Special Report No 13/98 concerning the audit of the use of risk analysis techniques in customs control and the clearance of goods accompanied by the replies of the Commission (pursuant to Article 188c(4), second subparagraph, of the EC Treaty)
Date: 1998-09-17
Institutions: European Court of Auditors
Subjects: customs formalities, customs inspection, customs regulations, import policy, report

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SPECIAL  REPORT  No  13/98

concerning the audit of the use of risk analysis techniques in customs control and the clearance
of  goods  accompanied  by  the  replies  of  the  Commission 

(pursuant  to  Article  188c(4),  second  subparagraph,  of  the  EC  Treaty)

(98/C  375/02)

CONTENTS

Paragraph
reference

Page

1.  INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.1 — 1.3

2.  THE  NEED  FOR  RISK  ANALYSIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2.1 — 2.6

3.  WHAT  IS  RISK  ANALYSIS? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.1 — 3.2

4.  COORDINATION  OF  RISK  ANALYSIS  ACTIVITIES  TO  DATE . . . . . . . .

4.1 — 4.2

5.  THE  COURT’S  INQUIRY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5.1 — 5.6

6.  FINDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6.1 — 6.55

General findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6.2 — 6.7

Specific  findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6.8 — 6.55

Use  of  filtering  systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6.14 — 6.34

Random  controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6.21 — 6.22

Effectiveness  of  filters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6.23 — 6.28

Rate  of  controls  effected  under  filtering  systems . . . . . . . . . . . . . . . . .

6.29

Simplified  procedures  under  a  filtering  system . . . . . . . . . . . . . . . . . . .

6.30 — 6.31

Strengths  and  weaknesses  of  filtering  systems . . . . . . . . . . . . . . . . . . .

6.32 — 6.34

Post  import  controls  and  risk  analysis . . . . . . . . . . . . . . . . . . . . . . . . . . .

6.35 — 6.55

National  control  plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6.46 — 6.47

Post  import  control  problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6.48 — 6.50

Test sample of customs declarations matching notices issued pursuant
to  the  mutual  assistance  arrangements . . . . . . . . . . . . . . . . . . . . . . . . .

6.51 — 6.55

7.  CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7.1 — 7.6

4

4

6

6

6

7

7

8

8

9

9

10

10

10

11

12

12

12

13

Replies  of  the  Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15

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1.  INTRODUCTION

1.1. The Community Budget is part financed by customs
duties and agricultural levies, known as ‘Traditional own
resources’.  For  1997  the  budget  estimate  for  traditional
own  resources  was  ECU  14,2  billion,  approximately
17,7 %  of  the  total  budget.  Responsibility  for  the
collection  of  these  resources  is  devolved  to  the  Member
States (1).  The  front  line  collection  is  carried  out  by  the
customs services of the 15 Member States. In addition to
the collection of own resources these customs services are
responsible,  among  other  things,  for  the  implementation
of  economic  policy  measures,  the  protection  of  the
Community  from  imports  of  prohibited  or  dangerous
goods  and  illegal  drugs,  monitoring  trade  in  endangered
species under the CITES (2) convention and the control of
exports  which  give  rise  to  charges  on  the  Community
budget  under  the  common  agriculture  policy.

intended 

1.2. The  completion  of  the  single  market  on  1  January
1993  was  accompanied  by  the  coming  into  force  of  the
Community  Customs  Code,  which  was  established  by
Council  Regulation  (EEC)  No  2913/92  of  12  October
1992 (3).  The  Code,  together  with  its  implementing
provisions (4),  was 
to  consolidate  existing
Community customs regulations, one of whose objectives
is  to  guarantee  a  uniform  application  of  customs
legislation 
the  Community.  This,  and
subsequent  amending  legislation,  lay  down  in  specific
terms  the  nature  of  controls  to  be  exercised  by  the
customs authorities in the protection of the Community’s
financial  interests  and  is  designed  to  ensure  the  correct
application  of  customs  legislation.

throughout 

Combined  Nomenclature  TARIC (5)  containing  in  excess
of  30 000  product  positions  many  of  which  comprise  a
number  of  different  duty  rates  dependent  on  the  country
of origin of the product. Customs legislation, in so far as
it  applies  to  specific  goods,  is  constantly  being  updated
by  the  amendment  of  duty  and  levy  rates  and  the
imposition  of  anti-dumping  duties  and  tariff  quotas.  All
these  factors,  together  with  the  objective  of  traders  to
maximise their profits, combine to ensure that the timely
collection  of  the  correct  duties  and  levies  are  ‘at  risk’.

2.  THE  NEED  FOR  RISK  ANALYSIS

2.1. Given these operating circumstances and the will in
all  Member  States  to  reduce  the  cost  of  public  services,
the  need  to  introduce  efficiency  measures  in  customs
control  while  ensuring  that  these  services  remained
effective  in  protecting  the  Community’s  interests  became
obvious.

the 

this  end  and  because  of 

2.2. To 
imminent
commencement  of  the  single  market  on  1  January  1993,
the  European  Institute  of  Public  Administration  of
Maastricht carried out, at the request of the Commission,
a  study  on  1992  and  the  organisation  of  Member  States’
and  Community  customs  administrations.  The  Customs
Questions Committee (6) agreed that the recommendation
of  the  study  to  improve  the  working  methods  of  the
customs services deserved more consideration. An ad hoc
group  of  experts  set  up  to  pursue  this  question,
concentrated  its  efforts  on  the  use  of  risk  analysis  in
customs  control.

1.3. To  put  the  role  of  the  European  Union’s  customs
services into perspective, it is necessary to understand the
nature  of  the  environment  in  which  they  are  required  to
operate.  Their  work 
is  dictated  by  Community
regulations underpinned in each of the Member States by
national legislation and instructions. They are required to
process each year some 30 million import declarations, a
similar  volume  of  export  declarations  and  some  20
million  Community  transit  operations.  They  apply  the

2.3. The  Ecofin  Council  approved,  on  23  November
1992, the use of risk analysis to target financial controls.
It  asked  the  Commission  to  adopt,  before  the  end  of
1993, measures to introduce the principle of targeted-risk
audits  to  all  sectors  subject  to  controls.  However,  the
Community  Customs  Code  and 
implementing
provisions  only  provided  for  the  use  of  risk  analysis
techniques  in  the  control  of  goods  imported  under
simplified  customs  procedures  by  air  or  by  sea.  The
regulations  governing  the  monitoring  of  agriculture

its 

(1)  Council  Decision  94/728/EC,  Euratom  of  31  October  1994
on  the  system  of  the  European  Communities’  own  resources
(OJ  L  293,  12.11.1994,  p.  9).

(2)  Convention  on  International  Trade  in  Endangered  Species

(CITES).

(3)  OJ  L  302,  19.10.1992.
(4)  Commission  Regulation  (EEC)  No  2454/93  of  2  July  1993
laying  down  provisions  for  the  implementation  of  Council
Regulation  (EEC)  No  2913/92  establishing  the  Community
Customs  Code  (OJ  L  253,  11.10.1993,  p.  1).

