EUROPEAN COMMISSION Brussels, 20.7.2017 SWD(2017) 269 final COMMISSION STAFF WORKING DOCUMENT Annual overview with information on the results of the Hercule III Programme in 2016 Accompanying the document REPORT FROM THE COMMISSION TO THE EUROPEAN PARLEMENT AND THE COUNCIL Protection of the European Union's financial interests - Fight against Fraud

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1. Introduction 1.1 Hercule III Programme 1.2 Hercule III: eligible actions, beneficiaries and budget 1.3 Purpose and scope of this overview 2. Budget implementation in 2016 2.1 Budget implementation by type of financial intervention 2.2 Budget implementation by type of eligible action 2.2.1 Technical Assistance grants 2.2.2 IT Support: Databases, IT-tools and analyses of samples from tobacco seizures 2.2.3 Conferences, seminars and digital forensic training 2.2.4 Legal training and studies 3. Achievements 2016 3.1 To improve the prevention and investigation of fraud and other illegal activities beyond current levels by enhancing transnational and multi-disciplinary cooperation 3.2 To increase the protection of the financial interests of the Union against fraud by facilitating the exchange of information, experiences and best practices, including staff exchanges 3.3 Strengthening the fight against fraud and other illegal activities by providing technical and operational support to national investigation, and in particular customs and law enforcement, authorities Examples of operational results obtained from the use of the AMT and CONTRAFFIC- SAD tools and the tobacco analyses laboratory (developed with the JRC). 3.4 To limit the currently known exposure of the financial interests of the Union to fraud, corruption and other illegal activities with a view to reducing the development of an illegal economy in key risk areas such as organised fraud, including cigarette smuggling and counterfeiting 3.5 To enhance the degree of development of the specific legal and judicial protection of the financial interests of the Union against fraud by promoting comparative law analysis 4. Communication

4.1 Informing potential applicants 4.2 Dissemination of results 4.3 Publicity 5. Feedback from participants of the programme 6. Conclusions and way forward Annex 1: Grants and contracts awarded and finalised under the 2016 Financing Decision 1. Introduction 1.1Hercule III Programme The aim of the Hercule III Programme (hereinafter referred to as “the Programme”) is to protect the financial interests of the European Union by fighting fraud, corruption and irregularities. The Programme provides support to national and regional administrations in Member States which “promote the strengthening of action at Union level to protect the financial interests of the Union”. The financial support mostly consists of grants awarded to competent authorities in the Member States to strengthen their operational and technical capacity to carry out investigations into activities detrimental to the financial interests of the Union. The financial support is used for the purchase of technical equipment, such as x-rays scanners, soft- and hardware for securing evidence from computers or smartphones (digital forensics examinations) or the purchase and installation of integrated systems for number plate recognition (Automated Number Plate Recognition Systems-ANPRS). To a lesser extent, the Programme also serves to finance trainings and conferences for Member States' authorities. The legal basis of the Programme requires the Commission to adopt an annual work programme for the implementation of the Programme and to submit a report on the main results and achievements every year to the European Parliament and to the Council. This is the third annual overview of the achievements and results and its structure is based on the third annual work programme. The Programme shall be implemented in accordance with Regulation (EU, Euratom) No. 966/2012. The Programme is the only instrument specifically dedicated to protecting the Union’s financial interests and is administered by the European Anti-Fraud Office (OLAF), which, in the field of antifraud policy operates as a Directorate-General of the European Commission. The general objective of the Programme “shall be to protect the financial interests of the Union thus enhancing the competitiveness of the Union's economy and ensuring the protection of the taxpayers' money”, whereas the Programme’s specific objective shall be “to prevent and combat fraud, corruption and any other illegal activities affecting the financial interests of the Union”. The five operational objectives of the Programme are described in section 3 of this report, together with an overview of the main results of the actions carried out under the Programme and the contribution the actions made to achieve the operational objectives. 1.2Hercule III: eligible actions, beneficiaries and budget There are three types of eligible actions supported by the Programme: 1.“Technical Assistance”: this type relates to support aimed at providing specific knowledge, equipment and information technology tools to national authorities as well as providing specific databases and IT tools facilitating data access and analysis; 2.“Training”, which relates to support for training activities, conferences and legal studies focused on the protection of the Union’s financial interests; 3.“Any other action”: actions necessary for attaining the general, the specific and the operational objectives of the Programme. The beneficiaries of the Programme are eligible bodies that are: 1.National or regional administrations of a Member State;

2.Research and educational institutes and non-profit-making entities in the Member States. Both types of beneficiaries shall “promote the strengthening of action at Union level to protect the financial interests of the Union”. Costs incurred for persons from third countries to enable their participation in an event funded under the Programme, such as conferences, seminars or training sessions, can be considered eligible for funding under certain conditions. The budget for the implementation of the Programme in 2016 amounted to EUR 14.5 million in commitment appropriations and EUR 20.1 million in payment appropriations and is financed under item 24.0201 of the European Union budget for 2016. 1.3Purpose and scope of this overview The annual overview is intended to fulfil the requirement under Article 13.1 of Regulation (EU) 250/2015 to "provide the European Parliament and the Council, on an annual basis, with information on the implementation of the Programme, including on the achievement of the objectives of the Programme and the results". To that end, this overview covers information on actions for which financial commitments were made under the 2016 work programme (section 2) as well as the results of actions that were finalised in 2016, but committed under the Hercule Programmes in previous years (section 3). 2. Budget implementation in 2016 The budget for the implementation of the Programme amounted to EUR 14.5 million in commitment appropriations. Table 1 gives an overview of the available budget and the commitments made in 2016. Table 1: Available budget and commitments made in 2016 TYPES OF ELIGIBLE ACTIONS 2016 BUDGET COMMIT % TECHNICAL ASSISTANCE (min. 70%) 10 850 000 11 560 377 106.5 Grants: Cigarettes and Investigation support Grants 8 800 000 9 454 616 107.4 IT Databases Procurement 1 250 000 1 150 000 92.0 IT tools and tobacco analysis (JRC) Procurement 750 000 905 791 120.8 Purchase of technical equipment Procurement 50 000 49 970 99.9 ANTI-FRAUD TRAINING (max. 25%) 3 650 000 2 970 823 81.4 Grants: Anti-fraud training Grants 900 000 900 000 100 Procured conferences Procurement 1 000 000 693 605 69.4 Digital Forensics Training sessions Procurement 950 000 883 811 93.0 Grants: Legal Training and Studies Grants 500 000 493 407 98.7 Study: Illicit tobacco trade Procurement 300 000 0 0 OTHER ACTIONS (max. 5%) 42 300 4 604 10.9 P.M. P.M. 42 300 4 604 10.9 TOTAL 2016 14 542 300 14 535 805 99.96 The information in the table above only relates to commitments made in 2016. The payments under the grant agreements and most of the contracts cannot be reported as most of the payments will only be made in 2017 and beyond. 2.1Budget implementation by type of financial intervention The Programme was implemented by making use of public procurement (for contracts) and calls for proposals (for grants). The Commission concluded contracts for the purchase of goods or services, such as access to databases, the development of IT-systems or the organisation of training and conferences. The contracts were concluded on the basis of existing framework contracts (FWC), the purpose of which is to establish the terms governing specific contracts to be awarded during a given period. In 2016, the overall amount spent on contracts was EUR 3 616 228 (as shown in graph 1). Grants are direct financial contributions to finance an action intended to help achieving a Union policy objective. The overall budget spent on grants was EUR 10 846 808. Grants are awarded following a call for proposals, inviting applicants to submit a proposal for an action that contributes to the achievement of the objectives of the Programme. The beneficiary of a grant becomes the legal and economic owner of the goods or services that are purchased with the help of the grant. Under the Programme, grants may cover up to 80% of the eligible costs of the action and up to 90% in exceptional and duly justified cases. In 2016, the Commission twice used the possibility to award a grant covering 90% of the eligible costs. In April 2016, the Commission launched three calls for proposals: Technical Assistance, Legal Training and Training & Conferences. The deadline for submission of applications was set for June 2016. The Commission published a notice on the calls in the Official Journal and on its website. Moreover, it informed the members of the Advisory Committee for the Coordination of Fraud Prevention (COCOLAF) and invited them to inform potential applicants about the Programme's funding opportunities. Under the three calls, the Commission received 122 applications that were subsequently examined by three different Evaluation Committees. Each application was examined on the basis of four sets of criteria that were listed in the technical specifications of the call and ranked on the basis of the scores obtained on the award criteria (the fourth set of criteria): ·Added value of the application for the protection of the financial interests of the Union; ·Conformity with the operational objectives of the Programme; ·Quality; ·Value for money. The examination of the applications eventually led to the award of 46 grants at the end of 2016. Tables 10, 11 and 12 provides an overview of the successful and rejected applications, broken down by Member State, call, amount requested and awarded grant. Graph 1 below gives a breakdown of the budget (planned) and achieved commitments in 2016 by type of financial intervention (grants and procurement).

