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, activity report, common strategy, fight against crime, financial control, fraud, fraud against the EU, illicit trade

EN 

   EN 

   EUROPEAN COMMISSION  Brussels, 14.7.2016  COM(2016) 472 final   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    {SWD(2016) 234 final} {SWD(2016) 235 final} {SWD(2016) 236 final} {SWD(2016) 237 final} {SWD(2016) 238 final} {SWD(2016) 239 final}  
 
 
TABLE OF CONTENTS 

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 .....................................................................................................................  

EXECUTIVE SUMMARY ...................................................................................................... 4 

1. 

2. 

INTRODUCTION........................................................................................................ 8 

ANTI-FRAUD POLICIES AT EU LEVEL ................................................................ 8 

2.1. 

Anti-fraud policy initiatives taken by the Commission in 2015 .................................. 8 

2.1.1.  Proposal for a Directive on the fight against fraud detrimental to the Union’s 

financial interests by means of criminal law ................................................................ 8 

2.1.2.  Proposal to establish a European Public Prosecutor’s Office (EPPO) ......................... 9 

2.1.3.  Evaluation of Regulation (EU, Euratom) No 883/2013 ............................................... 9 

2.1.4.  Fighting corruption in the EU ...................................................................................... 9 

2.1.5.  Commission Anti-Fraud Strategy (CAFS) ................................................................... 9 

2.2. 

Anti-fraud measures in revenue ................................................................................. 10 

2.2.1.  Mutual Administrative Assistance (MAA — amendment of Regulation No 515/97) 10 

2.2.2.  The Anti-Fraud Information System (AFIS).............................................................. 10 

2.2.3. 

Joint Customs Operations (JCOs) .............................................................................. 11 

2.2.4.  Fight against illicit trade in tobacco products ............................................................ 12 

2.2.5.  Fight against VAT fraud ............................................................................................ 12 

2.2.6.  Anti-fraud provisions in international agreements ..................................................... 13 

2.2.7.  Anti-fraud measures on fiscal marking for gas oils and kerosene ............................. 13 

2.3. 

Anti-fraud measures in expenditure ........................................................................... 13 

2.3.1.  Amendment of Financial Regulation (Regulation (EU, EURATOM) No 966/2012 on 
the financial rules applicable to the general budget of the Union) ............................ 13 

2.3.2.  Reporting of irregularity provisions in the Multiannual Financial Framework (MFF) 

2014-2020 — expenditure field ................................................................................. 14 

2.4. 

Other ........................................................................................................................... 14 

2.4.1. 

Implementation of the Hercule Programme ............................................................... 14 

3. 

4. 

4.1. 

4.2. 

4.3. 

5. 

Follow-up to the European Parliament Resolution on the protection of the EU’s 
financial interests — fight against fraud — annual report 2014 ................................ 15 

COOPERATION WITH THE MEMBER STATES ................................................. 16 

Advisory Committee for Coordination of Fraud Prevention (COCOLAF) ............... 16 

Measures taken by the Member States to counter fraud and other illegal activities 
affecting the EU’s financial interests ......................................................................... 17 

Implementation of the 2014 recommendations .......................................................... 18 

FRAUD AND OTHER IRREGULARITIES............................................................. 19 

2 

 
 
5.1. 

5.2. 

Reported irregularities and overall trends 2011-2015 ................................................ 20 

Irregularities reported as fraudulent ........................................................................... 21 

5.2.1.  Revenue ...................................................................................................................... 22 

5.2.2.  Expenditure ................................................................................................................ 23 

5.3. 

Irregularities not reported as fraudulent ..................................................................... 26 

5.3.1.  Revenue ...................................................................................................................... 27 

5.3.2.  Expenditure ................................................................................................................ 27 

5.4. 

Results from the activities of the European Anti-Fraud Office (OLAF) ................... 27 

6. 

7. 

7.1. 

7.2. 

RECOVERY AND OTHER PREVENTIVE AND CORRECTIVE MEASURES .. 28 

CONCLUSIONS AND RECOMMENDATIONS .................................................... 28 

Revenue ...................................................................................................................... 28 

Expenditure ................................................................................................................ 30 

ANNEX 1 — Irregularities reported as fraudulent .................................................................. 32 

ANNEX 2 — Irregularities not reported as fraudulent ............................................................ 33 

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EXECUTIVE SUMMARY 

The EU and the Member States share responsibility for protecting the EU’s financial interests 
and  fighting  fraud.  National  authorities  manage  approximately  80 %  of  EU  expenditure  and 
collect Traditional Own Resources (TOR). 

This is the second annual report on the protection of the European Union’s financial interests 
presented by the current Commission, in cooperation with the Member States. It covers anti-
fraud  measures  taken  by  the  Commission  and  the  Member  States  and  the  results  of  these 
measures.  This  work  is  performed  in  accordance  with  the  Treaty  on  the  Functioning  of  the 
European Union (TFEU), the Regulations and other instruments on the protection of the EU’s 
financial interests and the relevant national legislation.  

The  Commission  and  the  Member  States  protect  the  EU  budget  from  undue  or  irregular 
expenditure or evasion of customs duties and other levies, mainly through: 

(1) preventive actions; 
(2) investigative actions; 
(3) corrective mechanisms (primarily financial corrections imposed on Member States but 
also recoveries from recipients of EU payments for the expenditure side and collection 
of evaded customs duties and other levies); 

(4) repressive  measures  (in  particular  by  the  Member  States  for  the  shared  management 

funds and Traditional Own Resources (TOR)). 

Under  shared  management,  the  primary  responsibility  to  prevent,  detect,  investigate  and 
correct irregularities and suspected fraud lies with the Member States. 

The conclusions and recommendations included in the 2015 report are based on an analysis of 
the information available for the past five years and the problems and risks identified during 
that time. 

Measures taken at EU level to protect the EU’s financial interests, 2015 

All  actions  proposed  in  the  Commission  Anti-Fraud  Strategy  (CAFS)  have  now  either  been 
completed  or  are  ongoing  (recurring  actions  such  as  training  and  raising  awareness  about 
fraud). The implementation of anti-fraud measures in the Commission continues based on the 
Commission  departments’  anti-fraud  strategies  developed  under  the  CAFS.  These  are 
regularly reviewed and updated. As a result, several Commission departments have reviewed 
their anti-fraud strategy and three have adopted a Joint Anti-Fraud Strategy.  

The  Commission  continues  to  support  Member  States  in  their  fraud  prevention  efforts 
bilaterally  and  within  the  Advisory  Committee  for  Coordination  of  Fraud  Prevention 
(COCOLAF).  

Also  in  2015,  the  Commission  launched  an  ‘Experience  Sharing  Programme’  to  improve 
coordination  and  exchange  best  practice  in  the  fight  against  corruption.  As  part  of  this 
programme, three workshops were held with Member States in 2015 on themes such as asset 
declarations,  whistle-blower  protection  and  corruption  in  healthcare.  The  European  Anti-
Fraud Office (OLAF) also participated on behalf of the Commission in several European and 
international anti-corruption meetings. 

As  the  Member  States  manage  approximately  80 %  of  the  EU’s  budget,  it  is  of  utmost 
importance that  the Commission continues to assist them in developing their National Anti-

4 

 
 
Fraud  Strategies  (NAFS).  The  Anti-Fraud  Coordination  Services  (AFCOS)  of  the  Member 
States  play a  major  role  in  this  regard.  Six  Member  States  have  adopted  NAFS.  The  Czech 
Republic reported that it plans to revise its strategy, while Italy reported that its AFCOS has 
drawn  up  and  developed  strategic  orientations  and  actions  which  are  updated  annually  and 
published  since  2012  in  their  annual  reports  to  the  Italian  Parliament.  Five  Member  States 
reported that the adoption of their NAFS is ongoing. 

In 2015 discussions continued in the European Parliament and the Council on two proposals 
to reinforce and increase the efficiency of criminal law in the protection of the EU’s financial 
interests, namely: 

 

 

a  draft  Directive  to  strengthen  the  existing  legal  framework  by  harmonising  the 
definition  of  offences  affecting  the  Union’s  financial  interests,  as  well  as  the 
sanctions and time limitations for these cases; 

a  draft  Regulation  on  the  establishment  of  a  European  Public  Prosecutor’s  Office 
(EPPO),  proposed  in  2013  to  strengthen  and  streamline  the  prosecution  across  the 
EU of offences affecting the EU’s financial interests. 

The  adoption  in  2014  of  the  revised  public  procurement  and  utilities  directives  and  the 
adoption  of  a  new  concessions  directive  have  increased  transparency  and  strengthened  the 
anti-fraud and anti-corruption provisions by: 

  defining ‘conflict of interest’; 
  making e-procurement mandatory; 
 

introducing monitoring and reporting obligations to curb procurement fraud and other 
serious irregularities. 

Several  Member  States  received  recommendations  from  the  Commission  to  take  action  to 
improve transparency or step-up anti-corruption efforts in public administration, the judiciary 
and  public  procurement.  In  order  to  transpose  the  EU  directives  into  national  law,  most 
Member  States  have  drafted  new  national  laws.  In  seven  Member  States  the  new  law  came 
into effect on 18 April 2016. 

From  1 January 2016,  following  the  adoption  of  Regulation  No 2015/1929  amending  the 
Financial  Regulation,  the  Commission  has  established  an  improved  Early  Detection  and 
Exclusion System (EDES) for the protection of the EU’s financial interests. 

On  the  expenditure  side  of  the  EU  budget,  in  2015  the  Commission  adopted  a  package  of 
four delegated and four implementing regulations on the ‘Irregularity Reporting’ provisions in 
the  area  of  shared  management  for  the  Multiannual  Financial  Framework  2014-2020.  The 
objective is to improve the quality and consistency of the information reported by the Member 
States  on  irregularities  and  fraud  and  to  ensure  that  the  administrative  burden  on  Member 
States due to reporting obligations is kept to a minimum. 

On the revenue side of the budget, significant progress was made in 2015 to further protect 
the EU’s financial interests: 

 

the  revised  Regulation  515/97  on  mutual  administrative  assistance  in  the  customs 
area entered into force in 2015, creating an EU database on goods entering, transiting 
and leaving the EU. This will serve as a powerful tool in stepping up the fight against 
customs fraud; 

5 

 
 
 

 

 

it was shown in 2015 that mutual assistance notices issued following Joint Customs 
Operations (JCOs) conducted by OLAF are an important source of information for 
detecting irregularities in transactions involving certain types of goods; 

the  fight  against  cigarette  smuggling  and  other  forms  of  illicit  trade  in  tobacco 
products  remains  a  high  priority  for  the  EU  and  the  Member  States.  In  2015  the 
Commission continued to actively implement the action plan of the ‘Communication 
on stepping up the fight against cigarette smuggling and other forms of illicit trade in 
tobacco products’, in close cooperation with the Member States; 

the Hercule III Financing Programme contributes to strengthening the operations 
and administrative capacities of Member States’ customs and police forces. 

Detection  and  reporting  of  fraudulent  and  non-fraudulent  irregularities  that  affect the 
EU budget 

In 2015, 22  349 irregularities in relation to revenue and expenditure were reported by the 
Member States, involving a total amount of approximately EUR 3.21 billion in EU funds. 

