COMMISSION STAFF WORKING DOCUMENT EX-ANTE EVALUATION Accompanying the document Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND THE COUNCIL establishing the EU Anti-Fraud Programme
Date: 2018-05-30
Institutions: European Anti-Fraud Office, European Commission
Subjects: EU financing, EU programme, administrative cooperation, corruption, exchange of information, farming sector, fraud, fraud against the EU, pre-accession aid, tariff policy

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 30.5.2018  SWD(2018) 294 final  COMMISSION STAFF WORKING DOCUMENT EX-ANTE EVALUATION Accompanying the document Proposal for a  REGULATION OF THE EUROPEAN PARLIAMENT AND THE COUNCIL establishing the EU Anti-Fraud Programme  {COM(2018) 386 final}  
 
 
Table of contents 

1. 

INTRODUCTION: POLITICAL AND LEGAL CONTEXT ..................................... 2 

1.1.  Scope and context ................................................................................................ 2 

1.2.  Lessons learned from Hercule, AFIS and IMS .................................................... 3 

2.  THE OBJECTIVES ..................................................................................................... 7 

2.1.  Challenges for the programmes of the next MFF ................................................ 7 

2.2.  Objectives of the programme for the next MFF ................................................ 14 

3.  PROGRAMME STRUCTURE AND EU ADDED VALUE ................................... 15 

4.  DELIVERY MECHANISMS OF THE INTENDED FUNDING ............................ 18 

5.  PERFORMANCE MONITORING AND EVALUATION ...................................... 20 

ANNEX 1 .......................................................................................................................... 23 

ANNEX 2 .......................................................................................................................... 27 

ANNEX 3 .......................................................................................................................... 29 

ANNEX 4 .......................................................................................................................... 32 

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1. 

INTRODUCTION: POLITICAL AND LEGAL CONTEXT 

1.1. 

Scope and context 

This Commission staff working document (SWD) provides an ex-ante evaluation of the 
legislative  proposal  for  the  new  EU  Anti-Fraud  Programme.  It  is  required  for  all 
programmes  which  entail  significant  spending1.  The  scope  of  the  evaluation  covers  the 
lessons learned, the challenges to be addressed, internal coherence as well as coherence 
with  other  instruments,  policy  and  management  objectives,  the  objectives  of  the 
programme, the programme’s structure and its European Union’s (EU) added value, the 
delivery mechanisms, and performance monitoring and evaluation. 

Article 325 of the Treaty on the Functioning of the European Union (TFEU) provides for 
a  shared  obligation  of  the  Member  States  and  the  EU  to  protect  the  latter's  financial 
interests.  Article  33  TFEU  provides  for  the  strengthening  of  customs  cooperation 
between Member States and between the latter and the Commission. The implementation 
of  the  past  EU  multi-annual  budgets  has  been  accompanied  by  a  set  of  measures  to 
complement  the  Member  States  in  preventing  and  fighting  fraud  affecting  the  financial 
interests of the EU, and supporting mutual assistance in customs and agriculture matters. 
These measures include the Hercule spending programme, the Anti-Fraud Information 
System (AFIS) and the Irregularity Management System (IMS). 

Firstly, Hercule III2 is a multiannual action programme running from 1 January 2014 to 
31  December  2020  to  promote  activities  against  fraud,  corruption  and any  other  illegal 
activities  affecting  the  financial  interests  of  the  EU.  To  this  end,  it  contributes  to 
financing a range of activities, such as the purchase of technical equipment, training and 
conferences.  It  is  the  only  EU  programme  solely  dedicated  to  support  the  fight  against 
fraud  affecting  the  financial  interests  of  the  EU.  Secondly,  unlike  Hercule,  which  is  a 
spending  programme,  AFIS  is  an  operational  activity  which  finances  a  number  of 
operational  actions  under  Regulation  515/97  on  mutual  administrative  assistance  in 
customs  and  agriculture  matters3.  This  also  strengthens  the  protection  of  the  financial 
interests of the EU, mainly at the revenue side. Thirdly, IMS is an instrument introduced 
by  the  sectorial  legislation4  to  support  the  Member  States,  candidate  and  potential 

