COMMISSION STAFF WORKING DOCUMENT Implementation of the Commission Anti-Fraud Strategy (CAFS) Accompanying the document REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Protection of the European Union's financial interests - Fight against Fraud Annual Report 2014
Date: 2015-07-31
Institutions: European Anti-Fraud Office, European Commission
Subjects: administrative sanction, common strategy, criminal investigation department, fight against crime, financial control, fraud, fraud against the EU

EN 

   EN 

   EUROPEAN COMMISSION  Brussels, 31.7.2015  SWD(2015) 153 final   COMMISSION STAFF WORKING DOCUMENT Implementation of the Commission Anti-Fraud Strategy (CAFS) Accompanying the document REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Protection of the European Union's financial interests - Fight against Fraud Annual Report 2014 {COM(2015) 386 final} {SWD(2015) 151 final} {SWD(2015) 152 final} {SWD(2015) 154 final} {SWD(2015) 155 final} {SWD(2015) 156 final}  
 
 
TABLE OF CONTENTS 

COMMISSION STAFF WORKING DOCUMENT Implementation of the Commission Anti-
Fraud Strategy (CAFS) in 2014 ....................................................................................................  

LIST OF ABBREVIATIONS ..................................................................................................... 3 

1. 

2. 

2.1. 

2.2. 

2.3. 

3. 

3.1. 

3.2. 

4. 

Introduction ................................................................................................................... 4 

Priorities ........................................................................................................................ 4 

Adequate anti-fraud provisions ..................................................................................... 4 

Anti-fraud strategies for Commission Services ............................................................ 5 

Reporting on the anti-fraud strategies in the Annual Activity Reports ........................ 6 

Prevention and detection of fraud ................................................................................. 6 

Systematic controls and risk analyses ........................................................................... 7 

Awareness raising and training ..................................................................................... 7 

Investigations ................................................................................................................ 8 

4.1. 

OLAF investigations ..................................................................................................... 8 

4.2.  Whistleblowing ............................................................................................................. 8 

5. 

6. 

7. 

8. 

Sanctions ....................................................................................................................... 8 

Recovery ....................................................................................................................... 9 

Other cross-cutting prevention instruments ................................................................ 10 

Conclusion .................................................................................................................. 10 

2 

 
 
LIST OF ABBREVIATIONS 

TFEU 

EUR 

DG 

EAGF 

Treaty on the Functioning of the European Union 

Euro 

Directorate General 

European Agricultural Guarantee Fund 

EAFRD 

European Agricultural Fund for Rural Development 

EFF 

CAP 

CAFS 

AAR 

MoU 

CED 

REGIO 

HOME 

CNECT 

ENV 

COMP 

NR 

EC 

CFP 

European Fishery Fund 

Common Agricultural Policy 

Commission Anti-Fraud Strategy 

Annual Activity Report 

Memorandum of Understanding 

Central Exclusion Database 

Directorate-General for for Regional and Urban Policy 

Directorate-General for Home affairs 

Directorate-General for Communication Networks, Content and Technology 

Directorate-General Environment 

Directorate-General Competition 

Natural Resources 

European Commission 

Common Fishery Policy 

ERDF 

European Regional Development Fund 

ESF 

CF 

SME 

CP 

European Social Fund 

Cohesion Fund 

Small and Medium Sized Enterprise 

Cohesion Policy 

OLAF 

European Anti-Fraud Office (Office pour la Lutte Anti-Fraude) 

3 

 
 
1. 

INTRODUCTION 

On  24  June  2011  the  Commission  adopted  the  Commission  Anti-Fraud  Strategy 
(CAFS)1 with the following objective: 

To improve prevention, detection and the conditions for investigations of fraud and to 
achieve  adequate  reparation  and  deterrence,  with  proportionate  and  dissuasive 
sanctions,  and  respecting  the  due  process,  especially  by  introducing  anti-fraud 
strategies  at  Commission  Service  level  respecting  and  clarifying  the  different 
responsibilities of the various stakeholders. 