In  comparison  to  2014,  the  number  of  irregularities  detected  increased  by  36 %  while  the 
corresponding  financial  amounts  fell  slightly  by  1 %.  The  increase  in  number  is  linked  to 
certain specific situations in the cohesion policy area in two Member States. 

1 461  irregularities  were  reported  as  fraudulent  in  2015,  a  decrease  of  (11 %)  in 
comparison with 2014, while the concerned amounts increased by 18 % to EUR 637.6 million. 

On the revenue side there was a decrease in both numbers and amounts. 

By contrast, on the expenditure side there was a decrease of 10 % in the number of fraudulent 
irregularities reported in comparison with 2014 and the amounts involved increased by 55 %. 

The Commission and Member States have been insisting on the need to plan and focus their 
control  activities  on  the  basis  of  risk  analysis  and  IT  tools.  To  this  end,  the  Commission  is 
promoting the use of the Arachne risk analysis tool in Member States to enhance management 
verifications.  These  new  practices  may  have  played  a  role  in  improving  the  detection 
capabilities. 

No  major  shift  in  trends  has  been  observed  on  the  expenditure  side.  On  Traditional  Own 
Resources, solar panels were the goods most affected by fraud and irregularities. 

In 2015, the Commission was notified of  20 888 irregularities not reported as fraudulent 
(about 41 % more than in 2014). The figures: 

increased for the two shared management sectors; 
remained stable for the revenue sector; 

 
 
  decreased for pre-accession and direct expenditure. 

This largely reflects the progressive implementation of the various spending programmes, but 
also depends to a large extent on the specific situation in two Member States, as mentioned 
previously. 

Information on recoveries, financial corrections and other preventive and corrective measures 
will be part of the annual Communication from the Commission to the European Parliament, 
the Council and the Court of Auditors on the Protection of the EU Budget. 

6 

 
 
 
Measures taken by the Member States 

In 2015, Member States took a large number of anti-fraud measures in the following areas: 

  public procurement;  
 
financial crime;  
  conflict of interest;  
  corruption;  
 
  whistle-blowers. 

the definition of fraud; 

In particular, all Member States that were specifically recommended to strengthen their fraud 
detection and/or reporting systems took important steps to improve their national system. 

Most  Member  States  also  reported  having  taken  measures  to  strengthen  cooperation  with 
other Member States to ensure that all transactions and all economic operators are included in 
the population for post-clearance controls, irrespective of whether the importer is located in 
the Member State where the physical importation takes place.  

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1. 

INTRODUCTION 

Each  year,  under  Article  325(5)  of  the  Treaty  on  the  Functioning  of  the  European  Union 
(TFEU),  the  Commission,  in  cooperation  with  the  Member  States,  submits  to  the  European 
Parliament and the Council a report on measures taken to counter fraud and any other illegal 
activities affecting the EU’s financial interests. 

The EU and the Member States share responsibility for protecting the EU’s financial interests 
and  fighting  fraud.  National  authorities  manage  approximately  80 %  of  EU  expenditure  and 
collect Traditional Own Resources (TOR). The Commission oversees both of these areas, sets 
standards and verifies compliance. It is essential that the Commission and the Member States 
work closely together to ensure that the EU’s financial interests are effectively protected. One 
of the main aims of this report is to assess how well this cooperation was conducted in 2015, 
and how it could be improved. 

This  report  describes  the  measures  taken  at  EU  level  in  2015  and  provides  a  summary  and 
evaluation of the actions taken by the EU and Member States to counter fraud. The report also 
includes analysis of the main achievements of national and European bodies in detecting and 
reporting  fraud  and  irregularities  relating  to  EU  expenditure  and  revenue.  The  reporting 
system  has  significantly  contributed  to  the  protection  of  the  EU’s  financial  interests  and  to 
fighting  fraud.  The  report  in  particular  highlights  how  the  provisions  on  the  reporting  of 
irregularities are applied in each Member State, as the analytical part of this report is based on 
the information received from such reporting. 
The report is accompanied by six Commission Staff Working Documents.1  

2. 

2.1. 

ANTI-FRAUD POLICIES AT EU LEVEL 

Anti-fraud policy initiatives taken by the Commission in 2015 

2.1.1.  Proposal  for  a  Directive  on  the  fight  against  fraud  detrimental  to  the  Union’s 

financial interests by means of criminal law2 

The  proposed  Directive  aims  at  strengthening  the  existing  legal  framework  by  harmonising 
the  definition  of  offences  affecting  the  EU’s  financial  interests  and  the  sanctions  and  time 
limitations  for  such  cases.  Negotiations  between  the  European  Parliament  and  the  Council 
started in 2014 and are still ongoing. The latest trilogue took place in June 2015 to discuss the 
outstanding core issues i.e. the inclusion of VAT fraud in the scope of the Directive and the 
harmonisation  of  sanctions  and  prescription  periods.  Further  discussions  on  VAT  are 
currently taking place in the Council, following the ‘Taricco’ judgment of 8 September 2015,3 
in  which  the  European  Court  of  Justice  confirmed  that  VAT  fraud  is  covered  by  the  PIF 
Convention.  

1  

2  
3  

(i) Implementation of Article 325 by the Member States in 2015;  
(ii) Statistical evaluation of irregularities reported for 2015 own resources, natural resources, cohesion 
policy and pre-accession assistance;  
(iii) Recommendations to follow up the Commission report on protection of the EU’s financial interests 
— fight against fraud, 2014;  
(iv) Methodology regarding the statistical evaluation of reported irregularities for 2015;    
(v) Annual overview with information on the results of the Hercule III Programme in 2015;  
(vi) Implementation of the Commission Anti-Fraud Strategy (CAFS). 
COM(2012) 363 final. 
Case C-105/14, ‘Taricco’. The court concluded that the current EU legal instrument protecting the EU’s 
financial  interests,  namely  the  PIF  Convention  which  the  PIF  Directive  should  replace,  covers  VAT 
fraud. 

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2.1.2.  Proposal to establish a European Public Prosecutor’s Office (EPPO) 

The negotiations on the Commission’s proposal for a Regulation on the establishment of the 
European  Public  Prosecutor’s  Office4  (EPPO)  continued  in  the  Council  throughout  2015 
under  the  steer  of  the  Latvian  and  the  Luxembourgish  Presidencies.  The  progress  achieved 
made it possible to provisionally end the negotiations on the first half of the draft Regulation, 
dealing with aspects such as the competence, structure and investigative powers of the EPPO. 

2.1.3. 

 Evaluation of Regulation (EU, Euratom) No 883/2013 

In accordance with Article 19 of Regulation No 883/2013, the Commission is to submit to the 
European  Parliament  and  the  Council  an  evaluation  report  on  the  application  of  the 
Regulation  by  2 October 2017  in  order  to  assess  the  need  to  amend  the  Regulation.  To  this 
end,  the  Commission  is  commissioning  an  external  independent  study5  that  will  examine  to 
what extent the Regulation’s objectives have been met and remain relevant. In addition, the 
evaluation  will  look  at  the  operation  of  Regulation  883/2013  in  the  larger  context  of  an 
evolving  anti-fraud  landscape.  A  key  issue  in  this  regard  is  the  impact  that  establishing  the 
EPPO would have on OLAF’s investigative role. 

2.1.4.  Fighting corruption in the EU 

During  2015,  the  Commission  continued  to  work  on  the  follow-up  of  the  first  EU  Anti-
Corruption Report. The report: 

  assesses how each Member State tackles corruption; 
  examines how laws and policies work in practice; 
  suggests how each country can enhance its anti-corruption efforts. 

The  Commission  also  held  a  meeting  with  the  Member  States’  National  Contact  Points  for 
anti-corruption. 

In  2015,  anti-corruption  remained  a  priority  in  the  European  Semester  process  of  economic 
governance.  Several  Member  States  received  recommendations  to  take  action  to  improve 
transparency  or  step-up  anti-corruption  efforts  in  public  administration,  the  judiciary  and 
public procurement. 

The  Commission  also  launched  an  ‘Experience  Sharing  Programme’  for  Member  States. 
Three  workshops  were  held  in  2015  on  themes  such  as  asset  declarations,  whistle-blower 
protection and corruption in healthcare. 

OLAF participated on behalf of the Commission in several European and international anti-
corruption fora such as the EPAC/EACN.6 This European anti-corruption network, chaired by 
OLAF’s  Director  General,  produced  the  ‘Paris  declaration’  of  November  20157  calling  on 
European decision-makers to strengthen the fight against corruption. 

2.1.5.  Commission Anti-Fraud Strategy (CAFS) 

Implementation  of  the  Commission  Anti-Fraud  Strategy  (CAFS)  continued  in  2015.  All 
actions proposed in the CAFS have now been completed or are ongoing (i.e. recurring actions 

4  
5  
6  

7  

COM(2013) 534 final. 
http://ec.europa.eu/anti-fraud/olaf-and-you/calls-for-tender_en. 
European Partners Against Corruption（EPAC)/the European contact-point network against corruption
（EACN). 
http://www.epac-eacn.org/downloads/declarations/doc_download/151-paris-declaration-2015. 

9 

 
 
                                                 
  
such as training and raising fraud awareness8). Meanwhile, the implementation of new anti-
fraud  measures  in  the  Commission  continues  based  on  the  Commission  departments’  anti-
fraud strategies that were developed under the CAFS. The strategies are reviewed and updated 
regularly. 

The  implementation  of  the  CAFS  was  audited  by  the  Commission  Internal  Audit  Service 
(IAS)  in  2015.  The  audit  examined  the  anti-fraud  strategies  of  several  Commission 
departments  and  OLAF’s  horizontal  coordinating  role.  The  IAS  acknowledged  the  positive 
steps taken by OLAF and the selected services both in the overall management and oversight 
of  the  implementation  of  the  CAFS  and  in  the  preparation  or  revision  of  their  anti-fraud 
strategies. 
Several  Commission  departments  have  reviewed  their  anti-fraud  strategy  and  three9  have 
adopted a Joint Anti-Fraud Strategy (JAFS) for 2015-2020 covering seven funds10. Dedicated 
fraud  risk  analyses  have  been  performed  in  line  with  the  updated  guidelines  on  the 
development  of  a  service  level  anti-fraud  strategy.  A  trend  signalled  on  the  basis  of  these 
analyses is that dealing with sensitive information is increasingly identified as a fraud risk. On 
the one hand, this can be explained by the fact that more attention is given to non-financial 
fraud.  On  the  other  hand,  it  can  also  indicate  that  more  and  more  sensitive  information  is 
handled  by  the  Commission.  These  trends  will  be  considered  as  part  of  the  ongoing 
discussions in the Fraud Prevention and Detection Network. 

2.2.  Anti-fraud measures in revenue 

2.2.1.  Mutual Administrative Assistance (MAA — amendment of Regulation No 515/97) 
Regulation  (EU)  No 2015/152511  was  adopted  by  the  co-legislators  on  9 September 2015. 
The  new  Regulation  amends  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. 

The  new  Regulation  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. 

2.2.2.  The Anti-Fraud Information System (AFIS) 

The  Anti-Fraud  Information  System  (AFIS)  is  an  umbrella  term  for  a  set  of  anti-fraud 
applications operated by OLAF under a common technical infrastructure aiming at: 

 

the  timely  and  secure  exchange  of  fraud-related  information  between  the  competent 
national and EU administrations; 
  storage and analysis of relevant data. 

