LVMH limits to cash payments in Spain

Law 10/2010 on money laundering and terrorist financing prevention (hereinafter, “Law 10/2010”).

Royal Decree Law 304/2014 approving the Regulation of Law 10/2010 of 28 April on the prevention of money laundering and the financing of terrorism (hereinafter, “RDL 304/2014”).

Law 7/2012, of 29 October, on the modification of tax and budgetary regulations and the adaptation of financial regulations to intensify actions in the prevention and fight against fraud (hereinafter, “Law 7/2012”).

Yes.

During the Q4 of 2020, approval of the Preliminary Draft Bill is expected, which will amend Law 10/2010 of 28 April on the prevention of money laundering and the financing of terrorism, and transposing EU Directives on the prevention of money laundering and the financing of terrorism, including the transposition of the V Directive (hereinafter, the “AML Preliminary Draft Bill”).

Additionally, Spain is currently in the process of approving the Bill on measures preventing and fighting tax fraud, transposing Council Directive (EU) 2016/1164 of 12 July 2016 on rules against tax avoidance that directly affect the functioning of the internal market, and modifying certain tax and gambling regulations (hereinafter, the “Tax Fraud Prevention Bill”).

Yes. Law 7/2012 states that transactions cannot be paid in cash where one of the parties involved acts in a business or professional capacity with an amount equal to or greater than EUR 2,500 or its equivalent in foreign currency. Thus, the limit is EUR 2,500 for payments made in shops by individuals with a tax domicile in Spain.

However, the limit is EUR 15,000 or its equivalent in foreign currency when the payer is an individual who verifies that he does not have a tax domicile in Spain and is not acting in a business or professional capacity.

Moreover, the Tax Fraud Prevention Bill is expected to modify Law 7/2012 and consequently reduce the amount payable in cash to EUR 1,000 (or its equivalent in foreign currency) for transactions in which one of the parties involved acts in a business or professional capacity. The amount payable for an individual natural person not acting in a business or professional capacity will remain EUR 2,500 or its equivalent in foreign currency if this person’s tax domicile is Spain, and is EUR 10,000 or its equivalent in foreign currency where the individual is not acting in a business or professional capacity and verifies that he does not have a tax domicile in Spain.

For the purposes of calculating these amounts, all transactions or payments will be added together for goods or services that may have been fractioned.

For the purpose of this regulation, cash refers to the payment instruments set forth under article 34.2 of Law 10/2010:

• Paper money and metallic money, national or foreign;
• Cheques made payable to the bearer in any currency;
• Any other physical means, including electronic means, designed to be used as a means of payment in bearer form.

On 4 May 2016, the ECB decided to permanently stop producing the EUR 500 banknote and to exclude it from the Europa series, taking into account concerns that this banknote could facilitate illicit activities. Issuance of the EUR 500 stopped at the end of 2018, but EUR 500 banknotes may still be used as means of payment.

As pointed out in question 3, regarding limitations on cash payments, the amounts of all transactions or payments will be added together for goods or services that have been fractioned. There is no clear definition of partial and/or related payments.

Yes. Subject to the limitations on cash payments pursuant to Law 7/2012 as stated above, natural or legal persons who professionally trade in goods will be subject to some of the obligations established in Act 10/2010, such as identifying the parties with whom they intend to enter into business relationships or a transaction. They will also be subject to reporting obligations on suspicious transactions regarding collections or payments made by non-resident natural persons with the means of payment referred to before and for an amount exceeding EUR 10,000, whether the transactions are carried out in one or several transactions of which there appears to be a connection.

In this regard, those who professionally trade in goods must comply with due diligence, information and internal control measures. In particular, they will report to the Executive Service of the Commission for the Prevention of Money Laundering and Monetary Offences (“SEPBLAC”) all transactions revealing obvious inconsistencies in the nature, volume of activity or customer operating history, and transactions that a special review reveals to have no appreciable economic, professional or business justification for the execution of those transactions.

Moreover, they will notify SEPBLAC of any act or transaction on their own initiative, and following the structured special review referred to in article 17 of Law 10/2010 report even the mere attempt of any transaction with an indication or certainty of money laundering or terrorist financing.

The SEPBLAC and the Spanish Tax Agency (Agencia Tributaria).

A suspicious transactions report will be made without delay in accordance with the relevant procedures under article 26 of Law 10/2010 and should contain the following information:

• List and identification of the natural or legal persons taking part in the transaction and the nature of their participation.
• The activities of the natural or legal persons participating in the transactions, and the congruence between this activity and the transactions made.
• List of transactions and their dates stating their nature, the currency in which they were transacted, the amounts and place or places involved, their purpose and the means of payment or collection used.
• Steps taken by the institution or person covered by Law 10/2010 to investigate the transactions that have been reported.
• A statement of all the circumstances of whatever kind giving rise to the suspicion or certainty of a link with money laundering or terrorist financing, or providing evidence of the lack of economic, professional or business justification for the activities carried out.
• Any other data relevant to the prevention of money laundering or terrorist financing as determined in the regulations.

In the case of merely attempted transactions, the obliged subject should record the transaction as not executed and report all information obtained to SEPBLAC.

Law 7/2012 establishes that the acceptance of cash payments above the established limits constitutes a serious infringement and specifies a sanction calculation system (expected to be maintained with a slight modification through the Tax Fraud Prevention Bill) for that purpose. As per Law 7/2012, any sanction or penalty enforced by it will be deemed compatible with any other penalties that may apply on the basis of the regulations set out under Act 10/2010.

Moreover, Act 10/2010 establishes a penalty system for the breach of the obligations contained in the applicable regulations. The penalty may consist of:

• An administrative fine.
• Public or private reprimand.
• Suspension of authorisation to operate, if applicable.

Pursuant to Law 10/2010, obliged subjects will store documentation for a period of ten years formalising the fulfilment of the obligations established in this law. After this period, these documents can be eliminated.