COMMISSION STAFF WORKING DOCUMENT Implementation of the Commission Anti-Fraud Stategy (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 2015 Annual Report
Date: 2016-07-14
Institutions: European Anti-Fraud Office, European Commission
Subjects: EU programme, common strategy, fight against crime, financial control, fraud, fraud against the EU, illicit trade

EN 

   EN 

   EUROPEAN COMMISSION  Brussels, 14.7.2016  SWD(2016) 239 final   COMMISSION STAFF WORKING DOCUMENT Implementation of the Commission Anti-Fraud Stategy (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  2015 Annual Report {COM(2016) 472 final} {SWD(2016) 234 final} {SWD(2016) 235 final} {SWD(2016) 236 final} {SWD(2016) 237 final} {SWD(2016) 238 final}  
 
 
TABLE OF CONTENTS 

1. 

2. 

2.1. 

2.2. 

2.3. 

2.4. 

3. 

3.1. 

3.2. 

4. 

4.1. 

INTRODUCTION ............................................................................................................ 3 

PRIORITIES ................................................................................................................... 3 

Adequate anti-fraud provisions ................................................................................ 3 

Anti-fraud strategies for Commission Services ....................................................... 4 

Revision of the Procurement Directives ................................................................... 4 

Reporting on the anti-fraud strategies in the Annual Activity Reports ................ 5 

PREVENTION AND DETECTION OF FRAUD .................................................................... 5 

Systematic controls and risk analyses ...................................................................... 5 

Awareness raising and training ................................................................................ 6 

INVESTIGATIONS .......................................................................................................... 6 

OLAF investigations .................................................................................................. 6 

4.2.  Whistleblowing ............................................................................................................ 6 

5. 

6. 

7. 

8. 

SANCTIONS ................................................................................................................... 7 

RECOVERY ................................................................................................................... 8 

OTHER CROSS-CUTTING PREVENTION INSTRUMENTS ................................................ 8 

CONCLUSION ................................................................................................................ 8 

2 

 
 
 
 
 
1. 

INTRODUCTION 
The  Commission  Anti-Fraud  Strategy  (CAFS)1  was  adopted  on  24  June  2011. 
Starting  from  that  date,  the  Commission  has  worked  on  the  implementation  of  the 
strategy  to  improve  the  entire  anti-fraud  cycle  within  the  Commission:  prevention, 
detection, investigation, sanctions and recovery. 

Important milestones in the implementation of the strategy were the introduction of 
anti-fraud  strategies  at  Commission  service  level  and  the  adoption  of  the  updated 
procurement directives. 

The  CAFS  presented  actions  with  a  fixed  end-date,  such  as  the  above  mentioned 
actions,  and  actions  with  an  on-going  character,  such  as  training  and  awareness 
raising. All actions with a fixed end date have been completed. 

This does however not mean that there are no more activities to report upon. First of 
all, this report will give more insight in the on-going actions. And in addition it will 
provide a few examples of the actions implemented by the Commission services as 
part of the implementation of their Anti-Fraud strategies. 

2. 

PRIORITIES 

As reported in the previous implementation reports, the priority actions in the CAFS 
were completed in time. 

The priority actions were: 

(1)  Adequate  anti-fraud  provisions  in  Commission  Proposals  on  spending 
programmes  under  the  new  multi-annual  financial  framework,  in  the  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. 

The  fact  that  they  have  been  implemented  does  not  mean  that  there  have  not  been 
further  developments.  The  latest  developments  will  be  described  in  the  paragraphs 
below. 

2.1. 

Adequate anti-fraud provisions 

The  anti-fraud  provisions  have  been  integrated  in  the  proposals  for  the  MFF  2014-
2020 and still serve as good practice for new legislative proposals. 

In the area of shared management, the anti-fraud clause in the Common Provisions 
Regulation  (CPR),  Article  125.4.c,  is  now  being  implemented  in  the  management 
and  controls  systems  of  the  Managing  Authorities.  The  Commission  is  closely 
monitoring  the  implementation  of  this  key  requirement.  The  payments  to  Member 
States have been made conditional on the fulfilment key requirements, including this 
key  requirement,  to  make  sure  that  expenditure  is  only  granted  to  a  Member  State 
whose Management and Control System meets the criteria.  