8  

9  

10  

11  

For  example,  in  2015,  DGs  Regional  and  Urban  Policy  and  Employment,  Social  Affairs  &  Inclusion 
organised, in collaboration with OLAF and DG Internal Market, Industry, Entrepreneurship and SMEs, 
anti-fraud and anti-corruption seminars for Estonia, Hungary, Lithuania, Latvia, Portugal and Poland.  
DGs  Regional  and  Urban  Policy,  Employment,  Social  Affairs  &  Inclusion  and  Maritime  Affairs  and 
Fisheries. 
European  Regional  Development  Fund  (ERDF),  Cohesion  Fund  (CF),  European  Social  Fund  (ESF), 
European Maritime and Fisheries Fund (EMFF), Fund for European Aid to the Most Deprived (FEAD), 
European Globalisation Adjustment Fund (EGF), European Union Solidarity Fund (EUSF). 
Regulation (EU) No 2015/1525,OJ L 243, 18.9.2015, p. 1. 

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The AFIS Project encompasses two major areas: 

  mutual assistance in customs matters; 
 

irregularities management. 

By  the  end  of  2015,  AFIS  had  8  050  registered  end-users  on  behalf  of  more  than  1  700 
competent  services  in  Member  States,  partner  third  countries,  international  organisations, 
Commission departments and other EU bodies. In 2015, AFIS users exchanged 14  800 MAB 
mail  messages.  A  total  of  12  000  cases  were  available  in  the  AFIS  mutual  assistance 
databases and modules. 

The Anti-Fraud Transit Information System (ATIS) received information on 6.5 million new 
transit consignments. 

The  Irregularity  Management  System  (IMS)  received  23  400  new  communications  on 
irregularities from Member States and candidate countries. 

A  total  of  seven  joint  customs  operations,  including  three  organised  by  OLAF,  were 
conducted in 2015 using the Virtual Operations Coordination Unit (VOCU) application as a 
communication tool. 

The  AFIS  Portal  is  a  single  and  common  infrastructure  for  the  delivery  of  the  above-
mentioned  services  and  enables  substantial  economies  of  scale  and  synergies  in  the 
development, maintenance and operations of such a wide and diverse set of IT services and 
tools. 

2.2.3. 

Joint Customs Operations (JCOs) 

JCOs  are  coordinated  and  targeted  operational  measures  implemented  by  the  customs 
authorities of Member States and third countries over a limited time period to combat illicit 
cross-border trafficking in goods. 

In 2015, OLAF coordinated and cooperated with Member States in seven JCOs. To facilitate 
the coordination tasks in JCOs with a large number of participants, OLAF: 

  provided intelligence, technical and/or financial support; 
  ensured secure access and exchange of information via the AFIS platform; 
  made available its permanent operational coordination room. 

The  JCOs  mentioned  below,  co-organised  by  the  Member  State  customs  authorities  and 
OLAF  or  with  OLAF  support,  targeted  various  threats  such  as  smuggling  of  cigarettes, 
chemical drug precursors and narcotics. The seizures of cigarettes alone amounted to over 16 
million sticks. 

• 
JCO  JETSTREAM:  This  regional  maritime  surveillance  operation,  which  was 
coordinated by French Customs, targeted the detection of illicit trafficking of sensitive goods 
by sea in the Atlantic area. The operation resulted in the seizure of 2 tonnes of cannabis resin. 

JCO JUPITER: This regional maritime operation, which was coordinated by Spanish 

• 
Customs, aimed at fighting the illicit trafficking of sensitive goods in the Mediterranean Sea. 

JCO FRANKSTEAD:  This  regional operation, which was organised by German and 

• 
UK Customs, targeted narcotics. 

• 
JCO SASHA: This operation targeted the smuggling of chemical drug precursors and 
aimed to disrupt the organised crime networks behind the sea and air transport of these illegal 
chemicals. Almost all Member States participated in this action in the autumn of 2015, which 

11 

 
 
was organised together with and on the initiative of the French customs service and supported 
by Europol. The results include seizures comprising a total of 185 kg of illicit goods. 

• 
JCO  BALTICA:  This  operation  was  led  by  the  Polish  customs  administration  and 
OLAF, with the involvement of six Member States12 and Europol. The operation focused on 
the  problem  of  illegal  tobacco  products  coming  from  third  countries  such  as  Belarus  and 
Russia. 13 million smuggled cigarettes were seized during the operation. 

• 
JCO  HANSA:  This  operation,  which  was  organised  by  the  UK  Customs  in 
cooperation  with  Europol,  targeted  internal  movement  of  illegal  excisable  goods,  mainly 
cigarettes.  OLAF  provided  the  system  for  the  secure  exchange  of  the  information  and  took 
part as a participant in the operation. The final evaluation is still ongoing. 

JCO  ROMOLUK  II:  This  regional  operation,  co-organised  by  OLAF  and  Romanian 
• 
customs  and  involving  Romania,  Ukraine  and  Moldova,  targeted  smuggled  cigarettes  by 
checking  consignments  entering  the  EU  by  road  and  rail.  A  total  of  3  878  460  pieces  of 
cigarettes were seized as well as 107 litres of alcohol. 

2.2.4.  Fight against illicit trade in tobacco products 

The  2013  ‘Communication  on  stepping  up  the  fight  against  cigarette  smuggling  and  other 
forms of illicit trade in tobacco products’13 was accompanied by a comprehensive action plan. 
Since  then,  the  Commission  has  continued  to  actively  implement  the  action  plan  in  close 
cooperation  with  Member  States.  At  the  end  of  2016,  the  Commission  is  due  to  adopt  a 
comprehensive report on the progress made on implementing the strategy. 

The Commission strongly supports the timely ratification of the WHO Protocol to ‘Eliminate 
Illicit  Trade  in  Tobacco  Products’  (‘FCTC  Protocol’).  On  4 May 2015  the  Commission 
formally  proposed  that  the  EU  Council  ratify  the  Protocol  on  behalf  of  the  EU.  The  FCTC 
Protocol  is  the  first  multilateral  legal  instrument  which  seeks  to  tackle  the  problem  of 
cigarette smuggling worldwide in a comprehensive manner. 

A  Eurobarometer  on  illicit  tobacco  products  was  conducted  in  November-December  2015. 
Publication of a report is expected in the middle of 2016. 

2.2.5.  Fight against VAT fraud 

The  study  to  quantify  and  analyse  the  VAT  gap  published  by  the  Commission  on 
19 September 2013 was updated in 2015. The study provided estimates for the VAT gap for 
26 EU Member States for 2013 and revised estimates for the 2009-2012 period. It showed a 
lack of significant improvement in VAT revenue collection as the overall VAT gap in the EU-
26 reached EUR 168 billion, which equates to 15.2 % of VAT revenue loss. Member States 
are  working  together  with  the  Commission  to  explore  new  ways  of  enhancing  the  Eurofisc 
network so that it can detect fraud schemes much faster than usual. 

Experience in Member States has shown that VAT fraud schemes often exploit weaknesses in 
the way chains of transactions are checked as a result of the inclusion of counterparts located 
in  third  countries.  Following  a  mandate  received  from  Council,  in  2015  the  Commission 
started  negotiations  with  Norway  for  an  EU  agreement  for  administrative  cooperation  over 
VAT. Discussions are currently ongoing. 

The  other  activities  on  cooperation  with  customs  and  excises  as  well  as  on  the  digital 
economy and reporting obligations will be included in next year's report detailing action taken 
in 2016. 

12  
13  

Finland, Estonia, Latvia, Lithuania, Poland and Sweden. 
COM(2013) 324 final, 6.6.2013. 

12 

 
 
                                                 
2.2.6.  Anti-fraud provisions in international agreements 

Many  international  agreements  of  the  EU  contain  provisions  on  mutual  administrative 
assistance  (MAA)  in  customs  matters.  Moreover,  preferential  tariff  agreements  also  contain 
measures on the enforcement of preferential treatment (anti-fraud clauses). 

In  2015,  50  agreements  including  MAA  provisions  for  73  third  countries  were  in  force  and 
negotiations  were  under  way  with  other  countries,  including  major  trading  partners  such  as 
the USA and Japan. The provisional application of the Deep and Comprehensive Free Trade 
Area  (DCFTA)  with  Ukraine  was  scheduled  for  1 January 2016.  It  also  contains  MAA 
provisions and measures on the enforcement of preferential treatment. 

The Partnership and Cooperation Agreement (PCA) with Kazakhstan was signed in 2015. It 
includes provisions on mutual assistance in customs matters. 

2.2.7.  Anti-fraud measures on fiscal marking for gas oils and kerosene 

EU legislation14 requires Member States to apply a designated substance (fuel marker) to gas 
oils and kerosene, which are taxed at a lower national rate of excise duty than that applicable 
to  motor  fuels  used  as  propellants.  The  substance  was  approved  by  Commission  decision15 
and since the introduction of the rule only one marker has been in use — Solvent Yellow 124. 
In  the  latest  revision,  the  Commission  was  informed  of  an  increase  in  fraudulent  activities 
involving the illegal removal of the marker. 

The Commission launched a call for expression of interest in September 2015 to find a new 
and  better  performing  chemical  substance  which  could  replace  the  current  marker  and 
contribute to reducing illegal activities involving diesel. 

The  project  is  expected  to  run  for  several  years  until  the  new  marker  is  selected  by 
Commission  decision.  Administrative  selection,  technical  analysis  and  chemical  testing  in 
laboratories will be carried out in 2016.16 

2.3. 

Anti-fraud measures in expenditure 

2.3.1.  Amendment  of  Financial  Regulation  (Regulation  (EU,  EURATOM)  No 966/2012 

on the financial rules applicable to the general budget of the Union) 

Following  the  adoption  of  Regulation  No 2015/192917  amending  the  Financial  Regulation 
(FR),  the  Commission  established  from  1 January 2016  an  improved  Early  Detection  and 
Exclusion System (EDES) for the protection of EU financial interests. EDES ensures the: 

  early  detection  of  economic  operators  representing  risks  threatening  the  Union’s 

 

financial interests; 
imposition  of  administrative  sanctions,  including  exclusion  from  obtaining  Union 
funds and/or the imposition of a financial penalty on unreliable economic operators; 
  publication,  in  the  most  severe  cases,  on  the  Commission’s  website  of  information 
related to the exclusion and or the financial penalty, in order to reinforce the deterrent 
effect. 

The  decisions  to  exclude  and/or  to  impose  a  financial  penalty  are  taken  by  the  competent 
authorising officer, either on the basis of final judgments, or final administrative decisions. In 

14  
15  

16  

17  

Directive 95/60/EC of 27 November 1995 on fiscal marking of gas oils and kerosene. 
Commission Implementing Decision 2011/544/EU on establishing a common fiscal marker for gas oils 
and kerosene. 
The Directorate-General for Taxation and Customs Union is working on this in close cooperation with 
the Joint Research Centre. 
OJ L 286, 30.10.2015, p. 1. 

13 

 
 
                                                 
the absence of such conditions, the decisions will be taken on the basis of a recommendation 
of a newly created panel presided over by a high-level independent chair, which, among other 
things,  ensures  the  right  of  the  person  concerned  to  be  heard.  As  of  the  2016  report,  the 
Commission shall provide within this report the information referred to in Article 108(3) FR. 