(5)  Council  Regulation  (EEC)  No  2658/87  on  the  tariff  and
statistical nomenclature on the Common Customs Tariff (OJ
L  256,  7.9.1987,  p.  1),  latterly  amended  by  Commission
Regulation  (EC)  No  2086/97  of  14  November  1997
amending Annex I to Council Regulation (EEC) No 2658/87
(OJ  L  312,  14.11.1997,  p.  1).

(6)  The Customs Questions Committee is composed of the heads
of the customs administrations in the Member States and the
Director-General  of  DG  XXI.

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products  receiving  refunds  at  export (7)  also  require  the
use  of  risk  analysis  techniques  if  examination  rates  fall
below  5 %.

risk  analysis  or  express  the  desire  that  the  Community
customs  services  ‘act  as  if  one’.  The  most  significant  of
these  are  the  following:

2.4.
In  addition,  there  is  one  legislative  imperative  on
customs  authorities  to  use  risk  analysis  techniques  in
determining  how  and  where  to  exercise  their  control
mandates:  Decision  No  210/97/EC  of  the  European
Parliament  and  of  the  Council  of  19  December  1996
adopting  an  action  programme  for  customs  in  the
Community  (Customs  2000) (8)  which  arose  out  of  the
pilot  action  Customs  2000  initiated  in  December  1993
when  the  heads  of  the  customs  administrations  in  the
Member  States  stated 
improve
their 
cooperation  between  the  customs  services  to  implement
controls  and  procedures  of  equivalent  effectiveness  at
every  point  of  the  external  border  of  the  Community
customs  territory;  the  decision  stated:

intention 

to 

‘The  action  programme  shall  be  called  the  “Customs
2000  Programme”  and  shall  be  implemented  for  the
period  1  January  1996  to  31  December  2000’.  (Article
1(2)).

‘The  common  framework  of  objectives  provided  for  in
Article  1(3)  within  which  the  Commission  and  the
Member  State  shall  establish  plans  and  priorities  in
order  to  define  and  carry  out  coordinated  action  to
ensure  that  customs  action  matches  the  needs  of  the
Community’s  internal  market,  shall  aim  to:

1. guarantee that Community law is applied in such a
way  as  to  achieve  equivalent  results  at  every  point  of
Community  customs  territory  in  order  to:

—  . . .

—  protect  the  Community’s  interests,  particularly  its

financial  interests;  . . . ’  (Article  4).

‘In accordance with the objectives defined in point 1 of
Article  4,  the  Member  States  and  the  Commission
shall:

. . .

4.
in order to achieve these objectives, adjust working
methods,  equipment  and  materials  so  as  to  reinforce
the  effectiveness  of  controls;  foster  in  particular  the
development of targeting, risk analysis and a posteriori
auditing techniques and where necessary, determine the
nature  of  controls  to  achieve  equivalent  results;  . . .’
(Article  5).

(a) the  communication  from  the  Commission  to  the
European  Parliament  and  the  Council (9)  outlining  an
action  plan  for  transit  in  Europe;

(b) Council  resolution  of  23  November  1995  on  the

computerisation  of  customs  transit  systems (10);

(c) Council Regulation (EC, Euratom) 2988/95 (11) on the

protection  of  the  Community  financial  interests;

(d) Council  resolution  of  25  October  1996  on  the
simplification  and  rationalisation  of  the  Community’s
customs  regulations  and  procedures (12);

(e) the  Commission  replies  to  observations  made  by  the
Court  in  its  1993  and  1996  Annual  Reports (13);

(f)  the  European  Parliament  resolution  of  25  November

1995 (14);

(g) ‘second  report  on  the  operation  of  the  inspection
traditional  own  resources’  11

arrangements 
for 
December  1997 (15);

(h) Council  resolution  of  18  December  1997 (16)  setting
out  priorities  for  cooperation  in  the  justice  and  home
affairs field for the period 1 January 1998 to the date
of  entry  into  force  of  the  Treaty  of  Amsterdam.

2.6. All the documents listed in paragraph 2.5 stress the
need  for  using  state-of-the-art  customs  techniques  and
more  effective  working  methods  such  as  information
technology,  risk  analysis  and  targeted  control  using  risk
profiles,  common  and  coordinated  risk  management
policy, 
example  harmonised  qualitative  and
quantitative  control  by  degree  of  risk,  and  advanced
audit  systems.  They  insist  on  the  requirement  that
national  customs  services  act  as  if  they  were  one.
Member  States  are  invited  to  cooperate  closely  and  to
coordinate  their  efforts  with  a  view  to  attaining  these
common objectives. The Commission notes that there is a

for 

2.5. However,  several  Community  documents  and
pronouncements  either  encourage  or  exhort  the  use  of

(7)  Council  Regulation  (EEC)  No  386/90  of  12  february  1990
on  monitoring  carried  out  at  the  time  of  export  of
agricultural products receiving refunds or other amounts (OJ
L  42,  16.2.1990,  p.  6).
(8)  OJ  L  33,  4.2.1997,  p.  24.

(9)  OJ  C  176,  10.6.1997,  p.  3.
(10) OJ  C  327,  7.12.1995,  p.  2.
(11) OJ  L  312,  23.12.1995,  p.  1.
(12) OJ  C  332,  7.11.1996,  p.  1.
(13) OJ C 327, 24.11.1994, p. 295 and OJ C 348, 18.11.1997, p.

39.

(14) OJ  C  308,  20.11.1995,  p.  57.
(15) COM(97)  673  final,  11.12.1997.
(16) OJ  C  11,  15.1.1998,  p.  1.

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lack  of  homogeneity  in  the  inspection  techniques  from
one Member State to another and expresses its belief that
the  development  of  risk  analysis  methods  may  remedy
this state of affairs. Under the Customs 2000 programme
it  hopes  to  draw  up  Community-wide  ‘risk  profiles’.  For
some customs regimes it will ask Member States to make
systematic  use  of  risk  analysis  methods  in  their  control
measures.

