Amended Proposal for a Regulation of the European Parliament and the Council on mutual administrative assistance for the protection of the financial interests of the European Community against fraud and any other illegal activities (presented by the Commission pursuant to Article 250 (2) of the EC Treaty)
Date: 2006-09-14
Institutions: European Commission
Subjects: VAT, VAT resource, administrative cooperation, exchange of information, fraud, fraud against the EU

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 14.9.2006 
COM(2006) 473 final 

2004/0172 (COD) 

Amended Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND THE COUNCIL 

on mutual administrative assistance for the protection of the financial interests of the 
European Community against fraud and any other illegal activities 

(presented by the Commission pursuant to Article 250 (2) of the EC Treaty) 

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EXPLANATORY MEMORANDUM 

1. 

(1) 

(2) 

(3) 

BACKGROUND 

On  20  July  2004,  the  Commission  adopted  a  proposal  for  a  Regulation  of  the 
European  Parliament  and  of  the  Council  on  mutual  administrative  assistance  for  the 
protection  of  the  financial  interests  of  the  Community  against  fraud  and  any  other 
illegal activities1. 

The European Parliament gave its opinion at a first reading on 25 May 20052. 

The European Court of Auditors gave its opinion on 27 October 20053. 

2. 

OBJECTIVE OF THE AMENDED PROPOSAL 

The fight against fraud affecting the Community financial interests is shared competence of 
the Community the Member States. In particular complex transnational fraud schemes in the 
areas  of  VAT  fraud,  laundering  of  the  proceeds  of  EC  fraud  and  structural  funds  fraud  the 
criminal activity is carried out by organised crime taking advantage of the freedoms provided 
by  the  European  integration.  This  initiative  aims  at  creating  a  framework  for  general 
administrative  mutual  assistance  necessary  to  strengthen  the  protection  of  the  financial 
interests  of  the  Community.  For  this  purpose  the  Member  states  and  the  Commission  shall 
cooperate,  coordinate  and  assist  each  other  and  exchange  information  to  allow  swift 
investigations and appropriate action. 

This  altered  proposal  incorporates  amendments  made  by  the  European  Parliament  and 
suggestions made by Member States which reacted to the proposal. The opinion of the Court 
of Auditors has also been duly considered but did not lead to any specific changes to the text 
of  the  proposal.  The  opinion  given  by  the  European  Data  Protection  Supervisor4  did  not 
suggest any changes related to data protection issues. 

Under this regulation the Commission does not obtain any investigative powers of its own but 
puts its assistance (service platform) at the disposal of the Member States. 

The proposal neither aims at exercising control over the Member States’ services as regards 
their  specific  operational  competencies  nor  at  introducing  general  reporting  obligations 
beyond the exchange of information on cases of particular relevance at Community level. The 
precise  forms  and  methods  for  use  of  the  operational  OLAF  service  platform  in  the  fight 
against fraud to the detriment of the financial interests of the European Community are at the 
discretion  of  the  Member  States  (cf.  new  Article  5).  However,  this  proposal  provides  an 
unequivocal legal basis for the use of the OLAF service platform to support cooperation with 
other  participating  Member  States’  services.  The  role  of  the  Commission  as  regards  its 
operational  and  intelligence  support  is  that  of  a  facilitator,  i.e.  as  a  service  platform  for  the 
Member States services. 

1 
2 
3 
4 

OJ 290, 27.11.2004, p. 5; COM(2004) 509. 
Bull. 7.8.2004, point 1.6.26. 
OJ C 313, 9.12.2005, p. 1. 
OJ C 301, 7.12.2004, p. 4. 

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3. 

MODIFICATIONS  FOLLOWING  OPINION  ON  THE  AMENDMENTS  ADOPTED  BY  THE 
EUROPEAN PARLIAMENT 

On  23  May  2005,  the  European  Parliament  adopted  12  amendments.  The  Commission 
considers that a large number of the European Parliament's amendments are acceptable in full, 
in  principle  or  in  part,  as  they  improve  its  proposal  and  maintain  the  aims  and  political 
viability of the proposal. Moreover, the Commission also takes into consideration the results 
of  the  negotiations  of  the  proposal  in  the  Council  Anti-Fraud  working  group  as  well  as  the 
opinion of the European Court of Auditors which was consulted on the basis of Article 280 
(4) of the EC Treaty. 

The modifications of the proposal aim at the following objectives: 

(1) 

(2) 

(3) 

(4) 

(5) 

(6) 

(7) 

(8) 

(9) 

re-assuring  Member  States’  that  the  proposal  does  not  confer  any  new  investigative 
powers to the Commission; 

Specifying Member States’ discretion as to the forms and methods of cooperation; 

Pointing  out  the  Commission’s  role  as  a  Service  platform  in  contrast  to  its 
investigative tasks; 

Clarifying the scope of mutual administrative assistance under the proposal as regards 
indirect as well as direct Community expenditure; 

Further clarifying the delineation with respect to criminal law and other instruments of 
administrative cooperation (Regulation EC 1798/2003); 

Highlighting  the  coordination  function  of  central  liaison  offices  at  national  level  (cf. 
the deletion of the reference to the competent excise authorities); 

Emphasising  more  strongly  the  added  operational  value  which  the  Commission 
(OLAF) can contribute; 

Pointing  out  the  elements  of  a  Service  platform  for  Member  States  with  regard  to 
spontaneous assistance and risk analysis activity by the Commission; 

Deleting  the  provisions  on  “Special  watch”  which  provided  surveillance  following 
suspected irregularities, either on request or not; 

(10)  Circumscribing  the  scope  of  this  regulation  and  a  coordination  role  for  the 

Commission in relation to third countries; 

(11)  Clarifying  to  which  extent  Member  States  may  have  flexibility  in  implementing  the 

obligations under this regulation; 

(12)  Combining  the  designation  of  competent  authorities  by  Member  States  with  the 

establishment of a list of those authorities by the Commission; 

(13)  Strengthening  the  possibility  of  recovering  unlawfully  obtained  gains  and  the 

obligation to provide related information; 

(14) 

Introducing effective proportionate and dissuasive provisions concerning recovery; 

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(15)  Evacuating  Member  States’  apprehensions  that  their  services  might  be  obliged  to 
undertake activities which they are not entitled to perform under national law (deletion 
of  the  instrument  of  special  watch  from  the  modified  proposal,  i.e.  it  is  at  Member 
States’ discretion whether or not to make use of this particular instrument); 

(16)  Emphasising  that  information  on  suspicious  transactions  which  is  gathered  by  the 
Member  States’  Financial  Intelligence  Units  following  the  reporting  mechanisms 
established  under  the  money  laundering  directives  is  not  to  be  used  under  this 
proposed  regulation  for  the  purpose  of  prosecuting  money  laundering  but  rather  to 
collect elements of fact for an intelligence indicator to point to the possible existence 
of  EC  fraud  which  may  require  the  initiation  of  mutual  administrative  assistance 
activity. 

(17)  Confirming an exception for the obligation to cooperate for reasons of public order (cf. 

new Article 22). 

COMMISSION OPINION ON THE AMENDMENTS ADOPTED BY THE EUROPEAN PARLIAMENT 

More specifically the Commission is taking the following position on each amendment:  

Amendment no. 1 concerning a reference to the opinion of the EDPS5 in has been 
accepted with a slight modification. 

The introductory references "having regard" only refer to primary law provisions on 
the  legislative  procedure.  As  far  as  the  recitals  are  concerned,  reference  to  data 
protection rules in Article 286 EC Treaty and regulation 45/2001 is already made. 

Recital No. 13, is amended in the following way: 

(...)  Due  consideration  has  been  given  to  the  opinion  of  the  European  Data 
Protection Supervisor in drafting this Regulation6. 

Amendment  no.  2  has  been  incorporated  in  Article  3  (1)  as  an  additional 
clarification with a modified wording. 

The  Commission's  and  the  Member  States'  task  of  protecting  the  Community's 
financial interests is not limited to the Community territory: 

"1. (...) 

(a)  irregularity  means  fraud  (...),  including  irregularities  committed  partially  or 
entirely in third countries." 

Amendment  no.  3  concerning  Article  3  (1)(a)(i)  has  been  accepted  with  a  slight 
modification as it is a helpful clarification.  

The  wording  has  been  reviewed  replacing  "financing"  by  "expenditure"  as  it  is  not 
about own resources but Community expenditure: 

5 
6 

OJ C 301, 7.12.2004, p. 4. 
OJ C 301, 7.12.2004, p. 4. 