1 According to Article 30 of Regulation (EU, Euratom) 966/2012 on the financial rules applicable to the 
general budget of the Union, as amended by Regulation (EU, Euratom) 2015/1929 of 28 October 2015, OJ 
L 286 of 30 October 2015 (OJ L 286, 30.10.2015, p. 1). 
2  Regulation  (EU)  No  250/2014  of  the  European  Parliament  and  of  the  Council  of  26  February  2014 
establishing a programme to promote activities in the field of the protection of the financial interests of the 
European Union (Hercule III programme) and repealing Decision No 804/2004/EC (OJ L 84, 20.3.2014, p. 
6). 
3 Council Regulation (EC) No 515/97 of 13 March 1997 on mutual assistance between the administrative 
authorities  of  the  Member  States  and  cooperation  between  the  latter  and  the  Commission  to  ensure  the 
correct application of the law on customs and agricultural matters (OJ L 82, 22.3.1997, p. 1). 
4  For  Common  Agricultural  Policy:  Commission  Delegated  Regulation  (EU)  2015/1971  (OJ  L  293, 
20.11.2015, p. 6).; Commission Implementing Regulation (EU) 2015/1975 (OJ L 293, 10.11.2015, p. 6); 
For European Structural Funds, Cohesion Fund and European Maritime and Fisheries Fund: Commission 
Delegated  Regulation  (EU)  2015/1970  (OJ  L  293,  10.11.2015,  p.  1);  Commission  Implementing 
Regulation (EU) 2015/1974 (OJ L 293, 10.11.2015, p. 20); 
For  Fund  for  European  Aid  for  the  Most  Deprived:  Commission  Delegated  Regulation  (EU)  2015/1972 
(OJ  L  293,  10.11.2015,  p.  20);  Commission  Implementing  Regulation  (EU)  2015/1976  (OJ  L  293, 
10.11.2015, p. 11);  

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candidate countries to report to the Commission cases of irregularities, including fraud, 
in  the  areas  of  shared  management  and  pre-accession-assistance.  Annex  1  provides  a 
synoptic outline of all three instruments. 

Until  now,  Hercule,  AFIS,  and  IMS  have  been  implemented  separately,  as  standalone 
instruments. IMS services however are delivered through the AFIS platform and are also 
financed  (maintenance  and  development)  under  the  AFIS  budget.  In  the  context  of  the 
preparation of the next Multiannual Financial Framework (MFF), the Commission aims 
at  streamlining  and  simplifying  the  EU  support  to  the  Member  States,  as  well  as  at 
identifying  complementarities  and  synergies  between  programmes.  Therefore,  the 
Commission  proposes  to  put  forward  a  new  anti-fraud  programme  that  would  combine 
the existing Hercule III spending programme and the financing basis for AFIS and IMS. 
It is important to note however that the operational provisions of AFIS and IMS will 
remain  in  their  respective  legal  instruments5,  Regulation 515/97  for  AFIS,  and 
in 
sectorial 
Regulation 515/97  (Article  42a)  will  be  transferred  to  the  new  EU  Anti-Fraud 
Programme Regulation, which will repeal it from Regulation 515/97. This new financing 
arrangement  for  AFIS  will  cover  all  actions  currently  financed  under  AFIS,  including 
IMS.  The  new  regulation  will  decouple the  financing  of IMS  from  AFIS  and  spell this 
financing out as a stand-alone action to be financed under the new regulation. 

financing  provisions  of  AFIS 

IMS.  Only 

regulations 

the 

for 

1.2.  Lessons learned from Hercule, AFIS and IMS 

Hercule,  AFIS,  and  IMS  are  long-standing  EU  tools  to  support  the  figtht  against 
fraudulent  and  non-fraudulent  irregularities  to  the  detriment  of  the  EU  budget  and  for 
supporting  mutual  administrative  assistance  between  customs  administrations  and 
cooperation  with  the  Commission.  They  have  been  subject  to  regular  evaluations  and 
user  satisfaction  surveys,  which  have  largely  demonstrated  the  added-value  of  each  of 
them. 

Hercule has been evaluated twice in the last few years. The Commission ex post report 
on the evaluation of Hercule II programme (2007-2013) was adopted and transmitted to 
the  European  Parliament  and  the  Council  in  May  20156.  The  Commission  mid-term 
evaluation report of Hercule III (starting on 1 January 2014 until June 2017, the first half 
of  the  seven-year  period  that  the  programme  lasts  for)  was  adopted  and  transmitted  in 
early January 20187. 

The ex post evaluation of Hercule II found that the support granted to Member States was 
largely positive and led to better transnational and multidisciplinary cooperation between 

For Home  Affairs  Funds: Commission  Delegated  Regulation (EU)  2015/1973  (OJ  L  293,  10.11.2015,  p. 
20); Commission Implementing Regulation (EU) 2015/1977 (OJ L 293, 10.11.2015, p. 15). 
5 See footnotes 4 and 5 above. 
6  Report  from  the  Commission  to  the  European  Parliament  and  the  Council  on  the  achievement  of  the 
objectives of the Hercule II Programme, COM(2015) 221 final. 
7 Report from the Commission to the European Parliament and the Council, Mid-Term evaluation of the 
Regulation  (EU)  No  250/2014  of  the  European  Parliament  and  of  the  Council  of  26  February  2014 
establishing a programme to promote activities in the field of the protection of the financial interests of the 
European Union (Hercule III programme) and repealing Decision No 804/2004/EC, COM(2018) 3 final. 

