Weekend Edition Nº153

The European Travel Rule Regulation

Between privacy and transparency

Giulio Soana

Introduction

e Travel Rule Regulation constitutes the latest addition to the growing body of European legislation devoted to crypto-assets e causes underlying such an increased regulatory focus are multifaceted. On the one hand, the crypto-winter of 2021/2022 made the crypto-market too big to ignore. e failure of exchangers such as FTX and stable coins such as Terra Luna caused an aggregated loss of billions of dollars. e losses are also alleged to have had spill-over effects in the traditional market, with failures threatening regional and global economic stability. On the other hand, the criminal risk connected with crypto-assets has reached geopolitical dimensions. Crypto-assets are increasingly identied as facilitators for sanctions circumvention and state-sponsored acts of cybercrime.

Evenifthelegislativegoalis shared,atleastamongwesterncountries,the strategies differ. e US has, so-far, primarily adopted a regulationthrough-enforcementapproach.Financialsupervisorscommencedaseries of actions against crypto-companies under the same activity, same risk, same regulation standard. In contrast, the EU has devised a body of regulations customised to crypto-assets e Market in Crypto-assets Regulation (MiCaR) , the DLT Pilot Regime and the Travel Rule Re- (2) gulation are all part of the same strategy. e idea is to create a clear (3) playingeldtofosterthesafedevelopmentofthecrypto-market.

Iftheaimismeritorious,theresultsaremixed.

1.GiulioSoanaispursuingadoublePh.D inLawatKULeuvenandLuissUniversity

2. of the European Parliament and of the Council of 31 May 2023 on markets in crypto-assets, and amending Regulations (EU) No Regulation (EU) 2023/1114 1093/2010 and (EU) No 1095/2010 and Directives 2013/36/EU and (EU) 2019/1937, for an analysis of this Regulation see G. Soana, e Market in Cryptoassets Regulation. An introduction to the rst comprehensive European regulation of crypto-assets, EU Law Live, 134, 2023 and A. Engel, e New Regulation on Markets inCrypto-assets(MiCA)–AnAnalysisofitsSupervisoryandSanctioningFramework,EULawLive,147,2023.

3. of the European Parliament and of the Council of 31 May 2023 on information accompanying transfers of funds and certain Regulation (EU) 2023/1113 crypto-assetsandamendingDirective(EU)2015/849.

e idea is to create a clear playing eld to foster the safe development of the crypto-market. If the aim is meritorious, the results are mixed

e European regulator has struggled in adapting its legacy strategy – rooted in centralised, hierarchical intermediaries – to the decentralised and disintermediated ethos of crypto-assets. is has resulted in regulations fundamentally similar to legacy ones that dodge the more contentious issues – as is well-depicted by the ultimate exclusionofDecentralisedAutonomousOrganisationsfromMiCaR’spurview.

e same struggle has characterised the Travel Rules’ legislative path. e pain point being, in this case, the regulation of partially intermediated transactions e extension of a rule envisioned for a fully intermediated market to a disintermediated one raised a number of questions. e present article will frame the problem, and then describehowithasbeenaddressedbytheEuropeanregulator

AnintroductiontotheTravelRule

Before we delve into the implementation of the travel rule to crypto-assets, it is appropriate to briey delineate its general discipline. Eminently, the travel rule is a requirement that pre-exists crypto-assets and has long been appliedbynancialinstitutions

e travel rule is provided by Recommendation 16 of the Financial Action Task Force’s (FATF) Standard which states:

Countriesshouldensurethatnancialinstitutionsincluderequiredandaccurateoriginatorinformation, andrequired beneciary information, on wire transfers and related messages, and that the information remains with the wire transferorrelatedmessagethroughoutthepaymentchain(4)

e crux of the Recommendation, is the mitigation of the risk generated by wire transfers. e aim is to avoid that wire transfers can be used to move and launder illicit funds. To this end, the travel rule has the purpose of guaranteeing that all the parties involved in a wire transfer (sending and receiving nancial institution) have a complete understandingofthetransactionandconnectedriskfactor.

In a wire transfer each intermediary involved in the transaction only sees its side of the exchange. Each nancial institution knows its customer and evaluates whether the transaction is in line with its prole. However, this creates a one-sided perspective on the risk. To have a complete picture, it is necessary that all involved intermediaries do not only see their side of the transfer but also the counterparts’. is additionally allows the covered entity to evaluatewhetherthetransactionispartofapaernandconnectotherrelatedtransactions.

To this end, Recommendation 16 states that each wire transfer should include “accurate” originator and beneciaryinformation.Foraccurateitismeantthattheinformationisveriedbythesendingorreceivinginstitution.