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“infringements  relating  to  areas  of  revenue  as  well  as  expenditure,  whether 
managed on a centralised basis by the institutions, by shared, decentralised or 
joint management, (...)” 

Amendment  no.  4  concerning  Article  3  (1)(b)(i)  has  been  accepted  with  a 
modification as it would provide for a basis for mutual administrative assistance in 
the field of direct expenditure also in cases without a transnational context which is 
currently  an  important  missing  element  in  the  legislative  framework.  This  would 
therefore be a modification to the proposal and not a mere clarification.  

The Commission adapted the text with the following wording: 

(i)(a) which  –  in  the  case  of  infringements  relating  to  areas  of  revenue  or 
infringements  referred  to  in  subparagraph  (a)(ii)  of  this  article  and 
without prejudice to infringements covered by subparagraph (a)(iii) of this 
article  -  have  or  might  have  ramifications  in  other  Member  States,  or  where 
there  are  tangible  links  with  operations  carried  out  in  other  Member  States; 
and 

Amendment no. 5 concerning Article 3, (1)(b)(ii) has been accepted. 

(b)  “irregularities  (...)  of  particular  relevance  at  Community  level”  means 

irregularities: 

(i)  which, regardless of whether or not they have been discovered in a single 

or in several operations linked to each other, are estimated (...)” 

Amendment no. 6 concerning Article 4 has been accepted with a modified wording 
with a scope limited to transnational VAT fraud and limited to competent officials in 
order to maintain coherence with the provisions of Regulation 1798/2003 and has led 
to the introduction of Art. 4 (4). 

“In  the  field  of  irregularities  under  Article  3  (1)(a)(ii)  the  Commission  and  the 
designated  competent  officials  under  Regulation  (EC)  No  1798/2003  may  contact, 
cooperate or exchange information with each other. 

Where  a  competent  official  or  a  competent  authority  other  than  those  listed  in 
Regulation (EC) N° 1798/2003 or a central liaison office receives or sends a request 
or a reply to a request for assistance under this regulation, it shall inform the central 
liaison office of its Member State.” 

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Amendment no. 7 has been incorporated in a modified way in Article 4 (3). 

A comprehensive register of the competent authorities under the proposed regulation 
would be of great added value. However, such a register cannot be established by the 
Commission  on  its  own  but  only  in  cooperation  with  the  Member  States  which 
should  provide  the  Commission  with  the  necessary  information.  It  allows  Member 
States  to  raise  the  awareness  of  the  authorities  concerned  in  full  transparency.  The 
practical  use  of  its  publication  on  the  internet  is  not  evident.  Regular  updating  is 
necessary and requires Member States to provide the necessary information.  

“Member  States  shall  provide  the  Commission  with  information  concerning  their 
competent  authorities  for  the  purposes  of  this  Regulation.  They  shall  notify  the 
Commission  of  any  changes  to  those  authorities.  On  the  basis  of  the  information 
provided,  the  Commission  shall  publish  a  register  for  use  by  the  Member  States' 
authorities as well as the Commission. The Commission shall regularly update this 
register.” 

Amendment no. 8 concerning Article 11 has not been accepted. 

The amendment proposed by the European Parliament concerning information duties 
of  the  Member  States  to  the  Commission  on  the  basis  of  this  proposal  relating  to 
supplies  of  goods  under  the  VAT  information  exchange  system  under  regulation 
1798/2003 would go beyond the framework established by the latter regulation. 

Amendment  no.  9  concerning  Article  18  has  been  accepted  with  a  modified 
wording. 

As  the  Commission  (OLAF)  is  best  placed  to  coordinate  cooperation  with  third 
countries this amendment is incorporated into the proposal with a modified wording. 
The  coordinating  role  can  only  be  attributed  to  the  Commission  as  such  and  not  to 
OLAF on the basis of a Regulation adopted by the EP and the Council as this would 
interfere otherwise with the organisational autonomy of the Commission. 

“Information obtained by a Member State or the  Commission  from a  third country 
and  falling  within  the  scope  of  this  Regulation  shall  be  communicated  to  the 
competent  authorities  of  a  Member  State  and  to  the  Commission  if  it  might  enable 
them  to  prevent  or  counter  irregularities.  As  regards  the  exchange  of  such 
information the Commission shall have a coordinating role.” 

Amendment  no.  10  concerning  the  introduction  of  a  new  article  on  amending 
existing legal obligations has not been accepted. 

The  proposed  regulation  shall  not  affect  regulation  1798/2003  and  does  not  cover 
criminal  law.  Therefore,  the  proposed  regulation  cannot  refer  to  “amendments  to 
Regulation (EC) No 1798/2003 and Decision 2000/642/JHA. 

Amendment no. 11 concerning the introduction of a new provision on recovery has 
been accepted with a modified wording. 

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This  amendment  aims  at  giving  the  possibility  to  make  use  of  the  financial 
information from the anti-money laundering sector in order to facilitate the success 
of  recovery  measures  further  upstream.  Hence,  it  complements  –  insofar  as  it  is 
covered  by  the  scope  of  this  proposal  -  the  rules  on  recovery  under  Directive  CEE 
76/3087 amended by Directive 2001/448. 

The proposed amendments 11 and 12 have to be seen in the context of the resolution 
of  the  European  Parliament  on  the  protection  of  the  financial  interests  of  the 
Communities and the fight against fraud (no. 9, 11, 12, 24, 25, 28)9. These provisions 
complete  and  build  upon  but  do  not  affect  the  rules  in  place  in  Member  States  on 
recovery  in  the  field  of  Customs  duties  and  agricultural  levies  and  VAT  (Directive 
76/308 amended by Directive 2001/44. They have to be in line with respective third 
pillar law and shall not affect fundamental rights, in particular the right to property. 

The text of the proposal has been modified in the following way: 

“CHAPTER 3 

FACILITATION OF RECOVERY 

Article 20 

Obligation to provide information 

1.  For  the  purpose  of  facilitating  the  recovery  of  proceeds  resulting  from 
irregularities  the  requested  authority  shall collect  in  accordance  with  national  law 
from the institutions and persons referred to in Article 2 (1) of Directive 2005/60/EC 
all relevant financial information facilitating the application of measures referred to 
in Article 20 of this Regulation. The exchange of information under this Regulation is 
without prejudice to the rules on cooperation amongst  Financial Intelligence Units 
under Council Decision 2000/642/JHA. 

2. The applicant authority shall outline the relevant facts in a statement including the 
grounds for serious suspicion of an irregularity. When approached by the authorities 
of their Member State with a view to collecting relevant information, the institutions 
and  persons  referred  to  in  Article  2  (1)  of  Directive  2005/60/EC  shall  ensure  that 
this information remains confidential.” 

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8 

9 

Council  Directive  76/308/EEC  of  15  March  1976  on  mutual  assistance  for  the  recovery  of  claims 
resulting from operations forming part of the system of financing the European Agricultural Guidance 
and Guarantee Fund, and of the agricultural levies and customs duties, OJ L 73 , 19 March 1976 p. 18. 
Council Directive 2001/44/EC of 15 June 2001 amending Directive 76/308/EEC on mutual assistance 
for  the  recovery  of  claims  resulting  from  operations  forming  part  of  the  system  of  financing  the 
European Agricultural Guidance and Guarantee Fund, and of agricultural levies and customs duties and 
in respect of value added tax and certain excise duties, OJ L 175, 28.6.2001, p. 17. 
European  Parliament  resolution  of  7  June  2005  on  the  protection  of  the  financial  interests  of  the 
Communities and the fight against fraud (2004/2198(INI)). 

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Amendment no. 12 concerning the introduction of a new provision on recovery has 
been accepted with some modifications. Following the definition of serious fraud in 
the Convention on the protection of the European Communities' financial interests10 
which is being referred to in directive 2005/60 EC on the prevention of the use of the 
financial  system  for  the  purpose  of  money  laundering  and  terrorist  financing11 
Member  States  shall  apply  specific  measures  including  appropriate  administrative 
measures  against  fraud  and  money  laundering  such  as  recovery  at  least  as  of  an 
amount exceeding EUR 50 000. 

The text of the proposal has been modified in the following way: 

“Article 21 

Means of recovery 

1. In order to ensure effective recovery, Member States shall, upon request made by 
the  competent  authorities,  take  the  necessary  measures  to  freeze,  seize  and 
confiscate,  in  accordance  with  national  law,  any  unlawfully  obtained  proceeds 
arising  from  irregularities.  This  provision  shall  apply  to  the  proceeds,  involving 
sums of more than EUR 50 000, of any irregularity or of property, as referred to in 
Article  1  (2)  of  Directive  2005/60/EC,  the  value  of  which  corresponds  to  such 
proceeds. 