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authorities  in  their  activities  seeking  to  protect  the  EU’s  financial  interests.  The 
Programme contributed to strengthening the operational and investigative capacity of its 
main beneficiaries, such as police forces, customs authorities and other law enforcement 
agencies. 

The evaluation also found that the effectiveness of the Programme could be enhanced by 
ensuring  more  personal  contact  between  stakeholders,  for  example,  through  staff 
exchanges. The need to strengthen the reporting on the Programme’s activities, as well as 
the monitoring of the results, has also been highlighted. These findings were echoed in 
the mid-term evaluation of Hercule III (see below). 

Because no non-EU country entered into an agreement with the EU for their participation 
in the Programme, the geographical distribution of beneficiaries was essentially focused 
on Member States8. However, participants from a large number of non-EU countries did 
attend events, such as the digital forensic training sessions. 

The  mid-term  evaluation  of  the  Hercule  III  Programme  has  demonstrated  that  the 
Programme,  at  this  stage  of  its  implementation,  has  fulfilled  its  mission.  It  has  proven 
relevant, mechanisms are in place to ensure its coherence, and it has been effective and 
efficient.  There  is  a  clear  added-value  to  have  such  a  programme  at  EU  level,  and  its 
activities  have  been  found  largely  sustainable.  The  evaluation  report  also  contains 
suggestions to improve the existing Programme. 

The  independent  study  underpinning  the  Commission  evaluation  outlined  some  ideas 
which  have  been  proposed,  including  possible  objectives  and  activities  for  the 
programme going forward, in particular in the areas of cross-border cooperation between 
Member  States,  cooperation  with  non-EU  partners,  as  well  as  the  challenges  of  new 
technological developments. With regards to training activities, the study concluded, on 
the  basis  of  the  final  reports  of  the  actions  and  surveys  of  beneficiaries,  that  they 
generated  results  that  were  largely  in  line  with  the  expected  outputs.  Nonetheless,  it 
found  that  only  few  actions  involved  staff  exchanges  between  national  administrations 
and few actions involved international participation. 

The  evaluation  demonstrated  the  overall  efficiency  of  the  Hercule  III  Programme.  In 
particular,  the  application  process  did  not  appear  to  be  too  cumbersome  for  a  large 
majority  of  the  programme’s  stakeholders.  However,  some  applicants  suggested 
alleviating the burden generated by the application and reporting processes, for instance 
by reducing the amount of requested information or increasing the use of IT tools for the 
application  process.  Most  of  these  suggestions  are  currently  in  the  process  of  being 
addressed  since  the  Commission,  in  2017,  started  using  an  electronic  management 

8 Participating countries/territories comprise (Article 7 Regulation) EU Member States and may comprise 
(under  specific  conditions):  i)  acceding  States,  candidate  countries  (i.e.  Albania,  the  former  Yugoslav 
Republic  of  Macedonia,  Montenegro,  Serbia  and  Turkey)  and  potential  candidates;  ii)  partner  countries 
under the European Neighbourhood Policy (i.e. Algeria, Egypt, Israel, Jordan, Lebanon, Libya, Morocco, 
Palestine, Syria, Tunisia, Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine; Russia is not part 
of the European Neighbourhood Policy but takes part in cross-border cooperation activities); iii) European 
Free  Trade  Association  (EFTA)  countries  participating  in  the  European  Economic  Area  (EEA)  (i.e. 
Iceland, Liechtenstein, and Norway). 

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system  for  the  submission,  processing  and  management  of  grant  applications  under  the 
programme.  The  improvements  brought  about  by  the  electronic  management  system 
involve for instance digitalising the whole application process and introducing the use of 
digital  signatures.  The  electronic  system  has  noticeably  alleviated  the  administrative 
burden and related time and resources spent on the applications in particular. 

As AFIS is not a financial programme, it is not subject to the corresponding evaluation 
cycles.  Nevertheless,  there  is  a  set  of  indications  that  can  be  taken  into  account  for 
evaluating the performance of the related operational activities9. 