4.FATF,Internationalstandardsoncombatingmoneylaunderingandthenancingofterrorism&proliferation.eFATFRecommendations,Paris,2012

To have a complete picture, it is necessary that all involved intermediaries do not only see their side of the transfer but also the counterparts’

Recommendation16hasbeenimplementedwithintheEuropeanUnionbyRegulation847/2015 .(5)

e Regulation applies – following Article 3(9) – to any transfer of funds, at least partially executed electronically, where at least one of the service providers involved in the transaction is established within the EU .(6) Encompassed are not all value transfers, indeed, a series of exceptions are provided by Article 2(i)(e), cash withdrawals, payments for goods and services, . Essentially, the Regulation covers all exchanges of value carried etc outbytwoprivatecustomerswiththeintermediationofoneormorepaymentserviceproviders.

eRegulationthendetailsthecontentoftheidenticationandvericationduties.

On the side of the originator, the service provider has to aach the following information: the customer’s name, account number, ID number, number of identication of the customer, place, and date of birth; for the counterpart's, name, and account number . On the side of the beneciary, the service provider has only to verify that (7) theinformationrequiredbytheRegulationisaachedtothewiretransferandverifytheveracityofthedataconcerningitscustomer.

5. of the European Parliamentand of the Council of 20 May 2015 on information accompanying transfersof funds and repealing Regu- Regulation (EU) 2015/847 lation (EC)No1781/2006.

6. For a denition of “payment service provider” see of the European Parliament and of the Council of 25 November 2015 on payment Directive (EU) 2015/2366 services in the internal market, amending Directives 2002/65/EC, 2009/110/EC and 2013/36/EU and Regulation (EU) No 1093/2010, and repealing Directive 2007/64/EC.

7.SuchdutiesarepartiallyreducedbytheRegulation wherethetransferiswithintheEU(Article 5)orconcernssumsunderEurosonethousand(Article 6para 2).

e key element for the concrete implementation of the travel rule is the allocation of the duty to verify the veracity of the information aached to the wire transfer. is is an element that will be crucial for the implementation of this rule to the crypto-market Importantly, the verication duty is a resource intensive activity in terms of compliance It entails an additional effort by regulated entities to ascertain the truthfulness of the information provided by the customer To avoid overburdening covered entities, the travel rule breaks down the verication duty between the two intermediaries. Each intermediary only needs to verify the information pertaining to its own customer. is way the verication activity is pursued by theintermediaryonlywithrespecttothepartywithwhomtheyhaveadirectcontact–i.e.,theircustomer.

eextensionoftheTravelRuletocrypto-assets

e FATF has been a trailblazer in the extension of the travel rule to crypto-assets. If the applicability of Recommendation 16 to crypto-asset service providers was already hinted in the rst Guidance of 2015 , it is only in 2019 that the FATF detailed how (8) such a duty should be extended. Notably, the original wording of Recommendation 16 restricted its purview to wire transfers. Wire transfersweredenedas:

any transaction carried out on behalf of an originator person (both natural and legal) through a nancial institution by electronic means with a view to making an amount of money available to beneciarypersonatabeneciarynancialinstitution (10)

Crypto-assets transactions where initially considered outside of the purview of Recommendation 16 for two main reasons. First, Crypto-assets Service Providers (CASPs) are not qualied as (11) Financial Institutions. Second, crypto-assets are typically not qualied as currencies. At the same time, crypto-assets’ transfers were perceivedasqualitativelysimilartowiretransfersintermsofrisk.

8.FATF,Guidanceforarisk-basedapproachtoVirtualcurrencies.,Paris,2015,10.

9.FATF,Guidanceforariskbasedapproachtovirtualassetsandvirtualassetserviceproviders,Paris,2019,29.

10.FATF,GuidanceforaRisk-basedapproachforMoneyorvaluetransferservices,Paris,2016,9.

11.FATF,Guidanceforariskbasedapproachtovirtualassetsandvirtualassetserviceproviders,cit.,29.

e key element for the concrete implementation of the travel rule is the allocation of the duty to verify the veracity of the information aached to the wire transfer

To close this perceived gap, the Guidance of 2019 claried that Recommendation 16 applies to any exchange of value executed by a CASP e Guidance explicates that, due to the functional and not formal nature of FATF’s norms, the travel rule must be applied to any exchange of value that, in concreto, performs a function similar to a wire transfer With special regards to crypto assets, the Guidance explicitly extends the purview of the travel rule to two types of operations:

1) Traditional wire transfer carried out by a CASP; 2) crypto-assets transfers betweenaCASPandanothercoveredentity

e main problem of such an extension is connected with the structure of crypto-assets’ exchanges: in contrast with traditional electronic transfer of funds, transfers of crypto-assets do not always involve a covered entity as theycanalsobecarriedoutwithorbyaself-hostedwallet (12)

