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PROTECTING THE FINANCIAL INTERESTS OF THE COMMUNITY 
THE FIGHT AGAINST FRAUD 
THE COMMISSION'S ANTI-FRAUD STRATEGY 
WORK PROGRAMME FOR 1994 
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A STRATEGIC PROGRAMME FOR REINFORCING THE FIGHT AGAINST 
FRAUD TOGETHER WITH AN ACTION PLAN EQRJ324 
l. Background 
The protection of public finances is an essential element in ensuring the credibility and 
effectiveness of all policy. The need to strengthen the protection afforded to the 
financial interests of the Community, particularly in the context of the new provisions of 
the Treaty on European Union, was clearly spelled out by the Copenhagen European 
Council of 21/22 June 1993 when it asked the Commission to present proposals on this 
subject by March 1994. 
With the creation of the internal market and the entry into force of the Union Treaty, 
Europe has undergone a major transformation. 
The size of the Community budget, which stands at more than ECU 70 billion for 1994, 
and the threat posed to Community finances call for a new multidisciplinary approach, 
for an effort to modernize and rationalize methods and for the deployment of greater 
human and technical resources. 
The complexity of the realities across a whole range of sectors (own resources, 
expenditure, etc.) and the international dimension of large-scale fraud make it essential 
to offer a common response at the most appropriate level, going beyond what would be 
possible at national level. The growth of financial crime through groups organized along 
almost "business" lines which are able to negotiate with one another demands that the 
fight against fraud be made a priority of the "new European dimension" by deploying the 
full armoury of existing instruments, including the possibilities of cooperation under 
Title VI of the Union Treaty. 
Like organized crime, the fight against fraud has to extend beyond national bounds so that 
it can provide coherent and coordinated action as part of an integrated Community-level 
approach. 
To curb the threat to the Community's credibility, the fight against fraud must be a 
privileged area of close partnership between the Member States and the Commission so 
that together they can ensure respect for Community law and guarantee the protection of 
the Community's finances. As stated by the Council (Economic and Financial Affairs) 
in its conclusions on 7 June 1993, the attainment of these objectives must not be 
compromised by the principle of subsidiarity. 
1. CLOSER PARTNERSHIP 
Tackling fraud is primarily the responsibility of the Member States. Essentially, it is they 
who possess the means and the powers to take action. But maximum account must be 
taken of territorial integration in the Community. Every aspect of this situation must now 
be borne in mind when assessing the risks in order to target future action. 
To meet the challenge a national approach is no longer enough by itself. AH the 
resources available must be combined to boost their complementary impact and enhance 
synergy at the Community level with the help and support of the Commission. 
It follows that the fight against fraud can only be tackled through a close and constructive 
partnership between the Member States and the Commission. This partnership is 
anchored in the provisions of Article 209a of the EC Treaty, which provides that: 
Member States shall take the same measures to counter fraud affecting the 
financial interests of the Community as they take to counter fraud affecting their own 
financial interests. 
Without prejudice to other provisions of this Treaty, Member States shall 
coordinate their action aimed at protecting the financial interests of the Community 
against fraud. To this end they shall organize, with the help of the Commission, close 
and regular cooperation between the competent departments of their administrations. 
The Commission will make the necessary proposals to enhance this partnership and 
strengthen cooperation. 
2. THE LEGAL FRAMEWORK 
The legal framework for this partnership is clearly set out in the EC Treaty. Both the 
Commission and the Member States have clear obligations and responsibilities under the 
provisions of Article 209a EC. The Member States are also bound by Article 5 to 
respect their obligations under the Treaty and under secondary legislation. The 
Commission is bound to act to ensure the proper implementation of the Community 
budget by virtue of Article 205 and to ensure the application of the Treaty provisions 
themselves by virtue of Article 155. 
Moreover, secondary legislation includes a number of Council directives and Council and 
Commission regulations which are aimed at strengthening anti-fraud activities and 
cooperation between the Member States and the Commission. 