3.  WHAT  IS  RISK  ANALYSIS?

3.1. Risk analysis may be defined as a systematic process
of  making  decisions  based  on  structured  collection  and
analysis of information, structured risk identification and
analysis  to  target  intervention  at  the  most  serious  risks
in
and  to  evaluate  how  effective  the  targeting 
minimising  or  eliminating  the  risks.  Alternatively,  risk
analysis  is  a  system  for  the  identification  and  use  of
appropriate management information, in a consistent and
transparent  manner, 
identify,
document  and  assess  risk.  The  system  should  lead  to  the
minimisation  of  risks  by  coordinating  control  efforts  to
which  priorities  have  been  assigned.  It  should  include
performance  information  to  monitor  progress  and  allow
effective  review  of  the  entire  system.

comprehensively 

to 

is 

3.2. Any  system  of  risk  analysis  must  adhere  to  certain
fundamental  principles  if  it  is  to  meet  the  objectives  set
out  in  the  aspirations  of  the  European  Parliament,  the
Council,  the  Commission  and  the  heads  of  customs
administrations  (see  paragraph  2.5).  Such  principles  are:

(a)  the  context  within  which  risk  analysis  operates  must
be  clearly  defined  as  the  customs  territory  of  the
European Union as a single market. This implies that
fragmented  nature  of  Community  customs
the 
administrations  must  be  acknowledged  and  steps
must  be 
this  with
taken 
appropriate  coordinating  actions;

counterbalance 

to 

the  single  market,  risks 

(b) because  of  the  freedom  of  movement  given  to  goods
within 
the
Community  as  a  whole  as  well  as  purely  local  risks
must  be  identified.  Risk  identification  depends  very
significantly  on  the  ease  with  which  information  and
other worthwhile intelligence is shared between all the
affected  services;

faced  by 

Member  States  and  analysis  work  must  be
coordinated  to  avoid  unnecessary  duplication  and
waste  of  valuable  resources;

(d) the relative priority of the risks identified needs to be
determined  so  that  uniform  treatment  of  these  risks
can  be  effected  at  all  points  of  the  territory,  with
sufficient  resources  being  dedicated  to  eliminating
those  risks  of  greater  impact  to  Community  own
resources;

(e)  finally,  no  structured  system  would  be  complete
without an effective monitoring and review process to
ensure  that  all  pertinent  information,  underlying  the
assumptions  and  decisions 
is  accurate,
up-to-date  and  relevant.  Such  monitoring  must  be
carried  out  across  the  customs  services  of  the
Community,  in  a  spirit  of  cooperation.  The  review
must  use  information  feedback  from  the  process  and
lead  to  updating  the  analysis  and  prioritisation  of
control  work.

taken, 

4.  COORDINATION  OF  RISK  ANALYSIS  ACTIVITIES  TO

DATE

4.1. The  ad  hoc  group  of  experts,  referred  to  in
paragraph  2.2,  commenced  work  on  the  question  of  risk
analysis 
the
Commission  services  and  with  contributions  from  most
Member  States,  this  group  produced  guidelines  on  risk
analysis  to  be  used  across  the  Community.

in  March  1991.  With 

the  help  of 

4.2. Draft  guidelines  were  presented  to  the  Commission
by the group in February 1993. Before completion of the
guidelines,  a  number  of  drafts  were  made  available  to
Member  States,  which  were  encouraged  to  implement
them  as  they  stood.  Non-binding  guidelines  were  issued
to all Member States in October 1997. The guidelines are
to be the focal point of a pilot project to be conducted in
six  Member  States  until  31  December  2000.

5.  THE  COURT’S  INQUIRY

5.1. The  Court’s  inquiry  focused  on  the  use  of  risk
analysis  in  customs  controls  exercised  in  the  physical
inspection of goods and documentary checking of import
declarations  which  affect 
the  Community’s  own
resources.

(c)  access  to  the  information  of  risks  identified  must  be
ensured  Community  wide  so  that  adequate  and
coordinated  risk  analysis  can  be  carried  out.  Any
results  of  analysis  work  carried  out  in  individual
Member  States  should  be  shared  with  all  other

5.2. Despite 
the  absence  of  an  all-encompassing
statutory  basis  for  using  risk  analysis,  the  Commission
has  advocated  the  use  of  risk  analysis  in  customs
controls,  because  ‘it  is  materially  impossible  for  national
customs administrations to carry out physical inspections
and  documentary  checks  on  all  consignments  of

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goods’ (17).  Further,  as  it  is  traders  and  not  their  goods
which perpetrate fraud, risk analysis focused on traders is
an  important  consideration.  The  Court  considered  that
some six years after starting the risk analysis programme
and four years after the opening of the single market the
state of implementation of risk analysis techniques in the
Member  States  needed  to  be  audited.

5.3. Using as a model the components of a risk analysis
system  set  out  in  paragraph  3.2,  the  inquiry  focused  on
the  methodologies  adopted  in  eight  Member  States  to
identify  and  protect  the  Community’s  own  resources
from risks. The inquiry also examined the controlling and
coordinating  role  of  the  different  services  within  the
Commission.  It  also  sought  to  focus  on  the  management
and  effectiveness  of  the  techniques  employed,  the  use  to
which  sources  of  intelligence  are  put  and  the  extent  of
feedback mechanisms in place. Where formal risk analysis
techniques  were  not  in  use,  the  inquiry  attempted  to
in
assess 
protecting  the  Community’s  financial  interests.

the  effectiveness  of  alternative  methods 

5.4.
In  the  eight  Member  States  visited  (Belgium,
Denmark, Germany, Spain, France, Italy, the Netherlands
and  the  United  Kingdom)  the  Court  sought  information
on:

(a)  national control policies and instructions and assessed

the  extent  to  which  risk  analysis  is  used;

(b) the role played by national customs computer systems
in  the  selection  of  customs  declarations  for  special
examination.  This  included  the  systems’  ability  to
isolate 
testing
transactions  by  use  of  profile 
(filtering);

(c)  the information sources and methodology used in the

collection  of  risk  data;

(d) the  methodology  used  to  analyse  the  risk  data
provided  and  assign  resources  to  counterbalance  the
highest  risks;  and

(e)  the systems in use to distribute risk details to outfield
customs  staff  and  to  obtain  feedback  on  the  use  of
this  data.

5.5. The  Court 
the
methodology  in  a  number  of  customs  offices  in  each
Member  State  visited.

application  of 

tested 

the 

5.6. The  Court  selected  a  sample  of  information  notices
issued  by  the  Commission  to  Member  States  under
Council  Regulation  (EC)  No  515/97  of  13  March  1997
on mutual assistance (18),  to  assess  the  use  made  of  these
notices  by  Member  States  and  the  extent  to  which  they
are  made  available  to  operational  customs  staff.

6.  FINDINGS

6.1. The Court acknowledges that a number of Member
States  are  wholly  committed  to  and  supportive  of
attempts  being  made  to  develop  a  Community-wide  risk
analysis  methodology  for  use  in  customs  control.  The
findings  presented  in  this  report  should  assist  in  these
efforts.

General  findings

6.2.
In  most  Member  States  the  need  for  using  risk
analysis  techniques  is  recognised.  Operational  staff  have
reasonable  access  to  information  on  risks.  However,  in
most  instances  this  information  is  not  analysed  and  used
in an adequate way to ensure that resources are allocated
to  the  areas  of  highest  risk.