2.3.2.  Reporting  of  irregularity  provisions  in  the  Multiannual  Financial  Framework 

(MFF) 2014-2020 — expenditure field 

In  2015,  the  Commission  adopted  a  package  of  four  delegated  and  four  implementing 
regulations on  the reporting  of  irregularity  provisions in  the area  of  shared  management  for 
the  MFF  2014-2020.  The  acts  entered  into  force  in  November  2015.18  The  objective  is  to 
improve the quality and consistency of the information on irregularities and fraud reported by 
the  Member  States  while  imposing  a  minimal  administrative  burden  on  the  national 
authorities.  The  information  reported  by  the  Member  States  is  used  for  anti-fraud  purposes 
and is presented annually in this report. 

2.4. 

Other 

2.4.1. 

Implementation of the Hercule Programme 

The  Hercule  III  Programme19  (2014-2020)  promotes  activities  to  counter  fraud,  corruption 
and  any  other  illegal  activities  affecting  the  financial  interests  of  the  Union.  In  2015,  the 
programme had a budget of EUR 14.1 million for: 

18  

19  

OJ L 293, 10.11.2015: 
1. Commission Delegated Regulation (EU) 2015/1970 of 8 July 2015 supplementing Regulation (EU) 
No 1303/2013 of the European Parliament and of the Council with specific provisions on the reporting 
of irregularities concerning the European Regional Development Fund, the European Social Fund, the 
Cohesion Fund, and the European Maritime and Fisheries Fund. 
2. Commission Delegated Regulation (EU) 2015/1971 of 8 July 2015 supplementing Regulation (EU) 
No 1306/2013 of the European Parliament and of the Council with specific provisions on the reporting 
of  irregularities  concerning  the  European Agricultural  Guarantee  Fund and  the  European Agricultural 
Fund for Rural Development and repealing Commission Regulation (EC) No 1848/2006. 
3. Commission Delegated Regulation (EU) 2015/1972 of 8 July 2015 supplementing Regulation (EU) 
No 223/2014 of the European Parliament and of the Council with specific provisions on the reporting of 
irregularities concerning the Fund for European Aid to the Most Deprived. 
4. Commission Delegated Regulation (EU) 2015/1973 of 8 July 2015 supplementing Regulation (EU) 
514/2014 of  the  European  Parliament  and  of  the  Council with  specific  provisions  on  the  reporting  of 
irregularities concerning the Asylum, Migration and Integration Fund and the instrument for financial 
support for police cooperation, preventing and combating crime, and crisis management. 
5. Commission Delegated Regulation (EU) 2015/1974 of 8 July 2015 setting out the frequency and the 
format  of  the  reporting  of  irregularities  concerning  the  European  Regional  Development  Fund,  the 
European  Social  Fund,  the  Cohesion  Fund  and  the  European  Maritime  and  Fisheries  Fund,  under 
Regulation (EU) No 1303/2013 of the European Parliament and of the Council. 
6. Commission Delegated Regulation (EU) 2015/1975 of 8 July 2015 setting out the frequency and the 
format of the reporting of irregularities concerning the European Agricultural Guarantee Fund and the 
European  Agricultural  Fund  for  Rural  Development,  under  Regulation  (EU)  No 1306/2013  of  the 
European Parliament and of the Council. 
7. Commission Delegated Regulation (EU) 2015/1976 of 8 July 2015 setting out the frequency and the 
format of the reporting of irregularities concerning the Fund for European Aid to the Most Deprived, 
under Regulation (EU) No 223/2014 of the European Parliament and of the Council 
8. Commission Delegated Regulation (EU) 2015/1977 of 8 July 2015 setting out the frequency and the 
format of the reporting of irregularities concerning the Asylum, Migration and Integration Fund and the 
instrument  for  financial  support  for  police  cooperation,  preventing  and  combating  crime,  and  crisis 
management, under Regulation (EU) No 514/2014 of the European Parliament and of the Council. 
Regulation (EU) No 250/2014 of the European Parliament and of the Council of 26 February 2014. 

14 

 
 
                                                 
 

 
 

funding  actions  to  strengthen  the  operational  and  administrative  capacity  of  customs 
and police forces in the Member States; 
training activities and conferences; 
IT support.20 

On  27 May 2015,  the  Commission  published  a  report21  on  the  evaluation  of  the  previous 
Hercule  II  Programme  (2007-2013).  The  report  confirmed  that  the  programme  delivered  its 
intended impact at a reasonable cost, was well received by stakeholders and was successful in 
providing added value. 

3. 

FOLLOW-UP  TO  THE  EUROPEAN  PARLIAMENT  RESOLUTION  ON  THE  PROTECTION 
OF THE EU’S FINANCIAL INTERESTS — FIGHT AGAINST FRAUD — ANNUAL REPORT 
2014 

The  Commission  acknowledges  that  data  reported  is  still  not  fully  comparable  between 
Member  States  and  takes  note  of  Parliament’s  requests  to  improve  the  situation.  In  2015  a 
package  of  new  regulations  on  the  reporting  of  irregularities  was  approved  (see  2.3.2).  The 
Commission  has  launched,  in  cooperation  with  national  experts,  the  preparation  of  new 
guidelines on reporting aimed at reducing disparities and standardising the reporting process 
and  quality  of  the  information  to  enhance  comparability.  Furthermore, a  new  version  of  the 
Irregularities Reporting System (IMS) was deployed in 2016. 

In response to Parliament’s concerns about public procurement irregularities, the Commission 
acknowledges  that  they  remain  the  main  source  of  errors  in  cohesion  policy.  However,  the 
Commission has taken both preventive and corrective measures to address these irregularities 
which occur in many public spending areas. As a result of the corrective actions, a substantive 
part  of  financial  corrections  applied  are  linked  to  such  infringements.  The  Commission  is 
continuing to pay close attention to detecting and correcting public procurement irregularities. 
It  is  also  continuously  providing  guidance  to  national  authorities  on  this  matter  and  has 
organised workshops, presentations and training sessions. It is also taking action on a bilateral 
basis to assist Member States on specific issues. 

Following the Special Report of the European Court of Auditors on public procurement, the 
Commission  will  look  into  the  possibility  of  technical  improvements  to  the  IMS  to 
accommodate  the  Court’s  functional  requests.  The  possibility  of  interoperability  with  other 
Commission  databases  may  be  explored.  As  for  the  proposal  to  publish  beneficiaries,  the 
current legislation already provides for this and lists the type of information that needs to be 
published. 

Whistle-blowers  can,  as  pointed  out  by  Parliament,  play  an  essential  role  in  preventing  and 
detecting misconduct  such as  corruption. The Commission  itself adopted internal guidelines 
on whistleblowing on 6 December 2012 and these could be used as a possible model for those 
institutions and bodies that have not yet adopted their own rules. 

On the follow-up of OLAF’s recommendations at national level, which was a topic raised by 
Parliament in its Resolution, the Commission agrees with Parliament that the comprehensive 
prosecution  of  crimes  against  the  EU’s  financial  interests  is  essential  for  the  EU  and  its 

20  
21  

C(2015)2234 final of 8 April 2015. 
COM(2015)221 final of 27 May 2015: Report from the Commission to the European Parliament and to 
the Council on the achievement of the objectives of the Hercule II programme. 

15 

 
 
                                                 
Member States. The Commission however recalls that it is for the Member States’ competent 
authorities to ensure the assessment and appropriate follow-up to OLAF’s recommendations 
and  to  inform  OLAF,  at  its  request,  on  the  actions  taken.  For  its  part,  OLAF  analyses  the 
decisions  by  which  national  authorities  determine  not  to  pursue  cases  following  OLAF 
judicial recommendations.22  

The  Commission  has  already  identified  the  reasons  why  OLAF’s  judicial  recommendations 
are  followed  only  to  a  limited  extent,  having  done  this  in  the  impact  assessment  that 
accompanied  the  2013  legislative  proposal  for  the  EPPO.  The  EPPO  is  intended  to  address 
some  of  these  shortcomings,  such  as  difficulties  encountered  in  collecting  evidence  across 
Member  States.  In  addition,  the  Commission  has  launched  the  evaluation  of  Regulation 
883/2013 governing OLAF’s investigations, to be completed by 2017. This will also provide 
an opportunity to look at this issue. 

4. 

4.1. 

COOPERATION WITH THE MEMBER STATES 

Advisory Committee for Coordination of Fraud Prevention (COCOLAF) 

The  2015  meeting  of  the  Advisory  Committee  for  Coordination  of  Fraud  Prevention 
(COCOLAF)23  with  Member  States  experts  provided  an  opportunity  to  discuss  the  main 
developments in the fight against fraud and the preparation of the Article 325 TFEU Report 
on the ‘Protection of the European Union’s financial interests — Fight against fraud 2014’. 

The COCOLAF subgroups met in 2015 to: 

  prepare the reporting of irregularities provisions and the launch of the new IMS; 
  draw up fraud prevention documents; 
  share media strategies; 
 

launch communication activities on fraud prevention and deterrence. 

Two guidance documents were developed within the Fraud Prevention sub-group: 

 

 

‘National  Anti-fraud  Strategy  in  practice:  preparatory  phase’,  which  aims  to  assist 
Member States in drawing up their national strategies; 
‘Identifying  conflicts  of  interest  in  the  agricultural  sector  —  A  practical  guide  for 
funds managers’, which aims to assist the national authorities managing EU funds to 
better deal with situations of conflicts of interest. 

Both documents were developed using a collaborative approach with Member States’ experts, 
coordinated by OLAF. 

The AFCOS sub-group also exchanged experiences and best practice in anti-fraud activities 
during its meeting in October 2015. 

In  addition,  the  OLAF  Anti-Fraud  Communicators’  Network  (OAFCN)  sub-group  launched 
communication activities on fraud prevention and deterrence by organising a seminar entitled 
‘How best to communicate to deter fraud’. 

22  

23  

'The  OLAF  Report 

See 
fraud/sites/antifraud/files/olaf_report_2015_en.pdf  
Commission Decision 94/140/EC of 23 February 1994, amended on 25 February 2005. 

paragraph 

28-29. 

2015', 

page 

3.3, 

http://ec.europa.eu/anti-

16 

 
 
                                                 
4.2.  Measures  taken  by  the  Member  States  to  counter  fraud  and  other  illegal 

activities affecting the EU’s financial interests 

Member States reported taking a significant number of measures in 2015 to protect the EU’s 
financial  interests  and  fight  against  fraud,  reflecting  the  adoption  of  the  bulk  of  Union 
legislation for the new 2014-2020 programming period. 

Member States took measures covering the whole anti-fraud cycle. The measures were mostly 
in the area of public procurement, while others were on  conflict of interest, financial crime, 
corruption, AFCOS and the definition of fraud and whistle-blowers. 
In 2015, ten Member States24 focused on adopting measures to enhance national cooperation 
in  the  fight  against  fraud.  Further  to  this,  Bulgaria,  Luxembourg  and  Hungary  conducted 
training  for  officials  to  improve  their  skills  in  detecting  fraud,  while  Estonia  and  Malta 
focused  on  raising  awareness  about  fraud.  Specifically,  Estonia  conducted  corruption 
awareness training, while Malta’s AFCOS, in cooperation with the Ministry of Education and 
Employment, took measures to raise anti-fraud and corruption awareness among students in 
Maltese schools. 
Furthermore,  three  Member  States25  took  measures  to  strengthen  their  collaboration  with 
other Member States and third countries. In particular: 

  Bulgaria reported that four international seminars were held with the participation of 
160  representatives  of  the  tax  and  customs  authorities  of  Bulgaria,  Greece  and 
Romania  along  with  OLAF  and  AFCOS,  to  exchange  experience  and  discuss  case 
studies from the fight against fraud. In addition, steps have been taken to improve the 
interaction between administrations of Member States in the Balkan region; 
the  Czech  Republic  adopted  the  Joint  Declaration  of  the  Customs  Administration  of 
the Visegrad Group (V4) on introducing risk profiles for textile and footwear products 
from Asian countries; 

 

  France ratified the Protocol to ‘Eliminate the Illicit Trade in Tobacco Products’. 