Finally the adoption of the Union Treaty has introduced another new and important 
element. The provisions dealing with cooperation in the fields of Justice and Home 
Affairs (Title VI) open up new possibilities for action in tackling fraud, complementing 
those which exist already under the EC Treaty. In particular, Article K. 1(5) provides a 
legal basis for future initiatives by the Commission in this area. Under Article K.9 the 
Council, too, may decide unanimously that Article 100c EC should apply. 
The Member States, the Council and the Commission must work together to ensure that 
this new framework is properly exploited to the maximum extent. 
3. THE COMMISSION'S ANTI-FRAUD STRATEGY 
The new strategy aims to establish a coherent set of guidelines to serve as the framework 
for more concrete measures. Essential to such an approach is the partnership between 
the Member States and the Commission and the optimum exploitation of intelligence 
sources. 
The wide ranging nature of the financial interests at risk emphasizes the need to develop 
a common protective framework, of which the anti-fraud strategy will form a part. This 
framework must recognize the fact that only a close coordination of effort involving both 
the Commission and the Member States can lead to overall success. 
Protection of the financial interests of the Community 
Community 
Legislation 
and Budget 
Y. 
Evaluation Analysis 
aidControls 
Recovery 
and 
Prosecution 
\.. 
The diagram above shows the main elements relevant to the protection of the financial 
interests of the Community, including the central role of the anti-fraud strategy, and 
demonstrates the interaction between the different activities involved. 
Viewing the problem in the overall context, it must be realized that although the accent 
has to be placed on operational action to combat fraud, preventive action remains a key 
factor for the protection of the public finances. It is an inescapable prerequisite for the 
protection of the financial interests of the Community. 
Improving the protection of the financial interests of the Community requires concrete 
measures based on a critical analysis of the elements noted above. 
The policies of the Community are implemented through legislation and financed from 
the general budget. This legislation must limit the possibilities for fraud and provide a 
firm base for effective controls. 
To be effective, controls must be properly targeted to ensure that inspection services 
concentrate on high risk sectors. These sectors should be identified by means of audits 
and risk analysis. 
Where cases of fraud are detected, every effort must be made to recover sums which 
have been fraudulently obtained or which have not been paid when they were due. 
Equally it is vital for the Member States to prosecute and impose appropriate deterrent 
penalties. 
Finally lessons must be learned from experience through a careful evaluation of past 
cases of fraud in the different sectors so as to improve legislation and all other aspects 
of anti-fraud activity. 
At the heart of the action taken to ensure the highest level of protection there must be the 
optimum exploitation of information to select the operations to be carried out. To this 
end the Commission will be taking initiatives in close collaboration with the Member 
States to optimize the gathering and exploitation of intelligence so as to make the 
cross-checks essential for improved results. To achieve this it will develop every 
instrument for good internal collaboration and closer partnership with the authorities 
responsible in the Member States. 
This global approach, using modern tools and methods (computers, risk analysis, etc.), 
will make it possible to target action to counter the threats posed by large-scale financial 
fraud, with its links to organized crime. 
4. THE BROAD LINES OF THE ANTI-FRAUD STRATEGY 
The Commission's new strategy centres on the following four main elements: 
Reinforcing the presence on the ground and support for operations, concentrating 
on high-risk sectors. 
Strengthening the partnership between the Commission and the Member States, 
extending information networks and improving the exploitation of intelligence. 
Improving the Community legislative framework in every sector of activity. 
Securing greater compatibility between national legislation. 
4.1 REINFORCING THE PRESENCE ON THE GROUND AND SUPPORT FOR 
OPERATIONS 
Operations have to be conducted in every area of Community finance, but first and 
foremost in those areas which are considered the most sensitive. Reinforcement will 
cover both the supporting legislative provisions and direct operational arrangements. 
Attention must be given to ensuring that these measures also lead to improved recovery. 
8 
In 1994 action will cover the following priority areas: 
(a) Operations 
The Commission will deploy all the human resources at its disposal to reinforce 
operations and to support action by the Member States in this area. 
In particular it will give priority to organizing and coordinating targeted enquiries 
and investigations in complex cases of transnational fraud liable to involve more 
than one Community financial instrument. 