Graph 1: Hercule III budget and commitments in 2016 by type of financial intervention 2.2Budget implementation by type of eligible action Graph 2 below gives a breakdown of the budget (planned) and achieved commitments in 2016 by type of action. The "Technical Assistance" actions identified in Regulation 250/2014 encompass "Technical Assistance" activities as well as "IT-support", whereas the "Training Actions" include "Anti-fraud Training" and "Legal Training". The planned budget for technical assistance represented 74.6% of the total and the commitments represented 79.9%. These percentages are well above the minimum percentage of 70% to be spent on technical assistance actions as provided for in the annex to Regulation 250/2014. Graph 2: Hercule III budget and commitments in 2016 by type of eligible action Graph 3 gives an overview of the committed budget as well as the number of awarded grants for technical assistance (TA) and training actions (Antifraud training, TRAIN) and Legal training (LEGAL) in 2016. The information is broken down by Member State. The graph shows that grants were awarded to applications from 20 Member States. There were no grants awarded to applications from: DK, IE, CY, AT, SI, FI, SE and UK. Graph 3: Hercule III commitments (in EUR) and number of grants in 2016 by Member State and by sector of activity 2.2.1 Technical Assistance grants The budget for technical assistance grants was EUR 8 800 000. It was available for funding actions proposed by national and regional authorities. Examples of actions for which funding could be requested were: 1.The purchase and maintenance of investigation tools and methods used in the fight against irregularities, fraud and corruption perpetrated against the financial interests of the Union, including specialised training needed to operate the investigation tools; 2.The purchase and maintenance of devices and animals to carry out inspections of containers, trucks, railway wagons and vehicles at the Union's external borders and within the Union in order to detect smuggled and counterfeited goods imported into the Union with the aim or consequence to evade custom duties and excises (detection devices); 3.The purchase, maintenance and interconnection of systems for the recognition of vehicle number plates (Automated Number Plate Recognition Systems – ANPRS) or container codes for purposes related to the protection of the financial interests of the Union, including specialised training needed to operate these systems; 4.The purchase of services to support Member States’ capacity to store and destroy seized cigarettes and tobacco. The Commission received 72 applications from 20 Member States by the deadline of 9 June 2016. The total budget of the proposed actions was EUR 36 million and the requested financial support amounted to EUR 28 million. This amount exceeded the available budget of EUR 8.8 million more than three times. The Evaluation Committee set up for the examination of the applications adopted its recommendations in October 2016 and the decision to award a grant to 23 applications was adopted end October 2016. All applicants were informed of the outcome of the evaluation procedure and the reasons that led to the acceptance or rejection of their application. The overall amount for the grants was of EUR 9.5 million. The average co-financing percentage for the awarded grants amounted to 79.4% of the eligible costs of the action. The grants were awarded for the purchase of investigation equipment (including forensics equipment), the purchase of x-rays scanners, the purchase and training of sniffer dogs and Automated Number Plate Recognition Systems (ANPRS). Table 1 in Annex 1 gives an overview of the grants and co-financing rate, the beneficiaries and the supported action. 2.2.2 IT Support: Databases, IT-tools and analyses of samples from tobacco seizures Databases The Programme provides funds to procure databases or subscription to databases for law enforcement authorities in the Member States in order to support their operations and investigations. The Commission procures and manages the access to databases thus enabling substantial economies of scale. OLAF staff makes a limited use of these databases within the framework of investigations that are jointly undertaken by OLAF and its partners in the Member States. The databases were purchased in 2016 by concluding specific contracts under framework contracts, which were concluded in 2012 and 2013. Table 4 in Annex I gives an overview of the awarded contracts in 2016.

Development of specific IT tools for data analyses Two projects for the analysis of “big data” that were already initiated under the Hercule II Programme were continued in 2016. The Automated Monitoring Tool (AMT, for an amount of EUR 498 000 for two years) project and a project which follows up the earlier Container Traffic project (ConTraffic-REG-2, for an amount of EUR 222 791) are carried out by the Joint Research Centre (JRC) in Ispra (Italy) under administrative arrangements. The AMT generates automated alerts for outliers in trade data and can be used to monitor trade flows relevant for intelligence analyses and targeted controls by Member State customs, providing more realistic and effective scenarios for joint customs operations. The AMT has improved authorities’ ability to detect the undervaluation of imported goods and made them more efficient, freeing up human resources and time for other investigation work. The administrative arrangement for the AMT project has been renewed in 2016 to further develop and implement specific statistics for analysis of trade data and tools for the statistical detection of patterns of fraud to support Member States, especially in view of the amended Regulation (EC) No 515/97 . The ConTraffic Single Administrative Document (ConTraffic-SAD) analysis system is a pilot project run by the Commission (OLAF and JRC) in collaboration with customs authorities in Member States. This project has evaluated the feasibility and demonstrated the effectiveness of using Container Status Messages (CSMs) data to identify imports of containerized goods where the origin country is wrongly declared. The project is based on the ConTraffic technology developed at the JRC in collaboration with OLAF. The administrative arrangement for a new project to promote the systematic use of the CSMs based on the amended Regulation (EC) No 515/97 (ConTraffic-REG-2) with the JRC was launched in 2016 and runs until the end of 2017. The aim of the project is to assist Member States, together with the Commission, by providing support for verifying carriers' compliance with the obligation to report CSMs to national customs authorities, as well as by providing support for the detection of customs fraud through the implementation of an EU-wide system for the automatic and systematic origin verification of import declarations (SAD) based on CSMs. Section 3 contains examples of the results obtained in 2016 with the AMT and ConTraffic tools. Tobacco analyses The work programme provided for financial support to enable Member States' customs to carry out an analysis of samples taken from cigarettes and tobacco seizures. In 2016, the Commission renewed the administrative arrangement started in 2015 for an amount of EUR 185 000 with the JRC's Institute for Reference Materials and Measurements in Geel (Belgium) for carrying out chemical analyses on samples from tobacco and cigarettes seizures at the request of Member States. 2.2.3 Conferences, seminars and digital forensic training Conferences organised under grants The training activities supported under the Programme aim at providing grants to beneficiaries in the Member States for the organisation of targeted specialised and risk analysis training workshops, seminars and conferences. The training activities are also aimed at the strengthening of cross-border cooperation and the creation of networking activities between experts and law enforcement staff to facilitate exchange of information on best practices in relation to the protection of the financial interests of the Union. The priority topics addressed during seminars and conferences were defined in the specifications of the call for proposals launched in April 2016. These topics covered the exchange of experiences and best practices between the relevant authorities on fraud issues or the dissemination of knowledge and awareness raising on risks and red flags in, for example, the area of the management structural funds. The Commission received 28 applications from 13 Member States by the deadline of 23 June 2016. The aggregated budget of the 28 applications amounted to EUR 2.7 million, and the Commission was asked to contribute EUR 2.2 million, whereas only EUR 900 000 was available. The Commission awarded a grant to the 13 highest scoring applications for the amount of EUR 900 000, whereas 15 applications could not receive a grant as their score remained below the threshold needed for a grant. Table 5 in Annex 1 gives an overview of the grants and co-financing rate, the beneficiaries and the supported actions. Conferences organised under procurement In addition to grants, the Programme also gives financial support for the organisation by the Commission of high-level conferences and ad-hoc training activities focused on protection of the Union’s financial interests. The Commission used the services of one firm specialised in organising events under framework service contracts for the organisation of its conferences. The overall budget for conferences under procurement was EUR 1.1 million. Table 6 in Annex 1 provides an overview of the six events that were procured by the Commission in 2016. It should be observed that two events took place at the beginning of 2017: the debriefing of the Joint Customs Operation (JCO) in Bangkok (January 2017) and the conference for the evaluation of Regulation 883/2013 in Brussels (March 2017). Training organised under procurement: Computer forensics training The Commission signed a specific contract for the organisation of a two-week training session for 12 different digital forensic training courses in October 2016 for an amount of almost EUR 900 000. The training was organised in Zagreb by a service provider under a framework service contract concluded in 2013. The training session is organised for technical staff in law enforcement agencies that have to secure evidence in a lawful manner from digital information carriers, such as computers, smartphones, tables or network equipment. The two- weeks training courses were given by 27 experts and attended by 172 participants per week. The courses are developed by an international organisation of computer forensic experts, which also provided the trainers and ensured the quality control. At the end of the training sessions, the participants had to pass an exam to assess the newly acquired skills and competences. Most participants succeeded in passing these tests. The training sessions also gave the participants an opportunity to network and to exchange information and best practices in relation to computer forensic examinations. 2.2.4 Legal training and studies The legal training and studies are part of the overall training actions and aim at enhancing the development of the legal and judicial protection of the financial interests of the Union by promoting comparative law analyses. In 2016, the Commission awarded grants to applications that proposed actions covering the following topics:

