Question

German cheese producer has recently expanded its business activities to Norway and Denmark. Local subsidiaries of the German parent company have concluded cooperation agreements with several local farmers for the purposes of buying local fresh milk. Managerial stuff both in Norway and Denmark have requested for a financial contribution from the parent company to pay for the milk collected for cheese production in Germany. As the payments are to be made in cash to the local farmers, the German parent company wanted to send the money in notes instead of a bank transfer.

The German border police intervened and requested for prior declaration and prior authorization from German bureau of anti-money laundering. While the financial contribution was time-sensitive and the farmers threatened to stop milk shipments to Germany, the cheese producer did not have time to request for an authorization for export of currency and thus had to make a bank transfer instead.

Please explain if the requirement for prior authorization and the requirement for declaration are in line with the freedom of capital movement established in the TFEU?

Is Germany entitled to introduce such requirements for the export of currency to Norway? To Denmark? Please present your arguments.

Answer 1

In TEFU articles we can't see that they have stated the business should be only through bank transfer but its necessary for the digestion economy the transaction of foreign countries should only happen in through bank transfers. As there is also not mentioned that the transfer should happen in cash . All the articles of TEFU focuses on the free trade and government support on cross border trade.

Indeed yes. Germany is entitled to provide all the necessities for free trade . This shouldn't be the case for only cross border trade but the regional trade should also use tge bank transfers as there is space for black money. In part 7 of the TEFU Articles No.335-358. talks about final legal points such territorial and temporal applications. Its obvious that Germany should provide such requirements.