It is the same Guidance to recognise this fallacy and the connected breach crypto-assets open in the effectivenessofthetravelruleasitstates:

e FATF recognizes that unlike traditional at wire transfers, not every VA transfer may involve (or be bookended by)twoobligedentities,whetheraVASPorotherobligedentitysuchasaFI.IninstancesinwhichaVAtransferinvolves only one obliged entity on either end of the transfer (e.g., when an ordering VASP or other obliged entity sends VAs onbehalfofitscustomer,theoriginator,toabeneciarythatisnotacustomerofabeneciaryinstitutionbutratheran individual VA user who receives the VA transfer using his/her own distributed ledger technology (DLT) soware, suchasanunhostedwallet)(13)

Such a weakness is cross-sectional to the whole anti-money laundering strategy in the eld. As we move from a completelyintermediatedtoa(atleastpartially)disintermediatedtransfersystem,anintermediary-centredstrategy will necessarily miss a chunk of previously covered transactions. If traditional wire transfers are always carriedoutbyanintermediary,thesamedoesnotapplytocrypto-assetstransfers.(14)

When it comes to the travel rule there is one specic type of disintermediated transfer that generates a legislative puzzle:transfersthatareintermediatedonlyononesideofthetransaction.

An exchange of value that is completely disintermediated generates a problem of efficacy. In contrast, a transfer only unilaterally intermediated creates a problem of interpretation In the former case, there is no doubt that the Regulation does not apply. e transaction is carried out by two private parties that are under no obligation to complywiththeanti-moneylaunderinglegislation Incontrast,whenthetransactioniscarriedoutbetweenacovered entity and an individual this creates a new scenario. is is a transaction where there is a possibility of control, as a covered entity is involved. However, this is a form of control that was not envisioned when the travel rulewasrstintroduced.

12. FATF, Guidance for a risk based approach to virtual assets and virtual asset service providers, cit., 30; FATF, Updated Guidance for a risk based approach to Virtual AssetsandVirtualAssetServiceProviders,Paris,2021,65.

13.FATF,Guidanceforariskbasedapproachtovirtualassetsandvirtualassetserviceproviders,cit.,30.

14.EBA,EBAReportonthefutureofAML/CFTFrameworkintheEU,Paris,2020,40.

e main question the legislator had to deal with is, hence, whether and up to what extent should travel rule requirements be applied in such one-sided transactions Most importantly, should the verication duty of the CASPextendtotheunhostedcounterparty?

eanswertothisquestionisthecruxofthelegislativedilemma.

e solution adopted by the FATF, in its Guidance of 2019, is a conservative one. When a transfer is addressed or received by a self-hosted wallet, the CASP should solely identify the counterpart through a declaration released by its customer. is means the CASP has no duty to corroborate the truthfulness of the information (15) providedbyitscustomer,butsimplytoaskandrecordtheanswer is is asuboptimalsolutionintermsofnancial ows monitoring as, in traditional wire transfers, data of both the originator and addressee are veried. In contrast, when it comes to crypto-assets, the information concerning the self-hosted wallet is rooted in a declarationbytheCASP’scustomer.

e latest FATF Guidance, published in October 2021 takes a substantially similar approach. At the same (16) time, the Recommendation opens the door to additional, more stringent, requirements. e Guidance states that, while the general recommendation remains unaltered, States or covered entities may go beyond it. Particularly, they may do so by providing for additional obligations or cautions in the case of transactions with private wallets. Such measures can include classifying each transaction with a private wallet as high-risk, and thus subjecttomorestringentcomplianceobligations,orevenbanningsuchtransactions.

15.FATF,Guidanceforariskbasedapproachtovirtualassetsandvirtualassetserviceproviders,cit.,30.

16.FATF,UpdatedGuidanceforariskbasedapproachtoVirtualAssetsandVirtualAssetServiceProviders,cit.,65.

e main question the legislator had to deal with is, hence, whether and up to what extent should travel rule requirements be applied in such one-sided transactions

e European take on the travel rule. e Commission and European Parliament’s proposal

In July 2021, the European Commission presented a proposal for a Regulation on the application of the travel ruletothecrypto-assetsmarket.(17)

e Commission’s proposal did not mention self-hosted wallets, hence restricting its purview solely to CASPto-CASPtransactions However,theParliamentpushed,sincethestart,foranextensionofthepurviewofthetravel rule also to transactions with self-hosted wallets and, particularly, to unilaterally intermediated transactions (CASP-to-self-hosted) (18)

To this end, the proposal of the European Parliament provided for a duty of verication for any transaction involvingaself-hostedwallet.Undertheproposal,theCASPhadtoverifynotonlyitscustomer’sinformationbutalso thedataconcerningtheowneroftheself-hostedwallet (19)

e interesting aspect of this extension is that it changes the nature of Recommendation 16 in a way that directly affects the conformation of the market and the technology itself. Indeed, Recommendation 16, in the traditional market, requires intermediaries to aach to a wire transfer information they normally possess due to the Know Your Customer performed during the onboarding phase. In contrast, in the crypto-sphere, the Parliament’s proposal creates a new proling obligation extended to a party with no prior relationship with the covered entity–theowneroftheself-hostedwallet.