Moreover,  seven  Member  States26  adopted  fraud  prevention  measures  or  procedures  on  the 
management of EU funds. Out of these seven Member States, two27 chose to adopt guidelines 
or administrative procedures to improve the management of funds. In particular: 

  Bulgaria  adopted  a  2015-2016  action  plan  for  the  implementation  of  the  National 

 

Anti-Fraud Strategy; 
the  Czech  Republic  adopted  a  Government  Resolution  on  Basic  Anti-Corruption 
Orientations at governmental level, which sets the main direction of the government in 
the fight against corruption; 

  Denmark adopted a national anti-fraud policy for the European Regional Development 
Fund (ERDF) and the European Social Fund (ESF). The policy was launched in 2015 
on the Danish Business Authority’s website to foster a culture that is not conducive to 
fraud and to promote fraud prevention and detection; 

  Germany  adopted  an  anti-fraud  and  anti-corruption  strategy  including  a  fraud  risk 

assessment of all ERDF measures. 

Finally, ten Member States28 reported having made legislative changes to enhance protection 
against fraud, and two of those Member States29 have taken legal measures to combat customs 

24  
25  
26  
27  

Bulgaria, Denmark, Estonia, Spain, France, Croatia, Hungary, Netherlands, Poland, Portugal. 
Bulgaria, Czech Republic, France. 
Bulgaria, Demark, Estonia, Croatia, Netherlands, Austria, Portugal. 
Croatia, Austria. 

17 

 
 
                                                 
fraud.  Furthermore,  three  Member  States30  have  made  improvements  on  taxation  to  combat 
fraud. 

4.3. 

Implementation of the 2014 recommendations 

In  the  2014  Report  on  the  protection  of  the  European  Union’s  financial  interests,  the 
Commission recommended that the Member States: 

  use the AFCOS to its full potential while developing NAFS; 
 

transpose the public procurement directives into their national legislation, with special 
emphasis  on  the  definition  of  ‘conflict  of  interest’  and  measures  to  tackle  such 
conflicts; 
improve low levels of reporting; 

 
  strengthen  customs  controls,  particularly  considering  the  decreasing  number  of 

customs controls at the time of clearance. 

As  stated  in  the  previous  report,  by  the  end  of  2014,  all  Member  States  had  an  AFCOS  in 
place. Nonetheless, there are some variations in the responsibilities allocated to the Member 
States’ AFCOS: 

  most Member States31 empowered their AFCOS with coordination responsibilities; 
 
 

four Member States32 gave it administrative investigative powers; 
the United Kingdom gave it criminal investigative powers. 

Four  other  Member  States33  have  organised  an  AFCOS  network  which  entails  cooperation 
between various parties. 
The majority of Member States34 established a system of cooperation between their AFCOS 
and  relevant  national  parties  involving  a  variety  of  bodies  in  the  fight  against  fraud.  On 
structured coordination and the development of a National Anti-Fraud Strategy (NAFS), six 
Member States35 had adopted a NAFS by the end of 2015. The Czech Republic has reported 
that  it  plans  to  revise  its  strategy,  while  Italy  reported  that  its  AFCOS  has  drawn  up  and 
developed strategic orientations and actions which are updated annually and published since 
2012 in their annual reports to the Italian Parliament. Five more Member States36 reported that 
the adoption of their NAFS is ongoing. 

Most  Member  States37  drafted  new  national  laws  to  transpose  the  EU  public  procurement 
Directive. In seven Member States38 the law will come into effect by April 2016. Only two 

28  
29  
30  
31  

32  
33  
34  

35  
36  
37  

38  

Bulgaria, Czech Republic, Germany, Ireland, Spain, Italy, Cyprus, Lithuania, Austria, Poland. 
Bulgaria, Austria. 
Bulgaria, Estonia, Ireland. 
Belgium, Czech Republic, Denmark, Germany, Estonia, Greece, Spain, France, Croatia, Italy, Cyprus, 
Latvia, Luxembourg, Hungary, Netherlands, Poland, Portugal, Slovenia, Finland, Sweden. 
Bulgaria, Lithuania, Malta, Romania. 
Bulgaria, Denmark, Ireland, Slovakia. 
Belgium, Bulgaria, Czech Republic, Denmark, Germany, Estonia, Ireland, Greece, Spain, Croatia, Italy, 
Cyprus,  Latvia,  Lithuania,  Hungary,  Malta,  Netherlands,  Poland,  Portugal,  Romania,  Slovenia, 
Slovakia, Sweden, United Kingdom. 
Bulgaria, Greece, Croatia, Hungary, Malta, Slovakia. 
Spain, Latvia, Luxembourg, Romania, Slovenia. 
Bulgaria,  Czech  Republic,  Denmark,  Estonia,  Ireland,  Greece,  Spain,  Croatia,  Italy,  Cyprus,  Latvia, 
Lithuania, Hungary, Romania, Slovenia, Slovakia, Finland. 
Bulgaria, Estonia, Ireland, Greece, Italy, Slovenia, Slovakia. 

18 

 
 
 
                                                                                                                                                         
Member  States39  have  already  adopted  such  a  law.  Some  Member  States40  have  not  taken 
action as they consider that their national law already coincides with the Directive. 
All the four Member States41 that were specifically asked to strengthen their fraud detection 
and/or reporting systems have taken steps to improve their national system. France and Spain, 
also cited for their efforts on cohesion policy, reported on the developments they have made 
to further improve the reporting of irregularities. However, a significant number of Member 
States42  did  not  mention  taking  any  action  on  these  points  as  they  assumed  that  they  only 
applied to the four named Member States. 
Most  Member  States43  reported  having  taken  measures  to  enhance  cooperation  with  other 
Member States to ensure that all transactions and all economic operators are included in the 
population for post-clearance controls,  irrespective of whether the importer is located in the 
Member State of the physical importation. One of the ways they achieved this was by signing 
memoranda of understanding with the different services concerned. Furthermore, six Member 
States44  reported  that  they  do  not  exclude  economic  operators  registered  in  other  Member 
States in their investigations to identify customs fraud. 

5. 

FRAUD AND OTHER IRREGULARITIES 

Member  States  have  first-line  responsibility  for  managing  about  80 %  of  the  expenditure 
budget and for collecting almost all the revenue. 

Under sectoral regulations, Member States are requested to report to the Commission cases of 
fraudulent and non-fraudulent irregularities that they have detected. Information provided in a 
first irregularity report needs to be updated when developments occur. 

Under EU law, all cases of irregularities and suspected fraud above EUR 10  000 in the areas 
of  revenue  and  expenditure  should  be  reported.  However,  for  expenditure,  not  all  detected 
irregularities have to be reported.45 

The  irregularities  detected  and  reported  would  result  in  a  decreased  level  of  revenue  or  an 
undue item of expenditure if they were not discovered. The initiation of recovery procedures 
follows these detections. 

While irregularities in  relation to  traditional  own resources are detected within the financial 
year or earlier, the irregularities analysed in this document in relation to expenditure deal with 
amounts that occurred in previous financial years (on average about three years earlier). 

Examples of these irregularities could include the infringement of public procurement rules or 
ineligible expenditure. 

On the one hand, these types of irregularities show certain weaknesses in the administrations 
managing the funds. On the other, the fact that these irregularities are detected and reported at 
a later stage proves that the overall system is capable of correcting these situations throughout 
the lifecycle of projects and programmes. 

39  
40  
41  
42  

43  

44  
45  

Denmark, Hungary. 
Poland, Sweden. 
Denmark, Luxembourg, Slovakia, Finland. 
Belgium,  Bulgaria,  Germany,  Ireland,  Italy,  Cyprus,  Latvia,  Lithuania,  Hungary,  Malta,  Netherlands, 
Poland, Romania, Slovenia, Sweden, United Kingdom. 
Bulgaria, Czech Republic, Denmark, Spain, France, Croatia, Italy, Cyprus, Lithuania, Hungary, Malta, 
Poland, Finland, Slovenia, Slovakia, Sweden, United Kingdom. 
Bulgaria, Germany, Spain, Italy, Cyprus, Romania. 
See  the  Commission  Staff  Working  Document  ‘Methodology  regarding  the  statistical  evaluation  of 
reported irregularities’. 

19 

 
 
                                                 
Some  further  considerations  need  to be  made  on  the  subject of  fraud.  Fraud  is  a  ‘deliberate 
deceit’: the intentionality of this behaviour is usually proven through the recourse to false or 
falsified documents which inflate the declared costs for EU expenditure or reduce the revenue 
(for customs duties). 

It  is  clear  that  the  detection  of  fraud  is  far  more  difficult  than  the  detection  of  a  ‘simple’ 
irregularity,  where  no  deliberate  attempt  to  defraud  is  made.  While  the  latter  usually  stems 
from  a  vulnerability  in  the  first  layer  of  control,  the  former,  even  when  exploiting  existing 
weaknesses, is the result of a specific action put in place by individuals and/or organisations, 
with  malevolent  intent  and  with  methods  varying  from  the  simplest  to  the  most  complex 
schemes. 

The  detection  and  reporting  of  fraud  proves  that  the  overall  control  system  put  in  place  at 
national  and  EU  level  (including  OLAF)  functions  and  is  capable  of  detecting  fraud  and 
irregularities. 

The final decision on whether an irregularity actually constitutes fraud is the responsibility of 
the  relevant  authorities  of  the  Member  State  involved.46  As  criminal  procedures  can  take  a 
few years, unless specifically described as ‘established fraud’, any reference to detected fraud 
throughout this document should be interpreted as referring to cases of ‘suspected fraud’. 

5.1. 

Reported irregularities and overall trends 2011-2015 

In  2015,  22 349  (fraudulent  and  non-fraudulent)  irregularities  were  reported  to  the 
Commission, involving a total of approximately EUR 3.21 billion. Approximately EUR 2.79 
billion (up from EUR 2.26 billion in 2014) concerns the expenditure sector of the EU budget. 
Detected  irregularities  represent  1.98 %  of  payments  on  the  expenditure  side  and  1.71 %  of 
gross total traditional own resources collected. 

Compared  to  2014,  the  number  of  irregularities  detected  increased  by  36 %  and  the 
corresponding financial amounts remained stable (-1 %). 

Between  2011  and  2015,  the  number  of  reported  irregularities  increased  by  98 %,  while  the 
related  amounts  increased  by  81 %,  although  this  increase  mainly  concerns  the  expenditure 
budget. 

The revenue and expenditure sectors experienced different trends: decreasing for revenue and 
increasing for expenditure. 