1.Development of high-profile research activities, including studies in comparative law; 2.Improvement of the cooperation between practitioners and academics (through actions such as conferences, seminars and workshops), including the organisation of the annual meeting of the Presidents of the Associations for European Criminal Law and for the Protection of the Union's financial interests; 3.Awareness raising of the judiciary and other branches of the legal profession for the protection of the financial interests of the Union, including the publication of scientific knowledge concerning such protection. The Commission received 22 applications from 12 Member States by the deadline of the call for proposals on 16 June 2016. The aggregated budget of the 22 actions amounted to EUR 1.7 million and the Commission was asked to contribute for an amount of EUR 1.3 million (80% co-funding), where only EUR 500 000 was available. The Commission decided to award a grant to 10 applications for an overall amount of EUR 493 400 with an average co-financing rate of 70%. The grants were awarded, amongst others, for conducting studies on the preventive role of judiciary in protecting the financial interest of the European Union, the liability of legal persons for abuse of EU funds, as well as for the publication of a periodical on the protection of the Union’s financial interests. Table 8 in Annex 1 gives an overview of the awarded grants in 2016. 3. Achievements 2016 This section provides an overview of the main results achieved by beneficiaries by implementing the action for which the grant was awarded. Grant beneficiaries have to submit a final technical report with an overview of the main achievements as condition for the final payment. The report has to show how the results of the action contributed to the achievement of the objectives of the Programme. Beneficiaries of technical assistance grants shall, in addition to the final technical report, submit a final implementation report one year after the closing date of the action. This requirement has been introduced because beneficiaries are often not able to report on the achievements at the end of an action: technical assistance grants are awarded for the purchase and installation of technical equipment that, by the end of an action, has only been operational for a short period of time. The first tangible results of the use of technical equipment, such as the seizures of cigarettes, arrests made of suspected persons or estimates of prevented losses to the national or the Union budget can only be reported upon several months after the closing date of the action for which the grant was awarded. Beneficiaries of grants for training activities (conferences, seminars and training sessions) have to organise a survey among the participants to measure the relevance and quality of the event as well as overall user satisfaction. The final report of a training grant has to indicate how the action contributed to the achievement of the objectives of the Programme. All beneficiaries (grants and contracts) have to report on any problems encountered during the implementation of the action, such as delays in procurement procedures or staff changes. The report has to indicate how these problems were addressed and whether or not the problems eventually had an impact on the outcome or the results. This section mainly discusses the results of actions that came to an end in 2016, but that were initiated before 2016. The results will be examined in the light of the contribution made to the achievement of the operational objectives of the Programme. 3.1To improve the prevention and investigation of fraud and other illegal activities beyond current levels by enhancing transnational and multi-disciplinary cooperation The results of the activities undertaken in all of types of actions contributed to achieving this operational objective. The specialised anti-fraud trainings ensured a far-reaching anti-fraud and anti-corruption campaign across the EU and allowed a wide dissemination of anti-fraud measures affecting the EU's financial interests. The training seminars covered a wide range of disciplines, from combating irregularitities in the EU funds and VAT fraud to fight against illigal trade and smuggling, and combating financial crime. A total of 1 256 persons attended the anti-fraud trainings and conferences. 1026 feedback questionnaires were received after the events; they indicate that 97% of the participants assessed the organised events as 'excellent' or 'good'. Participants seemed to particulary appreciate events that have pratical impact on their daily work. Some participants observed that the lack of direct contact, discussions and exchange of information with participants from other countries, in spite of the international character of the event, was considered as one of the reasons for expressing dissatisfaction with the event. The Commission will take account of this observation during the examination of grant applications to ensure that conferences and training sessions will lead to strengthening of networks and the exchange of information on best practices. To this end, grant beneficiaries and contractors for the organisation of these events will be requested to organise a "post-event" survey 6 months after the event to assess the mid-term impact of the event. Grant beneficiaries often indicated the need for more flexibility during the preparation of an event. The administrative requirements before changes to the agenda of an event, the list of participants or the venue could be implemented were considered as burdensome. The Commission will adapt the forms for the submission of grant applications to enable this flexibility and will stress that adjustments cannot modify the purpose of the event for which the grant was awarded. A further simplification of the reporting requirements will be introduced as of 2017, for example by the introduction of an electronic grant management system enabling a smoother and faster reporting on the grant. The main results of these actions are: ·Improved investigation abilities of law enforcement officials involved in the protection of the financial interests of the European Union through the acquisition of new skills, knowledge and competence; ·Increased awareness on fraud risk indicators and EU anti-fraud policy. ·More widespread of specialised methodologies, tools and techniques to fight against fraud affecting the Union’s financial interests. A comprehensive overview of the finalised training events is given in Annex 1, table 7 (anti-fraud training) and table 9 (legal training). The Royal United Services Institute for Defence and Security Studies (RUSI) organised a two-day conference in November 2016, in Brussels. Participants came from police forces, customs authorities and other law-enforcement agencies. Nine Member States: (BE, FR, EL, IT, NL, PL, RO, ES and UK) were represented to assess the scale and scope of illicit trade across the region and the extent of organised criminal involvement. The conference played a part in: - sharing experience between the member states; - strengthening the position of customs and other law enforcement practitioners to design and implement more effective strategies and tactics to combat illicit trade, which will ultimately help EU member states to reduce both the harm caused by criminal groups and the financial burden of lost revenue associated with illicit trade;

- establishing close relationships between the customs and law enforcement agencies of participant countries, as well as between these agencies, academics and private sector organisations across the three sectors of tobacco, alcohol and pharmaceutical products. 3.2To increase the protection of the financial interests of the Union against fraud by facilitating the exchange of information, experiences and best practices, including staff exchanges The anti-fraud and legal training activities in particular contributed to achieving this objective, though the exchange of information through the AMT and CONTRAFFIC tools which increasingly support customs in drawing up risk analyses as the basis for their targeted controls. The Dutch "Asser" Institute organised a conference on the topic "The establishment of a European Public Prosecutor’s Office (EPPO) - Legal challenges and remaining questions", which took place in July 2016 in the Hague. The key objective of the conference was to bring together legal scholars and legal practitioners in order to discuss the legislative framework for the establishment of the EPPO and to take stock of the main elements of the EPPO legislative framework, including: the constitutional dimensions of the legislative framework, questions related to the competences and organisational make-up of the office, cooperation relations with OLAF and Eurojust and specific criminal law issues. The event facilitated the exchange of concepts and ideas and the event's design (panels and sessions covering the specified topics, alternated by discussion intervals) made it possible to obtain fruitful ideas and suggestions. The annual AFCOS seminar organised by OLAF took place in Tirana (Albania) from 1st to 3rd of June 2016. Its mains objectives were to: (1) bring together AFCOS and other relevant authorities from Candidate Countries, potential Candidate Countries, as well as Eastern Partnership Countries, with whom the EU has concluded association agreements, in order to (2) present the work of OLAF and AFCOS authorities, to (3) discuss challenges in their cooperation, and to (4) share best practices and experience in the areas of the protection of the EU's financial interests and fight against fraud. The seminar's impact was: - a better understanding among participants of OLAF's mandate, legal framework and practices, as well as of the obligations regarding the protection of the EU's financial interests; - improved cooperation and coordination between OLAF and enlargement/ Eastern Partnership countries in carrying out investigative activities; - Candidate Countries taking steps in preparing and adopting national antifraud strategies; - improved reporting of irregularities through the Irregularity Management System (IMS). 3.3Strengthening the fight against fraud and other illegal activities by providing technical and operational support to national investigation, and in particular customs and law enforcement, authorities Beneficiaries received grants for the purchase of technical equipment in order to: a)Strengthen the operational and investigative capacity by improving the quality, efficiency and effectiveness of technical hardware and technical support used in detecting and monitoring any illegal activity affecting the EU budget. It aims at a faster and more efficient detection of e.g. smuggled cigarettes and tobacco, illicit goods or the identification of new fraud schemes and modi operandi; b)improve skills and qualifications of the beneficiary's staff that tasked with the daily operations of the new equipment; c)improve the quality of evidence gathered during operations in support of fraud investigations. The improvements should speed-up legal proceedings in Member States and to reduce the number of dismissals during the prosecution or trial stages. The grants can also cover the expenditure for the maintenance of equipment as well as specific technical training for operational staff to ensure its optimal usage and management. Beneficiaries of technical assistance grants send a final implementation report on the results one year after the closing date of the agreement, thus enabling a better overview and understanding of the longer term impact of the Programme. Beneficiaries report, for example, on the number and amount of cigarettes and tobacco seizures, estimates of the prevented losses to the national and the Union’s budget, the emergence of new fraud schemes, the detection of networks of organised crime (OC) groups or the number of arrests made. This information contributes to improving the transparency of the Programme’s implementation, for as far as this transparency does not endanger on-going operations and investigations, and helps identifying the strengths and weaknesses of the Programme’s implementation. The Commission received reports on the implementation of grants that were funded under the Hercule II and Hercule III budgets of previous years. Even though it is difficult and sometimes impossible to establish a direct causal relationship between the grant, on the one hand, and the results achieved with the equipment purchased with financial support from the grant, on the other hand, it can certainly be assumed that without the financial support a substantially lower number of arrests, seizures and convictions would have been made. The seizures made with the help of x-rays scanners, for example, allow for a clear demonstration of this relationship, whereas this relationship is more difficult to demonstrate for support given for the purchase of digital forensics software or devices to monitor vehicles or persons suspected of involvement in illicit activities. The equipment nevertheless enables the beneficiaries to improve the overall efficiency and effectiveness of the operations they carry out in support of investigations to protect the Union's financial interests, as shown in the examples below. French customs finalized a project in 2016 where a grant for the purchase of digital forensic equipment was used during operations in support of investigations into the smuggling of cigarettes, tobacco and drugs as well as the identification of VAT-carrousels. The beneficiary managed to put the equipment in use in a fairly short period of time and to seize substantial amounts of cigarettes (three tons) in Calais that were ready for illegal shipment into the UK.