In  particular,  OLAF's  Internal  Audit  Capability  performed  an  audit  to  assess  the 
performance  of  AFIS.  Its  report  in  2014  confirms  the  efficiency  and  effectiveness  of 
AFIS and the adequacy of the management and coordination mechanisms. It concluded 
that  the  stakeholders  consider  the  quality  of  the  AFIS  services  as  satisfactory,  or  even 
highly satisfactory10. 

Overall, it appears that the operational activities under AFIS constitute a valuable support 
to  Member  States'  and  Commission's  operational  and  investigative  work  aiming  at: 
detecting  customs  infringements,  recovering  customs  duties,  and  enhancing  customs 
cooperation  in  the  anti-fraud  area.  The  efforts  made  in  recent  years  in  addressing 
identified shortcomings have contributed to increase the level of trust, participation and 
satisfaction of Member States' competent authorities. 

More  specifically,  the  permanent  physical  (Permanent  Operational  Coordination  Unit  - 
POCU)  and  IT  infrastructure  (Virtual  Operation  Coordination  Unit  -  VOCU)  for  the 
support  of joint customs  operations (JCO)  has been  regularly used  by Commission  and 
Member States, as well as third countries and other organisations on numerous occasions. 
The  evaluation  reports  submitted  after  the  completion  of  JCOs  show  that  this  physical 
structure  and  AFIS  application  strongly  facilitate  the  coordination  tasks  associated  to 
JCOs with a large number of participants. Their use is frequently recommended during 
the evaluation of these operations. The fact that these facilities are also frequently used 
for operational activities in the area of law enforcement cooperation (free of charge for 
the participants) is an additional proof of Member States' appreciation. 

Also  importantly,  the  reimbursement  of  transport,  accommodation  and  daily  allowance 
costs  of  representatives  of  the  Member  States'  training  courses  and  meetings  for 
investigative or operational actions, including JCOs, have proven to be critical to secure 
the participation of a large number of Member States in these initiatives. 

The Commission carries out regular survey reports on AFIS. The latest ones indicate that 
more  than  80%  of  Member  State  users  are  satisfied  with  the  functionality  and 

9 Notably on the basis of the Commission annual reports on AFIS activities (pursuant to Art. 51a of Reg. 
515/97) as part of the Commission report on the protection of the EU's financial interests (PIF Report). 
10 Audit report on performance audit of AFIS, Ares(2014)2592647.  

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performance  of  the  various  AFIS  applications,  as  well  as  for  the  AFIS  training 
provided11. 

Following  Member  States’  recommendations  provided  during  workshops  organised  by 
the  Commission,  OLAF  has  strengthened  in  recent  years  the  involvement  of  Member 
States during all stages of development of new or updated AFIS applications, aiming at 
improving its usage and user satisfaction. This was the case during the update of AFIS 
VOCU12, AFIS Mail13, Customs Information System (CIS)14 and IMS15, which involved 
a large number of Member States participants in the above-mentioned workshops. As a 
result  of  this  joint  work,  Member  States  acceptance  and  usage  of  the  mentioned 
applications  has  significantly  improved,  along  with  the  enlargement  of  these  user 
communities. 

The  European  Court  of  Auditors  concluded  that  the  information  on  Container  Status 
Messages (CSM) and fair prices provided by the two AFIS applications, CSM directory 
and Automated Monitoring Tool (AMT), are effective tools to identify potential cases of 
fraud  related  to  misdescription  of  origin  and  undervaluation/underinvoicing.  They  can 
also provide useful tools to estimate the size of the customs gap16. 

Looking  at  possible  improvements,  the  European  Court  of  Auditors  special  report  no 
19/2017 on "Import procedures: shortcomings in the legal framework and an ineffective 
implementation impact the financial interests of the EU", states that the EU’s tools and 
programmes  for  exchanging  customs  information  and  increasing  cooperation  have  not 
reached  their  full  potential.  In  particular,  certain  mutual  assistance  requests  related  to 
specific  fraud  areas  are  not  implemented  in  a  uniform  way  by  Member  States.  Some 
AFIS customs information systems are insufficiently used. 

Member  States  have  also  provided  some  feedback  on  the  performance  of  AFIS.  They 
have for some years stressed the issue of double reporting of customs information in CIS 
and in the exchange of risk-related information in a Risk Information Form17. The Project 
Group  ‘Reporting  Customs  seizures  in  Customs  Risk  Management  System  and  AFIS-
CIS’,  coordinated  by  the  Commission,  with  the  participation  of  Member  States 
representatives, was created to address this issue in 2016. A set of recommendations were 
issued by the project group, and its implementation is on-going. 