is regulatory approach generates a signicant discrimination between intermediated and self-hosted wallets. Signicantly,totransactwithaprivatewallet,anintermediarywillincurhighercompliancecoststhanwhentransacting with another CASP. is generates a risk of triggering a de-risking phenomenon. At the same time, the owner of a self-hosted wallet, to transact with an intermediated wallet, will be forced to de-anonymise their accountsufferingamuchgreaterrisktotheircondentialitythanwhentransactingwithaprivatewallet.

e discrimination in question is of particular interest because it represents a (more or less conscious) aempt by the legislator to inuence the conformation of the market so to favour its legislative goals. Signicantly, the legislator makes transactions through self-hosted wallets more resource intensive (for CASPs) and less private (for individuals). e change imparted by the legislation is all the more relevant where one considers that this goes againstthefundamentalinnovationofblockchain:thepossibilityofexchangingvalueonlinewithouttheneedto useanintermediary.

17. on information accompanying transfers of funds and certain crypto-assets (re- Proposal for a Regulation of the European Parliament and of the Council cast)COM/2021/422nal

18. European Parliament, Report on the proposal for a regulation of the European Parliament and of the Council on information accompanying transfers of funds and certaincrypto-assets,6ofApril2022.

19. See European Parliament, Report on the proposal for a regulation of the European Parliament and of the Council on information accompanying transfers of funds and certaincrypto-assets,cit.,art.14para 5b;art.16co 4a

eEuropeanParliament’sapproachposedtwomainproblems

Arstproblemis thatthelegislationrisksfracturingthecryptomarketintotwomutuallyuncommunicativesectors or whose interactions would become extremely intrusive, for the disintermediated side, and costly, for the intermediated one At the same time, while one understands the reasons why the legislator would want to push the crypto market towards increasing intermediation, the risk in doing so is to thwart the innovative core of cryptoassets Which,inlargepart,liespreciselyintheabilitytoexchangevaluedigitallyinadisintermediatedfashion.

Asecondproblemposedbythisapproachisthedisproportionateimpactofsuchanobligationonindividualprivacy. e entire privacy structure of crypto assets is based on pseudonymity. If the veil of pseudonymity is torn, the private user is exposed to a level of monitoring far more penetrating than in a normal nancial transaction. Signicantly, in the traditional nancial system, information is centrally stored by each intermediary in private ledgers. Such information is logically fragmented, as each intermediary only records the transactions and balances of their own clients nothing knowing about the customers of other intermediaries. In contrast, the blockchain ledger is public. Moreover, the connected information is logically centralised as each transaction carried out through a crypto-asset is recorded consequentially in a single ledger. is implies that, once the public key is de-anonymised, anyone can analyse and monitor the nancial activity of a given individual, thus, accessing highly sensitive data. In this sense, forcing the owner of a self-hosted wallet to identify themselves poses a signicant privacy problem. It forces them, for the sole purpose of conducting a transaction, to disclose their entire nancialhistorytothecounterpart’sCASP.(20)

20. See the dissenting opinionto the proposal as approved by the Parliamentof MEP Gunnar Beck according to whom “By going beyond the FATF rules, crypto users with private, self-controlled wallets will be discriminated against and treated differently than people with cash. Every single transaction is potentially “travel rule eligible” and wouldhaveto be reported.is is a blatant violation of data protection law and is reminiscent of the behaviour of totalitarian surveillance states”, see European Parliament, ReportontheproposalforaregulationoftheEuropeanParliamentandoftheCounciloninformationaccompanyingtransfersoffundsandcertaincrypto-assets,cit.

e discrimination in question is of particular interest because it represents a (more or less conscious) aempt by the legislator to inuence the conformation of the market so to favour its legislative goals

enaltext.Postpone,postpone,postpone?

enaltextoftheRegulation reachedasomewhatconfusingmiddleground. (21)

Eminently, Article 3(10), claries that the requirements of the Regulation apply to all transfer of funds including to or from self-hosted addresses However, the extension is not complete For transfers under 1000 euros the FATF’s rule applies: CASPs must solely identify the counterpart’s information based on the customer’s declaration For transfers that exceed such a threshold the Regulation requires CASPs to take adequate measures to assesswhethertheself-hostedaddressisownedorcontrolledbytheoriginator.

is is a confusing solution from an interpretative perspective. A key problem is that it remains unclear whether it should be read as a prohibition of all transactions to self-hosted addresses above the threshold not controlled by the customer or as a restriction of the verication duty only to such transactions. What is confusing is that, if the second interpretation is correct, it is unclear why increased compliance duties have been placed on transactions between the customer and his wallets and not on all transactions with self-hosted wallets. Indeed, there is no reasontoconsidertherstriskiercomparedtothesecond.

