COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE, THE COMMITTEE OF THE REGIONS AND THE COURT OF AUDITORS

A.I.6: Fraud-proofing of the legal framework for the implementation of the budget

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE, THE COMMITTEE OF THE REGIONS AND THE COURT OF AUDITORS

Directive (EU) 2017/1371 of the European Parliament and of the Council of 5 July 2017 on the fight against fraud to the Union’s financial interests by means of criminal law





Introduction

On 24 June 2011, the Commission adopted its current anti-fraud strategy. This comprised: (i) a Communication from the Commission to the other EU institutions , describing strategic objectives and key operational steps to attain them; and (ii) a more detailed Commission-internal Action Plan .

In preparation of the Multiannual Financial Framework (MFF) 2021 – 2027, the Commission has reviewed its anti-fraud strategy to take account of the developments in the (anti-)fraud landscape and in the design of EU policies. This review is reflected in its Communication ‘Commission Anti-Fraud Strategy: enhanced action to protect the EU budget’ , which this staff working document accompanies. For the strategy update, the Commission services have carried out a fraud risk assessment, involving also the executive agencies. The results are presented in another staff working document accompanying the Communication .

The two main vulnerabilities identified in the Fraud Risk Assessment are: (i) an underdeveloped central analytical capacity; and (ii) gaps in the corporate supervision of fraud risk management at department level. The priority objectives (Objectives 1 and 2) of the review are therefore to equip the Commission with stronger analytical capabilities and more centralised oversight mechanisms for anti-fraud action by individual Commission departments. The other key objectives (Objectives 3 – 7), based on the guiding principles and standards of the 2019 Commission Anti-Fraud Strategy (‘the 2019 CAFS’) and on the Fraud Risk Assessment, are to maintain the highest standards of professional ethics and competence, to optimise the legal framework for and transparency of EU funding, and to improve the fight against revenue fraud.

The measures listed in the tables below aim to meet one or more of these objectives. The measures are grouped according to stages of the anti-fraud cycle (prevention, detection, investigation and correction/sanctioning of fraud). They are divided into two further groups: those that relate to revenue and those that relate to expenditure and, within expenditure, to different management modes. Some action points (e.g. No 49, 50, 52, 55) refer to ongoing projects or measures so as to provide a more complete picture of the Commission's activities in a specific area.

The Action Plan is designed to implement the Communication on the 2019 CAFS. With its recurring (‘continuous’) actions, it will run until the next update of the CAFS, planned for around the mid-point of the coming MFF; in the meantime, the Action Plan will be reviewed and amended as appropriate. The Action Plan’s implementation will be monitored mainly by OLAF, the Fraud Prevention and Detection Network (Directors’ level) and by the Corporate Management Board. Commission services and executive agencies will in due course integrate their action points into their (local) anti-fraud strategies and, as soon as possible, into their planning and programming cycles by including relevant activities in their management plans and reporting on their implementation in their annual activity reports. The latter will be done using suitable output and, where appropriate, result indicators.

For the priority objectives, preliminary corporate-level result indicators should be developed by 2020. These result indicators should be refined and complemented throughout the 2019 CAFS’ implementation, in line with actual experiences and the results of further analysis. Similarly, result indicators for Objectives 3 – 7 should be defined after due analysis. To measure ethical awareness or anti-fraud know-how as result indicators for Objectives 3 and 4, for example, a sound methodology will need to be developed and a Commission-wide baseline established, in close cooperation with the Commission's internal control and ethics functions.

It should be noted that in the below tables the term ‘services’ means the Commission’s departments and administrative offices and the executive agencies. The term ‘(other) EU bodies’ includes regulatory/decentralised agencies, joint undertakings/joint technology initiatives and similar organisations.

A. Prevention and Detection A.I. Cross-cutting issues A.I.1: Priority measures: data collection and analysis Number Objective Action Lead service Due date 1 Data collection and analysis Provide strategic analyses that can feed into fraud risk assessments and fraud prevention activities of the Commission services and the Member States. Data sources for these analyses would include: oclosed OLAF investigations; ocases reported by the Member States through the Irregularities Management System (IMS). OLAF Support: JRC 2020 and then continuous 2 Data collection and analysis Promote the analytical use of IMS data (also by the Member States) to improve methods and deployment of resources in the field of fraud prevention, detection, investigation and correction. This action should be supported by a built-in analytical tool to be developed by OLAF. OLAF Support: REGIO, AGRI, EMPL, MARE, HOME, JRC 2020 and then continuous 2021 3 Data collection and analysis Closely monitor Member States’ reporting of irregularities by carrying out respective checks and/or external evaluation, with a view to improving and harmonising the quality and completeness of the data reported in the IMS. OLAF (coordination), REGIO, EMPL, MARE, AGRI, HOME 2021 and then continuous 4 Data collection and analysis Exploring possibilities to strengthen IT-based fraud prevention and detection (as regards risk scoring and controls for double-funding, (self-) plagiarism, etc.) by: oestablishing and disseminating a Commission-wide inventory of existing IT tools; oexamining ways to enhance the interoperability of these tools, where possible across management modes, share them among interested services and/or enrich them with data coming from several sources; oanalysing needs and potential for new developments, working towards the most cost-effective balance between corporate and local tools. Review and improve the ARACHNE risk scoring tool. Continue to promote its use among Member State authorities, supported by an external legal opinion as necessary.



Explore possibilities for an extended use of ARACHNE and other risk scoring tools in all management modes. Coordination: OLAF / JRC Support: BUDG, DIGIT, SJ, Spending Services EMPL Support: REGIO, AGRI, OLAF, JRC, SJ Coordination: OLAF/EMPL Support: JRC; RTD, DIGIT, BUDG, SJ, Spending Services 2020 and then continuous 5 Data collection and analysis Examine possible scope, tools and working methods for the exchange of audit results among services and for exploiting audit results for analysis and early detection of risks. Explore an extended use of specific applications of audit tools (MAPAR) on audit procedures and developing analysis of findings. OLAF Support:

RTD, DIGIT, BUDG, Spending services REGIO Support: RTD, DIGIT, OLAF, BUDG, Spending Services 2020-2021 6 Data collection and analysis Encourage cooperation with academia and practitioners by organising/contracting/co-financing conferences and studies on selected topics. OLAF 2020 and then continuous 7 Data collection and analysis Map and review channels for exchanging fraud-related information between services, other EU bodies, Member States (including exchanges with Eurofisc), non-EU countries and international organisations. OLAF Support: BUDG, SJ, JRC, Spending services 2020 and then continuous 8 Data collection and analysis Develop country profiles to better analyse and assess Member States’ anti-fraud action. OLAF 2020 and then continuous