The Romanian National anti-corruption directorate within the Prosecutor's Office attached to the High Court finalized the implementation of an action consisting of the purchase of investigation tools, such as recording devices and digital forensic soft- and hardware. These tools were primarily used for monitoring suspects during operations and investigations into irregularities and corruption perpetrated against the financial interests of the Union. The operations eventually led to detection of documents that were falsified in order to obtain EU funds for an amount of almost EUR 4.8 million. A second operation into similar allegations led to the detection of irregularities amounting to EUR 2.7 million. The latter could be established as the result of the digital forensic hard- and software and the subsequent analyses that could be made on the data that were retrieved from seized devices. The substantial amounts that were detected during the operations demonstrate that a modest financial contribution enables substantial results and provides a clear demonstration of the contribution made to the achievement of the objectives of the Programme. Examples of procured access to external databases The Commission procured access to external databases for use by law enforcement authorities in the Member States. The databases containing trade information, company data or container movements provide essential operational information for joint investigations of Member States' law enforcement agencies and OLAF. The databases also provide input for risk analyses used by customs to target their controls. A commercial database of worldwide trade statistics with aggregated figures is used by both the Member States and OLAF to analyse trade flows (imports and exports), identify potentially suspicious trade and cross-check allegations of customs fraud. The statistics database is an essential part of a risk analysis system and is in regular use by customs analysts and investigators, enabling them to confirm or remove any doubts about misdescription of origin declared of goods imported into the EU and circumvention of antidumping duties. Trade statistics data are used by a Member State customs service in a system of reference prices, which aims to fight undervaluation of textile products from China. The so called reference price calculated through an automated risk analysis system, and also taking into account other information (such as the AMT cleaned average prices), is an indication for a customs officer conducting clearance that a price is suspiciously low and that the customs value should be questioned. As direct effects of using that system, in a series of customs proceedings since 2014 the customs service was able to recover customs duties and VAT. As indirect effects of a preventive nature, the reference price system led to significant increase of customs values declared and therefore increased amount of customs duties and VAT collected. Databases with information on companies are very useful tools in the investigations carried out by customs in the fight against fraud that affect the financial interests of the EU, including smuggling of counterfeit goods and cigarettes, leading to seizures. One operation, for example, led to the seizure of a large quantity of tobacco with a significant value. Another operation revealed a tax fraud on undervaluation of goods and false invoices. Customs investigation offices in one Member State have recently investigated a large-scale smuggling of counterfeit textiles and perfumes, as well as of tobacco products, cooperating with the authorities in several countries. This led to large seizures with a significant estimated amount of evaded duties and taxes and several individuals charged. Following information from different sources and checks of companies on the database, customs officers found and seized containers with large quantities of untaxed cigarettes imported into the EU in several cases, and thus prevented significant potential losses of tax revenue. Examples of operational results obtained from the use of the AMT and CONTRAFFIC- SAD tools and the tobacco analyses laboratory (developed with the JRC). The Automated Monitoring Tool (AMT) is used as part of a suite of risk analysis tools by the Member States customs for risk management purposes. The signals produced by the AMT tool using analysis of trade data allow the Member States and OLAF to identify new cases of potential fraud. Estimates for EU import prices for any product, country of origin and Member State of destination, known as cleaned average prices, are being produced on the basis of sound statistical principles which make them suitable reference EU prices for the determination of the customs value of imported goods. Member States customs use the estimated cleaned average prices, for example, in a-posteriori controls where they have doubts concerning the declared customs value of the goods, for the detection of value based irregularities related to the imported goods. In particular, the use of cleaned average prices has helped with more effective targeting of possible undervaluation and thus helped to reduce fraud, for example: - In 2016, a joint customs operation was conducted by several Member States customs authorities and targeted criminal networks for importing textile and footwear from China into one Member State. The operation found that several of the trucks controlled participated in fraud circuits, five criminal networks were identified and several shell companies were closed in several countries. The value of imported goods was significantly understated, leading to substantial losses to the EU and Member States' budgets in customs duties and taxes. The operation determined that significant value frauds were committed during customs clearance in the Member State of importation (undervaluation) and were prolonged by non-payment of VAT in the countries of destination. This also revealed that these large-scale frauds were the result of very organized circuits, extremely reactive and having an excellent knowledge of the faults of controls, logistic circuits, false invoice systems and clandestine financial flows. - Another operation took place in 2016 and was carried out by the customs authorities of 23 EU Member States in close cooperation with the tax authorities. It targeted goods originating from non-EU countries imported into one Member State and released into free circulation. More than 200 physical controls, 390 documentary controls and 50 on-the-spot checks were made during the operational phase. This led to customs officers uncovering several instances of undervaluation and misclassification of goods at import, as well as a string of missing traders who "disappeared" in order to evade customs duties and VAT. - A Member State has recently used THESEUS tools as part of an exercise to target potentially undervalued goods. The results revealed undervaluation for customs purposes but also for other tax related reasons. The potential revenue at risk is of an order of magnitude of millions of euros. The ConTraffic system has been developed to provide for an automatic cross-checking of the origin declared by importers in the Single Administrative Documents (SAD), supporting Member States customs authorities in the detection of potentially fraudulent declarations and in the validation of investigative results. The ConTraffic tool gathers systematically container movements' data (Container Status Messages) and provides Member States and OLAF analysis facilities to better target suspicious or anomalous movements and thus better detect customs fraud. The system analyses the SAD customs declarations related to cargo containers imported into the EU by sea, submitted by participating Member States customs, in view of identifying new cases of customs fraud involving misdeclarations of origin. As a result of this type of analysis, fraud signals related to potential misdeclarations of origin were generated and reported to the participating Member States. The identified signals are used by the Member States customs, for example, in support of the risk analysis and of the decision whether to open an investigation or control the documents. By June 2016, the SAD data analysis facility was used by 11 Member States customs sending their data to the JRC systematically and receiving signals in return (out of 12 Member States that joined the project). About 50 million SAD declarations from 12 Member States customs have been analysed over a period of 6 years and 1 300 signals of possible fraud cases were generated and communicated to Member States customs for further investigation. A Member State customs service has reported that 46 investigation cases were opened based on the fraud signals reported by ConTraffic-SAD in the period 2013-2016, which revealed misdeclarations of origin related to, for example, the import of goods claiming lower duties applicable to a third country under preferential trade agreements: - One of the positive investigations resulted in EUR 26 000 of duties recovery and a fine of approximately EUR 130 000. It was related to the importation of tableware from China that has been declared with Taiwanese origin. - Another success story of detecting an abuse of preferential trade agreements relates to the importation of polyethylene from Thailand, whereas it was declared as coming from South Korea. A laboratory for testing tobacco at JRC-Geel facility was set up and became operational as from April 2016. A dedicated IT module on the OLAF AFIS platform for handling requests for testing has become operational in June 2016. JRC implemented and optimized analytical methods for the different types of chemical and molecular analyses carried out on samples of tobacco seizures in order to determine their chemical profile and other distinctive features. The information is compared to profiles from a reference database in order to help with the identification of the origin of the seizure and to check the authenticity of the tobacco if customs has any doubts following, for example, the conditions under which the tobacco was traded and seized. The reference database has been enhanced and the number of profiles of both seizures as well as profiles from legally traded tobacco products continued increasing and facilitates the identification of counterfeits or smuggled tobacco. Testing of 15 seized cigarette samples was carried out during 2016. The developed analytical methods are promising for discriminating counterfeit from genuine tobacco products and well suited for contributing to forensic investigations aimed at dismantling of criminal networks. 3.4To limit the currently known exposure of the financial interests of the Union to fraud, corruption and other illegal activities with a view to reducing the development of an illegal economy in key risk areas such as organised fraud, including cigarette smuggling and counterfeiting Several actions contributed to achieving this objective in 2016. The widespread availability of illicit tobacco within the EU has led to the loss of considerable tax and duty revenues (losses to the EU and Member States' budgets as a result of cigarette smuggling are estimated to be at least EUR 10 billion per year). One feature of the illicit market for cigarettes in the EU is the significant quantity of counterfeit products available at a lower cost than the genuine products. The Bulgarian National Customs Agency finalized an action that consisted of setting up a network enabling the connection of 32 fixed and 10 mobile x-ray scanners in different location in Bulgaria. The scanners are used for the examination of vehicles and the network enables a remote examination of the images generated by the scanners. The remote examination of images generated by scanners operated in different locations improves the beneficiary's ability to monitor suspect transport movements through the country. The action included training activities for the beneficiary's staff that operate the scanners. OLAF organised the 21st Task Group Cigarettes Conference in June-July 2016 in Riga with the participation of the World Customs Organisation and EUROPOL-EUBAM. During three days, 94 customs and law enforcement officials from all the Member States, one candidate country and seven third countries shared their views and best practices on the fight against illegal cigarette smuggling. Many law enforcement authorities presented their operations based on the information provided by OLAF or conducted with the support of OLAF, with a particular focus on OLAF's added value to the national investigations. The event contributed to the mutual trust and awareness between investigators, not only on a vertical level (OLAF – national authorities) but also on the horizontal level (between different national authorities with OLAF's key participation). In this sense, the participation of third countries is considered as being strategic in the fight against cigarette smuggling. The conference conclusions underlined the need for international cooperation to counter the smuggling of cigarettes which has a significant impact on the budgets of both the EU and its Member States. 3.5To enhance the degree of development of the specific legal and judicial protection of the financial interests of the Union against fraud by promoting comparative law analysis This operational objective is mainly achieved through legal training grants that are awarded for comparative law studies, legal conferences, seminars and publications. The conferences were attended by prosecutors, lawyers, investigators, police officers, academics, researchers, national civil servants, as well as members and officials of the EU institutions. The purpose of these conferences and seminars was to promote the dissemination of legal information on the latest developments in the area of fraud prevention and the fight against fraud, and constituted a good forum for discussion of future legislative solutions in the field of the protection of the EU financial interests. The satisfaction rate of the participants, expressed through the filled-in evaluation forms, was at around 90% for the legal conferences organised in 2016. The Programme continued funding the publication of “eucrim – The European Criminal Law Associations’ Forum", which was published four times in 2016 by the German Max Planck Institute. This periodical addressed current developments in the protection of the EU's financial interests, the activities of OLAF, the latest policy and legal developments in relation to procedural rights and judicial cooperation, or the fight against money laundering in the EU. Each issue is printed in 2000 copies and distributed to universities, libraries, courts, law enforcement authorities and individual subscribers. The articles are published on the internet as well.