On expenditure, several factors lie behind the increase: 

 

firstly,  it  is  linked  to  the  resources  available  in  the  EU  budget,  which  in  2015  were 
over 14 % higher than in 2011; 

  secondly,  cyclical  circumstances  such  as  the  approaching  closure  of  the  2007-2013 

 

 

programming period played a role; 
thirdly, the control over the management of EU funds by the appropriate institutions 
(European  Commission  and  Court  of  Auditors)  and  national  services  is  constantly 
improving; 
fourthly,  specific  circumstances  in  two  Member  States,47  which  reported  an 
anomalously high number of irregularities (40 % of the total number and 20 % of the 
total amounts). 

46  

47  

This  implies  that  the  cases  initially  reported  by  Member  States  as  potentially  fraudulent  may  be 
dismissed by judicial authorities. 
Spain and Ireland. See paragraph 5.3.2. 

20 

 
 
                                                 
In  the  area  of  Traditional  Own  Resources  (TOR),  the  total  number  of  irregular  cases 
registered  in  the  OWNRES  database  decreased  to  5  104  (from  5  538  in  2014).  The  total 
estimated  and  established  amount  reported  by  Member  States  as  irregular  (fraudulent  and 
non-fraudulent) decreased in 2015 to EUR 427 million (from EUR 611 million in 2014).  

A substantial decrease in amounts in 2015 can be explained by the fact that in 2014 the United 
Kingdom established significant irregular amounts due to undervalued textiles and footwear, 
which  did  not  occur  in  2015  to  the  same  extent.  On  the  contrary,  some  initially  established 
additional duties were cancelled, presumably due to lack of evidence of undervaluation. 

5.2. 

Irregularities reported as fraudulent 

The  number  of  irregularities  reported  as  fraudulent  (which  includes  cases  of  suspected  and 
established fraud) and the related amounts are not strictly in correlation with the level of fraud 
affecting the EU budget. Irregularities reported as fraudulent tend more to indicate how many 
cases of potential fraud are being detected by Member States and EU bodies. 

In  2015,  1 461  irregularities  were  reported  as  fraudulent,  involving  EUR  637.6  million, 
covering  both  expenditure  and  revenue.  Significant  differences  were  recorded  between 
sectors, as shown in Table 1. 
In comparison with 2014, the number of fraudulent irregularities48 reported in 2015 decreased 
by 11 %, while their financial impact increased by 18 %. 

Chart 1 shows the overall trends over the last five years, highlighting a decrease in the number 
of  reported  cases.  Nonetheless,  after  the  significant  decrease  between  2010  and  2011,  the 
subsequent years show a rising trend in the number of fraudulent irregularities detected and 
reported  until  2014,  whereas  the  related  amounts  fluctuated  greatly.  The  variation  in  the 
number  of  cases  is,  however,  more  informative  than  the  variation  in  the  amounts  involved. 
Indeed,  amounts  vary  greatly  from  year  to  year  as  they  can  be  affected  by  individual  cases 
involving high values. 

Chart 1: Irregularities reported as fraudulent and the related amounts, 2011-2015 

There are also differences between the trend for revenue (which shows a decrease by number 
and  by  amounts  in  2015)  and  the  trend  for  expenditure  (where  fluctuations  appear  to  be 
linked to the progression of the multiannual programming cycles and where there has been a 
slight decrease in the number of cases for the second consecutive year). 

48  

See the Commission Staff Working Document ‘Statistical evaluation of irregularities reported in 2015’. 

21 

 
 
 
                                                 
Table 1: Irregularities reported as fraudulent in 201549 50 

* The calculation includes estimated amounts reported 

A breakdown of all fraudulent irregularities reported in 2015, by Member State and by budget 
sector, is set out in Annex 1. 

5.2.1.  Revenue 

The number of irregularities reported as fraudulent for 2015 (612) is 26 % lower than the five-
year average (822 for the years 2011-2015). The total estimated and established TOR value 
(EUR 78 million) is 34 % lower in 2015 than the five-year average (EUR 119 million). In this 
context, the total number of cases reported as fraudulent and as not fraudulent remains quite 
stable in spite of a decrease in the number of cases reported as fraudulent. 

Customs controls carried out at the time of clearance of goods and inspections by anti-fraud 
services were the most successful methods of detecting fraudulent cases in 2015. In terms of 
amounts, inspections carried out by anti-fraud services and post-clearance controls were most 
fruitful. 

49  

50  

The  high  percentage  indicated  in  relation  to  'Structural  and  cohesion  funds  before  2007-2013'  is 
exclusively due to the fact that payments on those programming periods are almost finalised. 
Totals  and  subtotals  in  Tables  1,  2  and  3  and  in  Annexes  1  and  2  may  differ  from  the  sum  of  the 
individual values, due to the rounding-up of the underlying figures. 

22 

Budget sector (expenditure)N° of irregularities reported as fraudulentVariation in relation to 2014Involved amounts (in million EUR)Variation in relation to 2014As % of paymentsNatural resources444-14%74.18%0.13%Agriculture market support and direct payments1808%38.3-21%0.09%Rural development232-31%28.8110%0.29%Both1386%3.8-10%n/aFisheries1973%3.253%0.46%Cohesion Policy37121%477.574%0.96%ESIF 2014-201-0.2-0.00%Cohesion 2007-201336039%429.271%1.03%Structural and cohesion funds before 2007-201310-79%48.1102%86.79%Pre accession29-6%7.8-46%0.50%Pre accession assistance (2000-2006)9-59%6.1-58%n/rInstrument for Pre-Accession (2007-2013)20122%1.71643%0.11%Direct expenditure5-94%0.2-96%0.00%Total expenditure849-10%559.655%0.40%Budget sector (revenue)N° of irregularities reported as fraudulentVariation in relation to 2014Involved amountsVariation in relation to 2014As % of gross amount of TOR collected for 2015Revenue (traditional own resources)612-14%78-56%0.31%*TOTAL1 461-11%637.618%/ 
 
 
                                                 
Charts  2  &  3:  Methods  of  detection  of  fraudulent  cases  —  by  number  of  cases  and  estimated  and 
established amounts 

It  is  difficult  to  compare  Member  States  in  relation  to  the  reported  number  of  irregularities 
and their related amounts, as reporting practices are influenced by different interpretations of 
relevant  provisions.  From  a  financial  perspective,  the  variations  observed  from  one  year  to 
another  can  be  attributed  to  reports  of  individual  large  cases,  which  have  a  considerable 
impact on the annual figures, especially in Member States where lower amounts of TOR are 
collected.  Other  factors,  such  as  the  type  of  traffic,  type  of  trade,  level  of  compliance  of 
economic  operators  and  the  location  of  a  Member  State,  can  influence  the  figures 
significantly.  

5.2.2.  Expenditure 

For EU expenditure, there was a decrease of 10 % in the number of irregularities reported in 
comparison  with  2014.  The  decrease  was  seen  across  all  sectors  of  the  budget,  with  the 
exception of cohesion policy. However, some significant differences between sectors should 
be noted. 

Market support, direct payments and fisheries all showed increases, while rural development 
followed the opposite trend: an increase of 82 % between 2013 and 2014 was followed by a 
decrease by 31 % in 2015 (see paragraph 5.2.2.1). 

Decreases  were  also  seen  in  the  pre-accession  (6 %)  and  direct  expenditure  policy  sectors 
(94 %).  By  contrast,  cohesion  policy  showed  a  significant  increase  of  21 %,  following  the 
decrease in the previous year. 

Fluctuations  in  the  amounts  involved  are  usually  less  informative,  as  already  explained. 
However, the amounts involved have increased by 55% in comparison with 2014. Since the 
Commission  and  Member  States  are  insisting  on  the  need  to  plan  and  focus  their  control 
activities on the basis of risk analysis and IT tools, the increase could be a result of these new 
practices. 

Charts 4 and 5 show the irregularities reported as fraudulent and their associated amounts, by 
budget sector. 

For  the  third  consecutive  year,  the  largest  proportion  of  irregularities reported  as  fraudulent 
(52 %) was detected in the agricultural sector. However, as in previous years, and even more 
than in the past, the bulk of the related financial amounts (85 %) came from cohesion policy. 

23 

 
 
 
Charts  4  &  5:  Irregularities  reported  as  fraudulent  by  budget  sector  (expenditure)  —  by  number  and 
amount 

The use of false or falsified documentation or declarations remained the most common type of 
fraud  (34 %).  16  of  the  irregularities  reported  as  fraudulent  related  to  conflicts  of  interest, 
three  to  cases  of  corruption  and  another  73  to  other  irregularities  related  to  ethics  and 
integrity. 

About 23 % of irregularities reported as fraudulent in 2015 were detected by anti-fraud bodies, 
during  criminal  investigations  or  via  other  external  controls.  75 %  were  detected  by  the 
administrative control systems provided for under sector-specific regulations. This underlines 
the  importance  of  external  controls  in  the  fight  against  fraud  and  the  need  for  strong 
coordination with managing and audit authorities. Anti-fraud or criminal investigations detect 
cases  of  potential  fraud  involving  large  financial  amounts,  which  reflects  how  effective  the 
investigations are and the investigative capabilities of the authorities concerned. 
Detection continues to vary between Member States, but the differences have narrowed.51 In 
2015,  only  two  Member  States,  Ireland  and  Luxembourg,  did  not  classify  any  of  their 
irregularities  as  fraudulent.  Very  few  fraudulent  irregularities  (less  than  three  for  all 
expenditure  sectors)  were  reported  by  Belgium,  Sweden,  Malta,  Finland,  Denmark  and 
Austria.  The  Member  States  which  detected  and  reported  the  highest  number  of  fraudulent 
irregularities were Romania, Poland, Slovakia, Germany and Italy (between 199 and 53). The 
highest figures for amounts were reported by Italy, Portugal, Slovakia, Romania and Poland 
(between  EUR  213  million  and  EUR  40  million).  These  differences  are  caused  by  several 
factors  and  reflect  different  approaches  among  Member  States  and  among  various 
administrations in the same Member State. 

During the 2011-2015 period, 7 % of irregularities reported as fraudulent were established as 
fraud. In this area, Poland, Romania, Bulgaria and Germany52 reported the highest number of 
concluded procedures. 

5.2.2.1.  Natural resources (agriculture, rural development and fisheries) 

Despite a decrease of more than 30 %, the rural development sector accounted for the largest 
number of irregularities reported as fraudulent in 2015. The other sectors showed an increase 
in comparison with the previous year. 

51  
52  

See Annex 1. 
Germany changed the classification of a number of cases indicated as ‘established fraud’ in past years 
to ‘suspected fraud’. 

24 

 
 
 
                                                 
Similar to previous years, the irregularities notified by four Member States (Hungary, Poland, 
Romania  and  Italy)  represented  about  74 %  of  the  total  number  of  irregularities  reported  as 
fraudulent. 

Romania,  Poland,  Lithuania  and  the  Czech  Republic  reported  an  increasing  number  of 
fraudulent cases. 

The  increase  in  irregularities  reported  as  fraudulent  concerns  the  European  Agricultural 
Guarantee Fund (EAGF). For 2015, 3 % of reported cases concerned both EAGF and EAFRD.  