2. The measures referred to in paragraph 1 may be imposed on a natural or a legal 
person who has committed or is suspected of having committed the irregularity, or 
who  has  contributed  to  or  is  suspected  of  having  contributed  to  committing  the 
irregularity. These measures may also be applied to a natural or a legal person who 
benefits from the proceeds of the irregularity.” 

4. 

CONCLUSION 

Having regard to Article  250  (2) of the  EC treaty,  the  Commission  modifies  its  proposal  as 
follows: 

10 

11 

Convention drawn up on the basis of Article K.3 of the Treaty on European Union, on the protection of 
the European Communities' financial interests OJ C 316, 27.11.1995. p. 49. 
OJ L 309, 25.11.2005, p. 15, cf. articles 3 (5) and 39 (2). 

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2004/0172 (COD) 

Amended Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND THE COUNCIL 

on mutual administrative assistance for the protection of the financial interests of the 
European Community against fraud and any other illegal activities 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  establishing  the  European  Community,  and  in  particular 
Article 280(4) thereof, 

Having regard to the proposal from the Commission1, 

Having regard to the opinion of the Court of Auditors2, 

Acting in accordance with the procedure laid down in Article 251 of the Treaty, 

Whereas: 

(1) 

(2) 

(3) 

The  Community  and  the  Member  States  attach  great  importance  to  the  protection  of 
the financial interests of the Community and to the fight against fraud and any other 
illegal activities affecting those interests. 

The  Community  framework  on  mutual  assistance  should  permit  close  and  regular 
cooperation  between  the  competent  authorities  of  the  Member  States  as  well  as 
between the latter and the Commission, in order to protect the Community’s financial 
interests in all areas of Community financial resources and expenditure. 

The  provisions  of  this  Regulation  should  not  affect  the  conduct  of  investigations  by 
the  European  Anti-Fraud  Office  through  the  use  of  investigative  powers  and  in 
compliance with the safeguards provided for in Regulation (EC) No 1073/1999 of the 
European  Parliament  and  of  the  Council  of  25  May  1999  concerning  investigations 
conducted by the European Anti-Fraud Office (OLAF)3. The scope of this Regulation 
should  be  limited  to  certain  forms  of  assistance,  exchange  of  information  and 
coordination  which  may  precede,  follow  or  accompany  OLAF’s  investigative 
activities.  The  Commission  should  provide  support  to  the  Member  States’ 
authorities  by  facilitating  their  cooperation  and  exchanges  of  information  and 
generating intelligence alerts to analyse and prevent risks of fraud and any other 
irregularities  to  the  detriment  of  the  financial  interests  of  the  European 
Community. The Member States’ authorities should be given a certain degree of 

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2 
3 

OJ C 290, 27.11.2004, p. 5; COM(2004) 509. 
OJ C 313, 9.12.2005, p. 1. 
OJ L 136, 31.5.1999, p. 1. 

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discretion  as  to  the  measures  to  be  taken  for  the  protection  of  the  financial 
interests of the Community depending on what is needed for the effectiveness of 
Community law in the relevant area. 

The  introduction  of  new  Community  measures  should  not  be  such  as  to  affect  the 
application  of  national  criminal  law  or  of  rules  on  mutual  assistance  in  criminal 
matters or the national administration of justice. 

Insofar as the exchange of information on suspicious transactions as referred to 
in  Directive  2005/60/EC  of  the  European  Parliament  and  of  the  Council  of 
26 October  2005  on  the  prevention  of  the  use  of  the  financial  system  for  the 
purpose  of  money  laundering  and  terrorist  financing4  complemented  by 
Regulation  (EC)  1889/2005  of  26  October  20055  on  controls  of  cash  entering  or 
leaving  the  Community  may  assist  in  the  detection  of  fraud  to  the  detriment  of 
the  financial  interests  of  the  Community  this  rules  on  mutual  administrative 
assistance under this Regulation should apply. 

(5)The  fight  against  transnational  fraud  and  any  other  illegal  activities  affecting  the 
financial  interests  of  the  Community  demands  enhanced  coordination  at  Community 
level as  well  as  multidisciplinary cooperation with the Member States’ authorities in 
the  field  of  fraud  and  any  other  illegal  activities,  which  are  in  many  cases  related  to 
structures  of  organised  crime  and  are  detrimental  to  the  Community’s  financial 
interests.  This  Regulation  should further support permit cooperation between all the 
competent  authorities  of  the  Member  States,  and  between  the  latter  and  the 
Commission. 

In  the  fight  against  value  added  tax  fraud  the  central  liaison  offices  in  the 
in  Council  Regulation  No  1798/2003  of 
Member  States  as  referred  to 
7 October 2003 on administrative cooperation in the field of value added tax and 
repealing  Regulation  (EEC)  No  218/926  have  a  coordination  role  in  the 
cooperation against fraud. In as much as assistance in detecting and preventing 
irregularities  may  require  direct  cooperation  with  regional  and  local  anti-fraud 
authorities  and  officials,  all  information  communicated  should  be  notified  in 
parallel to the central liaison offices. 

(6)The  provisions  of  this  Regulation  should  not  affect  Community  legislation  which 
provides  for  more  specific  or  extensive  cooperation  between  the  Member  States  and 
the  latter  and  the  Commission,  such  as  Council  Regulation  (EC)  No  515/97  of 
13 March  1997  on  mutual  assistance  between  the  administrative  authorities  of  the 
Member States and cooperation between the latter and the Commission to ensure the 
correct application of the law on customs and agricultural matters7, or Regulation (EC) 

Directive 2005/60/EC of the European Parliament and of the Council of 26 October 2005 on the 
prevention of the use of the financial system for the purpose of money laundering and terrorist 
financing, OJ L 309, 25.11.2005, p. 13. 
Regulation  (EC)  1889/2005  of  the  European  Parliament  and  of  the  Council  on  controls  of  cash 
entering or leaving the Community, OJ L 309, 25.11.2005, p. 9. 
OJ L 264, 15.10.2003, p. 1. Regulation as amended by Regulation (EC) No 885/2004 (OJ L 168, 
1.5.2004, p. 1). 
OJ  L  82,  22.3.1997,  p.  1.  Regulation  as  amended  by  Regulation  (EC)  No  807/2003  (OJ  L  122, 
16.5.2003, p. 36). 

(4) 

(5) 

(6) 

(7) 

(8) 

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(9) 

(10) 

(11) 

(12) 

(13) 

No 1798/2003  of  7 October 2003  on  administrative cooperation in the field of value 
added tax and repealing Regulation (EEC) No 218/928.  

(7)The  exchange  of  information  is  a  key  element  in  the  fight  against  fraud  and  any 
other illegal activities affecting the financial interests of the Community. Information 
provided by the Member States to the Commission should be used by the Commission 
to form a comprehensive view on Europe-wide fraud and other illegal activities and to 
put this at the disposal of communicate that view to the Member States. 

(8)Fraud  and  any  other  illegal  activities  affecting  the  financial  interests  of  the 
Community,  in  particular  in  transnational  cases  which  often  involve  organised 
international  fraud  schemes  in  two  or  more  Member  States,  can  be  prevented  and 
fought most effectively if information of an operational, statistical or general nature is 
analysed and subjected to risk analysis at Community level, using the intelligence and 
risk-analysis capacity of the Commission including OLAF. in general and OLAF in 
particular. 

(9)The  fight  against  fraud  and  any  other  illegal  activities  affecting  the  financial 
interests  of  the  Community  also  necessitates  a  coherent  follow-up.  Information 
gathered or transferred by the Commission should therefore be admissible as evidence 
in administrative and judicial proceedings. 

(10)In the interest of successful cooperation between the competent authorities of the 
Member States and the Commission, the exchange of information should be organised 
in  accordance  with  the  rules  of  confidentiality  where  information  is  subject  to 
professional secrecy, while ensuring that personal data processed pursuant to the new 
provisions enjoys proper data protection. 