4. Communication The successful implementation of the programme required a structured way to inform potential beneficiaries on funding opportunities, and to provide answers to questions from (potential) beneficiaries by means of four different functional email boxes. Moreover, the Commission is required to disseminate information on the achievements and the results of the actions that received funding. 4.1Informing potential applicants Notices concerning the launch of Calls for proposals were published in the Official Journal and the full texts of the documents were made available on the Commission's website. The professional networks were actively informed. Potential applicants were also informed via e-mails sent to the members of the Advisory Committee for the Coordination of Fraud Prevention (COCOLAF), the OLAF Anti-Fraud Communicators Network (OAFCN) and European Judicial Training Network (EJTN). A short notice of the three Calls was published in "eucrim" issue 2/2016. The training Call was also published in the news section of the e-Justice Portal. 4.2Dissemination of results The dissemination of the results of actions under Hercule programme, in particular technical assistance, is rather sensitive as most of the achievements relate to investigations for which information cannot be disclosed. The dissemination on training activities was made through the distribution of electronic and/or paper reports summarising the event. Some beneficiaries posted the training materials on their websites or created dedicated websites. The reports of studies funded under grants are made available via the Commission's website



4.3Publicity Under the training type of actions, all beneficiaries of grants were requested to mention the support from the Hercule III programme: ·In every publication (title page) or related material developed (e.g. studies, booklets, newsletters, leaflets); ·In electronic information (e.g. websites, audio-visual material, videos, software); ·At information events (conferences, seminars); ·Insert a link from their website to the Hercule III programme's site. The Commission continued its efforts to improve the readability of the website with information on the Hercule Programmes. Beneficiaries of technical assistance grants were requested to mention the Hercule support in their reports and any other document or press release that reported on the results: press releases issued following seizures of counterfeited or smuggled cigarettes made with Hercule funded equipment, for example, should refer to the Union's funding. There is no requirement to include a reference to Hercule funding on equipment purchased with a grant, in particular if this might endanger operations or investigations. 5. Feedback from participants of the programme As indicated in section 3.1, beneficiaries of grants for trainings, conferences and seminars have to carry out surveys among the participants to collect information on the perceived quality and relevance of the event. The total number of participants to the events in 2016 was 1725, who were all requested to fill in an evaluation form with questions on the event’s relevance for their professional activities, the quality of the organisation and the speakers or the venue and other aspects. The Commission received 1 200 questionnaires (70% response rate) expressing a high level of satisfaction: more than 93% of the participants considered the event good or excellent. The feedback also confirmed that the events were attended, in general, by an audience as initially targeted by the organisers. The qualitative comments transmitted by participants in the evaluation forms, as well as the feedback collected from Commission staff attending the events helped in identifying areas for improvement, such as the exchange of information with participants from other countries, more practical/hands-on dimension of the events, conference logistics, prior information on cancellations or the presence of trainers having the necessary pedagogical, linguistic and cross-cultural skills. All the above-mentioned aspects raised by the participants are taken into consideration and monitored in the on-going, as well as the future Hercule III co-financed actions. 6. Conclusions and way forward The results above show that the implementation of the Programme in 2016 was overall successful. The improved reporting on the results has led to a better understanding of the impact of the Union’s interventions and allowed for increased transparency. These results show the that the actions undertaken with support from the Programme contributed to the protection of the financial interests of the Union and contributed to the prevention and fight against fraud, corruption and any other illegal activities affecting the financial interests of the Union, though the modest size of the Programme should be taken into account in this respect. The findings in the final implementation reports will be used for the on-going mid-term evaluation of the Programme and will be used for the Report that the Commission will transmit to the European Parliament and to the Council by the end of 2017.

From 2017 onwards, the Commission will ask beneficiaries of training grants and contracts to carry out a "post-event" survey among the participants of a conference, seminar or training in order to assess to which extent newly acquired skills and qualifications are put in practice and whether networking activities could be carried out after the event. In 2017, the Commission will start using the Participant Portal for the electronic submission of applications and the management of grants under the Hercule III Programme. The Participant Portal is an IT application developed for the management of research grants awarded under Research and Innovation programmes managed by the Commission and will now gradually extended to most of the Commission's funding programmes under direct management. The electronic submission and processing of applications is expected to shorten considerably the time for notifying applicants on the outcome of the evaluation procedure and is expected to reduce the administrative burden for applicants, grant beneficiaries and the Commission.