11 AFIS Satisfaction Survey report 2015, Ares(2015)5036716.  
12 VOCU: 4 workshops, with participants from: Belgium, Bulgaria, Germany, Spain, France, Ireland, Italy, 
Malta, the Netherlands, Portugal, Slovakia, and the United Kingdom on 15 & 16 May 2012, 29 & 30 April 
2013, 4 & 5 June 2013 and 6 & 7 June 2013. 
13  AFIS  MAIL:  2  workshops,  with  participants  from:  Germany,  Denmark,  Spain,  France,  Malta,  the 
Netherlands, Portugal, and the United Kingdom on 5/6 February 2015 and 2 June 2015.  
14 CIS: 6 workshops, with participants from: Austria, Germany, Denmark, Spain, France, Greece, Hungary, 
Italy, the Netherlands, Poland, Portugal, and the United Kingdom on 15 March 2016, 6 December 2016, 6 
April 2017, 5 October 2017, 27 October 2017 and 15 March 2018. 
15  IMS:  2  workshops  took  place  during  the  development  of  IMS5  in  which  participants  of  17  Member 
States  and  1  candidate  country  participated  (16/10/2014  and  3  February  2015).  The  4  IMS5-trainings 
(October – December 2015) were attended by all Member States.  
16 European Court of Auditors, Special Report No 19/2017: “Import procedures: shortcomings in the legal 
framework and an ineffective implementation impact the financial interests of the EU”, 5 December 2017.  
17 Run by DG TAXUD's Common Customs Risk Management System. 

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Like  AFIS,  IMS  is  not  a  programme  but  an  operational  activity  delivered  through  the 
AFIS platform and, as such, has not been subjected to formal evaluations. Neither have 
specific  audits  been  conducted  on  it  yet.  However,  irregularity  reporting  via  IMS 
underpins the Commission annual report on the protection of the EU's financial interests 
(PIF Report)18, as the statistical part of the report is based on IMS data19. The evaluation 
of the data is done in close collaboration with the Member States in the framework of the 
"Reporting and Analysis" expert's Group of the Advisory Committee for Coordination of 
Fraud  Prevention  (COCOLAF)  which  meets  twice  per  year  in  this  respect.  The  PIF 
Report  is  addressed  to  the  Council  and  the  European  Parliament.  The  latter  issues  an 
annual Resolution on the Protection of the EU's financial interests in response to on the 
PIF Report. 

IMS is used extensively by national authorities: over 3 500 users in the Member States 
and  candidate  countries  have  reported  to  the  Commission  about  58  500  cases  of 
irregularities, including fraud, over the last 5 years. The rationale of such reporting has 
been  adapted  over  time,  moving  from  a  system  which  recorded  the  financial  amounts 
unduly paid and needing recovery action to a collection of targeted data and information 
to perform risk analysis. 

The  European  Court  of  Auditors  special  reports  no  10/2015  on  "Efforts  to  address 
problems with public procurement in EU cohesion expenditure should be intensified" and 
no  24/2016  "More  efforts  needed  to  raise  awareness  of  and  enforce  compliance  with 
State  aid  rules  in  cohesion  policy"  made  recommendations  with  regard  to  IMS.  The 
Commission  should  adapt  the  database’s  structure  so  that  information  on  irregularities, 
including fraud, such as in the areas of public procurement and state aid, can be extracted 
and analysed respectively by type of public procurement irregularity and across Member 
States. These recommendations have been accepted and implemented by the Commission 
(OLAF). 

2.  THE OBJECTIVES  

2.1.  Challenges for the programmes of the next MFF 

The MFF post-2020 is proposed to amount to EUR 1 279 billion. It will be made up of 
own  resources,  among  which  the  customs  duties  levied  on  imports,  as  well  as  a  VAT-
based resource. 

Past  experience  shows  that  the  financial  interests  of  the  EU  are  impacted  by 
irregularities, including fraud. Every year, the PIF Report demonstrates that the level of 
such  irregularities,  including  fraud,  although  fluctuating,  stays  at  a  level  that  requires 
action  on  the  part  of  the  EU.  Therefore,  an  important  political  objective  of  the 

18 Overview of all Annual Reports on the protection of EU's financial interests:  https://ec.europa.eu/anti-
fraud/about-us/reports/communities-reports_en. 
19 Through the main part of the report dedicated to the statistical analysis and the specific Staff Working 
Document  (Statistical  evaluation  of 
the  Staff  Working  Document 
"Implementation of article 325 TFEU by the Member States" and the "Follow-up of recommendations to 
the Commission PIF Report" which accompany this report. For 2016 report see COM (2017) 383 final and 
SWD(2017) 266, 267 and 270 final. 

irregularities)  but  as  well 

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Commission is to support Member States in countering fraud and other illegal activities, 
thus ensuring that no taxpayers' money is diverted from its intended goal. 

