by the Council on the basis of Article K.3 of the Treaty on European Union on making it a criminal offence to participate in a criminal organization in the Member States of the European Union, (not published)

10

9.

Proposal for a Joint Action to create a European Judicial Network (not published)


11

Draft Convention on Mutual Assistance in Criminal Matters between the Member States of the European Union (not published).

12

The expression is taken over from a judgement of the Court of Justice of the European Communities (cu.se 68/88, Judgement of 21.9.1989, ECR.2965) expressed as follows: (the Members States) ‘'must ensure in particular that infringements of Community law are penalised under conditions, both procedural and substantive, which are analogous to those applicable to infringements of national law of a similar nature and importance and which, in any event, make the penalty effective, proportionate and dissuasive.”

13

When a positive conflict of jurisdiction occurs, paragraph 2 establishes that Member States shall consult one another with a view to co-ordinating their action to prosecute effectively.

14

The IJK recently proposed a Joint Action, for the establishment of a network of contact points in the Member States, to improve exchange of information in relation to credit card fraud. The Interpol Genera! Assembly in October 1997 adopted a proposal to establish a universal classification system for “bad" credit cards, which in reality is a clearing house function for the Interpol Secretariat to collect information, with the assistance of the credit card industry, and disseminate it through the contact lines with national police forced already existing with Interpol. The PC-YC of the Council of Europe has received a Belgian expert proposal for the establishment of contact points in relation to cvber-crime in general.

15

E.g. project AC026 SEMPER - Secure Electronic Marketplace for Europe.

Communication from the Commission to the European Parliament, the Council, the European Monetary Institutes and the Economic and Social Committee: "Boosting customers’ confidence in electronic means of payment in the Single Market"; COM(97) 353 final of 09.07.1997; O.J. L 208 of 02.08.1997, p. 52.

16

Commission Recommendation 87/598/EEC of 8 December 1987 on a European Code of Conduct relating to electronic payment (relations between financial institutions, traders and service establishments, and consumers), O.J. N' L 365 of 24 December 1987, page 72.