(11)  Due  consideration  should  be  given  to  the  data  protection  rules  applying  to  the 
Community  institutions  set  out  in  Article  286  of  the  Treaty  and  Regulation  (EC) 
No 45/2001 of the European Parliament and of the Council of 18 December 2000 on 
the  protection  of  individuals  with  regard  to  the  processing  of  personal  data  by  the 
Community institutions and bodies and on the free movement of such data9, and also 
to  as  well  as  the  rules  applying  to  the  Member  States  on  the  basis  of  Directive 
95/46/EC of the European Parliament and of the Council of 24 October 1995 on the 
protection of individuals with regard to the processing of personal data and on the free 
movement  of  such  data.10  Due  consideration  has  been  given  to  the  opinion  of  the 
European Data Protection Supervisor in drafting this Regulation11. 

(14) 

(12)The  measures  necessary  for  the  implementation  of  this  Regulation  should  be 
adopted  in  accordance  with  Council  Decision  1999/468/EC  of  28  June  1999  laying 
down  the  procedures  for  the  exercise  of  implementing  powers  conferred  on  the 
Commission12. 

8 

9 
10 

11 
12 

OJ  L  264,  15.10.2003,  p.  1.  Regulation  as  amended  by  Regulation  (EC)  No  885/2004  (OJ  L  168, 
1.5.2004, p. 1). 
OJ L 8, 12.1.2001, p. 1. 
OJ L 281, 23.11.1995, p. 31. Directive as amended by Regulation (EC) No 1882/2003 of the European 
Parliament and of the Council (OJ L 284, 31.10.2003, p. 1). 
OJ C 301, 7.12.2004, p. 4. 
OJ L 184, 17.7.1999, p. 23. 

EN 

11 

   EN 

 
                                                 
(15) 

(13)Since the objectives of the action to be taken, namely the fight against fraud and 
any other illegal activities affecting the financial interests of the Community cannot be 
sufficiently achieved by the Member States acting alone and can therefore by reason 
of  the  scale  and  effects  of  the  action  be  better  achieved  at  Community  level,  i.e. 
through cooperation of both Member States and the Commission, the Community 
may  adopt  measures,  in  accordance  with  the  principle  of  subsidiarity  as  set  out  in 
Article 5 of the Treaty. In accordance with the principle of proportionality, as set out 
in  that  Article,  this  Regulation  does  not  go  beyond  what  is  necessary  in  order  to 
achieve those objectives. 

(16) 

(14)This  Regulation  respects  the  fundamental  rights  and  observes  the  principles 
recognised in particular by the Charter of Fundamental Rights of the European Union, 

HAVE ADOPTED THIS REGULATION: 

TITLE I 
GENERAL PROVISIONS 

Article 1 
Subject matter 

This  Regulation  establishes  the  legal  framework  for  mutual  administrative  assistance 
cooperation  including,  in  particular,  and  the  exchange  of  information  between  the 
competent  authorities  of  the  Member  States  and  between  those  authorities  and  the 
Commission, in order to ensure equivalent and effective protection of the financial interests of 
the Community against fraud and any other illegal activities. 

Article 2 
Scope 

1. 

This Regulation shall apply in cases of fraud and any other illegal activities affecting 
the  financial  interests  of  the  Community  which  are  of  particular  relevance  at 
Community level. 

The  competent  authorities  of  the  Member  States  may  also  make  use  of  the 
instruments of mutual administrative assistance  established  by  this  Regulation 
exchange  information  and  provide  assistance  pursuant  to  this  Regulation  in  other 
situations  where  they  consider  such  exchange  of  information  and  assistance  at 
Community level to be necessary in countering fraud and any other illegal activities 
affecting the financial interests of the Community. 

2. 

The  provisions  of  this  Regulation  shall  not  apply  to  the  extent  that  Community 
legislation  provides  for  more  specific  cooperation  between  the  Member  States  and 
between the latter and the Commission, or provides for broader access to information 
by the Commission. 

EN 

12 

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3. 

4. 

5. 

In  particular,  this  Regulation  shall  not  affect  the  application  of  Regulation  (EC) 
No 515/97.  It  shall  not  affect  and  the  cooperation  between  Member  States  under 
Regulation (EC) No 1798/2003 on administrative cooperation in the field of value 
added tax and repealing Regulation (EEC) No 218/9213. 

This Regulation shall not affect the application of Regulation (EC) No 1073/1999. 

This Regulation shall not affect the application of national criminal law or of rules on 
mutual assistance in criminal matters or the national administration of justice. 

The obligation to give assistance provided for in this Regulation shall not cover the 
provision  of  information  or  documents  obtained  by  the  competent  administrative 
authorities acting with the authorisation or at the request of the judicial authority. 

However, in the event of requests for assistance, such information or documents shall 
be provided if the judicial authority which is to be consulted on the matter gives its 
consent. 

Article 3 
Definitions 

1. 

For the purposes of this Regulation the following definitions shall apply: 

(a)1.  “irregularity”  means  fraud  and  any  other  illegal  activities  with  particular 
relevance  at  Community  level,  affecting  the  financial  interests  of  the 
Community,  including  irregularities  committed  partially  or  entirely  in 
third countries, and in particular: 

joint  management, 

(i)(a) infringements  relating  to  areas  of  revenue  as  well  as  expenditure, 
whether  managed  on  a  centralised  basis  by  the  institutions,  by 
including  any 
shared,  decentralised  or 
infringement of a provision of Community law resulting from an act 
or  omission  by  an  economic  operator,  and  breaches  of  contracts 
arising  under  provisions  of  Community  law  any  infringement  of  a 
provision  of  Community  law  resulting  from  an  act  or  omission  by  an 
economic  operator,  including  breaches  of  contracts  arising  under 
provisions  of  Community  law,  which  has,  or  would  have,  the  effect  of 
prejudicing the general budget of the Community or budgets managed by 
it,  either  by  reducing  or  losing  revenue  accruing  from  own  resources 
collected directly on behalf of the Community, or by an unjustified item 
of expenditure; 

(ii)(b)  any  infringement  of  legislation  relating  to  value  added  tax  (VAT)  as 
referred to in Council Directive 77/388/EEC14, which has or would have 
the effect of diminishing the Communities’ own resources as referred to 
in Council Regulation (EEC, Euratom) No 1553/8915; 

13 
14 
15 

OJ L, 264, 15.10.2003, p. 1. 
OJ L 145, 13.6.1977, p. 1. 
OJ L 155, 7.6.1989, p. 9. 

EN 

13 

   EN 

 
                                                 
(iii)(c)  money  laundering  within  the  meaning  of  Article  1  of  Council 
Directive 2005/60/EC  of  the  European  Parliament  and  of  the 
Council16  in  relation  to  the  proceeds  of  an  infringement  as  referred 
to  in  points  (i)  and  (ii)  of  this  point  which  constitutes  fraud  or 
corruption  to  the  detriment  of  the  financial  interests  of  the 
Community,  complemented  by  Regulation  (EC)  1889/2005  of  the 
European Parliament and of the Council on controls of cash entering 
or  leaving  the Community17;money laundering, within the meaning of 
Article  1(c)  of  Council  Directive 91/308/EEC18,  in  relation  to  the 
proceeds of an infringement as referred to in paragraphs (a) and (b).  

(b)2.  “irregularities of particular relevance at Community level” means irregularities: 

(i)(a) which  -  in  the  case  of  infringements  relating  to  areas  of  revenue  or 
infringements  referred  to  in  subparagraph  (a)(ii)  of  this  article  and 
without  prejudice  to  infringements  covered  by  subparagraph  (a)(iii)  of 
this article - have or might have ramifications in other Member States, or 
where  there  are  tangible  links  with  operations  carried  out  in  other 
Member States; and 

(ii)(b)  which, regardless of whether or not they have been discovered in a 
single  or  in  several  operations  linked  to  each  other,  are  estimated  to 
cause overall fiscal damage in the Member States concerned in excess of 
EUR  500  000  in  the  area  of  VAT,  or  to  cause  damage  to  the 
Community’s  financial  interests  of  EUR  100  000  or  more  in  the  other 
cases  covered  by  this  Regulation;  in  the  case  of  money  laundering  the 
threshold  shall  apply  to  the  predicate  infringement  applies  to  the 
predicate offence; 

(c)3.  “legislation  relating  to  VAT”  means  all  the  Community  provisions  governing 
value added tax and the laws and regulations adopted by the Member States in 
order to comply with these Community provisions; 

(d)4.  “applicant authority” means a competent authority which makes a request for 

assistance; 

(e)5.  “requested  authority”  means  a  competent  authority  to  which  a  request  for 

assistance is made; 

(f) 

"central  liaison  office"  means  the  office  which  has  been  designated 
pursuant  to  Article  3(2)  of  Regulation  (EC)  No  1798/2003  with  principal 
responsibility  for  contacts  with  other  Member  States  in  the  field  of 
administrative cooperation; has  

(g)  “liaison department”, means any office other than the central liaison office 
with  a  specific  territorial  competence  or  a  specialised  operational 

16 
17 

18 

OJ L 309, 26.6.2005, p. 13. 
Regulation  (EC)  1889/2005  of  the  European  Parliament  and  the  Council  on  controls  of  cash 
entering or leaving the Community, OJ L 309, 25.11.2005, p. 9. 
OJ L 166, 28.6.1991, p. 77. 