Table 1 presents the number and financial value of the detected fraudulent irregularities, 
including fraud, as reported in the PIF Report. 

Table 1 –Irregularities reported as fraudulent, 2014 - 2016 

2014 

2015 

2016 

Budget 
sector 

Number of 
fraudulent 
irregularities 
519 

Involved 
amounts 
(EUR mn) 

Number of 
fraudulent 
irregularities 
444 

Involved 
amounts (EUR 
mn) 

Number of 
fraudulent 
irregularities 
413 

Involved 
amounts (EUR 
mn) 

31 

371 

306 

74.1 

68.6 

274.2 

Natural 
resources 
Cohesion 
policy 
Pre-
accession 
Direct 
expenditure 
Own 
resources 
Total 
 Source:  Protection  of  the  EU's  financial  interests  -  Fight  against  fraud  Annual  Reports  2014,  2015,  and 
2016. 

14.47 

176.2 

538.2 

477.5 

1 649 

1 461 

637.6 

1 410 

407 

710 

612 

513 

7.8 

0.2 

4.7 

28 

49 

78 

29 

83 

5 

61.8 

236.9 

3.0 

6.3 

83.0 

391.0 

Against  this  backdrop,  there  is  a  continued  need  for  a  comprehensive  approach  to 
combatting  fraud  affecting  the  EU's  financial  interests  in  all  Member  States  and  at  EU 
level. 

Institutional  developments  in  the  area  of  combatting  fraud  affecting  the  EU's 
financial interests 

The  future  EU  Anti-Fraud  Programme  will  be  implemented  at  a  time  of  significant 
changes  in  the  legislative  and  institutional  framework  for  the  protection  of  the  EU 
financial interests. 

Firstly, Council Regulation (EU) 2017/1939 of 12 October 2017 implementing enhanced 
cooperation on the establishment of the European Public Prosecutor’s Office (the EPPO), 
entered  into  force  on  20  November  2017  (the  EPPO  Regulation).  It  provides  for  the 
creation of the EPPO, competent to conduct criminal investigations and prosecute cases 
of suspected fraud affecting the financial interests of the EU, in the participating Member 
States. The EPPO is expected to bring a more consistent and effective prosecution policy 
for  crimes  affecting  the  EU  budget,  leading  to  a  greater  number  of  prosecutions, 
convictions and a higher level of recovery of lost EU funds. 

Secondly,  the  offences  for  which  the  EPPO  will  be  competent  are  defined  in  Directive 
(EU) 2017/1371 of the European Parliament and the Council of 5 July 2017 on the fight 
against fraud to the EU's financial interests by means of criminal law (the PIF Directive). 
The  PIF  Directive  will  strengthen  the  protection  of  the  EU's  financial  interests  by 
harmonising  the  definition  of  offences  affecting  them  (offences  of  fraud,  corruption, 
money  laundering  and  misappropriation)  as  well  as  harmonising  sanctions  and  time 

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limitations for such cases. The PIF Directive is set to be transposed in national legislation 
by July 2019. 

Finally,  the  Commission  has  recently  tabled  a  proposal20  to  amend  Regulation  No 
883/2013  on  OLAF  investigations21  (the  OLAF  Regulation).  The  main  driver  for  the 
proposal is the need to adapt the operation of OLAF to the establishment of the EPPO. In 
addition, it proposes a number of limited changes that follow from the evaluation of the 
OLAF  Regulation22  (submitted  to  the  European  Parliament  and  to  the  Council  on  2 
October  2017).  The  EPPO  Regulation  provides  for  a  close  relationship  between  the 
EPPO and OLAF, based on mutual cooperation within their respective mandates and on 
information exchange. 

In  accordance  with  Article  120  of  the  EPPO  Regulation,  the  EPPO  will  begin  its 
operations on a date to be determined by a Commission decision, not earlier than at least 
three years after the entry into force of the Regulation. It is expected that the EPPO will 
become operational at the end of 2020, in time for the implementation phase of the EU 
Anti-Fraud Programme. 

The  EU  Anti-Fraud  Programme  will  accompany  the  implementation  of  these  new 
developments,  to  contribute  to  Member  States  and  the  EU  reaping  maximum  benefits 
from these changes. The EU Anti-Fraud Programme will fund actions that support EU-
wide cooperation in the field of the protection of the EU financial interests, helping bring 
together the relevant actors: national authorities in all Member States, the EPPO, OLAF, 
as well as other EU bodies (in particular Eurojust and Europol), to facilitate cooperation 
and the exchange of expertise. 

