COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 31.01.1996 
COM(96) 17 final 
PROTECTION OF THE COMMUNITY'S FINANCIAL INTERESTS 
FIGHT AGAINST FRAUD 
WORK PROGRAMME 1996 
(presented by the Commission) 

Referring explicitly to the work completed in 1995, in particular the comparative analysis 
of Member States' reports on measures taken to combat fraud, the European Council of 
Madrid adopted and gave its full support to the conclusions of the ECOFIN Council of 
27 November 1995. In doing this it called on the Member States and institutions to take 
the necessary measures to ensure an equivalent level of protection of financial interests 
throughout the Community. 
The Commission's anti-fraud work programme, while fitting into the scheme of its general 
programme which was presented to the Council and Parliament in November 19951 takes 
fully into account these essential guidelines. 
The Commission will also ensure that this major concern is taken into consideration in 
the course of work on the Intergovernmental Conference. 
1. In its general work programme, the Commission, with regard to its anti-fraud 
priorities, specified that : 
"The measures to strengthen the legal protection of the Community's financial 
interests will be amplified. New administrative penalties will be 
introduced.Partnership with the Member States will be strengthened. Community 
legislation and programmes will be revised to enhance effectiveness, reduce the risk 
of fraud and give more flexibility in management." 
2. In accordance with these general guidelines, the Commission will present hereafter 
a detailed programme of specific anti-fraud activities for 1996. This detailed work 
programme aims to clarify further the guidelines contained in the general programme 
with a series of selective activities. These activities are grouped around 4 main 
headings which the Commission developed in presenting its anti-fraud strategy in 
1994, namely : 
stronger presence on the ground and firmer support for operational activities, 
concentrating on risk sectors; 
See COM(95)512 final of 20 November 1995. 
stronger partnership between the Commission and the Member States, 
development of information networks and better use of intelligence; 
improvement of Community legislation in areas of activity; 
securing greater compatibility between the legislations of member States. 
3. The activities in this work programme are set out under these four main headings 
and already take account of the need to achieve an equivalent level of protection 
throughout the Community as the European Council of Madrid expressly requested. 
4. As in the past, a number of specific activities in the 1996 programme are taken from 
previous programmes either because they are of a permanent nature and are essential 
for a global approach to fraud prevention or because more time is required to 
complete the work required. 
5. On the one hand, the new activities stem from the Council conclusions of 19 June 
1995 adopted following discussions on the 1994 annual report on the fight against 
fraud; the Council, in the framework of the procedures for adopting the regulation 
and the Convention on protection of Community financial interests, called upon the 
Commission to put forward additional initiatives to finalize these instruments. On the 
other hand, the activities follow on from the analysis made by the Commission of 
the Member States' reports on measures taken to combat fraud as well as from the 
conclusions adopted by the Council of 27 November 1995 on the basis of this 
analysis. 
6. A number of guidelines resulting from this comparative analysis require further 
information to be obtained to enable the Commission to carry out a more detailed 
study (for example, prevention, the question of out-of-court settlements, results 
following inspections and follow-up action in fraud cases, etc.). In this context, the 
Commission is directing its work to clarifying further the mechanisms likely to 
ensure an equivalent level of protection of financial interest throughout the 
Community. This work will begin shortly but its impact on anti-fraud policy will 
not be measurable in 1996. 
7. While these new activities fall in the main under the strategic headings of better use 
of intelligence, improvement of Community legislation and greater compatibility 
between the legislation of Member States, it is essential to continue also to highlight 
the importance of a presence on the ground and support for operational activity as 
advocated by the ECOFIN Council. 
8. This detailed programme of activities responds to the wishes expressed by the 
European parliament which justifiably insisted that the Commission's general 
programme should be clarified in respect of protection of financial interests and the 
fight against fraud and that it should be presented in such a way as to enable a 
regular assessment of it to be easily made. 
* 
* * 
1. Stronger presence on the ground and firmer support for operational activities, 
concentrating on risk sectors 
To increase the effectiveness of the fight against fraud, inspections and controls 
undertaken by the Commission's inspectors must be carried out within a specific fraud 
prevention framework covering all the areas of the Community budget. The purpose of 
the Commission proposal for legislative action referred to at III, l.b. of the 1996 
programme will be to clarify the specific material provisions with a horizontal application 
for on-the-spot controls and inspections (rights, obligations, procedures) to enable the 
Commission's inspectors to carry out their operational anti-fraud missions on the ground 
together with the national authorities. 
Contacts between the different judicial authorities and between the latter and the 
Commission must be strengthened and made easier. Initiatives in the framework of the 
third pillar referred to at point IV, 3 meet this objective. 
2. In addition to this legislative activity, the Commission will encourage direct contact with 
the investigation departments and judicial authorities in the Member States as well as 
with the competent bodies in the non-member countries, in particular the countries of 
Central and Eastern Europe. 