The aim is to reinforce the entire anti-fraud cycle in the Commission, in particular via 
the introduction of anti-fraud strategies at Commission Service level.  

Last year, for the first time, the Commission  reported on the implementation  of the 
anti-fraud  strategy,  in  accordance  with  its  obligation  established  in  the  CAFS.  This 
Commission Staff Working Document is therefore the second report that provides an 
overview of the state of play. 

By adopting the CAFS, the Commission envisaged reaching the referenced objective 
without creating additional layers of control and administrative burden. That is also 
why  this  report  is  integrated  into  the  Article  325  report  of  the  Commission  on  the 
Protection of the Financial Interests of the EU, as an annex. 

2. 

PRIORITIES 

The CAFS provided for anti-fraud measures in the areas of prevention and detection, 
investigations,  sanctions,  recovery  and  other  horizontal  fraud  prevention  policies. 
Last year's report on the implementation of the CAFS focused primarily on the three 
priority  actions  established  in  the  CAFS.  The  priorities  established  by  the 
Commission were focused on fraud prevention and had to be addressed by the end of 
2013: 

(1)  Adequate  anti-fraud  provisions 

in  Commission  Proposals  on  spending 
programmes under the new multi-annual financial framework, in light of impact 
analyses. 

(2)  The development of anti-fraud strategies at Commission Service Level, with the 
assistance of OLAF and of the central services, and their implementation. 

(3)  The revision of the public procurement directives with a view to addressing the 
need  for  simplification  while  limiting  the  risks  of  procurement  fraud  in  the 
Member States. 

These priority actions were completed by the end of 2013, as was reported last year. 
In  2014, the activities deployed under these  priorities developed further and a short 
description of the latest developments will be presented below.  

2.1. 

Adequate anti-fraud provisions 

In 2014, DGs continued to include anti-fraud provisions in new legislative proposals 
and related documents. 

For  example,  in  the  area  of  the  Common  Agriculture  Policy  (CAP)  secondary 
legislation (delegated and implementing regulations) was adopted in 2014. Delegated 

1 

COM(2011) 376 final 

4 

 
 
                                                            
Commission  Regulation  (EU)  No  907/2014  and  Commission  Implementing 
Regulation (EU) No 908/2014 contain specific anti-fraud provisions complementing 
Art.  58  of  Regulation  (EU)  No  1306/2013.  The  anti-fraud  provisions  address  the 
Paying  Agencies  for  CAP  funds  in  the  Member  States  and  cover  all  areas  of  CAP 
expenditure. 

In  addition  to  'fraud-proofing'  legislative  proposals  by  adding  efficient  anti-fraud 
clauses  to  them,  guidelines  and  policy  documents  were  also  fraud-proofed.  An 
example  is  the  Financial  Regulation  of  the  European  Schools  that  was  redrafted  in 
2014. The resulting Decision of the Board of Governors on this matter means that as 
from 1st January 2015, OLAF acquired the authority to investigate suspected fraud in 
the European School system. 

2.2. 

Anti-fraud strategies for Commission Services 

In  last  year's  report,  the  Commission  reported  that  all  Commission  services 
(Directorates-General  and  executive  agencies),  except  one,  had  developed  an  anti-
fraud  strategy.  The  last  Commission  service  also  adopted  its  anti-fraud  strategy  in 
2014. 

The  focus  of  the  Commission  services  has  shifted  from  the  development  to  the 
implementation  of  their  anti-fraud  strategies  and  to  updating  these  strategies.  Some 
Commission  services  had  already  adopted  an  anti-fraud  strategy  well  before  the 
deadline of 31 December 2013 and felt the need to update their strategy to reflect the 
latest developments in their policy areas.  

An  example  of  such  an  update  is  the  new  common  anti-fraud  strategy  for  the 
Research  family  (the  "RAFS").  The  RAFS  was  adopted  by  the  Research  Common 
Support Centre's Steering Board on 18 March 2015. This anti-fraud strategy reflects 
the integrated approach of the Commission  in  the research policy area as  it is valid 
for the spending research Directorate-Generals in the research domain, and also for 4 
executive  agencies  (ERCEA,  REA,  INEA,  EASME)  and  5  Joint  Technology 
Initiatives (JTI), namely IMI, Clean Sky, FCH, BBI, ENIAC. 