It can be argued that the reason of such a choice is solving the problem by dodging it: the problems analysed in the previous section are strongly reduced if the verication duty is restricted to transactions with self-hosted addresses owned by the customer. In terms of compliance costs, there is no signicant increase: the CASP does not have to verify the information of a third party as the account is owned by its customer. From the customer’s perspective, the restriction of privacy is present but less relevant as the customer is already using a centralised exchanger,hence,acceptingacertainlevelofmonitoring.

is explication seems to be conrmed by the rest of the Regulation. Truly, the text partially delegates the overall problem connected with self-hosted addresses to supervisors and supervised and partially postpones it (as MiCaRwithregardstoDAOsandNFTs).

Intherstsense,Article19bstatesthat:

Member States shall require crypto-asset service providers to identify and assess the risk of money laundering and terrorist nancing associated with transfers of crypto-assets directed to or originating om a self-hosted address. To that end,crypto-assetserviceprovidersshallhaveinplaceinternalpolicies,proceduresandcontrols.MemberStatesshallrequirecrypto-assetserviceproviderstoapplymitigatingmeasurescommensuratewiththerisksidentied

ese include “takingrisk-basedmeasurestoidentify,andverifytheidentityof,theoriginatororbeneciaryofatransfer made to or om a self-hosted address or the benecial owner of such originator or beneciary” is risk-based measure replicatestheParliament’sproposalsimplyshiingitslocusfromoverallregulationtoconcreteguidelines.

21. of the European Parliament and of the Council of 31 May 2023 on information accompanying transfers of funds and certain Regulation (EU) 2023/1113 crypto-assetsandamendingDirective(EU)2015/849.

In the second sense, Article 37, requires the Commission to issue a report assessing the risks posed by transfers to or from self-hosted addresses as well as the need for specic measures to mitigate those risks, andpropose,ifappropriate,amendmentstothisRegulation

Conclusions

e Travel Rule Regulation constitutes another example of the complexities connected with the extension of a framework envisioned for a centralised, intermediated market to a disintermediated one Once again, the European regulator seems to have chosen the easy way out. Instead of devising a customised legislation that addressed the specic problems posed by the market, it has adopted a mid-way solution that triestoforcecrypto-assetsintopre-existingregulatoryboxes

How well and for how long such an approach can be sustained is an open question. It may be time for the European regulator to live up to its ambitions and devise a truly customised legislative framework. Ideally, this would be one that addresses the two key innovations of crypto-assets:disintermediationanddecentralisation.

e Travel Rule Regulation constitutes another example of the complexities connected with the extension of a framework envisioned for a centralised, intermediated market to a disintermediated one. Once again, the European regulator seems to have chosen the easy way out

4 to 8 September 2023

Imerys Aluminates Groupe challenges European Commission's ETS Rules interpretation

Monday 4 September

Imerys Aluminates Groupe, a French company, led a case (T-391/23) against the European Commission in a dispute related to the European Union Emissions Trading System (EU ETS): Imerys Aluminates Groupe v Commission (Case T391/23).

Preliminary reference on ownership of immovable property within the context ofinvestmentaid

Monday 4 September

Official publication was made of a preliminary ruling request from the College van Beroep voor het bedrijfsleven (Netherlands), lodged on 8 June 2023, concerning the interpretation of the EU Guidelines for State Aid in the agricultural and forestry sectors and in rural areas, particularly, paragraphs 135, 136 and 137 and point 144(a) thereof: case Seberts (C354/23).

Court of Justice to rule on the compatibility with EU law of national rules on jurisdiction over actions for damages against the Bulgarian Supreme AdministrativeCourt

Monday 4 September

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A request for a preliminary ruling from the Varhoven administrativen sad (Bulgaria) lodged on 9 June 2023 concerning the compatibility with EU law of national rules on jurisdiction over actions for damages against the Varhoven administrativen sad (Supreme Administrative Court, Bulgaria; ‘the VAS’), was officially published in the OJ: Vivacom Bulgaria (CaseC-369/23)

Preliminary ruling request regarding the obligations of the creditor in connection to non-payment of consumer credit

Monday 4 September

A preliminary reference from the Sąd Rejonowy w Siemianowicach Śląskich (Poland) on the interpretation of Article 8 of Directive 2008/48/EC on credit agreements for consumers and repealing Council Directive 87/102/EEC, was officially publishedintheOJ:caseHoryzont(C-339/23).

Preliminary ruling request on the principles of proportionality, neutrality, and ne bis in idem in the context of VATfraud

Monday 4 September

READ

Official publication was made of a preliminary ruling request concerning the compatibility of the Belgian VAT Code with Council Directive 2006/112/EC on the common system of value-added tax and Article 50 of the Charter of Fundamental Rights, as regards unconditional overall liability of the parties involved and the cumulation of administrative and criminal penalties imposed in that regard: case Dranken Van Eetvelde (C-331/23).