6.3. Apart  from  the  communication  of  information  on
detected  fraud  cases  through  the  mutual  assistance
provisions, 
of
communication to ensure that information or intelligence
on  common  risks  are  shared  between  the  Member  States
and  the  Commission.

structured 

there 

lines 

are 

no 

information 

6.4. Mutual  assistance 
is  used  by  the
Member  States  essentially  for  a  posteriori  controls  of
customs transactions. It is only used exceptionally by the
customs  services  as  a  source  of  information  of  potential
risks  in  current  or  future  imports.

the  Commission 

6.5. While, 
formally
acknowledge  that  ‘people  defraud,  goods  don’t’  risk
analysis  at  present  focuses  nearly  exclusively  on  risky
goods. However, there is no significant effort throughout
the  Member  States  to  coordinate  the  identification  of

guidelines 

(17) Written  question  No  951/96  by  Viviane  Reding  to  the
Commission.  Problems  with  customs  checks  (OJ  C  322,
28.10.1996,  p.  16).

(18) OJ  L  82,  23.3.1997,  p.1.

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risky  goods.  Even  though  traders  and  customs  regimes
are  inherently  more  risk  prone,  there  is  no  endeavour  to
concentrate  risk  analysis  on  traders  or  customs  regimes.

6.6.
In  most  Member  States  the  feedback  process
consisted of financial details of the amounts collected as a
result  of  a  posteriori  controls.  In  most  cases  it  was  not
possible to say if the controls giving rise to the collection
of  additional  duties  were  carried  out  as  a  result  of  the
risk  analysis  exercise,  nor  did  data  transmitted  by  the
collection  centres  give  details  of  the  circumstances  and
specific  risks  which  gave  rise  to  the  collection  of
additional  duties.

is 

In 

low. 

6.7. The  extent  of  convergence  of  the  level  of  physical
and  documentary  controls  carried  out  in  the  Member
States 
three  Member  States  national
instructions  provide  that  direct  customs  declarations  are
subjected  to  a  100 %  documentation  check,  in  one
Member  State  visited  no  statistical  data  on  documentary
checks were available. In the other Member States visited,
the  level  of  documentary  checks  carried  out  varied  from
17 % to 70 %. In a number of Member States it was not
possible  to  determine  precisely  the  level  of  physical
inspections  carried  out  on  directly  imported  goods.
Estimates  made  by  the  Court  at  the  customs  offices
visited  indicate  that  the  level  of  physical  checks  carried
out  varied  from  1,4 %  to  10,3 %.

6.11. Only  in  two  Member  States  did  the  Court  find
evidence  of  on-going  analysis  of  risks  related  to  the
importation  of  goods  into  the  Community.  In  another
Member  State,  although  the  system  is  said  to  operate  on
the  basis  of  risk  analysis,  no  evidence  could  be  produced
to support this. In a further three Member States there is
ample  distribution  of 
information  on  risky  goods,
primarily  under  mutual  assistance  arrangements,  but
there  is  no  real  provision  for  analysis  of  the  risks
involved  to  ensure  the  targeting  of  those  goods  of  major
risk.

6.12.
In  three  of  the  Member  States  visited  all  customs
declarations  except  those  presented  under  simplified
procedures must receive a documentary check before final
clearance of import goods. In one of these, risk analysis is
used  to  select  declarations  for  physical  and  documentary
checks  at  the  time  of  clearance.  Other  declarations  are
subjected  to  ex  post  documentary  checks.

6.13. The very fact that 100 % checks are carried out in
Member  States  purporting  to  use  risk  analysis  in  their
control  procedures  calls  into  question  the  respective
customs  authorities’  confidence  in  the  quality  of  the  risk
analysis  carried  out.  According  to  the  Commission  ‘this
constitutes  an  unwarranted  obstruction  to  the  flow  of
legitimate  trade  and  places  a  disproportionate  burden  on
the  staff  and  budgets  of  customs  administrations’ (19).

Specific  findings

Use  of  filtering  systems

6.8. All  the  Member  States  visited  would  contend  that
they  use  risk  analysis  techniques  in  their  customs  control
activities  and  support  this  contention  with  national
control  plans  or  instructions.  However,  the  emphasis
placed  by  them  on  the  distinct  risk  areas  of  goods,
traders  and  customs  regimes,  is  variable.  This  variability
in emphasis is further heightened by the different levels of
central  involvement  in  the  risk  management  process.

6.9. Responsibility  for  the  performance  of  risk  analysis
is wholly devolved to local offices in four of the Member
States  visited,  while  the  others  had  elements  of  local  and
central  or  regional  input  to  the  methodology.

6.14. The alternative to 100 % checking of declarations
is  the  use  of  filtering  systems.  These  systems  rely  on  the
creation  of  filtering  profiles  or  parameters  and  can  only
effectively  be  implemented  in  a  computerised  clearance
in  all  the
environment.  Customs  clearance  systems 
Member  States  visited,  have  some  filtering  capability  to
determine  whether  selected  declarations  are  subjected  to
physical  or  documentary  control.  In  one  Member  State,
however,  only  those  customs  offices  connected  to  the
computerised  customs  clearance  system  can  make  use  of
filtering information and even then control of the selected
declarations  is  not  mandatory.

6.10.
In  most  of  the  Member  States  the  distinction
between  risk  identification  (see  paragraph  3.2(b))  and
risk analysis (see paragraph 3.2(c)) is not made. This lack
of  clarity,  evident  at  central  administration  level,  is
carried down to operational level by the absence of clear
national  guidance  or  training.

6.15. The  degree  of  effectiveness,  sophistication  and
reliability  of  the  filtering  systems  in  use  in  the  Member

(19) Written  question  No  951/96  by  Viviane  Reding  to  the
Commission.  Problems  with  customs  checks  (OJ  C  322,
28.10.1996,  p.  16).

3.12.98

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those 

transactions  most  prone 

States varies from one Member State to another. Filtering
of customs declarations is effected by establishing profiles
risk  and
of 
programming  the  clearance  system  to 
isolate  those
matching  the  profiles.  Profile  setting  is  the  responsibility
of  the  central  customs  administration  in  two  Member
States,  while  in  a  further  five,  local  customs  office  have
the  facility  to  add  profiles  which  deal  with  locally
determined  risks.

to 

6.16.
In  one  Member  State,  while  the  facility  to  set
profiles  centrally  exists,  it  is  not  currently  used  for
selection of imports for physical checks. A customs value
limit  criterion  of  greater  than  ECU  12 500  is  set  for
documentary  control.  This  criterion  selects  so  many
declarations  as  to  render  virtually 
local
risk-based criteria, where they exist. Local criteria are not
used in some offices; in others they are managed applying
the principles set out in paragraph 3.2. The pre-clearance
of  goods  using  commercial  documents (20)  before  entry
into  the  computerised  system,  may  result  in  customs
being  unable  to  perform  the  checks  required  by  the
system.  As  a  consequence,  the  control  process  may  be
rendered  uneven.

ineffectual 

6.17. The  system  in  another  Member  State  only  allows
profiles to be set using three out of eight valid parameter
types.  This  restriction  results  in  broad  category  selection
with  the  consequence  that  very  few  national  or  central
profiles  are  used.  The  system,  comprising  a  registration
and  clearance  module  allows  users  of 
simplified
procedures in the Member State to easily bypass a profile
selection  or  any  user  to  avoid  being  caught  by  a  profile
by  clearing  goods  at  a  customs  centre  other  than  their
home  office.  There  is  no  coordination  of  locally  set
profiles  with  the  result  that  homogenous  control  is  not
possible  in  the  customs  offices.