EN 

14 

   EN 

 
                                                 
responsibility  which  has  been  designated  by  the  competent  authority 
pursuant  to  Article  3(3)  of  Regulation  (EC)  No  1798/2003  to  exchange 
directly information on the basis of that Regulation; 

(h)  “competent  official”,  means  any  official  designated  pursuant  to  Article 
3(4)  of  Regulation  (EC)  No  1798/2003  who  can  directly  exchange 
information on the basis of that Regulation ; 

(i)6.  “administrative  enquiries”  means  all  controls,  checks  and  other  action 
undertaken by the competent authorities in the performance of their duties with 
a  view  to  establishing  whether  irregularities  have  been  committed,  excluding 
action  taken  at  the  request  of,  or  under  a  direct  mandate  from,  a  judicial 
authority; 

(j)7.  “financial information” means information on suspicious transactions received 
by  the  competent  national  contact  points  pursuant  to  Directive  2005/60/EC 
91/308/EEC and other information that is appropriate for tracing the financial 
transactions linked to irregularities covered by this Regulation; 

(k)8.  “competent authorities” means the national or Community authorities referred 

to in Article 4(1).  

The  thresholds  set  out  in  point  (2)(b)  paragraph  1(b)(i)  of  this  Article  may  be 
increased in accordance with the procedure referred to in Article 24(2). 

Article 4 
Competent authorities 

Cooperation under this Regulation shall include the following competent authorities, 
acting within the scope of their respective powers: 

(a) 

the Member States’ authorities which are : 

(i) 

(ii) 

directly  responsible  for  the  management  of  financial  funds  originating 
from  the  Community  budget  and  designated  as  such  by  relevant 
Community law and national law provisions; or 

responsible  under  the  applicable  national  provisions  of  administrative 
law for the prevention of and the fight against fraud and any other illegal 
activities affecting the financial interests of the Community; or 

2. 

1. 

EN 

15 

   EN 

 
(iii) 

the  competent  authorities  listed  in  Regulation  (EC)  No  1798/2003,  the 
respective  central  liaison  offices  and  liaison  departments  designated 
pursuant to that Regulation, other investigation authorities competent to 
investigate VAT fraud or the competent authorities referred to in Council 
Directive  92/12/EEC19  insofar  as  information  gathered  may  afford 
evidence of VAT fraud; or 

(iv)  set up as “financial intelligence units” by the Member States pursuant to 
Council Decision 2000/642/JHA Article 21 of Directive 2005/60/EC to 
collect and analyse information received. 

(b) 

the Commission, including the European Anti-Fraud Office (OLAF). 

Member  States  shall  take  the  necessary  measures  to  ensure  the  exchange  of 
information  between  their  competent  authorities,  regardless  of  their  competencies 
and internal status, and between the latter and the Commission. 

Member States shall provide the Commission with information concerning their 
competent authorities for the purposes of this Regulation. They shall notify the 
Commission of any changes to those authorities. On the basis of the information 
provided, the Commission shall publish a register for use by the Member States' 
authorities as well as the Commission. The Commission shall regularly update 
this register.  

In  the  field  of  irregularities  under  Article  3  (1)(a)(ii)  the  Commission  and  the 
designated  competent  officials  under  Regulation  (EC)  No  1798/2003  may 
contact, cooperate or exchange information with each other. 

Where a competent official or a competent authority other than those listed in 
Regulation  (EC)  N°  1798/2003  or  a  central  liaison  office  receives  or  sends  a 
request  or  a  reply  to  a  request  for  assistance  under  this  regulation,  it  shall 
inform the central liaison office of its Member State. 

2. 

3. 

4. 

19 

OJ L 76, 23.3.1992, p. 1. 

EN 

16 

   EN 

 
 
                                                 
TITLE II 
COOPERATION DUTIES 

CHAPTER 1 
MUTUAL ADMINISTRATIVE ASSISTANCE AND EXCHANGE OF INFORMATION 

Section 1 

Article 5 
Forms and methods of cooperation 

Member States may exercise discretion as to the most appropriate forms and methods of 
cooperation. However, they shall provide such information and assistance as necessary 
to ensure the effective proportionate and dissuasive protection of the financial interests 
of the Community. 

Section 2 
Instruments of assistance on request 

Article 65 
Assistance on request 

1. 

2. 

3.2. 

4.3. 

The  competent  authorities  shall  assist  each  other  on  request  to  prevent  and  detect 
irregularities. At the request of the applicant authority, the requested authority shall, 
as far as is required to satisfy the purposes of the request and in accordance with the 
objectives  of  this  Regulation,  transmit  to  the  applicant  authority  all  information  of 
relevance  for  the  prevention  and  detection  of  irregularities.  The  information  to  be 
transmitted shall include information on the operations constituting the irregularity as 
well as financial information, both on the underlying operations and on the natural or 
legal persons involved. 

Requests  for  assistance  and  information  exchange  shall  be  accompanied  by  a 
brief statement of the facts known by the applicant authority. 

In  order  to  obtain  the  information  sought,  the  requested  authority  or  the 
administrative authority to which it has recourse shall proceed as though acting on its 
own account or at the request of another authority in its own Member State. 

The  requested  authority  shall  make  available  any  information  in  its  possession  or 
obtained  by  it  concerning  operations  or  transactions,  detected  or  planned,  which 
constitute  or  which  appear  to  the  applicant  authority  to  constitute  irregularities.  or, 
where  applicable,  concerning  findings  of  a  special  watch  carried  out  pursuant  to 
Article 6.  

EN 

17 

   EN 

 
It shall supply the applicant authority with any attestation, document or certified true 
copy of a document in its possession or obtained by it. However, original documents 
and items shall be provided only where this is not contrary to the legislation in force 
in the Member State in which the requested authority is based. 

4. 

5. 

Requests  for  assistance  and  information  exchange  shall  be  accompanied  by  a  brief 
statement of the facts known by the applicant authority. 

If the applicant authority addresses its request to an authority which is not competent 
for  the  assistance  requested  that  authority  shall  forward  the  request  immediately  to 
the a competent authority, the central liaison office or the liaison department and 
shall inform the applicant authority accordingly. 

Article 6 
Special watch 

At the request of the applicant authority, the requested authority shall as far as possible keep a 
special watch or arrange for a special watch to be kept within its operational area: 

(a) 

(b) 

(c) 

(d) 

1. 

on  persons,  and  more  particularly  their  movements,  where  there  are  reasonable 
grounds for believing that they are committing irregularities; 

on places where goods are stored in a way that gives grounds to suspect that they are 
intended to supply operations which constitute irregularities; 

on the movements of goods indicated as being the object of potential irregularities; 

on means of transport and financial transactions, where there are reasonable grounds 
for believing that they are being used to commit irregularities. 

Article 7 
Administrative enquiries on request 

At  the  request  of  the  applicant  authority  the  requested  authority  shall  carry  out 
administrative  enquiries  concerning  operations  which  constitute  or  which  appear  to 
the  applicant  authority  to  constitute  an  irregularity,  or  shall  arrange  to  have  such 
enquiries carried out. 

The requested authority or the administrative authority to which it has recourse shall 
conduct these administrative enquiries as though acting on its own account or at the 
request  of  another  authority  in  its  own  Member  State.  It  shall  communicate  the 
results of the enquiry to the applicant authority. 

2. 

By agreement between the applicant authority and the requested authority, officials 
appointed  by  the  applicant  authority  may  be  present  at  the  administrative  enquiries 
referred to in paragraph 1. The enquiries shall at all times be carried out by officials 
of the requested authority.  

EN 

18 

   EN 

 
 
Officials of the applicant authority may not, on their own initiative, assume powers 
of  inspection  conferred  on  officials  of  the  requested  authority;  however,  they  shall 
have  access  to  the  same  premises  and  the  same  documents  as  the  latter,  through 
officials of the requested Member State as intermediaries and for the sole purpose of 
the administrative enquiries being carried out. 

3. 