Denmark can link the preservation of Danish nationality to a legitimate bond withthecountry:CourtofJustice

Tuesday 5 September

In X v Udlændinge- og Integrationsministeriet (C-689/21), the Grand Chamber of the Court of Justice ruled on the compatibility of Article 20 TFEU, together with Article 7 of the Charter, with Danish legislation providing for the loss of citizenshipbyoperationofthelaw.

ECtHR: Violation of Article 8 ECHR in case concerning absence of legal recognition for same-sex couples in Bulgaria

Tuesday 5 September

In the case of Koilova and Babulkova v Bulgaria (application no 40209/20), the European Court of Human Rights (ECtHR) unanimously ruled that Bulgaria violated Article 8 of the European Convention on Human Rights (ECHR), which covers the right to respect for private and family life, due to its absence of any legal recognition and protection for same-sexcouples

CourtofJusticetoruleonwhetheranational court must observe ex officio compliance with the principle of nonrefoulement

Tuesday 5 September

Official publication was made of a preliminary ruling request, fromtheRechtbankDenHaag,ziingsplaatsRoermond(Netherlands), lodged on 14 March 2023, concerning the possible obligation of the national court, in proceedings regarding an application for permission to stay, to verify ex officio the observance of the principle of non-refoulement: Ararat (C-156/23).

European Parliament’s action for failure to act against Commission over U.S. visarulesdismissedby

CourtofJustice

Tuesday 5 September

the

e Court of Justice, siing in its Grand Chamber, delivered its judgment in Parliament v Commission (Exemption de visa pour les ressortissants des États-Unis) (C-137/21), concerning an action for failure to act pursuant to Article 265 TFEU brought by the European Parliament against the European Commissionoveritsnon-compliancewithEUvisarulesinrelationtotheUnitedStates.

Court of Justice streaming hearing today

incase

regardingterminationofemployment due to leaving the Catholic Church

Tuesday 5 September

e hearing of the Court of Justice in Kirchliches Krankenhaus (case C-630/22) concerning a preliminary ruling request, by which clarication is sought on the compatibility with EU law of a national rule, which provides that a private organization, theethosofwhichisbasedonreligiousprinciples,maytakeinto account previous affiliation to a particular religious community when considering employing members of staff in that organization,wasstreamedontheCourt’swebsite.

Commission proposes measures to boost cross-border activities of nonprotassociations

Tuesday 5 September

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e European Commission put forth a proposal, which seeks to enhance the functioning of the Internal Market by eliminating legal and administrative obstacles for non-prot associationsoperatinginmultipleMemberStates.

Action against Frontex for human rights violations dismissed by General Court

Wednesday 6 September

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In WS and Others v Frontex (T-600/21), the General Court rendered its judgment concerning an action for damages againsttheEuropeanBorderandCoastGuardAgency(Frontex),pursuanttoArticles268and340TFEU,forallegedbreaches of fundamental rights under the Charter and of its Code ofConductandStandardOperatingProcedures.

General Court rejects challenges to EU sanctions brought by individuals and entities,includingoligarchs

Wednesday 6 September

e General Court issued judgments in several cases, upholding the EU sanctions in the context of the Russia-Ukraine warandinresponsetothesituationinBelarus.

Executive Vice-President of the Commission temporarily withdraws from work

Wednesday 6 September

Executive Vice-President of the European Commission Vestager notied President von der Leyen about her nomination as an official candidate by the Danish Government for the position of President of the Management Commiee of the EuropeanInvestmentBanktoPresidentvonderLeyen.

Commission designates six gatekeepers undertheDigitalMarketsAct

Wednesday 6 September

Under the Digital Markets Act (DMA), the European Commission designated six gatekeepers, namely Alphabet, Amazon, Apple, ByteDance, Meta, and Microso, as well as 22 coreplatformservicesprovidedbythosegatekeepers

Commission proposes Passenger NameRecordDataAgreementswithSwitzerland, Iceland, and Norway for enhancedsecurity

Wednesday 6 September

e European Commission recommended initiating negotiations with Switzerland, Iceland, and Norway to establish agreements for the transfer of Passenger Name Record (PNR) data, which is vital for enhancing authorities' capabilities in detecting, prosecuting, and investigating terrorist activitiesandseriouscriminaloffenses

Reporting rules for banks' shadow banking exposure adopted by the Commission

Wednesday 6 September

e European Commission introduced technical standards forcreditinstitutionstoreporttheirexposurestoshadowbanking entities, which establish criteria for identifying shadow bankingentities,ensuringuniformityandcomparabilityinexposurereportingbycreditinstitutions.