6.18. A third Member State’s nationally set profiles are
mainly designed to isolate declarations subject to customs
control  mandatory  under  Community  regulations.  Only
local  profiles  are  expected  to  be  based  on  risk  analysis.
There is little coordination of locally set criteria, with the
result of unequal treatment of declarations of similar risk
in  different  customs  offices.  Risk  analysis  is  not  used  in
the  regular  revision  and  updating  of  locally  established
risk  profiles.

(20) Community  Customs  Code,  article  76.

6.19. The  risk  profiling  system  of  another  Member
State,  which  is  carried  out  by  a  central  service,  is
concentrated  mainly  on  risks  associated  with  smaller
irregular importers. A ‘customer’ based system is used for
audit  control  of  major  traders.  National  profiles,  which
rarely  give  rise  to  mandatory  physical  inspections,  allow
local  customs  offices  autonomy  in  setting  the  level  of
physical inspections and documentary control using local
risk  factors.

6.20. The system in yet another Member State , which is
centrally  administered,  uses  predetermined,  statutory  risk
criteria  together  with  a  mathematical  algorithm  (random
factor) 
for  physical  control.
On-going  risk  analysis  is  not  used  to  update  the  profile
criteria  in  use,  as  these  are  set  in  legislation  and  are  of  a
general character.

to  select  declarations 

Random  controls

recommend 

6.21. The  Commission  guidelines 
the
integration of random controls in the overall risk analysis
methodology  as  a  means  of  detecting  new  or  previously
undetected  risks.  Only  in  three  Member  States  was  there
evidence  of  elements  of  random  selection  of  declarations
for  control.  One  Member  State’s  system  by  its  nature
incorporates  an  element  of  randomness  in  its  selections.
Local  customs  staff  in  another  Member  State  are  not
encouraged  to  use  random  tests.

6.22. Even  the  most  rigorous  risk-analysis  system  runs
important  risk  factors  may  be
the  risk  that  new 
overlooked  or  that  knowledge  of  the  criteria  in  use  may
be  discovered  by  potentially  dishonest  traders  or  agents.
It is critical therefore that all risk analysis systems contain
an  element  of  randomness  in  their  selection  procedures.

Effectiveness  of  filters

focused 

6.23. The effectiveness of filters is very much determined
by  the  quality  of  the  analysis  work  which  has  gone  into
setting  the  profiles.  The  setting  of  profiles  which  are
insufficiently 
selection  of
results 
declarations  which  are  not  inherently  risky  and  as  a
consequence  subvert  the  original 
intentions  of  the
profile-setting exercise. Examples of this were cited above
in  relation  to  two  Member  States  (see  paragraphs  6.15
and  6.16).

the 

in 

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6.24. To properly assess the effectiveness of the filtering
process  it  is  necessary  that  adequate  and  relevant  data  is
available  on  which  to  base  such  an  assessment.  This
means  that  information  on  the  types  of  declarations
selected  by  the  filters,  the  results  of  the  ensuing  controls
(value  and  circumstances)  and  an  interpretation  of  this
information  must  be  fed  back  to  the  analysis  service  for
inclusion  in  future  profile  exercises.

6.25.
In  none  of  the  Member  States  visited  was  there
evidence  of  adequate  feedback  of  the  results  of  the
filtering  process.  In  two  Member  States  local  customs
staff  have  the  power  to  override  nationally  set  profiles
without  the  need  to  report  the  fact.  As  a  consequence,
national  data  and  statistics  on  the  effectiveness  of
filtering are unreliable.

6.26. Where  local  customs  staff  carry  out  controls  in
response  to  local  risk  factors,  there  is  generally  no
formalised mechanism for recording the factors for future
local  or  national  use.  The  system  in  two  Member  States
has,  outside  the  ‘risk  analysis’  system,  provision  for  the
recording  of  incidence  of  locally  selected  controls.  It  also
provides  for  feedback  of  the  results  of  serious  fraud  or
irregularity cases.

6.27.
In  one  customs  office  in  a  Member  State,  ECU
22,5 million in additional duties was recovered in respect
of  underdeclarations  which  had  initially  been  cleared,
under  the  risk-analysis  system,  without  check.  The
balance  of  ECU  15  million  recovered  arose  from
declarations  selected  by  the  system  as  being  risky.  The
Court  is  concerned  that  such  a  significant  sum  could  be
collected  from  declarations  initially  deemed  to  be  ‘low
risk.’

Simplified  procedures  under  a  filtering  system

input 

trader 

(DTI)  using 

6.30. Under  simplified  clearance  procedures  the  use  of
filtering  systems  is  problematic  for  the  exercise  by
customs  authorities  of  the  right  to  physically  inspect
goods.  In  the  first  instance,  the  simplified  procedure  of
direct 
electronic  data
interchange,  only  allows  the  customs  authorities  a  short
time  in  which  to  indicate  a  desire  to  carry  out  physical
inspection  of  the  goods  before  they  are  removed  from
customs  control.  The  procedure  permits  customs
authorities to block the removal of goods. In practice, the
pressures  on  operational  customs  officials  to  carry  out
controls, often in geographically remote locations, present
logistical  problems.  On  the  other  hand,  physical  controls
on  imports  by  traders  with  approval  to  use  period  entry
systems,  i.e.  one  global  monthly  declaration  of  all  goods
imported  in  a  given  month,  are  at  best  difficult.  Post
import  control  of  these  traders  is  the  only  possible
option.

In  one  Member  State  national  instructions,  in  use
6.31.
for  a  number  of  years,  require  that  risk  analysis  be  used
in  the  control  of  importations  by  large  traders  using
simplified procedures. However, the Court found that the
selection  of 
is
carried  out  on  a  daily  ad  hoc  basis  without  any  obvious
use  of  risk  analysis  techniques.

importations  for  on-the-spot  control 

Strengths  and  weaknesses  of  filtering  systems

6.28.
In  all  cases,  the  absence  of  adequate  feedback  to
central  administrations  means  that  these  administrations
are  unable  to  confirm  that  a  truly  homogenous  coverage
of customs control exists within their own customs areas,
let  alone  ensure  such  homogeneity  at  Community  level.

In  principle,  filtering  systems  provide  a  basis  for
6.32.
adequate  controls  on  the  Community’s  own  resources.
However,  this  is  only  the  case  when  they  are  carried  out
with  appropriate  analysis  of  identified  risks  and  where
there  is  reasonable  autonomy  in  local  offices  to  hone  the
outputs  of  such  systems.