Annex 1: Grants and contracts awarded and finalised under the 2016 Financing Decision Table 1 - Technical Assistance grants awarded under the 2016 Financing Decision MS Beneficiary Subject Awarded Grant in Euro Co-fin % 1 EE Estonian Tax and Customs Board Portable X-Ray 100 198 80 2 RO Anti-Corruption General Directorate Increasing efficiency in investigating and combating corruption 139 030 80 3 PL Border Guard Maritime Division Purchase mobile x-rays scanners 116 558 80 4 PT General Prosecutor of the Republic Forensic Computer Lab 548 701 80 5 FR Service national de douane judiciaire (SNDJ) Surveillance equipment 121 170 80 6 ES AEAT-Customs Video surveillance equipment 380 800 80 7 LT Financial Crime Investigation Service FCIS Procurement of intelligence equipment 100 650 79.6 8 LV Latvian State Police Strengthening the technical capacity 110 482 80 9 EL GSAC-AFCOS Purchase x-ray scanner 1 107 200 80 10 PL National Police Headquarters Strengthening the investigative capacity 546 548 80 11 PL Ministry of Finance, Treasury Intelligence Department Purchase of technical equipment 284 834 80 12 RO National Anti-Corruption Directorate - PNA Prosecutors' office Consolidating of the investigative capacity 870 527 80 13 LT Special Investigation Service of the Republic of Lithuania Purchase of special technical equipment 255 235 80 14 FR Douane - DNRED Purchase of interception equipment 408 000 80 15 FR Forensic and Criminal Intelligence Agency of the French Gendarmerie (PJGN) Acquisition of digital forensic equipment 344 847 80 16 ES Guardia Civil Purchase of scanners and monitoring devices 614 624 80 17 EE Estonian National Police Creation of criminal analysis platform 192 040 80 18 HR Croatian Ministry of Finance - Customs Purchase mobile x-ray scanner 1 200 000 80 19 BE Belgian National Police Enhancing the fight against EU financial fraud 290 568 80 20 SK Financial Directorate of the Slovak Republic Purchase of digital forensics equipment and software 330 684 66.7 21 BG Bulgarian Border Police Enhancing technical capacity 347 478 80 22 MT Malta Customs Department Enhancing technical capacity 331 262 80 23 HU National Tax and Customs Board Technical capacity development 711 965 80 Total 9 453 401 79.4



Table 2 - Technical Assistance grants finalised in 2016 MS Beneficiary Subject Amount paid Amount paid as % to initial commit-ment 1 MT Maltese Customs Department Purchase of mobile scanner 584 000 100 2 ES Guardia Civil Improving electronic undercover surveillance 253 318 76.6 3 FR Direction Interrégionale des douanes d'Antilles Guyane Purchase of mobile scanners 100 166 100 4 FR Direction Nationale du Renseignement des Enquêtes Douanières Purchase of equipment for monitoring vehicle movements 114 136 99.2 5 RO General Inspectorate of the Romanian Police Strengthening the operational capacity of sniffer dogs police units 182 416 93.7 6 FR Direction générale des douanes et droits indirects Purchase of Automated Vehicle Number Recognition System cameras 209 598 100 7 LV State Revenue Service Purchase of Automated Vehicle Number Recognition System 98 778 100 8 NL Fiscale Inlichtingen - en Opsporingsdienst Purchase of scanners 47 800 100 9 ES Guardia Civil, Fiscal and Borders Command Strengthening of operational capacity 179 349 76.8 10 FR Service Commun des Laboratoires Purchase of technical equipment and implementation of software for cigarette analysis 100 256 96.4 11 BG National Customs Agency X-Rays Networking, Image and Data Exchange 1 466 729 100 12 LV Corruption Prevention and Combating Bureau of the Republic of Latvia Improvement of forensic, analytical and surveillance capabilities 186 411 100 13 PT Polícia Judiciária Lisbon Anti-Fraud Interception System 1 050 866 99.2 14 PL Ministry of Finance, Polish Customs Service Purchase of Backscattering Van 682 678 80.1 15 PL Customs Chamber Opole Implementation of computer forensics in Polish customs service 157 250 92.9 16 LT Financial Crime Investigation Service Procurement of Intelligence equipment 45 615 98.4 17 RO Ministry of Internal Affairs, County Police Inspectorate Bistrita Năsăud Strengthening the operational capacity 56 061 86.7 18 FR Direction générale des douanes et droits indirects- Direction Nationale du Recrutement et de la formation professionnelle Purchase of sniffer dogs and vehicles for transport of sniffer dogs during operations. 12 552 32.4 19 BE Service Public Fédéral Finances, Administration Générale des douanes et accises Assistance technique d'aide à l'enquête: purchase of digital forensic equipment 21 480 70.5 20 RO National Anticorruption Directorate within the Prosecutor's Office attached to the High Court of Cassation and Justice Purchase of technical equipment: purchase of investigation tools: monitoring devices as well as digital forensic soft- and hardware 95 197 98.1 21 MT Customs Department Lease of a mobile x-ray scanner for a period of 5 years. 1 106 667 100 22 FR Direction générale des douanes et droits indirects Purchase of technical equipment 37 233 87.6 Total 5 888 529 85.4 Table 3 – Technical Assistance final Implementation reports received in 2016 FD MS Beneficiary Subject Results 1 2013 EL Greek Customs Service Cigarette Detector Dogs With the help of 9 sniffer dogs, 242 seizures were made of more than 250 million cigarettes, 440kg tobacco and EUR 440 000 cash. Estimated prevented losses: EUR 26.5 million. 2 2014 FR Direction générale des douanes et droits indirects Renforcement des capacités en équipes maître-chien anti-tabac (assistance technique) The deployment of sniffer dogs during 6 operations led to the seizure of more than 3 tons tobacco. 3 2012 HU X Service Provider Capacity Building In Hungary Investigations tools purchased under several grants enabled this beneficiary the seizure of almost 400 000 packages of cigarettes and 46 tons of tobacco, together with counterfeits, cars and other valuables. More than 150 persons were investigated (including customs staff) and around 50 persons arrested. In addition, more than EUR 3 million was seized, whereas the estimated losses at more than EUR 10 million. 4 2013 HU X Modernising the Technical Background of Crime Detection 5 2012 HU X Purchase of GSM monitoring systems 6 2012 HU X Technical Development for a more effective Fight against Cigarette-related abuses Transport and low-altitude monitoring equipment enabled the seizure of cigarettes (693k boxes), tobacco (14 tonnes) and money (EUR 1 million). The prevented losses and expected fines amount to more than EUR 5 million. 7 2013 IE Irish Revenue Commissioners Procurement of Equipment The use of luggage scanners, sniffer dogs and cameras led to the seizure in several places of almost 70 million cigarettes, 2.3 tons of tobacco, drugs and counterfeits. Criminal convictions were secured in more than 100 cases for smuggling and the sale of such products. 8 2013 LT Financial Crime Investigation Service - Ministry of Interior Procurement of Intelligence Equipment Use of digital forensic equipment to dismantle OC groups involved in VAT-fraud with oil trades; money laundering and traffic of luxury cars. Estimated amounts involved: more than EUR 70 million. 9 2012 LV State Revenue Service of the Republic of Latvia Technical Support for the Purchase of the Fuel Unloading Systems The use of this equipment in 14 operations led to the detection of 17 infringements of the customs legislation. The estimated losses were more than EUR 7 000. The deployment of the equipment purchased under the second grant enabled the seizure of more than 7 million cigarettes in 22 infringements. The estimated losses were more than EUR 800 000. 10 2013 LV State Revenue Service of the Republic of Latvia Technical Support for the Purchase of Special Technical Equipment for Customs Control 11 2013 PL Customs Chamber in Wrocław Implementation of the Criminal Analysis in The Customs Service - Technical Assistance The use of digital forensic soft- and hardware enabled Wrocław customs the seizure of more than 19 million cigarettes, 60 tons tobacco, alcohol, fuels and counterfeited goods. It also lead to the investigation of 80 persons, 13 of which were detained and 5 the subject of a prosecution. The overall losses of these seizures were more than EUR 20 million. 12 2013 PL Treasury Intelligence Department, Ministry of Finance Purchase and Modernisation of the Technical Equipment The transport vehicles, monitoring equipment and computers were used in several operations aimed at identifying the modi operandi of OC-groups involved in VAT frauds with electronic equipment, money laundering and cigarettes smuggling and counterfeits. It led to the seizure of more than 80 tons of tobacco, cigarettes manufacturing machines, liquors and fuels as well as the investigation of almost 60 persons. The estimated losses amount to at least EUR 100 million, but are likely to be higher. 13 2012 PL Central Bureau of Investigation – Warsaw Purchase of electronic surveillance equipment and training for the Central Bureau of Investigation of illicit consignments of tobacco products Forensic equipment used to examine digital information devices in operations against OC-groups involved in VAT-carousels, money laundering and economic crimes led to 8 arrests and 104 persons under investigation. The estimated amounts involved were more than EUR 1.3 million, though the amounts could not be given for a number of operations. The use of the equipment purchased under the second grant led to the seizure of more than 9 million cigarettes, 50kg tobacco, drugs, amphetamines and smuggled liquors. The amounts concerned were more than EUR 1.5 million. 14 2012 PL National Police Headquarters Purchase of the Computer Forensics Laboratory Equipment for the Central Bureau of Investigation; Purchase of monitoring equipment. 15 2013 PL Regional Police Headquarters in Olsztyn Enhancing the operational potential of the Warmia and Mazury Police by developing a system for combating and preventing tobacco crime Transport equipment and computers were used in operations enabling the seizure of more than 10,000 packages of cigarettes and 60kg of tobacco, as well as 300 liters liquors. Evaded taxes, excises and custom were almost EUR 100,000. 16 2012 PL Regional Police Headquarters in Lublin Technical support for the Lublin police in the scope of fighting the cigarette smuggling and counterfeiting on the Eastern border of the EU Investigation equipment, such as (infrared) camera's, cars, binoculars and IT-equipment enabled the seizure of more than 4.5 million cigarettes, 1523kg tobacco in a large number of operations. The amounts involved (prevented losses, money laundering) were almost EUR 40 million. 17 2013 RO Dambovita County Police Inspectorate Strengthening the operational capacity of Dambovita County Police Inspectorate by purchasing the latest technology used to combat fraud The purchased equipment enabled a smoother and better examination of forensic evidence. It was used in the examination of documents used for a large number of transactions and eventually helped to detect VAT and tax evasion cases as well as money laundering and counterfeited bank notes. The overall amount was more than EUR 6 million and was eventually recovered. 18 2010 SK Financial Directorate of the Slovak Republic Purchase of Technical Equipment for the Detection of Illicit Consignments of Tobacco Products Video recording equipment, high-performance cameras and endoscope used in more than 80 operations enabled the seizure of more than 2 million cigarettes, 30kg tobacco, drugs, liquors and counterfeits. Around 5 persons were investigated and the estimated losses were more than EUR 325 000. 19 2013 PL Regional Police Headquarters Gdańsk Support for the Provincial Police Headquarters in Gdansk for the investigation and evidence collecting process regarding crimes against the financial interests of the EU. The monitoring equipment purchased under this grant enabled the seizure of 2 tons of tobacco, together with substantial amounts of drugs under several criminal investigations. The prevented losses of the tobacco seizure were around EUR 0.5 million. Table 4 - Databases that were contracted under the Hercule III budget in 2016 Name Content Commitment in Euro 1 NTELX Information on ship manifests 375 000 2 GTA Global Trade Atlas: trade statistics data 200 000 3 GRS Global Reference Solution: contains basic company information from all over the world and gives information on links between companies 575 000 D&B reporting system Dun & Bradstreet: Financial details of companies all over the world Total committed under 2016 budget 1 150 000