General Court: Public interest relating to international relations justies partialrefusalofaccesstodocuments

Wednesday 6 September

e Ninth Chamber of the General Court delivered its judgment, in Foodwatch v Commission (T-643/21), a case concerning an action for annulment of a Commission’s decision, by which the applicant’s request for access to a document regarding a meeting held in the framework of the Regulatory Cooperation Forum (RCF) was rejected, based on public interest groundsrelatingtointernational

relations

General Court rules partly in favor in a challenge brought by former Russian tech industry businessman Alexander Shulgin

ursday 7 September

e General Court rendered its judgment in Shulgin v Council (T-364/22) concerning the challenge brought forth by Aleksandr Aleksandrovich Shulgin, a Russian businessman, who contested the imposition and continuation of restrictive measures by the EU due to actions compromising or threatening Ukraine'sterritorialintegrity,sovereignty,andindependence

Romanian rules governing promotion of judges to higher courts are compatiblewithEUlaw,holdsCourtofJustice

ursday 7 September

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e Court of Justice delivered its judgment in Asociaţia ‘Forumul Judecătorilor din România’ (C-216/21), a case concerning the procedure for the promotion of judges to higher courtsinRomania.

EU and UK reach political agreement on UK’s association to Horizon Europe andCopernicus

ursday 7 September

e European Commission and the United Kingdom reached a political agreement regarding the participation of the UK in Horizon Europe, the EU's research, and innovation program, andCopernicus,theEU'sEarthobservationprogram

Court of Justice claries VAT exemption for transportation services related to the importation of goods and the taxation of non-resident service providers

ursday 7 September

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e Court of Justice delivered its judgment in Cartrans Preda (C-461/21), a request for a preliminary ruling from the Tribunalul Prahova (Romania) which concerns the interpretation of Article 144 of Council Directive 2006/112/EC of November 28, 2006, on the common system of value-added tax (VATDirective),inlightofArticle86(1)(b)and(2)ofthesamedirective,aswellasArticles56and57TFEU.

Jurisdiction in EU trademark infringement cases involving multiple defendants,clariedbyCourtofJustice

ursday 7 September

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e Court of Justice delivered its judgment in Beverage City Polska(caseC-832/21)concerningtheinterpretationofArticle 8(1) of Regulation (EU) No 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil andcommercialmaers.

ursday 7 September

e Court of Justice delivered its judgment in Lietuvos Respublikos generalinė prokuratūra (C-162/22), concerning the use of personal data relating to electronic communications in the context of administrative investigations into corruption in the publicsector

ursday 7 September

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e Court of Justice delivered its judgment in Lietuvos Respublikos generalinė prokuratūra (C-162/22), concerning the use of personal data relating to electronic communications in the contextofadministrativeinvestigationsintocorruptioninthe publicsector.

CourtofJusticedismissesappealinVersobankv.ECB

ursday 7 September

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On 7 September, the Court of Justice delivered its judgment in Versobank v ECB (C-803/21 P), a case which follows from the General Court’s earlier ruling in Ukrselhosprom PCF and Versobank v. ECB (T-351/18 and T-584/18), which concerned the ECB’s decision to withdraw Versobank’sauthorizationtooperateasacreditinstitution

CourtofJustice:Aposterioriauthorization of search and seizure not incompatible with EU law, provided that sufficient judicial protection is subsequently guaranteed READ MORE ON

ursday 7 September

eFourthChamberoftheCourtofJusticedelivereditsjudgment in Rayonna prokuratura Lovech, TO Lukovit (Fouille corporelle) (C-209/22), a case concerning a preliminary rulingrequest,wherebyclaricationissoughtinregardstotheinterpretation of EU law, in the context of a situation in which coercive measures in the form of personal search and seizure were carried out against a person believed by the police to be in possession of narcotics during the investigation of an offenserelatingtothepossessionofnarcotics.

AG Szpunar proposes dismissal of appeal claiming more restricted preliminary examination by the CommissionofStateaidcomplaints READ MORE ON EU

ursday 7 September

AG Szpunar delivered his Opinion in Joined Cases Mytilinaios v DEI and Commission (C-701/21 P) and Commission v DEI (C-739/21 P), whereby the appellants have sought the annulment of the judgment of the General Court in DEI v Commission(T-169/08).

Court of Justice: e use of data collected in connection with administrative investigationsintocorruptioninthepublicsectorisprecludedbyEUlaw

Court of Justice: e use of data collected in connection with administrative investigationsintocorruptioninthepublicsectorisprecludedbyEUlaw

Court of Justice claries conditions to refuse to recognise and enforce a judgment for being contrary to public policy

ursday 7 September

e Court of Justice rendered its judgment in Charles Taylor Adjusting (C-590/21), concerning the interpretation of Article 34(1) of Regulation 44/2001 and the recognition and enforcementofjudgementsincivilandcommercialmaers.

Court of Justice should declare Article 259 TFEU action brought by Latvia against Sweden admissible but should dismiss it on the merits, argues AG RicharddelaTour

ursday 7 September

On7September,AGRicharddelaTourhandeddownhisOpinion in Latvia v. Sweden (C-822/21), an action under Article 259 TFEUconcerningSweden’sallegedfailuretocomply with itsobligationsunderArticle14(3)ofDirective2014/49ondepositguaranteeschemes.