Rate  of  controls  effected  under  filtering  systems

6.29.
It  was  not  possible  to  obtain  a  breakdown  of  the
rate  of  controls  effected  in  all  of  the  Member  States
visited,  either  generally  or  by  traders  or  by  risky  goods.

the 

in  particular, 

6.33. The  effectiveness  and  efficiency  of  the  filter
systems in the Member States is lessened by a number of
factors, 
coordinated
transnational profiles, the absence of real analysis of risks
in  many  areas,  the  absence  of  feedback  on  the  results  of
controls,  the  inadequacies  of  certain  computer  systems
and  in  some  instances  the  lack  of  understanding  of  the
purposes and objectives of a targeting system. In one case
the  Court  noted  the  use  of  a  risk  profile  declaration

lack  of 

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where  the  maximum  amount  of  duty  had  been  paid,
rather  than  those  where  preferential  rates  were  claimed.

6.34. These  shortcomings  can  result  in:

(a)  risky goods or traders not being identified because of

inadequate  feedback;

(b) real risks not being properly attended to because of a
swamping  of  filter  hits  by  use  of  blanket  criteria,  for
example  value  limit  (see  paragraph  6.15);

(c)  traders  bypassing,  either  accidentally  or  deliberately,
filter  controls  arising  from  inflexible  computerised
systems  and  procedures  (see  paragraph  6.16)  and

(d) inconsistencies  in  the  treatment  of  like  risks  not  only
across  the  customs  territory  but  within  individual
Member  States.  This  can  arise  from  the  use,  as  local
profiles,  of  risk  factors  which  should  have  been
regarded  as  of  national  or  even  Community
importance  —  as  in  the  two  Member  States  where
there  is  no  coordination  of  the  risk  criteria  used
between  customs  offices.

Post  import  controls  and  risk  analysis

6.35. At  a  national  level  appropriate  risk  ratings  of
traders  is  of  primary  importance  in  the  effective  control
of  Community  own  resources.

6.36.
It is clear from the DAS audit work carried out by
the  Court  in  all  Member  States  in  recent  years  that  a
significant  level  of  own  resources  is  paid  by  a  small
number  of  large  traders  in  all  the  Member  States.  Many
of  these  traders  make  their  customs  declarations  on  a
deferred  monthly  basis,  using  the  period  entry  system.
The  Commission  guidelines  advocate  the  use  of  risk
analysis  techniques 
in  the  selection  of  traders  for
control.

6.37. All  Member  States  visited  use  post  clearance
control  visits  to  supplement  controls  carried  out  at  the
time  of  importation  or,  for  the  control  of  traders  using
simplified  procedures.

6.39. The  national  control  plan  of  one  Member  State’s
customs  service  provides  for  the  use  of  risk  analysis  in
post  import  control  work.  This  work  is  carried  out  by  a
national  and  regional  inspection  service  in  accordance
with  preselected  financial  limits.  Although  traders  for
control  under  the  annual  programmes  are  to  be  selected
by  using  risk-analysis  techniques,  the  criteria  used  in
specific  cases  under  review  could  not  be  provided  to  the
Court.  The  Court  noted  that  where  post  import  controls
carried  out  under  these  plans  detect  underpayment  of
duties  the  procedures  in  operation  do  not  permit  the
control  to  extend  to  a  current  date,  thus  requiring  a
subsequent  control  under  the  next  programme  and  may
result  in  additional  duties  not  being  established  at  the
earliest  opportunity.

6.40.
In  one  Member  State,  the  authorisation  of  traders
to  use  simplified  procedures  is  deemed  to  be  determined
under  risk  analysis  conditions,  using  all  recorded  fiscal
knowledge of the trader. National instructions require an
annual  control  visit  (an  audit)  to  be  carried  out  in  every
instance  and  include  provision  for  extraordinary  visits  if
deemed  necessary.  Risk  analysis  is  not  formally  used  to
select  the  traders  for  extraordinary  visits.

6.41. Control  plans  in  one  Member  State  provide  for
the  selection  of  traders  for  post  import  controls  on  the
basis  of  potential  revenue  loss.  A  system  based  on
quantified revenue at risk is designed to give assurance in
terms  of  ‘confidence  that  any  gap  between  what  is
intended to happen and what does happen is acceptable’.
The  system,  which  targets  the  traders  and  customs
regimes  of  greatest  risk,  has  been  examined  in  a  recent
National Audit Institution review and as a consequence is
currently  being  revised.  The  criticisms  levelled  at  the
system are that: risk is adjusted to give a desired level of
audit  work;  it  is  inflexible;  systems  evaluations  are
incomplete;  tests  are 
insufficient;  the  training  and
guidance  given  under  the  system  needs  to  instill  a  better
understanding  of  auditing  techniques  and  principles;
resourcing  is  static  and  does  not  reflect  risks,  and  other
competing  objectives  of  the  customs  administration  may
result  in  a  reduction  in  the  achievement  of  the  assurance
objective.

6.38.
In  one  Member  State,  the  annual  control  plan  for
the valuation and accounting control service is not based
on formal risk analysis. The national standards set for the
level  of  inspections  are  not  being  met.

6.42. Customs  control  plans  for  period  entry  traders  in
another  Member  State  are  required  to  be  formulated
using  formal  risk  analysis  procedures.  In  most  cases  this

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is  done,  although  some  inconsistency  was  detected  in  a
number  of  offices  visited.

Post  import  control  problems

6.43.
In  a  further  Member  State,  although  the  national
control  plan  requires  the  use  of  risk  analysis  in  selecting
traders  for  control,  there  was  little  evidence  of  a  formal
risk-analysis  approach.  In  the  customs  offices  visited,
local  knowledge  of  traders  was  applied  in  the  selection
process,  but  in  an  informal  way.

is 

system 

faced.  The 

6.44. A post import control system is widely used by the
customs  authorities  in  one  Member  State  to  counter  the
risks 
characterised  by  a
computer-assisted  risk  selection  process  using  predefined
risk factors. An annual plan of trader audits is produced.
The  Court  noted  however,  that  the  data  on  which  the
risk  analysis  is  based  were  not  kept  up  to  date  and  that
different levels of initial risk assessment are made for new
traders  depending  on  which  customs  region  makes  the
assessment.  For  the  regions  visited  on  audit,  the  Court
noted  that  the  level  of  audits  planned  was  not  being
achieved  and  that  the  results  of  previous  audits  were
generally not being used to update the risk factors in the
planning process.

6.48. The  Court  has  already  reported  on  post  import
controls  in  the  Member  States  in  its  report  on  the  1993
financial  year.  This  report  notes  that  a  number  of
Member States are using risk analysis in determining their
control  plans.

6.49. The  Court  finds  that  five  years  later  there  is  little
progress  in  the  use  of  risk  analysis  to  target  those  risky
traders. In fact, even in those Member States where there
is formal expression given to the use of risk analysis, the
findings  above  indicate  that  there  is  urgent  need  for  a
more  formalised  targeting  in  this  area.

6.50.
In  many  cases  the  risk  criteria  are  adjusted  to
match a predetermined resource allocation. Rather, under
a proper risk-analysis system risks should, as stated in the
preamble,  be  identified,  assessed  and  prioritised  before
the  allocation  of  resources.