In the framework of the 'sound and efficient' management initiative concerned with 
implementation of activities financed by the Community for the benefit of the countries 
of central and eastern Europe and the new independent States, the Commission services 
concerned will proceed to reinforce their capacity to carry out on-the-spot controls. 
3. The cigarettes and textiles task groups will continue to function. The olive oil and "beef 
task groups will move to the operational stage. 
Teams will consist of specialists and inspectors from all relevant departments at the 
Commission and in the Member States, depending on the area under investigation. The 
object of the task groups exercise is to optimize cooperation between all Commission and 
national bodies acting in partnership to tackle the same problem. The direct links between 
the components of a task group cut the time needed to react to situations giving cause for 
concern and new forms of fraud. 
4. The computerization of transit operations seeks to make the procedure more efficient and 
to offer a means of early detection and effective prevention of fraud.2 
Once the requisite resources have been released, and the remaining technical and 
regulatory questions resolved, transit operations should be entirely computerized 
throughout the Union and EFTA States by 1998. 
In addition to computerization, there will have to be an increase in the number of 
physical checks on goods at offices of destination and entry to avert the risk of fraud. 
The use of electronic data-transmission techniques will be further developed and there 
will be more thorough monitoring of the data that are transmitted. Pending 
computerization of the transit scheme, the Commission will in the short term strengthen 
the early warning system (direct contact between entry office and destination office) for 
high-risk products to make information that is exchanged more readily usable. 
5. In the mutual assistance arena, the SCENT network will be developed in a systematic 
fashion to reflect the possibilities and needs of the various user categories. 
The number of users will be increased. The use of the communications infrastructure and 
technical facilities developed (e.g. e-mail) could be extended to other authorities involved 
in combating fraud, for matters falling with their specific area of responsibility e.g. 
distribution of documents, while maintaining strict compliance with their respective 
competencies. 
6. Non-member countries and Community operators must be made more fully aware of the 
impact of fraud in Customs regimes and preferential schemes, in particular in the textile 
sector, and reminded that importers are liable to the Community for amounts evaded. 
See Council Resolution of 23.11.1995 on the computerization of the customs transit scheme: 
OJ C 372, 7.12.1995, p. 2. 
System Customs enforcement Network. 
Preferential concessions are given to stimulate the economic development of non-member 
countries or to tighten the Community's economic links with its partners. Infringements 
of provisions governing preferential tariff schemes are damaging not only to the economy 
of the non-member country enjoying the benefit of the scheme but also to the 
Community's financial interests. 
A Commission communication to be submitted directly to the Parliament and Council on 
the current situation in the area of preferential agreements is planned. It is aimed at 
making them aware of the need to adopt the following measures : 
inform economic operators of the risks inherent in the use of preferential Customs 
regimes and arrangements and of their responsibilities; 
inform non-member countries who benefit from Community preferences of the 
obligations arising from acceptance of the agreements. In addition, measures aimed 
at assisting operators to overcome risks linked with trade with non-member countries 
will be studied. 
inform Member States of "systems control audit"; 
send a questionnaire to each country benefitting from preferential treatment 
requesting information on inspection measures which they have taken; 
put forward a horizontal legal instrument establishing provisions for the suspension 
from autonomous preferential arrangements or concerning European Union 
agreements in accordance with the Community's contractual obligations; 
the establishment by the Commission of a specific investigation mechanism for 
grievances and infringements of the provisions of EEC regulation N° 3281/94 and 
more specifically article 9; 
improve the financial follow-up of investigation cases. 
7. Operational activities on the ground will increasingly be guided by risk analysis findings. 
The development of activities here falls into the second area of priority referred to in II.6. 
II. Stronger partnership between the Commission and the Member States, development 
of information networks and better use of intelligence 
1. The approach to training adopted is aimed at meeting priority needs. The training of 
officials in the Member States will be more closely targeted on specific areas and 
preferably provided for those services specializing in the fight against fraud against the 
Community budget. 
The Commission is particularly attentive to training for staff and services involved in 
implementing structural policies. 
The Commission also feels that there is much to be gained from establishing contacts 
with the countries of Central and Eastern Europe, where the Union supplies extensive 
project financing. It is very much in the Community's interest to cooperate closely and 
ensure that the development of activities in these countries and trade with them proceed 
as planned. 
These activities must also be set in the perspective of enlargement. National 
administrations will be made aware through training courses of the risks of fraud in 
certain areas of Community policy. 
These actions correspond with the wishes expressed by these countries in their contacts 
with the Commission. 
2. In the merging and strengthening of items used to finance anti-fraud measures in the 1996 
budget, priority will be attached to assistance to specialist anti-fraud departments, notably 
to enhance their operational capacities in combating fraud against the Community budget. 