(b) Structural Funds (and other non-EAGGF areas of expenditure) 
The Commission will put a high priority on extending its action in these areas of 
Community financing. Initiatives will be taken to: 
speed up the adoption of the planned rules governing the notification by the 
Member States of cases of fraud and irregularities in the Structural Funds; 
ensure that Member States communicate information on cases of fraud and 
irregularities affecting the Structural Funds, including information on subsequent 
administrative and legal action; 
ensure that the new Cohesion Fund instruments are supported by adequate 
anti-fraud measures, including the reporting of suspect cases; 
set up structures within the Commission and with the Member States to coordinate 
anti-fraud activities, including risk analysis techniques in all areas of expenditure 
not yet covered by specific measures. 
(c) Export procedures 
The Commission will take action in four areas to reduce fraud: 
developing risk analysis techniques for the entire Community in cooperation with 
the Member States; 
improving and computerizing transit procedures; 
clarifying the conditions concerning entitlement to refunds in Commission 
Regulation 3665/87;' 
tightening up control procedures, including reinforcing and targeting its control 
visits to Member States, concentrating in particular on transnational activities. 
(d) Own resources 
The Commission will take specific action to safeguard own resources, concentrating on: 
improving and computerizing the transit system in parallel with the measures 
planned for export procedures; 
tightening targeted controls, in particular with regard to transnational operations; 
Commission Regulation (EEC) No 3665/87 of 27 November 1987 laying down common detailed 
rules for the application of the system of export refunds on agricultural products; OJ L 351, 
14.12.1987. 
10 
strengthening its information base in this sector; 
ensuring that agreements negotiated with third countries contain adequate 
provisions on mutual assistance and administrative cooperation; 
taking concrete action in cases of misuse of provisions aimed at granting 
preferential treatment to imports from non-Community countries. 
(e) Recovery of Community funds 
The Commission will take practical steps to: 
ensure follow-up action on fraud cases to assess the success of steps taken to 
recover Community funds. This action will involve improved notification by 
Member States and the use of the Commission's IRENE1 data base; 
ensure priority is given to the adoption of amendments to Council Regulation 
No 1552/892 to reinforce follow-up procedures in the area of own resources; 
clarify the responsibilities of the Member States and their relations with the debtor 
or the beneficiary in recovery procedures, particularly in complex cases involving 
a number of Member States where close cooperation is required; 
put forward proposals aimed at ensuring that national rules limiting the time 
during which recovery action can be taken do not hinder or complicate the 
recovery of Community funds. 
2 IRENE is the Commission's data base of cases of fraud or irregularity communicated by the 
Member States to the Commission in accordance with the provisions of certain Community legal 
instruments. 
OJL 155, 7.6.1989. 
11 
establish a procedure in certain areas of expenditure (EAGGF Guarantee Section, 
for example) along the lines of the arrangements for own resources under Council 
Regulation No 1552/89, whereby the Member States keep separate accounts for 
established amounts that have not yet been recovered, so that the recovery of 
amounts paid out unduly as a result of fraud or irregularity can be better 
monitored. 
4.2 STRENGTHENING THE PARTNERSHIP BETWEEN THE COMMISSION 
AND THE MEMBER STATES, INCLUDING THE IMPROVEMENT AND 
EXPLOITATION OF INTELLIGENCE 
The object of this action is to ensure that the resources of the Member States and the 
Commission devoted to anti-fraud activity achieve the best possible results. This must be 
based on a sharing of responsibilities and of information and intelligence. Action must 
be aimed at: 
strengthening working links between anti-fraud services in the Member States and 
in the Commission, including the partnership that is vital for effective operational 
action; 
concentrating on the collection and analysis of intelligence, where the Commission 
will provide an integrated approach to information collection and analysis to 
cover all sectors of Community interest; 
improving methods for tackling complex international frauds and large-scale 
financial crime, including its links to organized crime; 
strengthening initiatives on training and exchanges of knowledge and expertise. 
12 
In 1994 action will cover the following priority areas: 
(a) The Commission will strengthen its links with the anti-fraud services of the 
Member States by: 
developing an integrated system of internal Commission information and 
intelligence data bases containing information relevant to the fight against fraud 
to be used to assist in operational activities of the services of the Member States; 
exploiting intelligence systematically and developing early warning systems on 
suspect activities; 
drawing up proposals to limit entitlement to subsidies or access to certain import 
arrangements by establishing criteria for the exclusion of non-reliable 
beneficiaries. 