Test  sample  of  customs  declarations  matching  notices
issued  pursuant  to  the  mutual  assistance  arrangements

6.45.
It  is  not  clear  how  the  procedures  in  use  in  the
Member  States  visited  to  ensure  the  selection  of  risky
traders 
in  the  annual  audit  plan,  are  capable  of
identifying  traders  who,  although  they  have  significant
customs  transactions,  clear  their  declarations  at  different
customs  points  both  within 
in
neighbouring  Member  States.

the  country  and 

6.51.
In  all  cases,  the  Member  States  carry  out  a
retrospective  examination  of  transactions  matching  the
notices  and  put 
in  place  post  clearance  recovery
procedures  where  appropriate.  However,  in  relation  to
the  use  of  this  information  as  a  basis  of  on-going  risk
analysis  the  Court’s  findings  are  more  varied.

National  control  plans

6.46. A  precondition  for  the  creation  of  a  homogenous
approach  to  customs  control  throughout  the  Community
is  the  existence  of  consistent  national  control  plans.

6.47. Although  all  the  Member  States  have  national
control  plans,  strategies  or  instructions,  only  in  three
Member  States  was  there  evidence  of  formal  national
control  planning.  Despite  this,  it  was  evident  from  the
Court’s  audit,  that  the  diversity  of  control  practices
found  arises  from  the  absence  of  adequate  coordination
at  a  central  level  of  the  local  or  regional  inputs  to  the
planning system.

is  widespread  distribution  of  mutual
6.52. There 
assistance  information  notices  to  customs  offices  in  three
Member States. However, in each of these three Member
States, customs officials at these offices must rely on their
memories  to  target  declarations  matching  the  criteria
involved.  In  one  system,  the  declarations  are  subject  to
documentary  check  and  under  the  random  selection
mechanism  integrated  into  the  system  each  declaration
made  has  a  chance  of  being  selected  for  physical
examination.

6.53.
In  three  other  Member  States  some  analysis  is
carried  out  on  the  detail  of  the  information  notices,  to
determine  whether  national  profiles  should  be  set  in  the
declarations’  filtering  system.

6.54.
In  another  Member  State  mutual  assistance
information  is  not  used  to  create  national  profiles.
Selective  distribution  of  the  information  is  carried  out,
but  not  on  the  basis  of  risk  analysis.

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6.55. One  of  the  Member  States  visited  only  issues
mutual  assistance  notices  to  customs  offices  where  there
has been a past history of affected transactions. Thus this
information  is  not  available  for  future  determination  of
risks  in  all  the  regions.

initiated.  Alternatively,  some 
integration  of  customs
administrations  by  creating  common  specialised  units  or
services  at  Community  level  for  example  planning  and
control  activities,  may 
improve  coordination  among
Member  States  (see  paragraph  6.2).

7.  CONCLUSION

that 

7.1. The  aspirations  of  the  European  Parliament,  the
Council,  the  Commission  and  the  heads  of  customs
administrations 
the
Community  act  as  one  by  taking  coordinated  action  to
achieve  equivalent  results  in  the  Community  customs
territory,  by  use  of  effective,  efficient  and  homogenous
application  of  Community  rules  are  far  from  being  met
(see  paragraphs  6.2  and  6.6).

the  customs 

services  of 

7.2. While  there  is  a  widespread  willingness  to  further
the  use  of  risk  analysis  in  the  customs  services,  the  lack
of  coordination  in  particular  on  the  determination  of
risky  goods  and  circumstances  renders  ineffectual  a  good
deal  of  the  control  work  being  undertaken  at  local  level
(see  paragraphs  6.4,  6.14  to  6.19).

7.3. There  was  sufficient  evidence  to  confirm  that  much
information  on  risky  subjects  is  being  passed  out  to  the
frontline of the customs services. However, in the absence
of  really  effective  analysis  of  the  relevance  and  potential
of  these  risks  for  the  individual  frontier  posts,  the
availability of this large mass of information does nothing
to  improve  the  direction  of  the  control  effort  available
(see  paragraphs  6.9,  6.32  and  6.50).

7.4. There  are  as  many  manifestations  of  risk-analysis
methodologies  as  Member  States  visited  on  this  enquiry.
While there may be common agreement on the need for a
risk  methodology  and  while  the  Commission’s  guidelines
give  a  good  road-map  for  its  implementation,  present
trends  indicate  an  uncoordinated  and  uneven  application
of  Community  legislation  (see  paragraphs  6.6,  6.33(d),
6.46  and  6.49).

7.6. There  is  still  a  considerable  amount  of  work  to  be
done  to  ensure  there 
is  an  effective,  efficient  and
homogenous  risk-analysis  system  in  operation  in  all  the
Member  States.  The  Commission  should:

(a) ensure  its  guidelines  are  incorporated  in  binding
regulations  and  framed  to  include  the  best  possible
protection  to  the  Community.  Community  legislation
governing  all  aspects  of  customs  activity  and  control
should  be  amended  without  delay  to  provide  for
mandatory  use  of  risk-based  methodologies  and
targeted  controls;

(b) ensure  its  services  have  adequate  resources  to  provide
for  the  effective  coordination  of  meaningful  analysis
of  all  data  for  use  in  all  Member  States  and  in
particular in the areas of goods and regimes at risk. In
particular,  the  Commission  should  undertake  the
risk-analysis  and  consequential
coordination  of 
intra-Community
regard 
control  plans  with 
transactions  or  traders  operating  in  more  than  one
Member  State;

to 

inappropriate 
legislative 

(c) take  steps  to  ensure  that  in  proposing  any  new  draft
customs  legislation,  it  does  not  increase  risks  by
or
introducing 
unmanageable) 
The
Commission  must  also  ensure  effective  on-going
oversight  of  national  legislation  introduced  in  the
Member States, which in some instances gives effect to
Community  legislation,  to  ensure  that  this  national
legislation  does  not  create  additional  risk;

(burdensome 
requirements. 

(d) ensure  that  the  activities  of 

inspection  and
monitoring  services  are  planned  on  a  risk  basis  so  as
to  contribute  to  the  achievement  of  equivalent
controls in all the Member States and to an acceptable
level;

its 

7.5. Five  years  after  the  coming  into  being  of  the  single
market and after six years of operation of the Matthaeus
Programme (21),  a  greater  amount  of  cohesion  would  be
expected  from  the  training  and  exchange  programmes

(21) Council  Decision  91/341/EEC  of  20  June  1991  on  the
adoption  of  a  programme  of  Community  action  on  the
subject  of  the  vocational  training  of  customs  officials
(Matthaeus  programme)  (OJ  L  187,  13.7.1991,  p.  41).

the  many 

(e) take  the  actions  necessary  to  incorporate  into  its
guidelines  and 
effective
legislation 
innovative  initiatives  taken  in  the  Member  States,  for
example centralised analysis of products risks, analysis
of  regime  risks,  the  use  of  freight  intelligence  units,
and  random  selection  using  risk  algorithms.  It  is
essential that the best of these innovations are brought
together to form a comprehensive protective barrier to
the  Community’s  own  resources;

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(f)  require the harmonisation of the level of documentary
checks  carried  out  in  the  Member  States.  The  Court
noted  that  documentary  checks  varied  from  17 %  in
two Member States to 100 % in three Member States.
Clearly,  using  risk  analysis  in  a  100 %  checking
environment is unnecessarily wasteful of resources and
also  imposes  an  additional  distraction  to  the  carrying
out of the checks involved. Often post import controls
interests
suffer 

circumstances.  The 

these 

in 

of  harmonising  controls,  to  place  an  even  burden  of
control  on  all  economic  operators  in  the  Union,  must
be  stressed;

(g) assist  Member  States  to  design  more  structured  and
scientific  risk  analysis  systems,  by  the  provision  of
expertise, 
coordination
research 
facilities.

training, 

and 

This  report  was  adopted  by  the  Court  of  Auditors  in  Luxembourg  at  its  meeting  of  16  and  17
September  1998.