The need for support in the fight against fraud and for customs cooperation under 
the next MFF 

The  EU  and  the  Member  States  are  responsible  for  countering  fraud  and  any  other 
activities  affecting  the  financial  interests  of  the  EU,  in  accordance  with  Article  325(1) 
TFEU. The need to ensure that the taxpayers' money is legally spent remains one of the 
pillars of trust in the EU and, as the PIF Reports show, fraud and other illegal activities 
against the EU's financial interests remains a relevant problem. 

On  13  March  2018,  the  Commission  organised  a  one-day  workshop  with  relevant 
stakeholders  in  the  Member  States  (representatives  of  the  anti-fraud  coordination 
services and customs administrations), aimed at consulting stakeholders on possible ideas 
for new forms of support under the future programme. See also Annex 4 (on Procedural 
information) for a synoptic overview of all consultations, evidence and sources, as well 
as  the  organisation  of  the  ex-ante  evaluation.  The  consultation  strongly  confirmed  the 

20 COM(2018) 338  
21 Regulation (EU, Euratom) No 883/2013 of the European Parliament and of the Council of 11 September 
2013  concerning  the  investigations  conducted  by  the  European  Anti-Fraud Office  (OLAF)  and  repealing 
Regulation  (EC)  No  1073/1999  of  the  European  Parliament  and  of  the  Council  and  Council  Regulation 
(Euratom) No 1074/1999 (OJ L 248, 18.9.2013, p. 1). 
22 COM(2017) 589 and SWD(2017) 332 

9 

 
 
                                                            
need  for  continued  support  in  the  form  of  an  EU  anti-fraud  programme,  especially  to 
counter cross-border fraud affecting EU's financial interests. This echoes the findings of 
the  mid-term  evaluation  of  the  Hercule  III  where  the  majority  of  stakeholders 
considered  the  needs  and  problems  identified  in  the  Hercule  III  Programme  still  to  be 
relevant.  Furthermore,  the  workshop  also  yielded  some  ideas  for  new  activities  which 
could  be  supported  in  addition  to  the  activities  currently  performed  under  Hercule  III, 
AFIS and IMS (see Annex 2 and 3). 

Regulation 515/97 tasks the Commission with a number of activities in connection with 
mutual administrative assistance in the customs area. Today more than ever, especially in 
view  of  the  the  increasing  sophistication  of  criminal  groups,  customs  fraud  can  take 
various forms: there can be undervaluation (a single case discovered following an AFIS-
based operation led to a recovery order of more than EUR 2 billion), misclassification of 
goods,  origin  fraud  and  outright  smuggling,  including  notably  of  tobacco  and  other 
excisable products. In addition, recent phenomena like the rise in small value parcels in 
relation  to  e-commerce  present  new  challenges.  The  purpose  of  AFIS  is  to  finance 
activities  to  address  these  challenges  in  close  cooperation  with  Member  States.  These 
activities  include  the  development  and  maintenance  of  the  AFIS  platform,  all  costs  of 
installing  and  maintaining  the  permanent  technical  infrastructure  for  the  purposes  of 
customs  cooperation,  operational  actions  and 
transport, 
accommodation and daily allowance costs of representatives of the Member States taking 
part  in  the  EU  missions,  training  courses,  meetings  for  administrative  investigations  or 
operational  actions  conducted  by  the  Member  States,  where  they  are  organised  by  or 
jointly  with  the  Commission.  AFIS  should  continue  delivering  high  quality  services  to 
the  Member  States,  while  at  the  same  time  taking  account  of  any  new  challenges.  The 
needs  to  be  covered  by  the  AFIS  operational  activity  are  discussed  with  the  Member 
States  in  relevant  forums,  such  as  the  Expert  Group  on  Mutual  Assistance  in  Customs 
Matters  and  the  Fight  against  Illicit  Tobacco  Trade  Expert  Group.  The  AFIS  work 
programme  is  only  approved  after  prior  examination  in  the  Expert  Group  on  Mutual 
Assistance in Customs matters. 

the  reimbursement  of 

In the illicit trade of tobacco area, in particular, the Council Conclusions on stepping up 
the fight against illegally traded tobacco products in the EU, adopted by the Council of 
the European Union in December 201723, have stressed the role of customs authorities as 
the leading authority for controlling the cross-border movement of goods, especially key 
inputs for manufacturing cigarettes and tobacco products and highlighted the importance 
of  effective  multilateral,  multidisciplinary  and  multinational  cooperation  between 
relevant  authorities  at  national,  EU  level  and  with  third  countries  and  other  relevant 
parties  in  the  fight  against  illegally  traded  tobacco  products  in  the  EU.  The  Member 
States  and  the  Commission  have  thus  been  invited  to  detect  and  investigate  illegally 
traded  tobacco  products,  including  by  enhancing  the  collection  of  data  and  information 
based on advanced analytical IT solutions, and creating interoperability options to fight 
against illegal tobacco trade. 