The Commission services that are working together with EU agencies have brought 
the  concept  of  anti-fraud  strategies  to  the  attention  of  their  partner  EU  agencies. 
Through  the  network  of  EU  agencies'  correspondents  in  Directorates-General  and 
horizontal  services,    as  well  as  the  network  of  Commission  representatives  in  the 
agencies'  management  boards,  the  commission  services,  together  with  the  EU 
agencies,  have  been  working  on  the  implementation  of  the  commitments  stemming 
from the 2012 Roadmap in respect of agencies' anti-fraud activities.  

As  a  result,  the  second  progress  report  on  the  implementation  of  the  common 
approach  of  EU  decentralised  agencies  contains  a  reference  to  those  decentralised 
agencies that have already adopted anti-fraud strategies. 

Around  30%  of  the  EU  agencies  have  now  developed  and  adopted  such  a  strategy. 
Although  there  is  no  such  legal  obligation,  the  Commission  services  remain 
committed, to have all EU agencies develop and adopt an anti-fraud strategy.   

5 

 
 
2.3. 

Reporting on the anti-fraud strategies in the Annual Activity Reports 

In line with the revised Standing Instructions for the Annual Activity Report (AAR) 
for the year 2013 following Article 66 (9)2 and Article 32(2) point d3 of the financial 
regulation that relates to the prevention, detection, correction and follow-up of fraud 
and irregularities as one of the internal control objectives, the authorising officers by 
delegation had to report on their anti-fraud strategies.  

All  Commission  Services  have  developed  an  anti-fraud  strategy  in  which  they 
propose anti-fraud activities specific to their policy area; the state of play in terms of 
implementation  and identified  outstanding measures  are made public, in  so far as it 
does not endanger their effectiveness. Quantified indicators reported were essentially 
the number of fraud suspicions transferred to, or being investigated by, the European 
Anti-Fraud Office (OLAF). 

2.4. 

Audit on the implementation of the CAFS 

In 2015 the IAS finalised an audit on the adequacy and effective implementation of 
DGs anti-fraud strategies. The audit broadly acknowledges the positive steps already 
taken  by  OLAF  and  the  five  sampled  DGs  both  in  the  overall  management  and 
oversight  of  the  implementation  of  the  CAFS  and  in  the  preparation,  or  revision  of 
their  anti-fraud  strategies.  With  regard  to  individual  DGs  selected  for  the  audit  the 
IAS  acknowledges  that  all  of  them  have  developed  or  have  continued  to  improve 
their AFS, using the guidelines, support and expertise of OLAF. 

The report encourages OLAF to go on strengthening its guidance to further improve 
the effectiveness of DGs' AFS. 

3. 

PREVENTION AND DETECTION OF FRAUD 

The  CAFS  dedicated  much  attention  to  the  prevention  and  detection  of  fraud.  It 
underlined  the  importance  of  an  integrated  approach  by  emphasising  that  the 
objectives of the CAFS should be achieved through the internal control process of the 
Commission,  applicable  at  all  management  levels.  The  Commission  has  performed 

2  

3' 

The Authorising Officer by delegation shall report to his or her institution on the performance of his or her duties 
in the  form of an annual activity report declaring that,  he or she has reasonable assurance that: (a) the information 
contained in the report presents a true and fair view; (b) the resources assigned to the activities described in the 
report have been used for their intended purpose and in accordance with the principle of sound financial 
management;(c) the control procedures put in place give the necessary guarantees concerning the legality and 
regularity of the underlying transactions. 
For the purposes of the implementation of the budget, internal control is defined as a process applicable at all 
levels of management and designed to provide reasonable assurance of achieving the following objectives: […] 
(d)  prevention, detection, correction and follow-up of fraud and irregularities'. 