For  the  Court  of  Auditors

Bernhard  FRIEDMANN

President

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REPLIES  OF  THE  COMMISSION

1.  INTRODUCTION

Although  the  Court’s  observations  provide  a  clearer  idea
of  customs  controls,  the  conclusions  it  draws  are  based
on  how  the  customs  union  will  be  administered  by  the
final  phase  of  the  Customs  2000  programme  or  even
beyond.

1.2. Member  States  do  have  a  general  obligation  to
undertake  controls  but  they  clearly  also  have  an
opportunity to assess the way in which such controls are
carried  out  both  in  general  and  in  specific  cases.

The  Council  has  introduced  rules  governing  control
methods  for  agricultural  exports,  although  they  cover
customs  export  procedures  and  are  tailored  to  the  needs
of  the  EAGGF,  for  which  they  were  designed.  For  only
one  product,  bananas,  are  there  rules  specifying  checks
for  the  purposes  of  collection  of  import  duties.

Commission  Regulation  (EC)  No  89/97  of  20  January
1997  introduced  an  Article  290a  and  Annex  38b  to  the
implementing  provisions  laying  down  the  methods  of
checking  bananas  entered  for  free  circulation.  The
circumstances  surrounding  this  Regulation  are  highly
specific  and  its  adoption  cannot  be  interpreted  as  proof
of  a  willingness  on  the  part  of  the  Member  States  to
accept  that  this  area  be  administered  horizontally  by
Community legislation.

1.3. The Customs 2000 decision defines the institutional
environment  in  which  national  customs  authorities  are
required to operate. Its objective is to establish a balance
between  the  role  of  Community  institutions  and  that  of
the  Member  States  and  to  maintain  this  balance  in  a
spirit  of  unity  and  partnership.  The  Commission  will
shortly  present  a  report  on  the  implementation  and
impact  of  the  Customs  2000  programme  to  Parliament
and  the  Council.

2.  THE  NEED  FOR  RISK  ANALYSIS

the  Ecofin  Council  underlined 

the
2.3. Although 
importance  of  risk  analysis  to  target  financial  controls  in
1992  it  was  not  until  1996  that  a  framework  was
introduced  for  customs  by  the  Customs  2000  decision.
This  covers  the  whole  range  of  customs  legislation

the  need 

to
obviating,  although  not  excluding, 
incorporate  references  to  these  working  methods  in  the
Customs Code. On modern control methods the Customs
2000  decision  is  quite  categoric  about  the  Commission’s
role which is to support or encourage the measures to be
worked  out  and  implemented  by  the  Member  States
(point  1  of  Article  9).

2.6.
In  1997,  in  fulfilment  of  its  assigned  role,  the
Commission  drew  up  guidelines  for  drawing  up  risk
profiles.

6.  FINDINGS

structured 

to  6.55. The 

6.1 
lines  of
lack  of 
communication  and  shared  information  between  the
Member  States  and  the  Commission  is  due  to  the  fact
that  the  customs  union  is  not  managed  by  a  single
customs administration and does not have an appropriate
structure.

The  Commission’s  1997  guidelines  were  designed  to
encourage the convergence of working methods which, as
the  Court  notes  in  its  findings,  is  a  future  objective.
National working methods are still heavily contingent on
other  factors  including  departmental  organisation,  staff
training,  availability  of  resources  and  computerisation  of
procedures.

7.  CONCLUSION

7.2. Computerisation  of 
customs  procedures  will
improve  coordination.  Member  States  are  at  different
stages  in  this  process.  Development  of  transnational
(New
customs  procedures 
computerised transit system) will help achieve the desired
coordination  but  a  system  of  identifying  goods  based  on
a  nomenclature  code  must  be  retained.

the  NCTS 

such 

as 

Intensive  unstructured  transmission  of  all  sorts  of
7.3.
information 
a
methodological problem which needs to be examined and

customs  offices 

to  outlying 

is 

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addressed.  This  might  be  done  in  the  future  within  the
appropriate  forums  responsible  for  implementing  the
Customs  2000  decision.

schemes  under 

7.5. Training  and 
the
exchange 
Matthaeus  programme  are  designed  to  promote  an
open-minded  approach  and  convergence  of  practice
within  customs  services  but  will  also  encourage  the
eventual  harmonisation  of  national  working  methods
even though these are at present contingent on a number
of  other  factors  (see  point  6).

There would be no point in setting up specialised units at
Community  level  unless  they  had  an  operational  role.
Such  a  role  would  be  appropriate  for  a  single  customs
administration  but  goes  far  beyond  the  objective  of  the
partnership-based  management  tool  recommended  by
Customs  2000.

There would, however, be no reason why Member States
might  not  consider  setting  up  a 
joint  operational
structure  of  this  kind  between  themselves.

7.6. Our  remarks  on  the  limits  inherent  in  the  Customs
2000 decision (see introduction) also apply to the Court’s

recommendation that the guidelines be made compulsory
(point  7.6(a))  and  to  the  innovative  initiatives  in  a
number of Member States (point 7.6(e)). On the question
of  documentary  checks,  which  vary  in  scope  from  one
Member  State  to  another  (point  7.6(f)),  a  distinction
must be made between full-scale controls and preliminary
selection  operations.  The  latter  will  have  to  continue  to
be  carried  out  by  customs  officials  as  long  as  there  is  no
computerised  procedural  environment.

The  Commission  is  very  aware  of  the  need  to  examine
draft  legislation  for  any  risk  it  may  entail  (point  7.6(c)).

compiling 

its  annual 

control  programmes
When 
identifying  priority  areas  the  Commission  uses  a  number
of  objective  criteria  based  on  a  risk  analysis  of  the  most
sensitive  customs  and  accounting  procedures  in  terms  of
their  impact  on  traditional  own  resources.  As  these  are
often  followed  up  by  further  controls  in  the  Member
States  they  contribute  to  the  achievement  of  equivalent
controls  in  all  the  Member  States  to  an  acceptable  level
(point  7.6(d)).