AG Emiliou: Court of Justice should dismiss ground of appeal in Eurobolt v. Commission

ursday 7 September

On 7 September, AG Emiliou delivered his Opinion in Eurobolt and Others v. Commission and Stafa Group (Case C517/22 PP), a case concerning an anti-dumping duty on imports of certain iron or steel fasteners consigned from Malaysia.

Publiccontractmaybeconcludedbefore a judicial body has reviewed the legality of awarding that contract, concludesAGCamposSánchez-Bordona

ursday 7 September

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AG Campos Sánchez-Bordona delivered his Opinion in CROSS Zlín (C-303/22), a case concerning a preliminary reference, whereby the Court of Justice is asked whether national rules in the area of public procurement are compatible with Directive 89/665/EEC on the coordination of the laws, regulations and administrative provisions relating to the application of review procedures to the award of public supply and public works contracts and Article 47 of the Charter of FundamentalRights.

AG Szpunar delivers Opinion in Inditex, clarifying directives on trade mark law

ursday 7 September

AdvocateGeneral(AG)SzpunardeliveredhisOpinioninInditex (C-361/22), concerning the interpretation of the directives concerning trade mark law and, in particular, the limits to which the exclusive right of the owner of a registered trade markissubject.

ursday 7 September

On 7 September, AG Emiliou delivered his Opinion in Nordic Info (Case C-128/22), a request for a preliminary ruling from the Court of First Instance in Brussels, concerning three ‘non-pharmaceutical interventions’, put in place by the Belgian Government, in July 2020, in response to the Covid pandemic

Temporary travel restrictions during Covid pandemic not precluded by Unionlaw,arguesAGEmiliou

CommissionReleasesGuidanceonSanctionsCompliance

Friday 8 September

e European Commission released a guidance note aimed at European operators to assist them in recognizing, evaluating, and comprehendingthepotentialrisksassociatedwithsanctionscircumvention,alongwithstrategiestopreventit

Insights, Analyses & Op-Eds

Extension of a nal EAW issued by a non-judicial authority: the relationship between surrender and the consent procedure and the effects of res judicata (C142/22, OE v Minister for Justice and Equality)

by Francesco Rossi

Analysis of the Court of Justice’s judgment in OE v Minister for Justice and Equality (C-142/22), a case which, according to theauthor,demonstratestheCourtofJustice’straditionalstance to facilitate and accelerate surrenders and to ght against impunityintheAreaofFreedom,Security,andJustice.

Karma’s a boomerang: e right of communication to the public aer Ocilion(C-426/21)

by Tito Rendas

Op-Ed on the Court of Justice’s judgment in Ocilion (C-426/21), a case which, according to the author, illustrates the predicaments created by the Court’s expansion of the right of communication to the public onto territory that had previously remained outside the scope of copyright harmonization: that of secondary liability, which concerns the acts of those who, while not directly transmiing or giving access to content,facilitatesuchacts.

DG COMP’s Google AdTech Investiga-

by Christian Bergqvist

Analysis of the Court of Justice’s ruling in Lin (Case C-107/23PPU),acasewhich,accordingtotheauthor,representsthelatestiterationofthetensionbetweentheprotection oftheUnion’snancialinterestsandtheprotectionofthefundamentalrightssetoutintheCharterofFundamentalRights.

Justice

by Claudia Cantone

Op-Ed on the Court of Justice’s judgment in K.B. y F.S. (C-660/21), a case which, according to the author, concerns the striking of a balance between guaranteeing the effectivenessoftherightsconferredtoindividualsbyEUlawononeside and, on the other, respecting the procedural autonomy of Member States to designate the rules to implement and safeguardtheserightsatthedomesticlevel

Text and Data Mining in Europe: Exploring Challenges in TDM Exceptions of the Directive on Copyright in theDigitalSingleMarket

by Maryna Manteghi

by Sam van der Vlugt

Analysis of the Court of Justice’s judgment in Napfény-Toll (C-615/21), a case which, according to the author, showcases the longevity of tax disputes, which require persistence from the parties, especially when the case gets ping-ponged aroundbetweencourtsforaverylongtime.

Op-Ed on the exceptions under Articles 3 and 4 of the Copyright in the Digital Single Market Directive, which, according to the author, have failed to take into account the freedom of informationandthefreedomofresearchinabalancedway.

e longer the wait the greater the reward? Not in (Hungarian) VAT procedures. No breach of legal certainty and effectiveness in cumulative suspension of limitation period (Case C-615/21 Napfény-Toll)

tion

e Court of

claries the role of domestic criminal courts in the protection of the right to be informed of the righttoremainsilent(CaseC-660/21)

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