Regarding EAGGF Guarantee Section expenditure, the Commission will continue to 
support the Member States financially in carrying out action plans to improve the 
8 
structure and efficiency of inspectorates, following the criteria and procedures set out in 
its proposal to the Council. 
3. Evaluation of the first year of operation of the freephone number was favourable, and the 
scheme will continue to run. 
In 1996 the scheme will be extended to the three new Member States. 
4. Communications between the Member States and between the latter and the Commission 
following the rules for the implementation of Council Regulation (EC) No 1469/955 of 
29 June 1995 on measures to be taken with regard to certain beneficiaries of operations 
financed by the Guarantee Section of the EAGGF (black lists) : see III.3. 
5. The working parties set up in the appropriate bodies will be invited to investigate the 
following matters in particular: 
the system for exchanging mutual assistance forms. If need be, measures will be 
taken to ensure optimal use of the resultant information and thus boost its 
effectiveness; 
the establishment of a central CIS database following adoption of the proposal for 
a Regulation on mutual assistance in customs and agricultural matters, the aim being 
to improve the efficiency of the use made of information exchanged between 
Member States via SCENT. 
the consequences to be drawn from analysis of frauds and irregularities detected with 
a view to enhancement of the databases. 
6. Irene and Pre-Irene will be replaced by a new base, Irene 95, which will incorporate all 
irregularity cases detected, irrespective of the source of the information (Member State 
report, MA form, UCLAF investigation, etc.), make cases easier to monitor (financially 
also) and make intelligence easier to exploit. 
COM(95)467 final, 12.10.1995: Proposal for a Council Regulation on the implementation of Member 
States' action plans on control of EAGGF Guarantee Section expenditure. 
OJ L 145, 29.6.1995, p. 1. 
Customs Information System. 
7. To intensify the use made of intelligence, studies will be carried out by the Joint 
Research Centre at Ispra in the context both of its institutional support for the 
Commission and of its competitive support projects. An in-depth statistical analysis of 
cases already stored in Irene will be undertaken to analyse risk factors inherent in certain 
types of transaction and establish fraud profiles. UCLAF will evaluate software products 
available on the market so as to equip itself with high-performance tools. 
8. In relation to own resources, the value of the information contained in the reports 
foreseen under the amendments to Regulation (EC, Euratom) No 1552/897 will clearly be 
improved by the implementation of provisions which have already been included in a 
Council joint position which will require better co-operation between the Commission and 
national administrations. 
The Commission will continue its sample case-by-case monitoring to help the Member 
States in their efforts to recover receipts involved in major fraud cases. The aim is not 
only to accelerate the recovery procedure, obtain the payments due in specific cases and 
improve the rate of recovery but also to use individual cases to identify legislative 
measures that might be needed. 
The study now under way on the Member States' recovery arrangements, referred to in 
item III.2 on transit (harmonisation of time limits for recovery from principals for whom 
guarantees have been given), is aimed at ensuring the effectiveness of and equal treatment 
for the protection of the Community's financial interests in this area. If initiatives of a 
legislative nature are deemed necessary to achieve this, the Commission will make the 
proposals required. 
Various measures taken in the Community transit field including increase of the guarantee 
for sensitive goods should also lead to an improvement in the recovery of traditional own 
resources. 
Adoption of the Council's common position on 17.11.1995 for the adaptation of Regulation (EC, 
Euratom) No 1552/89 implementing Decision 88/376/EEC, Euratom on the system ofthe Community's 
own resources. 
10 
Regarding the Structural Funds, the Commission will insist that Member States take 
irregularity reporting more seriously. 
As requested by the Madrid European Council, the Commission will consider the 
possibility of extending from agriculture to other areas the system of disallowing finance. 
This exercise is to be carried out within the framework of action on sound and efficient 
management (SEM2000). 
HI. Improvement of Community legislation in areas of activity 
1. The Council Regulation on protection of the Community's financial interests having been 
adopted9, the Commission will: 
(a) continue the study undertaken of the comparative analysis to respond to the Council 
request for the system of administrative penalties to be extended to areas of the 
budget where they are needed, notably the Structural Funds; 
(b) work actively for adoption by the Council of the proposal for a Regulation 
"concerning on-the-spot checks and inspections for the detection of fraud and 
irregularities detrimental to the financial interests of the European Communities"10 
in the first half of 1996; 
(c) then update Council Regulation No 165/74 on the powers of authorized Commission 
representatives in relation to own resources; 
(d) adopt rules for the implementation of Regulation (EC) No 1469/95 on measures to 
be taken with regard to certain beneficiaries of operations financed by the 
Guarantee Section of the EAGGF (black list). 