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COM(2011) 376 final 

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2.2. 

Anti-fraud strategies for Commission Services 

Since every Commission service has an anti-fraud strategy, the anti-fraud approach 
in  the  Commission  has  entered  a  new  phase.  The  emphasis  has  shifted  from  the 
implementation of the Commission Anti-Fraud Strategy to the anti-fraud strategies of 
the Commission services. 

Over the past three years, all Commission services have updated or are about to work 
on  an  update  of  their  Anti-Fraud  Strategy.  The  fraud  risk  assessments  that  are 
performed  for  this  purpose,  give  a  good  insight  in  the  fraud  risks  faced  by  the 
Commission. Apart from the risks directly related to financial fraud, the Commission 
services  also  identify  risks  related  to  the  reputation  of  the  Commission  and  to  the 
treatment  of  sensitive  information  (which  could  for  example  facilitate  insider 
trading). 

OLAF  will  keep  a  close  eye  on  the  identified  fraud  risks  and  tries  to  facilitate  the 
exchange of good practices between Commission services, for example through the 
Fraud Prevention and Detection Network. 

Also in 2015, the Internal Audit Service (IAS) conducted an audit on the 'Adequacy 
and effective implementation of DGs' anti-fraud strategies. A sample of 5 DGs were 
audited to see how effective the Anti-fraud strategies in the DGs were in ensuring the 
adequacy  and  effective  application  of  their  governance,  risk  management  and 
relevant control processes for fraud prevention, detection and follow-up of fraud. 

The IAS acknowledged the positive steps taken by OLAF and the selected DGs both 
in the overall management and oversight of the implementation of CAFS and in the 
preparation, or revision of the anti-fraud strategies. 

Nevertheless, the IAS also identified areas of improvement, in particular reinforcing 
the  integration  of  the  DGs  AFSs  into  the  internal  control  system.  OLAF  was 
recommended  to  update  the  methodology  and  guidance  for  the  development  of 
Commission  services'  anti-fraud  strategies  in  this  regard.  For  more  details  see  also 
the text in paragraph 2.4. 

2.3. 

Revision of the Procurement Directives 

The  procurement  directives,  which  were  adopted  by  the  legislator  on  26  February 
2015, need to be transposed by the Member States in national legislation by 18 April 
2016.  DG  GROWTH  is  closely  monitoring  the  transposition  and  requested  21 
Member  States  on  26  May  2016  to  transpose  in  full  one  or  more  of  the  three 
directives into national law. 

By  31  May,  eight  Member  States  have  transposed  the  procurement  directives  into 
national law:  

1.  Denmark 
2.  France 
3.  Germany 
4.  Hungary 
5.  Italy 
6.  Romania 
7.  Slovakia 
8.  United Kingdom 

4 

 
 
 
 
The  transposition  is  very  relevant  in  the  context  of  the  Commission  Anti-Fraud 
Strategy  because  the  new  rules  promote  accountability  and  help  combat  corruption 
through  increased  transparency  requirements.  The  rules  make  it  easier  and  cheaper 
for small and medium enterprises (SMEs) to respect the EU's transparency rules and 
to bid for public contacts. 

2.4. 

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

One of the main principles  of the CAFS  was the integration of anti-fraud activities 
into  already  existing  procedures  and  processed  in  order  to  reduce  administrative 
burden. The audit of the Internal Audit Service (IAS) on the effective and adequate 
implementation of DGs' anti-fraud strategies (see paragraph 2.2) observed in general 
that the integration of the anti-fraud measures identified in the Commission services 
anti-fraud strategies into the Internal Control system could be improved. 

As  part  of  this  observation,  the  Commission  has  introduced  a  so-called  'anti-fraud 
objective' in the 'Instructions for the strategic plan 2016-2020 and the Management 
Plan  2016'.  All  Commission  services  have  to  report  on  the  implementation  of  this 
objective,  which  was  developed  in  co-operation  with  the  Fraud  Prevention  and 
Detection Network and reads as follows: 

Minimisation  of  the  risk  of  fraud  through  application  of  effective  anti-fraud 
measures, integrated in all activities of the Commission service, based on the 
Commission  service's  anti-fraud  strategy  (AFS)  aimed  at  the  prevention, 
detection and reparation of fraud. 