(b) The Commission will take practical measures to increase its information sources 
by: 
installing an experimental freephone service to allow European citizens to provide 
information on fraud in confidence directly to the Commission; 
setting up other procedures to encourage people to provide information. 
(c) The Commission will continue to develop and advocate the use of risk analysis 
techniques in all sectors, working in close contact with the Member States. 
13 
(d) The Commission will place a priority on training, exchange programmes and other 
initiatives designed to encourage the protection of the financial interests of the 
Community. 
(e) The Commission will provide appropriate technical assistance to the Member 
States. 
(f) The Commission will work to make a success of the new Advisory Committee for 
the Coordination of Fraud Prevention, set up jointly with the Member States as the 
principal forum for officiai consultation and the regular assessment of experience. 
4.3 IMPROVING THE COMMUNITY LEGISLATIVE FRAMEWORK IN EVERY 
SECTOR OF ACTIVITY 
Legislative action here must concentrate on two specific areas: 
clarification and simplification of sectoral legislation; systematic inclusion of 
administrative sanctions in the regulations; 
strengthening control procedures and specific anti-fraud measures. 
In 1994 action will cover the following priority areas: 
(a) Following the study on administrative sanctions1 the Commission will make 
1 SEC(93) 1172, 16 July 1993. 
14 
proposals aimed at strengthening regulatory provisions in the area of controls and 
sanctions at Community level. In addition, the Commission intends to propose a 
mechanism to provide for a general regulation on administrative sanctions at Community 
level. 
(h) Conscious of the need to combat fraud, the Commission will continue the 
systematic introduction of sanctions in the implementing provisions relating to the 
regulations on the common market organizations. It also intends to examine the 
possibility of extending the system of administrative sanctions to all budgetary areas, in 
particular in Community policy areas involving the Structural Funds. 
(c) The Commission will consider proposing a legal instrument to extend 
administrative cooperation to cover the authorities most directly responsible for combating 
financial crime in order to improve the coordination at Community level of all 
operational activities at the stage before legal procedures are started. 
(d) The Commission will give top priority to the adoption of amendments to Council 
Regulation No 1468/81' designed to strengthen mutual assistance procedures in customs 
and agriculture. 
4.4 IMPROVING THE COMPATIBILITY OF NATIONAL LEGISLATION 
The Commission, having examined the results of the comparative study it had carried out 
of the laws, regulations and administrative provisions of the Member States applicable 
to fraud against the Community budget,2 believes that urgent measures are needed to 
ensure coherent action within and between the Member States. In this regard it is 
i Council Regulation (EEC) No 1468/81 on mutual assistance between the administrative authorities 
of die Member States and cooperation between the latter and the Commission to ensure the correct 
application of the law on customs or agricultural matters. OJ L 144, 2.6.1981. 
SEC(93) 1172, 16 July 1993. 
15 
important to address the need for convergence of Member States* legal systems in 
appropriate areas. To put in place this common approach and the concrete measures 
which that implies the Commission and the Member States must ensure the best possible 
protection of Community finances by making maximum use in a complementary manner 
of both the provisions of the EC Treaty and the provisions on cooperation in Title VI of 
the Union Treaty. 
In 1994 action will cover the following priority areas: 
(a) The Commission will put forward proposals with the aim of ensuring that fraud 
against the financial interests of the Community is treated by the Member States as a 
criminal offence and that an adequate legal framework exists to bring those responsible 
for fraud to account. 
(b) Furthermore it will put forward proposals for action on extraterritoriality, judicial 
cooperation and interstate cooperation in general to ensure that appropriate measures can 
be taken to combat fraud in cases involving more than one jurisdiction. 
ISSN 0254-1475 
COM (94) 92 final 
DOCUMENTS 
EN 09 
Catalogue number : CB-CO-94-100-EN-C 
ISBN 92-77-66709-5 
Office for Official Publications of the European Communities 
L-2985 Luxembourg