6 

 
 
 
 
                                                            
several actions aimed at the improvement of prevention and detection of fraud which 
are described in this paragraph. 

3.1. 

Systematic controls and risk analyses 

In  last  year's  report,  the  IT  tool  ARACHNE  was  briefly  mentioned.  In  2014,  the 
Commission continued its efforts to make the tool operational in the Member States 
that are implementing the European Structural and Investment Funds. DG EMPL has 
promoted the use of the risk scoring tool ARACHNE by the Member States and has 
provided  training  for  the  use  of  the  tool.  So  far,  16  Member  States  have  sent 
programme  data  and  the  roll  out  of  the  system  is  continuing.  Eight  Member  States 
already use the ARACHNE tool and DG EMPL continues to monitor its use. 

In  2014,  a  new  IT-tool  was  made  available  to  improve  transparency  in  relations 
between  external  parties  and  Commission  officials.  The  Commission  uses  the 
BASIS-tool  (Briefing  And  Speeches  Information  System)  to  manage  requests  for 
meetings with external stakeholders. DG FISMA has enhanced the BASIS tool with 
an  event  management  module.  Through  this  module  it  is  possible  to  keep  track  of 
contacts and meetings with external parties.  

This  tool  contributes  to  the  newly  established  EC  approach  on  transparency  and 
relations  with  external  stakeholders.  The  tool  aims  at  promoting  more  transparency 
with  external  stakeholders and coordinating a common approach  on topics  vis-à-vis 
external stakeholders to: 

a)  give a clear and unambiguous signal against fraud, corruption and bribery; 

b)  promote  an  open  and  structured  approach  vis-à-vis  external  stakeholders  and 

lobbyists; 

c)  ensure  that a  Commission  service  coordinates  its  messages  and  positions  on  the 

policy areas under its responsibility. 

The use of this recently developed tool will be promoted within the Commission to 
include more Commission Services. 

Lastly,  the  Irregularity  Management  System  (IMS)  must  also  be  mentioned.  Last 
year's report outlined the update of the IMS. In 2014, the DGs that implement the ESI 
funds have indicated that they have standardised the use of IMS during audits. 

3.2. 

Awareness raising and training 

One  of  the  actions  in  the  CAFS  aimed  at  raising  awareness  and  training  was  the 
creation of the Fraud Prevention and Detection Network (FPDNet). This network met 
four times in 2014 (and met 14 times in total from September 2011 until December 
2014).  The  aim  of  the  FPDNet,  to  share  best  practices,  was  pursued  with 
presentations from various Commission services on their anti-fraud activities, such as 
IT-tools,  experience  with  the  Early  Warning  System  (see  also  the  paragraph 
'sanctions' in this report) and anonymised fraud cases. 

Apart  from  the  FPDNet,  in  which  all  Commission  Services  participate,  individual 
Commission services have been engaged in training and awareness raising actions in 
2014.  Fraud  related  topics  such  as  ethics  training  for  newcomers,  fraud  risk 
workshops to include staff in the risk awareness of the DG, and specific training on 
financial processes were given. The Commission services organised about 50 training 
sessions  the  topics  mentioned  above,  which  involved  more  than  1500  commission 
staff. 

7 

 
 
Under  the  umbrella  of  the  Committee  for  Fraud  Prevention  (COCOLAF),  the 
Commission  and  Member States' experts cooperated on fraud prevention in  the ESI 
Funds. For this purpose, a subgroup of the COCOLAF was created which was tasked 
with the development of two guidance documents in 2014 (as was the case in 2013). 
In  November  2014,  two  guidance  documents  were  presented  to  the  COCOLAF 
subgroup.  The  first  guidebook  explains  the  role  of  auditors  in  fraud  prevention  and 
detection  and  a  second  guidebook  provides  guidance  on  the  creation  of  a  national 
anti-fraud strategy.  

4. 

INVESTIGATIONS 

4.1. 

OLAF investigations 

In  2014,  the  Commission  and  OLAF  worked  on  the  conclusion  of  Administrative 
Arrangements  on  co-operation  and  a  timely  exchange  of  information.  These 
administrative arrangements were signed on 29 January 2015.  