Together with this anti-fraud objective a set of indicators was introduce. The aim of 
the introduction of this objective and indicators is to facilitate the monitoring of anti-
fraud  measures  in  the  Commission's  internal  control  system  and  to  facilitate 
monitoring  of  anti-fraud  activities  of  the  Commission  services  through  the  existing 
reporting cycles. 

The  reporting  on  the  indicators  is  presented  in  the  Annual  management  and 
Performance report for the 2015 budget. 

 http://ec.europa.eu/atwork/pdf/synthesis_report__2015_en.pdf  

3. 

PREVENTION AND DETECTION OF FRAUD 

The  CAFS  focused  on  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  priority  actions  described  in  the  previous 
paragraph  are  an  example  of  this  approach.  In  addition,  the  Commission  has 
performed  several  other  actions  aimed  at  the  improvement  of  prevention  and 
detection of fraud. 

3.1. 

Systematic controls and risk analyses 

In particular the Commission services active in the area of research and innovation, 
where  scientific  studies  are  being  supported,  plagiarism  can  be  a  threat  to  the 
fulfilment  of  the  objectives  of  the  Commission.  If  a  researcher  provides  the 
Commission with a report of his achievements in order to obtain financial support, it 

5 

 
 
 
 
should  of  course  be  established  that  the  presented  report  results  from  the  scientific 
activities performed, and not from plagiarising other sources.  

After a presentation of URKUND in the FPDNet, several DGs expressed interest in 
using  this  tool  for  their  activities  too.  DGs  that  for  example  order  studies  or  hire 
consultants to write reports would like to be able to also perform a plagiarism check. 

3.2. 

Awareness raising and training 

The  exchange  of  best  practices  between  Commission  services  was  explicitly 
addressed in the CAFS. The CAFS announced that the Inter-service group of Fraud 
Proofing  Correspondents  would  be  developed  into  the  Fraud  Prevention  and 
Detection  Network  (FPDNet).  The  CAFS  further  clarified  that  this  network  would 
serve as a centre of expertise with regard to fraud prevention and detection. In 2015, 
the  network  met  four  times  and  representatives  of  all  Commission  services 
participated in the meetings.  

Examples of subjects presented in the network are a guidance note on the detection 
of  forged  documents  and  another  guidance  note  on  the  prevention  of  conflict  of 
interests,  an  IT-tool  to  detect  plagiarism  and  an  update  of  the  methodology  and 
guidance for the development of DGs anti-fraud strategies. 

The network will continue to serve the goals stipulated in the CAFS in the coming 
years as it is proven to be a useful forum for all participants. 

4. 

INVESTIGATIONS 

4.1. 

OLAF investigations 

Regulation  2015/1525  amending  Council  Regulation  (EC)  No  515/97  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 matters was adopted by the co-legislators on 9 
September  2015. It improves the current framework for detecting and investigating 
customs fraud at EU and national level. In particular, it provides for the creation of 
centralised  databases  containing  information  on  container  movements  and  on  the 
goods  entering,  leaving  and  transiting  the  EU.  This  amendment  is  expected  to 
significantly  strengthen  the  analytical  capabilities  of  both  OLAF  and  national 
customs authorities in detecting fraudulent operations. 

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 whistleblowers2 acting in good faith. This protection includes 
confidentiality  of  the  identity  of  the  whistleblower.  The  guidelines  also  include 
provisions on the consequences of malicious denunciations. 

The 2012 Commission's Guidelines on Whistleblowing , prepared by DG HR/IDOC, 
include  a  review  clause,  according  to  which  the  practical  application  and 
effectiveness of these whistleblowing guidelines are to be evaluated at the end of a 

2  

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. 

6 

 
 
 
                                                            
 
period  of  three  years  following  their  adoption,  i.e.  in  December  2015.  DG  HR  is 
currently drafting the report on the review of the whistleblowing guidelines. 

In  addition,  information  and  communication  on  whistleblowing  forms  an  integral 
part  of  the  ethics  presentations  that  DG  HR  provide  to  Commission,  EEAS  and 
Agencies's staff. 

5. 

SANCTIONS 

The  Commission  established  an  improved  Early  Detection  and  Exclusion  System 
(EDES)  on  1  January  2016,  following  adoption  of  Regulation  No  2015/1929 
amending the Financial Regulation. EDES will be used by the Commission to ensure 
the following actions:  

  The  early  detection  of  an  economic  operator  representing  risks  threatening 

the European Union's financial interests. 