The  most  recurrent  types  of  fraudulent  irregularities  are  the  use  of  ‘false  or  falsified 
documents’, ‘false or falsified request for aid’ and ‘declaration of fictitious products, species 
and/or  land’  for  the  EAGF.  For  the  EAFRD,  Member  States  indicated  ‘other  irregularities 
related to ethics and integrity’, ‘false or falsified documents’ and ‘false or falsified request for 
aid’. 

In 2015, control activities performed by administrative bodies represented the most successful 
type of control, having detected 50 % of the total irregularities reported as fraudulent. 
Of the irregularities reported as fraudulent between 2009 and 201353, 10 % were described as 
established  fraud.  Over  the  same  period,  12 %  of  the  cases  were  dismissed.  Bulgaria  and 
Poland reported having concluded the highest number of established fraud procedures. 

5.2.2.2.  Cohesion policy: 2007-2013 and 2000-2006 programming periods 

For the third consecutive year, cohesion policy was not the area of budget expenditure with 
the  highest  number  of  irregularities  reported  as  fraudulent.  The  related  amounts,  however, 
accounted for the largest proportion of the total. 

In  line  with  the  trend  shown  in  recent  years,  the  ERDF  accounted  for  both  the  largest 
proportion  of  reported  fraudulent  irregularities  and  related  financial  amounts  in  2015  (60 % 
and 75 % respectively). 

Most of the fraudulent irregularities (64 %) were detected by the control system provided for 
in EU legislation. This continued the trend highlighted since 2012, but represented a striking 
change  from  the  previous  programming  period  (2000-2006),  when  fraudulent  irregularities 
were almost exclusively detected during anti-fraud and criminal investigations. 

In terms of financial amounts, the most significant results were obtained during administrative 
controls (44 %) and criminal and anti-fraud investigations or anti-fraud controls (44%). 

Fraudulent cases are, on average, reported within ten months of their detection. Detection, on 
average, occurs less than three years after the fraudulent practices began.  
Of  the  irregularities  reported  between  2009  and  201354,  12 %  of  irregularities  reported  as 
fraudulent  were  established  as  fraud  (this  figure  stood  at  11 %  in  2013).  4 %  of  cases  were 
dismissed.  Germany,  Poland  and  Italy  reported  having  concluded  the  highest  number  of 
established fraud procedures. 

53  
54  

2009-2013 has been taken as the reference period for analysing established fraud cases and dismissals. 
See footnote 53.  

25 

 
 
                                                 
5.2.2.3.  Pre-accession  policy:  Pre-accession  Assistance  (PAA)  and  the  Instrument  for  Pre-

Accession (IPA) 

The  number  of  irregularities  reported  as  fraudulent  in  PAA  and  their  related  amounts 
decreased  in  2015  in  comparison  with  the  previous  year.  Romania  reported  fraudulent 
irregularities in PAA concerning the rural development programme.55 

The  number  of  fraudulent  irregularities  related  to  the  IPA  and  the  amounts  concerned 
increased  in  comparison  with  2014.  Most  of  the  fraudulent  irregularities  were  reported  by 
Turkey. The highest fraudulent amounts were recorded for cross-border cooperation and rural 
development. 

5.2.2.4.  Expenditure directly managed by the Commission 

Expenditure  directly  managed  by  the  Commission  is  analysed  on  the  basis  of  data  on  the 
recovery orders issued by Commission departments. 

In  2015,  according  to  the  accrual-based  accounting  system  (ABAC),  there  were  five 
recoveries classified as irregularities reported as fraudulent (i.e. ‘OLAF-notified’ cases). They 
accounted for EUR 0.2 million. 

5.3. 

Irregularities not reported as fraudulent 

In  2015,  the  Commission  was  notified  of  20 888  irregularities  not  reported  as  fraudulent 
(about  41 %  more  than  in  2014).  The  figures  increased  for  the  two  shared  management 
sectors,  remained  stable  for  the  revenue  sector  and  decreased  for  pre-accession  and  direct 
expenditure. The related financial impact decreased to approximately EUR 2.58 billion (7 % 
less than in 2014 — see paragraph 5.3.2), as shown in Table 2. 

Table 2: Irregularities not reported as fraudulent in 201556 

55  
56  

SAPARD. 
See footnote 49. 

26 

Budget sector (expenditure)N° of irregularities not reported as fraudulentVariation in relation to 2014Involved amounts (in million EUR)Variation in relation to 2014As % of paymentsNatural resources4 37028%342.444%0.62%Agriculture market support and direct payments1 2447%131.221%0.29%Rural development2 85735%186.655%1.91%Other / N/A8662%5.291%n/aFisheries183101%19.5195%2.76%Cohesion Policy10 322107%1 769.89%3.54%ESIF 2014-201-0.0-0.00%Cohesion 2007-139 730108%1 681.610%4.03%Structural and cohesion funds before 2007-2013591104%88.1-10%159.01%Pre-accession98-30%5.3-43%0.34%Pre-accession assistance (2000-2006)7-87%1.2-81%n/rInstrument for Pre-Accession (2007-2013)916%4.150%0.26%Direct expenditure1 606-11%110.815%0.69%Total expenditure16 39658%2 228.213%1.58%Budget sector (revenue)N° of irregularities not reported as fraudulentVariation in relation to 2014Involved amountsVariation in relation to 2014As % of gross amount of TOR collected for 2015Revenue (traditional own resources)4 4920%349.0-57%1.40%* TOTAL20 88841%2 577.2-7%/ 
 
 
                                                 
* The calculation includes estimated amounts reported 

Annex 2 shows a breakdown of all non-fraudulent irregularities reported in 2015, by Member 
State and by budget sector. 

5.3.1.  Revenue 

The number of irregularities not reported as fraudulent for 2015 (4  492) is 1 % lower than the 
five-year  average  (4  515  —  years  2011-2015).  The  estimated  and  established  amount 
(EUR 349 million) is 1 % higher in 2015 than the five-year average (EUR 347 million). 

Non-fraudulent  irregularities  were  primarily  detected  by  means  of  post-clearance  controls 
(54 % of the number of cases and 56 % of the amount). Other important methods of detection 
for non-fraudulent cases in 2015 were: 

  voluntary admission (16 % of numbers and 15 % of the amounts); 
  customs controls at the time of clearance of goods (13 % of numbers and 12 % of the 

amounts). 

In  2015,  solar  panels  were  the  goods  most  affected  by  fraud  and  irregularities  in  monetary 
terms.  In  many  instances  irregularities  involving  solar  panels  were  detected  following  a 
mutual  assistance  notice  issued  by  OLAF.  This  underlines  the  importance  of  investigations 
conducted by OLAF for detection of irregularities on transactions with certain types of goods 
(e.g.  incorrect  CN  (combined  nomenclature)  codes  or  origin  of  goods,  evasion  of  anti-
dumping duties). 

5.3.2.  Expenditure 

The  increase  in  the  number  of  irregularities  not  reported  as  fraudulent  concerns  the  main 
expenditure sectors of the EU budget (agriculture and cohesion policy). Irregularities related 
to pre-accession and direct expenditure have decreased. 

The magnitude of this increase is due to the high number of irregularities reported by Spain in 
the cohesion policy sector.57 They represent 36 % of the total irregularities reported in 2015. 
This  increase  is  mirrored  by  a  significant  rise  in  the  related  financial  amounts.  Ireland  also 
reported  an  unusually  high  number  of  irregularities,  the  bulk  of  them  concerning  the  2000-
2006 period.58 All detected irregularities are followed up with corrective measures by national 
authorities in order to protect the EU’s financial interests. 

5.4. 

Results from the activities of the European Anti-Fraud Office (OLAF)59 

In  2015,  OLAF  opened  219  investigations.  Over  the  same  period,  304  investigations  were 
concluded and 364 recommendations60 were issued. 

57  

58  

59  

60  

The  high  number  of  irregularities  reported  in  2015  does  not  correspond  exclusively  to  irregularities 
detected during this financial year, but also to irregularities detected throughout the whole 2007-2013 
period and not reported until 2015. 
For  the  IMS  reporting  year  2015  Ireland  reported  538  non-fraudulent  ERDF  related  irregularities,  of 
which  537  relate  to  ‘historic’  reporting  for  the  2000-2006  programming  period.  These  537  non-
fraudulent  ERDF  irregularities  were  identified  and  corrected  in  the  years  2000-2010  and  the  EU’s 
financial interests were protected. Due to administrative issues and closure of the contradictory phase of 
2000-2006 funding in the Member State, the actual reporting to the IMS only took place in 2015. As a 
result,  the  irregularity  reporting  data  for  Ireland  for  2015  appears  high  in  comparison  with  previous 
years. 
For  a  full  description,  see  ‘The  OLAF  Report  2015’.  https://ec.europa.eu/anti-fraud/about-
us/reports/olaf-report. 
At the end of an investigation, OLAF can issue the following types of recommendations:   
financial (recommending the recovery of unduly spent amounts), judicial (recommending the starting of 

27 

 
 
                                                 
OLAF sent 98 recommendations for judicial action to national authorities and recommended 
that approximately EUR 888.1 million be recovered, of which about EUR 97.9 million related 
to revenue and EUR 790.2 million to expenditure (see Table 3). 

Table 3: Amounts recommended for recovery in 2015 following OLAF investigations 

6. 

RECOVERY AND OTHER PREVENTIVE AND CORRECTIVE MEASURES 

Detailed information on recoveries, financial corrections and other preventive and corrective 
measures  (interruptions  and  suspensions  of  payments)  are  published  in  the  Communication 
from the Commission to the European Parliament, the Council and the Court of Auditors on 
the Protection of the EU Budget.61 
No further information on this subject will be given in this report.62 

7. 

CONCLUSIONS AND RECOMMENDATIONS 

The role of the Member States is pivotal in ensuring that the financial interests of the EU are 
adequately  protected.  Indeed,  as  Member  States  collect  or  manage  and  spend  the  greatest 
share of the resources of the EU budget, they also have a specific responsibility in ensuring 
that  the  principles  of  sound  financial  management  are  duly  applied  and  respected.  Member 
States  have  the  obligation  to  ensure  that  fraud  and  irregularities  affecting  the  EU  financial 
interests are detected and corrected, and in the case of fraud, adequately prosecuted. 

2015 has been a year of consolidation for several initiatives taken by the Commission and the 
Member States in previous years. On some strategic issues like the EPPO, negotiations have 
progressed, but have still not achieved conclusive results. 

In  other  areas,  significant  steps  were  taken  in  2015  to  enhance  the  protection  of  the  EU’s 
financial interests, in particular for the revenue side of the budget. 

Revenue 

7.1. 
The  adoption  of  Regulation  (EU)  No 2015/152563  has  improved  the  current  framework  for 
detecting and investigating customs fraud at EU and national level, significantly strengthening 

criminal  procedures  against  individuals  by  national  authorities),  disciplinary  (recommending  the 
institutions)  and  administrative 
launching  of  disciplinary  procedures  vis-à-vis  staff  of 
(recommending addressing weaknesses in administrative procedures). 
For  the  2014  financial  year,  see  COM(2015)  503  of  8 October  2015.  The  Communication  for  the 
financial year 2015 is expected between the end of July and September. 
Some  information  concerning  recovery  is  given  in  the  Commission  Staff  Working  Document 
‘Statistical evaluation of the irregularities reported in 2015’. 
See paragraph 2.2.1. 

the 

61  

62  

63  

28 

Recommended amountmillion EURStructural Funds624.0Customs and trade97.9External Aid76.1Centralised expenditure42.0Agricultural Funds36.8New financial instruments10.4EU staff0.9TOTAL888.1Sector 
 
 
                                                                                                                                                         
the  analytical  capabilities  of  both  OLAF  and  national  customs  authorities  in  detecting 
fraudulent operations. 