As defined in article 1(2) of Regulation (EC, Euratom) N' 2988/95 of 18.12.95 on the protection of 
the European Communities financial interests : 'Irregularity' shall mean any infringement of a 
provision of Community law resulting from an act or omission by an economic operator, which has, 
or would have, the effect of prejudicing the general budget of the Communities or budgets managed 
by them, either by reducing or losing revenue accruing from own resources collected directly on 
behalf of the Communities, or by an unjustified item of expenditure. 
Regulation (EC, Euratom) N* 2988/95 of 18.12.95, O.J. N" L 312 of 23.12.95, p. I. 
Doc. COM(95)690 final. 
11 
2. As announced in its communication of 29 March 1995 on the Community transit 
scheme, the Commission will make the necessary additional proposals in terms both of 
the practical application of the relevant provisions and of the provisions themselves. 
Following on from the existing scheme and agreements (amendments to provisions 
governing the comprehensive guarantee, acceleration of the procedures for discharging 
transit documents, determination of compulsory routes), the Commission intends to amend 
the relevant legislation : 
more flexible procedure for banning use of the comprehensive guarantee to cover 
transactions involving high fraud risk goods, so that these transactions are covered 
for all import duties concerned; 
acceleration of the procedures for discharging transit documents for sensitive goods; 
determination of compulsory routes (limiting journey times); 
banning any change in the office of destination; 
increase comprehensive guarantee to 100%; 
re-examination of cases where temporary suspension of use of the guarantee has 
already been applied 
reinforcement of ex post controls; 
consideration of more appropriate sharing of responsibility for the Customs debt 
between the different possible debtors in the transit area; 
harmonization of time limits for recovery from principals for whom guarantees have 
been given; 
mandatory use of T2 or T2L documents for Community goods carried by sea. 
In addition, the Commission will provide the necessary assistance in the enquiry which 
Parliament intends to carry out on fraud in the transit regime under article 138C of the 
EC Treaty. 
Doc. COM(95)108 final. 
The Committee has already expressed approval of the first four points. The other points will be 
examined internally with a view to proposing any amendments to regulations considered necessary. 
12 
3. The Commission will play its part, in close co-operation with the Member States, in the 
review of the TIR Convention, with a view to improving detection of frauds in the TIR 
regime. 
4. The Commission will evaluate all positive and negative incentives to the Member States 
to detect and report fraud and irregularity cases to ascertain whether these incentives are 
adequate. 
5. The Commission, as part of its action to achieve sound and efficient management, will 
ensure evaluation of legislation in terms of clarity, enforceability and vulnerability to 
fraud from the initial proposal up to the final phase of its adoption 
Regarding ex post evaluation, the same principles are applied by identifying high risk 
fraud sectors so as to target efficiently examination of legislation13 
Experience in fraud prevention, financial control and risk analysis will be fully exploited 
to complete these missions successfully. The views of the competent services in the field 
will be systematically highlighted so that account is taken to ensure fraud proofing of 
legislation. 
6. The Commission will continue its work with a view to adoption of the proposal for a 
Regulation on mutual assistance in customs and agricultural matters to replace regulation 
1468/81. Following adoption of this proposal, the CIS implementing rules for the 
database will be specified in the implementing provisions. 
The Commission will also participate in the final adoption of regulation 1552/89. 
13 In this context, the Commission is planning to examine the rules governing limitation periods for 
guarantees in the customs code, [import duties on beef,] the question of staffing for Regulation (EC) 
No 2048/89 laying down general rules on controls in the wine sector and the beef export refund, the 
olive oil production aid scheme and Articles 23 and 24 of Regulation (EEC) No 4253/88 (the 
Structural Funds Regulation). 
13 
IV. Greater compatibility between legislation of the Member States 
Following establishment of the Convention on protection of financial interests and the 
agreement reached on its protocol on corruption : 
1. The Commission will present the initiative decided on 20 December 1995 so that the 
Council can adopt this second instrument (presented as a protocol to the Convention on 
the protection of the Community's financial interests ) before the year is out. This will 
establish the liability of corporate bodies and define an offence of laundering the proceeds 
of fraud. It contains specific provisions relating to judicial cooperation, priority 
jurisdiction to prosecute and the jurisdiction of the Court of Justice. 
2. The Commission will provide active support in the discussion opened by the Italian 
presidency on joint action to establish a framework for the exchange of liaison 
magistrates. The latter will be able to contribute to an improvement in the fight against 
fraud. 
3. In the area of corruption, the Commission will participate in the finalisation of the 
protocol to the Convention on the protection of financial interests and will take the 
measures necessary to follow up the protocol while taking account of the work and 
requests of the European parliament in this field. 
4. The Commission will monitor the process of ratification of the Convention on protection 
of the financial interests of the European Communities as well as the procedures for 
transposition into national legal systems by member States. It will report to the Council 
on progress with transposition into national penal law. 
14 COM(95)693 final. 
15 OJ C316, 27.11.95, p. 48. 
14 
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COM(96) 17 final 
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