The Arrangements concern internal and external investigations, and clarify the flow 
of information received from OLAF, as well as the flow and modalities of access to 
the information given by the Commission in the framework of OLAF investigations. 

4.2.  Whistleblowing 

The guidelines on whistleblowing, issued in December 2012, provide ample guidance 
on  how  and  when  to  report  serious  irregularities.  They  highlight  the  protection 
afforded  to  whistleblowers4  acting  in  good  faith.  This  protection  includes  the 
confidentiality  of  the  identity  of  the  whistleblower.  The  guidelines  also  include 
provisions on the consequences of malicious denunciations. 

In  line  with  the  guidelines,  which  stipulate  a  review  three  years  after  adptopm,  the 
guidelines  will  be  reviewed  in  the  autumn  of  2015  in  a  combined  effort  of  DG  HR 
and OLAF.  

5. 

ADMINISTRATIVE SANCTIONS 

One of the key actions regarding administrative sanctions in the CAFS is the use of 
the Central Exclusion Database (CED). The CED contains the information related to 
economic  operators  which  have  been  excluded  from  obtaining  EU  funds  for  a 
determined duration on the basis of the Financial Regulation. The CED is linked to 
the  Commission's  Early  Warning  System  (EWS).  On  14  November  2014,  the 
Commission adopted a new decision5 on the EWS. This is one of the main tools the 
Commission uses to minimise risks to the Union's financial interests and reputation. 
The system identifies entities which might pose such a risk. 

The  Decision  makes  the  rules  simpler.  It  reduces  the  number  of  warning  categories 
from five to two: one for verification, one for exclusion. The aim of the verification 
warning is to increase the monitoring of the identified entity. Exclusion warnings are 
automatically  reflected  in  the  Commission's  CED  which  identifies  entities  and/or 
their  management  proven  to  be  unreliable  or  fraudulent.  This  means  they  are  no 
longer entitled to obtain EU funds. 

4  

5  

A whistleblower is a member of staff, acting in good faith, who reports facts discovered in the course of, or in 
connection with his or her duties, which point to the existence of serious irregularities. The reporting should be done 
in writing and without delay. 
Commission Decision 2014/792/EU of 13 November 2014, OJ L 329, 14.11.2014 

8 

 
 
                                                            
The  new  rules  ensure  a  coordinated  approach  in  assessing  cases  of  verification  and 
exclusion.  Furthermore,  they  detail  the  procedure  on  the  right  of  the  entities 
concerned  to  be  heard.  They  also  reinforce  the  cooperation  between  the  European 
Anti-Fraud Office (OLAF) and other Commission departments. 

The  revision  of  the  Commission´s  Early  Warning  System  is  paving  the  way  for  a 
creation  of  a  comprehensive  system  of  'early  detection  and  exclusion',  already 
proposed  by  the  Commission  on  18  June  2014,  as  part  of  a  partial  revision  of  the 
Financial  regulation  (COM(2014)358)  and  on  which  a  political  agreement  was 
reached in June 2015:  

•  Creation  of  a  more  transparent,  better  organised  and  more  efficient  system  of 
early detection and exclusion of economic operators enhancing fraud prevention 
and the protection of the Union's financial interests:  

•  Extended and strengthened list of exclusion grounds  

•  Possibility to take into account the remedial measures  

• 

Improved  procedure  to  exclude  companies  and/or  impose  a  financial  penalty:  a 
decision will be taken after a recommendation by a centralised panel 

•  Possibility  for  the  Commission  to  intervene  on  grounds  of  strong  evidence, 
without  having  to  wait  for  a  final  judgment.  When  these  procedures  will  be 
triggered  by  information  resulting  from  an  OLAF  investigation,  the  service  will 
be invited to present the evidence to the panel. 

•  Access for the other EU institutions, bodies, European offices and agencies to the 

early detection stage. 

The annual report from the Commission to the European Parliament and the Council 
on the Protection of the European Union’s financial interests will contain information 
on the decisions taken concerning exclusion and financial penalty. 