Table 5 – Anti-Fraud Training & Conferences grants awarded in 2016 MS Beneficiary Subject Commitment in Euro Co-fin % 1 PL Komenda Wojewódzka Policji w Olsztynie Protecting the European Union’s financial interests through cooperation between services, and acquisition and exchange of skills in combating tobacco crimes and crimes to the detriment of the European Union. 90 989 80 2 LV Ministry of Finance of the Republic of Latvia Strengthening the capacity for the institutions involved in the AFCOS network to set up and identify the strategic and control tools for the fight against fraud and corruption 53 481 49 3 IT Agenzia delle Dogane e dei Monopoli “White Smoke” - Exchange of tools and best practices for the fight against the illicit traffic of cigarettes (in particular cheap-whites) in the participating region 91 350 80 4 RO Anticorruption General Directorate (DGA) Improving the cross-border cooperation for preventing and combating fraud, corruption and other illegal activities in South Eastern Europe 56 679 80 5 LT Lithuanian Police Forensic Science Centre Improving Baltic States Police Computer Forensics Specialists' Skills in IT Investigations by Organizing Training of Specialized IT Forensics Software 46 706 80 6 CZ Transparency International CZ Conflict of Interests as a Risk of Fraud 40 096 80 7 IT University of Perugia – Department of Political Sciences Fighting corruption through administrative measures - supporting development of new anti-corruption policies 147 116 80 8 PL Szkoła Policji w Katowicach Protection of the financial interests of the EU – common obligations and challenges 75 018 80 9 RO Calarasi County Police Inspectorate Transnational cooperation between law enforcement authorities for strengthening the activity of preventing and fighting against fraud with EU funds in the agricultural field 96 722 80 10 PL Regional Police Headquarters in Lublin Enhancing the effectiveness of fighting corruption crimes detrimental to the European Union’s financial interests 43 709 80 11 SK Financial Directorate of the Slovak Republic Seminar focused on customs controls and risk analysis of vehicles on the border with Ukraine in the fight against customs fraud targeting the smuggling and counterfeiting of tobacco products 41 144 80 12 IT Osservatorio sulla criminalità nell’agricoltura e sul sistema agroalimentare Tobacco road 47 998 80 13 IT Agenzia Veneta per i Pagamenti in Agricoltura - AVEPA SafeNet: Strenghten Anti Fraud European Network 68 991 80 Total 900 000 77 Table 6 – Anti-Fraud Training & Conferences Procured Conferences organised by the Commission in 2016 Dates Conference Title Location No of participants Amount paid in Euro (1) 1 (1) 17-19 January 2017 ASEM Briefing Conference – JCO RENEGADE Bangkok Thailand 80 248 361 Objectives: Preparing the Joint Customs Operations (JCO) RENEGADE; discussing and approving the operational plan as well as training of ASEM partners in the AFIS IT tool for the secure exchange of information during the JCO. The event contributed to the prevention and the fight against counterfeits under the ASEM framework. The conference and training extended the access to the AFIS platform to many non-EU countries and enhanced international cooperation in the antifraud area by facilitating the exchange of intelligence and the conduct of operational actions in the various countries involved. The on-going evaluation of the JCO suggests the possibility for the initiation of OLAF investigations in the field of IPR. 2 28 June - 1 July 2016 Task Group Cigarette 2016 Riga Latvia 94 91 387 Objectives: In the context of OLAF's leading role in the field of coordination and investigation activities concerning the smuggling of cigarettes into the EU, this event provided the Member States with an update on the current situation in relation to cigarettes smuggling. This update is based on the analysis and the interpretation of data collected by OLAF during 2015-2016. In addition, the event enabled the exchange of information about recent developments, strategies and trends in the area of cigarettes smuggling as well as discussions on enforcement measures to improve effectiveness and cooperation in this field. 3 17-19 June 2016 AFCOS Seminar Tirana Albania 70 62 119 Objectives: Bringing together AFCOS and other relevant authorities from candidate countries, potential candidate countries, as well as Eastern Partnership countries, with whom the EU has concluded association agreements, in order (i) to) present the work of OLAF and AFCOS authorities, (ii) to discuss challenges in their cooperation, and (ii) to share best practices and experience in the areas of the protection of the EU's financial interests and fight against fraud (e.g. functioning of AFCOS, investigative cooperation, preparation of an antifraud strategy, irregularity reporting, etc.). 4 (1) 1-2 March 2017 Conference on the Evaluation of Regulation 883/2013 Brussels Belgium 190 193 505 Objectives: The conference was organised as part of the evaluation of Regulation 883/2013. It gathered stakeholders from a wide range of antifraud backgrounds including high-level representatives from OLAF's operational partners, the European Commission, the European Parliament, the Council, the European Court of Auditors and OLAF Supervisory Committee. The participants presented their insights on the application of Regulation 883/2013; discussed the preliminary evaluation findings and provided further evidence for the evaluation of the Regulation. It was also an opportunity to discuss how the future EPPO would impact the current framework of OLAF and the antifraud landscape in general. 5 13-14 April 2016 Training for Member States on European Maritime Safety Agency’s SSN and IMS (IMDatE) applications Lisbon Portugal 23 24 082 Objectives: Training Member States' customs officers interested in vessel movement data that would support their analytical, intelligence and operational work. 6 22-25 November 2016 High level meeting between customs and other regulatory authorities Hong Kong 28 27 991 Objectives: The purpose of this meeting between the customs and other regulatory authorities was to exchange views on how to combat certain types of illegal activities and abuse, including on sensitive products and transhipment fraud and to explore how OLAF and non-EU countries could work together in a practical way to reduce the impact of this abuse. The participants discussed setting up a pilot project concerning a clearly defined product shipped from China to Europe and from Europe to China and to explore the feasibility of a Joint Customs Cooperation (JCO) on combatting this type of abuse and fraud building on the experience of the above mentioned pilot project. Total 485 205 780 (2) (1) Events n° 1 and 4 are committed under Hercule Budget 2016, but implemented in early 2017. Since the amounts paid are not known yet, the amounts indicated are the amounts committed. The overall amount committed under the 2016 Financing Decision for procured conferences was: EUR 693 605.- (2) This total does not include events n°1 and 4 Table 7 - Anti-Fraud Training & Conferences grants finalised in 2016 Beneficiary Title Participants Total paid Amount paid as % to initial commitment 1 RO National Anticorruption Directorate - DNA Training for operating technical equipment needed to support investigations 59 56 733 78 2 NL National Police of The Netherlands Sniffer Rats II 16 41 879 17 3 RO Dolj County Police Inspectorate INTACT-INcreasing the Awareness of law enforcement agencies involved in the fight against smuggling and counterfeiting of tobacco product in Romania, Hungary, Bulgaria 220 37 459 55 4 IT Istituto Europeo per lo Sviluppo Socio Economico EU funded actions: rules, laws and best practices sharing in the field of fraud prevention 88 62 572 82 5 HU National Tax and Customs Administration of Hungary Enhancing international cooperation between the partner authorities involved to strengthen the fight against infringements affecting the financial interests of the EU on the EU's external and internal borders 56 25 033 55 6 RO National Anticorruption Directorate within the Prosecutor's Office Frauds in respect of EU revenue by simulated customs operations - typologies and methods of investigation 30 11 090 37 7 SK Financial Directorate of the Slovak Republic Training focused on detection of smuggled and counterfeited tobacco products in air, land and maritime container transport 57 44 805 73 8 CZ Oživení, o.s. Whistleblowing: Challenge for the Czech Republic 144 39 538 90 9 BG National Revenue Agency (NRA) Increasing NRA’s administrative capacity in preventing and investigating fraud 151 20 979 46 10 RO Freedom House Romania Better legal protection for EU financial interests in Romanian public procurement 267 59 832 87 11 PL Provincial Police Headquarters in Gdańsk Identifying illegal production and distribution of excise goods 115 16 728 61 12 IT Italian Carabinieri Operational approaches to fighting fraud in the European agricultural and food sectors 53 49 916 84 Total 1 256 466 565 56