In  so  far  as  national  provisions  on  criminal  proceedings  reserve  certain  acts  for 
officials  specifically  designated  by  national  law,  the  officials  of  the  applicant 
authority shall not take part in such acts. In no circumstances shall they participate in 
searches of premises or the formal questioning of persons under criminal law. 

Article 8 
Activity of officials in another Member State or on mission in a Member State 

By agreement between the applicant authority and the requested authority and in accordance 
with  the  arrangements  laid  down  by  the  latter,  officials  duly  authorised  by  the  applicant 
authority may be permitted to obtain information on irregularities, from the offices where the 
administrative  authorities  of  the  Member  State  in  which  the  requested  authority  is  based 
exercise their functions.  

The  information  concerned  must  be  needed  by  the  applicant  authority  and  be  derived  from 
documentation to which the officials of those offices have access.  

The  officials  of  the  applicant  authority  shall  be  authorised  to  take  copies  of  that 
documentation. 

Article 9 
Written authority of officials 

Officials of the applicant authority who are present in another Member State or on mission in 
a Member State in accordance with the Articles 67 and 78 must at all times be able to produce 
written authority stating their identity and their official functions. 

Article 10 
Time limit for providing assistance and information 

1. 

2. 

3. 

The  requested  authority  shall  provide  the  assistance  and  information  referred  to  in 
Articles  56  and  7  as  quickly  as  possible  and  not  later  than  six  weeks  following 
receipt  of  the  request.  However,  where  the  requested  authority  is  already  in 
possession of that information the time-limit shall be four weeks. 

In  particular  cases,  time  limits  different  from  the  ones  provided  for  in  paragraph  1 
may be agreed between the requested and the applicant authorities. 

Where  the  requested  authority  is  unable  to  respond  to  a  request  by  the  deadline,  it 
shall  inform  the  applicant  authority  forthwith  of  the  reasons  for  its  failure  to  do  so 
and shall state when it will be able to respond. 

EN 

19 

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Article 11 
Data concerning value added tax 

For  the  purpose  of  providing  operational  and  technical  assistance  and  where 
necessary  to  help  competent  authorities  of  the  Member  States  to  detect  and 
investigate  irregularities  within  the  meaning  of  Article  3(1)(a)(ii)  the  Commission 
may shall be granted access to Member States’ records stored in national databases 
as referred to in Article 22 of Regulation (EC) No 1798/2003. 

The detailed rules concerning this access, including rules on confidentiality and data 
protection  as  well  as  on  the  use  of  information  obtained  from  the  Member  States’ 
records,  shall  be  laid  down  in  accordance  with  the  procedure  referred  to  in 
Article 2224(2). 

Insofar as it may afford evidence of irregularities within the meaning of point (b) of 
the first paragraph of Article 3, Member States’ authorities shall communicate to the 
Commission information gathered on the basis of Directive 92/12/EEC. 

Section 3 
Spontaneous Assistance 

Article 12 
Provision of information concerning operations or transactions 

The  competent  authorities  of  the  Member  States  shall  provide  the  Commission, 
without  prior  request,  with  relevant  information  in  respect  of  operations  or 
transactions, which constitute or which appear to constitute irregularities. 

Acting  with  the  help  of  appropriate  technological  support,  the  Commission  shall 
analyse  the  information  provided  and  shall  provide  the  Member  States  with  the 
corresponding analytical results, with a view to providing technical and operational 
assistance in the detection and investigation of irregularities. Where the Commission 
considers that irregularities have taken place in one or more Member States, it shall 
inform the Member States concerned thereof. 

Financial  information  shall  be  exchanged  spontaneously  between  the  Member 
States  and  the  Commission  The  obligation  to  exchange  financial  information 
spontaneously  between  the  Member  States  and  the  Commission  shall  apply 
regardless of whether the transaction is carried out in a single operation or in several 
operations which seem to be linked. 

Rules on confidentiality and data protection shall be adopted in accordance with the 
procedure referred to in Article 242(2). 

1. 

2. 

2. 

1. 

2. 

3. 

4. 

Article 13 
Special watch without request 

Where they consider it useful for the protection  of the financial interests of  the Community 
against irregularities, competent authorities of the Member States shall arrange for a special 
watch to be kept: 

EN 

20 

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(a) 

(b) 

(c) 

(d) 

(e) 

1. 

2. 

on  persons,  and  more  particularly  their  movements,  where  there  are  reasonable 
grounds for believing that they are committing irregularities; 

on places where goods are stored in a way that gives grounds to suspect that they are 
intended to supply operations which constitute irregularities; 

on the movements of goods indicated as being the object of potential irregularities; 

on means of transport, where there are reasonable grounds for believing that they are 
being used to commit irregularities. 

on financial transactions, where there are reasonable grounds for believing that they 
are being used to commit irregularities. 

Article 1314 
Communication of general information 

The  competent  authorities  of  the  Member  States  shall  communicate  general 
information  to  the  Commission  on  new  ways,  means,  methods  and  practices  of 
committing irregularities as well as on the detection and prevention of irregularities, 
which might contribute to the fraud-proofing of relevant legislation, as soon as such 
information is available to them. 

The  Commission  shall  communicate  to  the  competent  authorities  in  each  Member 
State,  as  soon  as  it  becomes  available,  any  information  that  would  enable  them  to 
prevent irregularities and to enforce relevant legislation. 

CHAPTER 2 
USE OF INFORMATION 

Article 1415 
Use as evidence 

Findings,  certificates,  information,  documents,  certified  true  copies  and  any  intelligence 
communicated to a competent authority in the course of assistance provided for in Articles 6, 
7,  8  and  13  shall  constitute  admissible  evidence in administrative or judicial proceedings in 
any Member State, in the same way as if they had been obtained in the Member State where 
the proceedings take place.  

Article 1516 
Exchange of information 

Information obtained under this Regulation as well as under other Community provisions may 
be exchanged by the Commission with other competent authorities in accordance with and for 
the purpose of this Regulation, to the extent to which such exchange is compatible with the 
Community provisions under which the information has been obtained. 

EN 

21 

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Article 1617 
Follow-up 

The  competent  authorities  of  the  Member  States  shall  inform  the  Commission  of  relevant 
updates of the information communicated and the administrative enquiries conducted under this 
Regulation, and especially of the administrative or judicial proceedings instituted, insofar as this 
is compatible with national criminal law. 

1. 

2. 

1. 

2. 

Article 1718 
Confidentiality rules and data protection 

Information  communicated  or  acquired  in  any  form  under  this  Regulation  shall  be 
covered  by  professional  secrecy  and  protected  in  the  same  way  as  similar 
information is protected by the national legislation of the Member State that received 
it and by the corresponding provisions applicable to the Community institutions and 
bodies. 

Such  information  may  not  be  communicated  to  persons  or  authorities  other  than 
those within the Community institutions and bodies or in the Member States whose 
functions  require  them  to  know  it  nor  may  it  be  used  for  purposes  other  than  to 
ensure effective protection of the financial interests of the Community. 

The Commission and the Member States shall ensure, when processing personal data 
pursuant  to  this  Regulation,  that  the  Community  and  national  provisions  on  the 
protection  of  data,  in  particular  those  laid  down  by  Directive  95/46/EC  and,  where 
applicable, by Regulation (EC) No 45/2001 are complied with.  

The European Data Protection Supervisor shall be consulted before adoption of the 
implementing  rules  provided  for  in  the  second  subparagraph  of  Article  11, 
Article 12(4) and Article 2322. 

Article 1819 
Relations with third countries 

Information obtained by a Member State or the Commission from a third country and 
falling within the scope of this Regulation shall be communicated to the competent 
authorities  of  a  Member  State  and  to  the  Commission  if  it  might  enable  them  to 
prevent or counter irregularities. As regards the exchange of such information the 
Commission shall have a coordinating role. 

Provided  that  the  third  country  concerned  has  given  a  legal  undertaking  to  provide 
the  assistance  required  to  gather  proof  of  the  irregular  nature  of  operations  which 
appear to constitute an irregularity, information obtained under this Regulation may 
be  communicated  to  that  third  country  as  part  of  a  concerted  action,  subject  to  the 
agreement  of  the  competent  authorities  supplying  the  information,  in  accordance 
with their national provisions on the protection of personal data, with Articles 25 and 
26  of  Directive  95/46/EC,  and  where  applicable  with  Article  9  of  Regulation  (EC) 
No 45/2001. 