Against  this  background,  the  results  from  detections  in  the  traditional  own  resources  area 
show a slightly downward trend, partly influenced by the high values of detections in 2014. 
The  detection  of  irregularities  and  fraud  concerning  solar  panels64  (many  of  which  were 
detected following mutual assistance notices issued by OLAF) underlines: 

 

 

the importance of investigations conducted by OLAF in the detection of irregularities 
in transactions with certain types of goods;65 and 
the added value that coordination and cooperation at EU level can generate in the fight 
against fraud. 

Customs  control  strategy  is  a  combination  of  different  types  of  controls.  Post-clearance 
controls  are  the  most  effective  method  of  detection  both  in  terms  of  the  number  of  cases 
detected  and  in  terms  of  amounts.  However,  controls  at  the  time  of  clearance  of  goods  and 
inspections carried out by anti-fraud services are indispensable for detecting certain types of 
fraud and new fraud patterns. 

In  many  Member  States,  budget  constraints  have  led  to  the  reduction  of  staff  in  charge  of 
controls. Some Member States operate with remarkably few customs staff. Reduced controls 
may  boost  inward  trade  flows  but  this  could  be  at  the  cost  of  effective  controls  and  the 
protection of the EU’s financial interests. 

Recommendation 1 

Given the current budget constraints, Member States are: 

  requested  to  strike  the  right  balance  between  trade  facilitation  and  the 
protection of the EU’s financial interests, which are also national interests 
considering  the  national  taxes  collected  at  import  and  considering  that 
Member States are compensated for collecting traditional own resources; 
invited  to  exchange  experiences  on  instances  where  customs  authorities 
were particularly successful in detecting fraud or irregularities at the time 
of clearance; 

 

 

  requested to incorporate information received from other Member States 
or the Commission departments through the CRMS, AFIS or OWNRES 
systems  into  risk management  and  complement  the  national  populations 
used for risk management purposes; 
invited  to  cooperate  closely  with  one  another  and  exchange  information 
beyond  the  borders  over  post-clearance  controls/audits  and  to  prevent 
fraud-related  trade  diversion  from  one  Member  State  to  another.  When 
determining which companies are to be checked, attention should be paid 
to  those  that  are  established  in  one  country  but  which  clear  all  their 
imports at customs offices in other Member States.  

In 2015, ‘voluntary admissions’ became a more important source of irregularity detection. In 
the  light  of  this,  the  outcomes  of  voluntary  admissions  need  to  be  taken  into  account  when 
planning  future  control  strategies,  in  particular  for  post-clearance  controls  but  also  when 
adapting the control strategies and so that it is possible to conduct oversight on self-assessed 

64  
65  

The goods most affected by irregularities and fraud. See paragraph 5.3.1. 
E.g. incorrect CN codes or origin of goods, evasion of anti-dumping duties. 

29 

 
 
                                                 
operators  in  the  future.  Above  all,  ex  post  adjustments  of  customs  value  need  to  be  taken 
thoroughly into account. 

Recommendation 2 

Considering  the  increasing  number  of  cases  of  voluntary  admission  and  the  related 
amounts,  Member  States  are  reminded  of  the  need  to  adapt  their  customs  controls 
strategies, taking into account the outcomes of voluntary admissions and are therefore 
invited to: 

  adapt  their  yearly  planning  of  staff  and  resources  required  for  ex  post 

 

verification of information received by voluntary admissions; 
take  into  account  customs  risk  management  and,  if  required,  take  into 
account in control plans the types of irregularities revealed by voluntary 
admissions; 

  extend  customs  controls  to  other  economic  operators  with  businesses  or 
operations  identical  or  comparable  to  those  having  made  voluntary 
admissions.  

7.2. 

Expenditure 

On  the  expenditure  side,  the  fluctuation  in  the  number  of  fraudulent  irregularities  reported 
over  the  last  five  years  is  difficult  to  interpret.  However,  whereas  the  overall  number  of 
detections  has  remained  fairly  stable  over  the  last  three  years,  the  amounts  concerned  have 
regularly increased. There is a significant difference between: 

a.  spending programmes which are multiannual and for which the level of detection 

follows their cyclical nature; and 

b.  direct  payments  and  market  support  (agricultural  policy),  where  payments  and 
actions  follow  an  annual  cycle  and  the  detection  of  fraud  and  irregularities  shows  a 
certain consistency and stability over time. 

Fraud detection practices still differ between Member States. 

The  number  of  Member  States  detecting  and  reporting  a  significant  number  of  fraudulent 
irregularities has increased, showing their commitment to the fight against fraud affecting the 
EU’s financial interests. 

The  Commission  remains  concerned  about  the  low  number  of  potentially  fraudulent 
irregularities reported by some countries. In particular, the progress noted in the 2014 Report 
for certain Member States came to a standstill or even regressed in 2015. 

Although satisfactory, the quality of irregularity reporting could be further improved to allow 
more in-depth analysis of the underlying phenomena. 

30 

 
 
 
Recommendation 3 

Member  States  are  requested  to  further  improve  quality  control  of  the  information 
submitted  via  the  Irregularity  Management  System  (IMS),  in  particular  information 
on:  

- the description of detected irregularities; 

- the priority areas concerned; 

- the localisation of the projects/actions affected by fraud and irregularities. 

As  some  Member  States  report  a  very  low  number  of  fraudulent  irregularities,  in 
particular  in  relation  to  the  amount  of  funds  allocated  to  them,  the  Commission 
recommends strengthening their work on detecting and/or reporting fraud: 

• 

• 

in agriculture: Finland, Austria and the United Kingdom; 

in cohesion policy: Spain, France and Lithuania. 

The  role  of  managing  and  paying  authorities  in  detecting  fraud  has  grown  since  2012  and 
should be further enhanced in the coming years under the new regulatory framework for the 
2014-2020 period. 

The  Commission  believes  that  this  role  could  be  further  enhanced  if  these  authorities  make 
systematic use of appropriate IT tools. 

Recommendation 4 

• Given the complexity of the operations managed and the high number of beneficiaries 
concerned,  Member  States  (managing  authorities/paying  agencies  and  audit/control 
authorities) are invited to plan and focus their audits and control activities on the basis 
of risk analysis and performing IT tools. 

•  The  Commission  has  developed  and  put  at  the  Member  States’  disposal  systems  and 
tools  such  as  Arachne,  IMS  and  the  Fraud  Risk  Assessment  tool.  The  Commission 
encourages  Member  States  to  use  these  systems  and  tools  more  systematically  and 
efficiently, unless other comparable alternatives are already available to them. 

31 

 
 
 
ANNEX 1 — IRREGULARITIES REPORTED AS FRAUDULENT 

The number of irregularities reported as fraudulent measures the results of Member States’ work to counter fraud and other illegal activities 
affecting the EU’s financial interests. Therefore, the figures should not be interpreted as indicating the level of fraud in the Member States’ 
territories. Totals differ from Table 1 as Annex 1 does not include third countries (pre-accession) and direct expenditure. 

32 

N€N€N€N€N€N€Belgique/België1010437 538 346Bulgaria5773 4794186 6134252 4111292141 212 79523648 683Ceská republika13791 5603514 398 6774815 190 237244 705Danmark10102064 001 406Deutschland6615 842585 711 930646 327 7728814 566 960Eesti61 507 6801452 36371 960 044481 625Éire/Ireland0081 544 668Ellada476 861476 8613313 375 473España11945 82211 321 308122 267 130744 830 245France821 957 601140 039921 997 6409916 502 399Hrvatska32 184 460251 86452 236 3246621 169Italia359 786 8682937 72930205 897 33767216 621 934405 689 688Kypros4211 7604211 7603112 709Latvija5402 394113 204 277163 606 671181 616 073Lietuva154 097 052154 097 05217559 196Luxembourg0000Magyarország288 461 627161 707 7814410 169 4085205 201Malta120 386120 38600Nederland2061 205 24781 205 24700Österreich16 6251426 0852432 7109882 508Polska1175 180 8745935 009 85817640 190 732591 732 136Portugal5228 1688664 9751477 090 1622777 983 3044508 718Romania13512 628 91121 253 8285350 128 89996 060 35119970 071 989211 106 514Slovenija6913 60362 728 096123 641 6993139 295Slovensko192 243 2245674 248 4767576 491 700297 541Suomi/Finland16 67616 6766412 415Sverige129 027129 02700United Kingdom3119 5763171 37971 321 728131 612 68339989 999TOTAL42570 872 666193 214 524371477 462 083126 112 508827557 661 78061277 807 672REVENUEMember StatesAgricultureFisheriesCohesion PolicyPre-AccessionTOTAL EXPENDITURE 
 
 
 
ANNEX 2 — IRREGULARITIES NOT REPORTED AS FRAUDULENT 

Totals differ from Table 2 as Annex 2 does not include third countries (pre-accession) and direct expenditure.  

33 

N€N€N€N€N€N€Belgique/België12198 676421 150 403541 349 0791997 702 369Bulgaria355 500 245575 53210331 888 59929885 12517238 349 500496 851Ceská republika542 075 902351 662623234 818 961680236 946 526703 459 097Danmark211 459 851112 1053100 821251 572 777853 572 789Deutschland1044 268 3974593 26838137 549 89448942 411 5591 68098 309 892Eesti31916 700381 406 812692 323 5124112 658Éire/Ireland611 700 27154573 999 78460675 700 055241 795 956Ellada10640 248 5174126 99611437 671 52622478 047 040193 001 966España50245 516 48712755 3425 105434 379 5795 619480 651 40824019 835 842France16721 176 547192 557 52918623 734 07526015 873 136Hrvatska117 65512 43123260 16025280 2468558 813Italia49334 130 041134 18119145 870 4493553 93568880 588 6071128 801 968Kypros4257 0923472 1337729 226114 363Latvija311 164 772110 245519 821 4688310 996 48512378 930Lietuva24325 514 99313675 805536 933 03230933 123 83030795 857Luxembourg0000Magyarország27914 735 635265 57230437 517 79158552 318 99820798 466Malta6109 51614511 67320621 1894604 651Nederland2029 873 243536 962 981635 312 71531822 148 940459111 189 852Österreich23626 623908 130 0521138 756 676634 189 849Polska2626 096 96461 673 150826190 580 7121 094198 350 825693 249 352Portugal27914 745 038274 241 23221527 732 17952146 718 450141 730 597Romania1 08682 452 484233 151 694374123 894 1905386 4341 488209 884 802727 478 348Slovenija21411 740384 768 205595 179 9459307 191Slovensko325 085 3141189 016373416 581 123406421 855 4536474 901Suomi/Finland19372 214147 88412850 164321 270 261321 326 606Sverige362 396 3388318 970301 949 056744 664 364763 039 021United Kingdom721 606 19918480 90871133 810 99680135 898 10292050 860 956TOTAL4 182322 657 45218319 466 54310 3221 770 262 277602 085 65414 7472 114 471 9274 492349 560 277REVENUEMember StatesAgricultureFisheriesCohesion PolicyPre-AccessionTOTAL