6. 

RECOVERY 

The  CAFS  underlined  the  responsibility  of  Member  States’  authorities  and 
Commission Services in the recovery of sums unduly paid. 

The competent authorities of the Member States and of European institutions have to 
provide information on the actions they have taken following recommendations made 
by  OLAF  (Recital  32  of  Regulation  No  883/2013).  Following  this  obligation,  the 
Commission  has  set  up  a  reporting  system  to  monitor  the  recovery  of  sums  unduly 
paid,  covering  both  shared  management  and  direct  management.  Based  on  the 
information  provided  by  the  competent  authorities,  OLAF  reports  the  amounts 
recovered following investigations in its annual report. 

Table  2  Amounts  recovered  (*)  by  the  relevant  authorities  following  OLAF’s 
recommendations (million EUR) 

Customs and trade 

Agricultural Funds 

Structural Funds 

2012 

33.9 

14.3 

33.4 

2013 

76.5 

3.2 

2014 

135 

43 

33.7 

22.7 (**) 

9 

 
 
 
External aid 

New financial instruments 

EU staff 

Centralised expenditure 

Total 

12.8 

0.003 

0.05 

0.04 

94.5 

2.5 

0.3 

0.8 

0 

2.5 

2.2 

0.9 

0.2 

117 

206.5 

(*) In the context of this report, the term ‘recovery’ includes the results of recovery orders issued by 
the Commission or any other institution, body, office or agency, offsetting of debts, de-commitment of 
EU finances from projects or programmes, debt liability apportionment between the by Member States 
and recoveries of administrative expenditures from officials and other servants of the EU institutions, 
bodies, offices and agencies. Not all of these recovery transactions are individually identifiable in the 
institutions’ accounting systems. Commission and Member States in certain sectors and recoveries of 
EU funds (e.g. import duties) from economic operators 

(**) Of which EUR 7.1 million concerned the European Social Fund. 

Source: The OLAF report 2014 

7. 

OTHER PREVENTION INSTRUMENTS 

As  of  25  March  2015,  the  Transparency  Register  contains  over  8,000  registrants 
(interest  representatives).  The  revised  Inter-Institutional  Agreement  (IIA)  on  the 
Transparency Register entered into force on 1 January 2015 and a new version of the 
online  tool  was  launched  on  27  January  2015.  The  Commission  Work  Programme 
2015  foresees  a  proposal  for  a  mandatory  Register  based  on  an  IIA  covering  the 
Commission, the European Parliament and the Council. 

8. 

CONCLUSION 

After  completing  the  priority  actions  of  the  CAFS  in  2013,  2014  was  a  year  of 
consolidation and further improvement of the anti-fraud cycle in the Commission. By 
completing  the  inclusion  of  anti-fraud  clauses  in  the  legal  bases  for  financing 
decisions  in  the  2014-2020  programming  period,  a  solid  legal  foundation  has  been 
established  in  the  domain.  Work  continued  in  2014  on  the  delegated  and 
implementing acts and other proposals that touch upon the protection of the financial 
interests of the EU.  

With  the  establishment  of  anti-fraud  strategies  at  Commission  Service  level,  the 
Commission  established  a  central  strategy  in  each  service  to  address  the  risks  of 
fraud.  Implementation  of  action  plans  and  updating  of  strategies  continue.  Best 
practice in fraud prevention and detection are shared between Services on a case-by-
case basis and through the Fraud Prevention and Detection Network. Conditions for 
continuous  improvement  have  thus  been  created  and  Commission  services  have 
embarked on this path in the implementation of anti-fraud actions and the updating of 
their anti-fraud strategies. Recognising these important first steps OLAF will, in line 
with  IAS'  recommendations,  issue  further  guidance  in  the  coming  year  to  further 
improve the effectiveness of DGs' anti-fraud strategies. 

Fraud  training  is  critical  in  communicating  anti-fraud  policy  and  to  raise  fraud 
awareness of Commission Staff and was prominent on the agenda of the Commission 
in 2014. 

10