EN 

22 

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Article 1920 
Risk analysis by the Commission 

In order to facilitate, in particular, the work of the competent authorities in the Member 
States  tThe  Commission  may  use  any  information  of  a  general  or  operational  nature 
communicated by Member States under this Regulation to perform both strategic and tactical 
risk assessments, with the use of appropriate information technology support, leading to the 
production of intelligence-based reports and alerts in order to raise the awareness of identified 
threats  and  thus  enhance  the  effectiveness  of  appropriate  operational  responses  by  the 
competent  national  authorities  and  the  Commission,  subject  to  the  limits  of  the  latter’s 
competence. 

CHAPTER 3 

FACILITATION OF RECOVERY 

Article 20 
Obligation to provide information 

1. For the purpose of facilitating the recovery of proceeds resulting from irregularities 
the  requested  authority  shall  collect  in  accordance  with  national  law  from  the 
institutions and persons referred to in Article 2 (1) of Directive 2005/60/EC all relevant 
financial information facilitating the application of measures referred to in Article 20 of 
this Regulation. The exchange of information under this Regulation is without prejudice 
to the rules on cooperation amongst Financial Intelligence Units under Council Decision 
2000/642/JHA20. 

2.  The  applicant  authority  shall  outline  the  relevant  facts  in  a  statement  including  the 
grounds for serious suspicion of an irregularity. When approached by the authorities of 
their Member State with a view to collecting relevant information, the institutions and 
persons  referred  to  in  Article  2  (1)  of  Directive 2005/60/EC  shall  ensure  that  this 
information remains confidential. 

Article 21 
Means of recovery 

1. In order to ensure effective recovery, Member States shall, upon request made by the 
competent  authorities,  take  the  necessary  measures  to  freeze,  seize  and  confiscate,  in 
accordance  with  national  law,  any  unlawfully  obtained  proceeds  arising  from 
irregularities. This provision shall apply at least to the proceeds, involving sums of more 
than  EUR  50 000,  of  any  irregularity  or  to  property,  as  referred  to  in  Article  1  (2)  of 
Directive 2005/60/EC, the value of which corresponds to such proceeds. 

20 

OJ L 271, 24.10.2000, p. 4.  

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23 

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2.  The  measures  referred  to  in  paragraph  1  may  be  imposed  on  a  natural  or  a  legal 
person who has committed or is suspected of having committed the irregularity, or who 
has contributed to or is suspected of having contributed to committing the irregularity. 
These measures may also be applied to a natural or a legal person who benefits from the 
proceeds of the irregularity. 

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TITLE III 
FINAL PROVISIONS 

Article 22 
Public order 

1.  Cooperation  may  be  withheld  if  the  requested  authority  considers  that  execution  of 
the  request  would  be  contrary  to  its  sovereignty,  security,  public  policy  or  other 
fundamental interests of the Member State in which it is based. 

Tax  secrecy  or  banking  secrecy  shall  not  constitute  a  reason  for  refusing  mutual 
assistance in the sense of this Article. 

2. Reasons shall be given for any refusal to give assistance. The requested authority shall 
inform  the  Commission  as  early  as  possible  of  any  refusal  to  give  assistance  and  its 
reasons. 

Article 2321 
Implementing rules 

Detailed  implementing  rules  concerning  the  mutual  assistance  and  exchange  of  information 
provided  for  in  Chapter  1  of  Title  II  shall  be  adopted  in  accordance  with  the  procedure 
referred to in Article 2224(2). 

In addition to the matters referred to in the second subparagraph of Article 11 and in Article 
12(4) those rules may cover; in particular: 

(a) 

(b) 

(a) 

(b) 

(c) 

1. 

2. 

irregularities within the meaning of Article 3 (1)(a)(ii); 

irregularities within the meaning of Article 3 (1)(a)(iii); 

irregularities within the meaning of point (b) of the first paragraph of Article 3; 

irregularities within the meaning of point (c) of the first paragraph of Article 3; 

irregularities in the structural funds sector. 

Article 2422 
Committee 

The Commission shall be assisted by the Committee (hereinafter referred to as “the 
Committee”) set up under Article 43 of Regulation (EC) No 515/97. 

reference 

Where 
this  paragraph,  Articles  5  and  7  of 
Decision 1999/468/EC  shall  apply,  having  regard  to  the  provisions  of  Article  8 
thereof. 

is  made 

to 

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The  period  referred  to  in  Article  5(6)  of  Decision  1999/468/EC  shall  be  three 
months. 

3. 

The Committee shall adopt its rules of procedure. 

Article 2523 
Evaluation report 

Every three years after the date of entry into force of this Regulation, the Commission shall 
report to the European Parliament, the Court of Auditors and the Council on the application of 
this Regulation. 

Article 2624 
Entry into force 

This Regulation shall enter into force on the twentieth day following that of its publication in 
the Official Journal of the European Union. 

This Regulation shall be binding in its entirety and directly applicable in all Member States. 

Done at Brussels,  

For the European Parliament 
The President 

For the Council 
The President 

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LEGISLATIVE FINANCIAL STATEMENT 

Policy area(s): Anti-fraud 

Activities: Mutual administrative cooperation and exchange of information 

TITLE OF ACTION: PROPOSAL FOR A REGULATION OF THE EUROPEAN PARLIAMENT 
AND  OF  THE  COUNCIL  ON  MUTUAL  ADMINISTRATIVE  ASSISTANCE  FOR  THE  PROTECTION 
OF THE FINANCIAL INTERESTS OF THE COMMUNITY AGAINST FRAUD AND ANY OTHER ILLEGAL 
ACTIVITIES 

1. 

BUDGET LINE(S) + HEADING(S) 

24.0106 (fight against fraud) 

2. 

OVERALL FIGURES: 

2.1. 

Total allocation for action (Part B): EUR million for commitment: - 

2.2. 

Period of application: From entering into force on. 

2.3. 

Overall multi-annual estimate of expenditure 

(a) 

Schedule  of  commitment  appropriations/payment  appropriations 
intervention) (see point 6.1.1) - (not applicable see point 5.1.1) 

(financial 

EUR million (to three decimal places) 

[n+1] 

[n+2] 

[n+3] 

[n+4] 

Year 
[n] 

[n+5 
and 
subs. 
Years] 

Total 

Commitments 

Payments 

(b) 

Technical and administrative assistance and support expenditure(see point 6.1.2) 

Commitments 

Payments 

Subtotal a+b 

Commitments 

Payments 

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(c) 

Overall  financial  impact  of  human  resources  and  other  administrative  expenditure  
(see points 7.2 and 7.3) 

Commitments/ 
payments 

1.851   1.851   1.751 

1.751 

1.751,  1.751 

(The  first  two  years  include  each  an  amount  of  EUR  100 000  for  the  development  of 
information systems for internal use of the Commission, see point 7.3) 

TOTAL a+b+c 

Commitments 

1.851 

1.851 

1.751 

1.751 

1.751 

1.751 

Payments 

1.851 

1.851 

1.751 

1.751 

1.751 

1.751 

2.4. 

Compatibility with financial programming and financial perspective 

[X]  Proposal is compatible with existing financial programming. 

2.5. 

Financial impact on revenue: 

[X]  Proposal  has  no  financial  implications  (involves  technical  aspects  regarding 

implementation of a measure) 

3. 

BUDGET CHARACTERISTICS  

Type of expenditure 

EFTA 
contribution 

Contributions 
from  applicant 
countries 

in 

Heading 
financial 
perspective 

Non-comp 

Non-diff 

NO 

NO 

NO 

5 

4. 

LEGAL BASIS 

Article 280(4) of the EC Treaty. 

5. 

DESCRIPTION AND GROUNDS 

5.1. 

Need for Community intervention  

5.1.1.  Objectives pursued 

The initiative for a regulation on the basis of article 280 of the EC Treaty concerns a 
framework dedicated to administrative mutual assistance necessary to strengthen the 
protection of the financial interests of the Community.  

EN 

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For  the  purpose  of  the  protection  of  the  financial  interests  of  the  Community  the 
Member States and the Commission shall assist each other and exchange information 
in particular in the field of money laundering of the proceeds of EC fraud, of fraud 
on  VAT  and  any  other  illegal  activities  detrimental  to  the  Community’s  financial 
interests in particular those in the field of structural funds. 

