Recommendation 1: Harmonise national definitions of organised crime to ensure EPPO has competencies over all cross-border cases. Harmonising definitions would make it easier for the EPPO as well as Member States to investigate and prosecute cross-border cases of involving organised crime’s attempts to defraud EU financial interests. In this regard, Member States should follow the definition of organised crime outlined in the Council Framework Decision 2008/841. This would also help in obtaining a clearer picture on the extent to which organised crime is involved in defrauding EU’s financial interests across Member States as it would allow for cross-country comparisons on a more consistent basis.
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Recommendation 2: The Commission should support and encourage Member States to use both EDES and Arachne to tackle fraud and organised crime. Increased use by the EU Member States would improve the utility of the EU tools. With an aim to have all Member States adopt these EU tools, minimum requirements should be established for each of the Member States’ data collection and risk analysis systems to facilitate further harmonisation across Member States of data mining tools.
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Recommendation 3: The Commission should engage in communication activities with Member States on how to use data tools such as Arachne and EDES. Such communication would also allow the Commission to understand Member States’ reservations behind not using these tools and amend them where appropriate.
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Recommendation 4: The EU data collection and risk analysis tools should be better integrated.Furthermore, the same tools should be available for all EU funding programmes (e.g. all shared management funding such as cohesion, employment, research and development, agricultural and regional funds).
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Recommendation 5: Member States are encouraged to establish regional cooperation networks for groups of Member States to share information on cases and strategies to combat fraud against the EU finances if it is of interest to them. Such regional cooperation networks would allow Member States to obtain best-practice and information that is more relevant to the cases being dealt with by national authorities. Regional (in addition to EU-wide) networking would make it easier to focus on the priorities of specific countries as well as fostering cooperation in tackling fraud where there is a transnational dimension.
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Recommendation 6: In line with Article 11 of the PIF Directive, the Commission and Member States should ensure that their jurisdiction is established over criminal offences against the EU’s financial interests occurring in third countries. Member States should introduce laws that bring their rules in line with Article 11 to ensure extended jurisdiction. The Commission on the other hand should make efforts to ensure Member States have complied with these obligations and encourage them to prosecute and investigate cases involving third countries. Ensuring such jurisdiction is established would make it easier for the EPPO (and Member States not participating in the EPPO) to prosecute cases of fraud in which money is laundered outside of the EU. Considering that criminal profits are quickly moved out of the EU this would also help to increase the confiscation rate which is important for deterring organised crime from engaging in this activity.
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Recommendation 7: The intra-community VAT system should be updated to close loopholes that can be exploited by organised crime through MTIC schemes. Legislative solutions which allow for the payment of VAT across EU borders without the potential for ‘Missing Traders’ to disappear with the VAT owed to Member States would remove a key way in which EU and national financial interests are defrauded by organised crime.
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Recommendation 8: The EU should set common quality standards for national anti-fraud systems and reporting procedures and require a declaration of compliance. This would help ensure that managing authorities develop robust control systems to manage EU funds. Member States all have different national strategies to tackle fraud. While each Member State faces a different regional context when it comes to fraud and organised crime, minimum standards established across the EU would help ensure fraud an emphasis on working towards best practices.
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Recommendation 9: Member States need to develop effective fraud risk assessment and management systems to help ensure the early detection and reporting of fraud risks. To help achieve this, Member States could benefit from the use of Arachne in public procurement procedures, the implementation of the Commission guidelines and recommendations relating to programmes and the systematic use of the PIF Reports’ findings in relation to national fraud risk assessments. More needs to be done to ensure that fraud risk assessment approaches are regularly reviewed to address new emerging fraud risks.
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Recommendation 10: Supported by the EU, Member States should be encouraged to provide training to staff of the relevant authorities to equip them with the knowledge to identify potential fraud, make use of the relevant tools effectively and report suspicious cases in line with EU standards. This should also be done with a view to enhancing the capacity of authorities managing EU funds to detect, investigate and report fraud. This is particularly with the case of data tools such as EDES and Arachne where training schemes for the national authorities would help them understand how to use tools identified by the EU to full effect.
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Recommendation 11: The European Commission should define minimum standards for AFCOSs and Member States should adopt these standards to help harmonise their effectiveness across the EU. These standards should include the responsibility to have a comprehensive overview of cases of fraud affecting EU finances under investigation by all competent authorities at the national level and to help coordinate such information sharing. Additionally, the AFCOSs’ role could be extended to include being a liaison point for the Advisory Committee for the Coordination of Fraud Prevention (COCOLAF) of the Commission and the Working Group on Combating Fraud of the European Council.
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Recommendation 12: Member States should take up more of the cases highlighted by OLAF of possible fraud against the EU’s finances. The creation of the EPPO should help increase the success rate in prosecutions and the recovery of defrauded funds. Nevertheless, Member States still have responsibility in areas where the EPPO does not have the competency to intervene, for example when a case of VAT fraud occurs in only one Member State. Furthermore, considering the large scale of fraud, Member States should continue to investigate and prosecute cases alongside the EPPO to tackle the issue.
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Recommendation 13: Member States should seek to involve civil society as well as the private sector in the effort to combat fraud. This would include developing confidential channels to report suspected fraud and to guarantee protection to those doing so. Furthermore, involving civil society and the private sector in the fight against fraud and organised crime would help ensure that expertise in this third sector that is not found in the EU institutions or Member States currently is fully mobilised in the EU’s fight against fraud.
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Recommendation 14: Member States supported by OLAF and the EPPO where appropriate, should undertake research to improve the estimates of the financial impact of organised crime fraud involving the EU’s finances, particularly when it comes to EU expenditure. This could be done in partnership with international organisations so as to ensure a harmonised approach by Member States and a joint effort in their fight against organised crime.
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Recommendation 15: Member States should with EU guidance as appropriate, regularly evaluate their anti-fraud frameworks to establish their effectiveness, identify best practices and review their anti-fraud strategies to address any emerging risks. Independent reviews of the anti-fraud frameworks would help ensure Member States are consistent in adopting high standards in the fight against fraud and also help to identify best-practices in these Member States and/or help them adopt such policies from elsewhere.
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