Table 8 - Legal Training & Studies grants awarded in 2016

MS Beneficiary Subject Commit-ments in Euro Co-fin % 1 NL Utrecht University, School of Law, Utrech Center for Regulation and Enforcement in Europe/RENFORCE Comparative study Exchange of information with EU and national enforcement authorities: Improving OLAF’s legislative framework through a comparison with other EU authorities (ECN/ESMA/ECB) 76 215 80 2 PL ELRA - European Law Research Association Conference and post-conference publication The Cost of Non-Europe 45 574 90 3 DE Max Planck Society for the Advancement of Science Periodical publication eucrim: The European Criminal Law Associations' Forum - publication of a periodical on the protection of the EU’s financial interests 70 838 80 4 CZ Transparency International Czech Republic Comparative study Transparency of corporate ownership structures of public money recipients, including their tax transparency 45 978 80 5 LU University of Luxembourg Comparative study Liability of company directors in a comparative EU criminal justice context 49 697 31.6 6 ES Anti-Fraud Office of Catalonia Comparative study and seminar Managing conflicts of interest for the prevention of fraud and corruption in the European Union 32 701 80 7 RO Expert Forum Association Comparative study and conference Money and politics – linking EU funds and political parties 55 537 80 8 BG Program for the Development of the Judicial System Association Comparative study and conference Liability of Legal Persons for Abuse of EU Funds: Comparing Bulgaria’s New Legislation with EU Member States’ Law and Practice 31 810 80 9 RO Transparency International Romania Comparative study The preventive role of judiciary in protecting the financial interest of the European Union – a comparative analysis for improved performance 48 807 80 10 DE Academy of European Law - ERA Conference Annual Forum on Combating Fraud and Corruption in the EU 2017 36 250 73.9 Total 493 407 69.6



Table 9 - Legal training and studies grants finalised in 2016 MS Beneficiary Title N° of part. Total paid Amount paid as % to initial commitment 1 IT University of Bologna, European School of Advanced Fiscal Studies Comparative study and conference: Criminal and Administrative Investigations in the field of VAT and Customs Duties. From national Practices to an EU Integrated System of Information and Evidence Exchange 100 53 079 89.6 2 IT Fondazione Lelio e Lisli Basso (ISSOCO) Conference and publication: EPPO and OLAF investigations: the judicial review and procedural guarantees 105 67 338 86.2 3 PL European Law Research Association Conference and publication: Interactions between the EPPO and national authorities 103 33 257 65.2 4 IT University of Ferrara Comparative study and seminar: Relationships between national judicial authorities and the investigative agencies in the view of the EPPO: operational models and best practices in fight against EU frauds 40 52 097 87.5 5 HR Croatian Association of European Criminal Law Conference and publication: European Criminal Procedure Law in Service of Protection of European Union Financial Interests: State of Play and Challenges 80 75 832 86.6 6 DE Max Planck Institute for Foreign and International Criminal Law Periodical publication "eucrim" - The European Criminal Law Associations' Forum N/A 52 488 81.6 7 DE Academy of European Law Conference Annual Forum on combating corruption in the EU 2016 - Transnational cooperation between judicial and administrative authorities to better protect the EU’s financial interests 41 35 846 67.0 Total 469 369 937 80.5



Table 10 - Technical Assistance - Overview of awarded grants and rejected applications in 2016 MS Received applications (Number) Requests for 90% funding (Number) Grants requested (EUR) Awarded grants (Number) Awarded grants 90% (Number) Grants awarded (EUR) 1 BE 1 0 356 658 1 0 290 568 2 BG 3 1 1 492 288 1 0 347 478 3 CZ 1 0 160 000 0 0 0 4 DK - - - - - - 5 DE - - - - - - 6 EE 3 0 517 031 2 0 292 238 7 IE - - - - - - 8 EL 3 2 1 652 284 1 0 1 107 200 9 ES 2 0 1 028 463 2 0 995 424 10 FR 4 0 1 351 267 3 0 874 018 11 HR 2 1 3 348 000 1 0 1 200 000 12 IT 2 1 887 624 0 0 0 13 CY - - - - - - 14 LV 2 0 333 522 1 0 110 482 15 LT 2 0 355 885 2 0 355 885 16 LU - - - - - - 17 HU 5 1 1 480 938 1 0 711 966 18 MT 3 0 788 545 1 0 331 262 19 NL - - - - - - 20 AT - - - - - - 21 PL 18 5 7 809 086 3 0 947 940 22 PT 1 0 553 261 1 0 548 701 23 RO 15 1 4 149 619 2 0 1 009 557 24 SI 2 1 523 679 0 0 0 25 SK 1 0 396 524 1 0 330 684 26 FI - - - - - - 25 SE 1 0 247 056 0 0 0 28 UK 1 0 214 200 0 0 0 Total 72 13 27 645 930 23 0 9 453 403 Average amount requested: EUR 383 971 (Overall amount requested/number of applications) Average amount awarded: EUR 411 018 (Overall amount awarded/number of grants)



Table 11 - Call for proposals Training and Conferences 2016 - Overview of awarded grants and rejected applications MS Received applications (Number) Requests for 90% funding (Number) Grants requested (EUR) Awarded grants (Number) Awarded grants 90% (Number) 42 Grants awarded (EUR) 1 BE - - - - - - 2 BG 1 44.000 0 0 3 CZ 1 40.096 1 40.096 4 DK - - - - - - 5 DE - - - - - - 6 EE - - - - - - 7 IE - - - - - - 8 EL 2 203.299 0 0 9 ES - - - - - - 10 FR 1 157.553 0 0 11 HR 1 81.740 0 0 12 IT 4 355.456 4 355.456 13 CY - - - - - - 14 LV 1 86.606 1 53.481 15 LT 1 55.266 1 46.706 16 LU - - - - - - 17 HU 1 45.156 0 0 18 MT - - - - - - 19 NL - - - - - - 20 AT - - - - - - 21 PL 4 299.348 3 209.716 22 PT - - - - - - 23 RO 9 639.464 2 153.401 24 SI - - - - - - 25 SK 1 41.144 1 41.144 26 FI - - - - - - 27 SE - - - - - - 28 UK 1 126.595 0 0 28 2 175 722 13 900 000