Background 

framework 

Fraud  and  any  other  illegal  activities  affecting  the  financial  interests  of  the 
Community  warrant  a  more  comprehensive 
for  administrative 
cooperation  between  Member  States  authorities  and  with  the  Commission.  This  is 
reflected by the Commission’s firm commitment to the fight against fraud in order to 
protect  the  Community’s  financial  interests  which  is  clearly  demonstrated  in  its 
Communication, adopted on 28 June 2000, on an overall strategic approach for the 
protection  of  the  Community’s  financial  interests  and  the  fight  against  fraud1.  This 
approach  underlines  the  importance  of  an  overall  anti-fraud  legislative  policy  by 
following  a  horizontal  and  cross-pillar  legislative  approach.  This  legislative  policy 
must be given concrete expression with the drawing up of specific rules, in particular 
for  information  exchanges,  and  close  and regular  cooperation  between  the  Member 
States and between the latter and the Commission. 

On  the  basis  of  this  legislative  policy  the  Commission  mentions  in  its  working 
programme for 2003 the preparation of a proposal for a regulation of the European 
Parliament  and  of  the  Council  establishing  a  cooperation  mechanism  between  the 
competent authorities of the member States and the Commission in order to ensure 
the  protection  of  the  Community’s  financial  interests  against  illegal  activities 
including  matters  such  as  VAT  fraud,  money  laundering  and  other  financial 
transactions  in  relation  to  the  proceeds  of  EC  fraud  as  well  as  any  other  illegal 
activities detrimental to the Community’s financial interests in particular concerning 
fraud concerning structural funds. 

The  Commission  has  reiterated  in  its  Communication  containing  an  Action  Plan 
for 2001-20032,  the  importance  of  reinforcing  cooperation  to  prevent  money 
laundering of proceeds from fraud and any other illegal activities detrimental to the 
Community’s  financial  interests  and  VAT  fraud  in  order  to  be  able  to  realise  an 
effective  action  against  organised  crime,  particularly  economic  and  financial  crime 
(including fraud and money laundering). To combat this type of crime, the European 
Union should take co-ordinated action and have a strategy of cooperation and mutual 
information  between  all  public  partners  in  addition  to  existing  programmes  as 
Fiscalis in the sector of VAT. 

5.1.2.  Measures taken in connection with ex ante evaluation NOT APPLICABLE 

5.1.3.  Measures taken following ex post evaluation NOT APPLICABLE 

1 

2 

Communication  from  the  Commission,  Protection  of  the  Communities’  financial  interests,  The  fight 
against fraud - For an overall strategic approach, COM(2000) 358 final. See especially paragraph 1 and 
1.2.2 of this communication. The Council (ECOFIN) adopted this communication on 17 July 2000 and 
the  European  Parliament,  which  approved  the  guidelines.  The  Parliament  approved  the  guidelines 
presented in its Resolution of 13 December 2000. 
Adopted by the Commission on 23 May 2001, COM(2001) 254 final. See especially paragraph 2.2.1. 

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29 

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5.2. 

Action envisaged and budget intervention arrangements 

NOT APPLICABLE: see point 5.1.1. 

5.3.  Methods of implementation 

NOT APPLICABLE: see point 5.1.1. 

6. 

FINANCIAL IMPACT  

NOT APPLICABLE: SEE POINT 5.1.1. 

6.1. 

Total financial impact on Part B - (over the entire programming period) 

(The  method  of  calculating  the  total  amounts  set  out  in  the  table  below  must  be 
explained by the breakdown in Table 6.2.) 

6.1.1.  Financial intervention 

Commitments (in EUR million to three decimal places) 

Breakdown 

[Year 
n] 

[n+1] 

[n+2] 

[n+3] 

[n+4] 

Total 

[n+5 and 
subs. 
Years] 

Action 1 

Action 2 

etc. 

TOTAL 

6.1.2.  Technical  and  administrative  assistance,  support  expenditure  and  IT  expenditure 

(commitment appropriations) 

[Year 
n] 

[n+1] 

[n+2
] 

[n+3] 

[n+4] 

Total 

[n+5 and 
subs. 
years] 

1) Technical and 
administrative assistance 

a) Technical assistance  

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30 

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b) Other technical and 
administrative 
assistance: 

- intra muros: 

- extra muros: 

of which for construction and 
maintenance  of  computerised 
management systems 

Subtotal 1 

2) Support expenditure 

a) Studies 

b) Meetings of experts 

Information 

c) 
publications 

and 

Subtotal 2 

TOTAL 

6.2. 

Calculation  of  costs  by  measure  envisaged  in  Part  B  (over  the  entire 
programming period) 

7. 

IMPACT ON STAFF AND ADMINISTRATIVE EXPENDITURE  

7.1. 

Impact on human resources 

Types of post 

Staff to be assigned to management of the 
action using existing and additional resources 

Total 

Description of tasks deriving from the 
action 

Number of 
permanent posts 

Number of temporary 
posts 

Officials 
temporary staff 

or 

A 

B 

C 

2 (1 already occupied) 

2 (1 already occupied) 

2 (1 already occupied) 

3 (1/2 - 1 already occupied) 

11 

1 

5 

1 

4 END 

4 

10 

15 

Other human resources 

Total 

EN 

Coordination  of 
investigations  and 
intelligence work in the field of fraud in 
particular on VAT and structural funds 
and  money  laundering  of  proceeds  of 
fraud  detrimental  to  the  Community’s 
financial interests. 

Coordination  of  investigations  in  the 
field  of  VAT,  structural  funds  and 
money laundering of proceeds of fraud 
detrimental 
the  Community’s 
financial interests. 

to 

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7.2. 

Overall financial impact of human resources 

Type of human resources 

Amount (EUR) 

Method of calculation *  

Officials 

Temporary staff 

Other human resources 

1 188 000  11 x EUR 108 000 

173 340  4 (END) x EUR 43 335 

(specify budget line) 

Total 

1 361 340 

The amounts are total expenditure for twelve months. 

7.3. 

Other administrative expenditure deriving from the action 

Amount EUR 

Method of calculation 

Budget line 

(number and heading) 

Overall allocation (Title A7) 

Overall allocation 24.0106 (fight against fraud) 

A3.010211 Other management expenditure (missions)  

A3.0201 Control, studies, analysis and activities specific 
to the European anti-fraud office 

117 000 

13 (operational and intelligence staff) x 
missions  per  year  x  1.500  (average 
costs of Anti-fraud—missions) 

60 000 

2  x  (each  year)  a  meeting  of  the 
Committee (30.000 costs per meeting)3 

208 000 

13 (operational and intelligence staff) x 
investigation 
2 
(average  No.  of 
8,000 
coordination  meetings) 
(average costs of such a meeting) 

x 

Total per year 

385 000 

3 

Where multidisciplinary (e.g. Customs and VAT) issues are discussed by the Committee envisaged by 
this  Regulation,  the  travel  costs  of  two  delegates  per  Member  State  will  be  reimbursed  by  the 
Commission. 

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A3.0103  Buildings  and  related  expenditure  of  policy 
area 

EUR 100 000  Two  information  systems  have  to  be 
developed:  one  for  VAT  and  one  for 
money laundering. The development of 
each system entails the following costs: 

system specification: EUR 25 000 

development: EUR 35 000 

tests: EUR 10 000 

user manuals and training: EUR 15 000 

installations: EUR 15 000 

total (1): EUR 100 000 

Total:2 systems: EUR 200 000 

cost to be spread over two years 

A3 01 60 Documentation and library expenditure 

5 000 

special 
purchase  of  books,  subscription 
specialised periodicals 

library,  documentation  and 
to 

Total 

1 851 340 

The amounts are total expenditure for twelve months. 

1 Specify the type of committee and the group to which it belongs. 

I. 

Annual total (7.2 + 7.3) 

II. 

Duration of action 

EUR 1 851 340 
(year 1 and 2) 

EUR 1 751 340 
(from year 3) 

does not apply 

III. 

Total cost of action (I x II) 

does not apply 

The  needs  for  human  and  administrative  resources  shall  be  covered  within  the  allocation 
granted to the managing DG in the framework of the annual allocation procedure. 

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8. 

FOLLOW-UP AND EVALUATION 

8.1. 

Follow-up arrangements 

The  Committee  shall  adopt  an  implementing  regulation  following  the  comitology 
procedure  in  order  to  determine  the  relevant  implementing  modalities  of  mutual 
assistance  and  exchange  of  information  in  specific  areas  covered  by  the  proposed 
regulation. 

8.2. 

Arrangements and schedule for the planned evaluation 

Every three years after the date of entry into force of the regulation, the Commission 
shall report to the European Parliament, the Court of Auditors and the Council on the 
application of the measures provided for in the regulation. 

9. 

ANTI-FRAUD MEASURES 

NOT APPLICABLE. 

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