  The  imposition  of  administrative  sanctions  by  exclusion  of  an  unreliable 
economic  operator  from  receiving  Union's  funds  and  or  the  imposition  of  a 
financial penalty. 

  The publication, in the most severe cases, on the Commission's internet site 
of information related to the exclusion and or the financial penalty, in order to 
reinforce their deterrent effect. 

An  important  difference  between  the  Early  Warning  System  (EWS)  and  Central 
Exclusion Database (CED) is the introduction of a Panel, making sure the rights of 
third parties are respected.  

The Panel will be independent and composed of: 

  a high-level independent chair; 
 
  one  representative  of  the  requester  within  the  Commission  or  other 

two representatives of the Commission as owner of the system; 

Institutions and bodies. 

This Panel has been set-up to centrally assess requests for entry into the system and 
issue  recommendations  for  exclusion  and  financial  penalties  referred  to  it  by  the 
Commission or other Institutions and bodies (Article 108 of the FR). The competent 
authorising officer will refer a case to the Panel for a central assessment where there 
are no final judgments or final administrative decisions related to the exclusion and 
its duration or to the financial penalty, and their publication. 

Where the contracting authority decides to deviate from the recommendation of the 
panel, it shall justify such decision to the panel. The Panel will also be competent to 
ensure  the  rights  of  defence  of  the  economic  operator.  It  is  then  the  competent 
authorising officer that takes the decision on the basis of the panel recommendation 
to  exclude  and  or  impose  a  financial  penalty  and  possibly  publish  the  related 
information on the Commission's website. 

The  system  retains  the  possibility  to  assess  the  remedial  measures  taken  by  the 
economic operator to demonstrate its reliability. In this case, the economic operator 
should not be excluded (except for the most severe criminal activities). 

7 

 
 
 
6. 

RECOVERY 

The  CAFS  underlined  the  responsibility  of  Member  States’  authorities  (in  shared 
management) 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. Based on the information provided by the competent authorities, OLAF 
reports the amounts recovered following investigations in its annual report. 

7. 

OTHER CROSS-CUTTING PREVENTION INSTRUMENTS 

The  first  EU  Anti-Corruption  Report  was  published  on  3  February  2014  by  the 
European Commission. It was one of the actions mentioned in the Commission Anti-
Fraud  Strategy,  where  reference  was  made  to  the  Communication  from  the 
Commission  to  the  European  Parliament,  the  Council  and  the  European  Economic 
and Social Committee on Fighting Corruption in the EU (COM(2011)308 final).  

The  Commission  is  following-up  the  first  Report  with  the  Member  States.  To 
stimulate peer learning and exchange of best practices the Commission also launched 
an  'Experience  sharing  programme'  for  Member  States.  Six  workshops  for  anti-
corruption  national  experts  were  held  during  2015-2016  covering  themes  such  as 
asset  declarations,  whistle-blower  protection,  corruption  in  healthcare,  public 
procurement, private sector corruption and political immunities. 

The  second  European  Union  Anti-Corruption  Report  is  under  preparation  by 
Commission Services (DG HOME). In addition to assessing the situation in each of 
the EU Member States, the report will also cover three thematic issues: 

1.  Corruption  in  public  procurement  at  the  local  level  in  large  infrastructure 

projects; 

2.  Transparency of financial flows and beneficial ownership; 
3.  Corruption in healthcare. 

8. 

CONCLUSION 

The year 2015 saw the Commission enter a new phase in the implementation of the 
CAFS. Given that the priority actions and most other actions of the CAFS have been 
implemented or are being repeated each year (on-going actions), the focus has now 
shifted to the actions coming from the anti-fraud strategies of Commission services, 
which were developed under the CAFS. 

This is a good development, in particular given the positive assessment by the IAS of 
the  Commission  services'  anti-fraud  strategies.  The 
IAS  has  also  given 
recommendations to improve  the quality of the anti-fraud strategies at Commission 
services'  level.  These  recommendations  have  been  implemented  in  updates  of 
methodology and guidance and in the anti-fraud strategies which will in turn lead to 
an improvement of the anti-fraud system of the Commission as a whole. 

8