23 Council document no 15638/17 of 11 December 2017. 

10 

 
 
                                                            
 
IMS is an activity that the Commission is tasked with by sectorial legislation. The IMS 
system  needs  to  be  adequately  maintained  and  developed  in  order  to  allow  Member 
States  to  comply  with  their  reporting  obligations.  Going  forward,  IMS  would  work  on 
simplifying  this  process  for  the  Member  States,  while  ensuring  that  data  quality  and 
completeness is continuously improved. Additionally and importantly, the system should 
enhance  the  data  analysis  offer,  allowing  the  widest  possible  dissemination  and 
accessibility  of  the  analytical  results  for  Member  States  also  in  order  to  improve  and 
focus fraud prevention activities. 

Synergies and internal and external coherence 

The  Hercule  III  Regulation  has  proved  to  provide  adequate  guarantees  in  terms  of 
internal  coherence.  As  noted  by  the  independent  study  supporting  the  mid-term 
evaluation,  the  internal  coherence  of  the  programme  is  ensured  by  how  its  various 
components support each other, for example: the forensic training activities enhance the 
effects of the hardware and software purchases under the programme and the high-level 
conferences ensure that some key topics for the protection of EU's financial interests are 
discussed  and  coordinated  at  the  EU  level  by  relevant  authorities  from  the  Member 
States.  The  evaluation  also  found  that  the  implementation  of  the  programme  sought  to 
maximise  the  internal  coherence  by  placing  emphasis  on  the  EU  external  border,  the 
most exposed Member States and the most critical areas24. 

There  are  already  existing  synergies  between  Hercule,  AFIS  and  IMS,  that  could  be 
strengthened  in  the  EU  Anti-Fraud  Programme.  In  particular,  Hercule  has  supported 
AFIS-based investigative activities by allowing for the participation of third countries in 
JCOs.  Hercule  has  paid  for  non-EU  participants  in  these  otherwise  EU-only  actions. 
Hercule funds the access by the Member States authorities to certain databases via AFIS 
and training of national authorities on the irregularity reporting linked to IMS. Moreover, 
IMS  is  provided  via  the  AFIS  IT  platform.  These  operational  synergies  should  be 
continued  and  further  elaborated  by  bringing  together  the  three  instruments  under  one 
single  programme,  for  example,  by  financing  AFIS  and  IMS  pilot  projects  through 
Hercule-type activities (grants or procurement). 

During the dedicated workshop in March 2018, the participants from competent national 
authorities expressed support for further exploiting the underlying synergies between the 
three components of the EU Anti-Fraud Programme. Ideas were suggested for new AFIS 
and  IMS  activities  under  the  future  programme,  for  instance  in  connection  with  the 
analysis  of  data  available  in  AFIS  and  IMS  databases  (Annex  3).  More  administrative 
synergies  could  be  achieved  in  the  new  programme  through  conducting  joint 
programming as well as consolidated monitoring and reporting on the performance. 

24 The maximum co-financed rate could be exceptionally raised from 80% to 90% for very specific actions 
satisfying  at  least  two  of  the  following  criteria:  i)  taking  place  at  an  external  EU  border  (especially  the 
EU’s eastern border); ii) taking place at the most vulnerable locations (as regards seizures of cigarettes and 
tobacco);  iii)  reflecting  the  results  of  the  Eurobarometer  survey  of  citizens’  attitudes  to  counterfeited, 
smuggled  cigarettes  and  “cheap  whites”;  and  iv) reflecting  the  findings  of  the  2014  PIF  report  (e.g.  as 
regards  the number  of  cases of smuggled  cigarettes  reported  and  the  estimated  traditional  own  resources 
involved). 

11 

 
 
                                                            
The  fight  against  tobacco  smuggling  is  another  area  where  the  future  programme  will 
provide synergies and internal coherence from a policy point of view. The Commission, 
with OLAF as lead service, has been stepping up both enforcement and policy action in 
this regard. In the past some actions were financed under AFIS (notably JCOs), whereas 
other elements were financed under Hercule, such as measures to promote and implement 
the  Protocol  to  the  Framework  Convention  on  Tobacco  Control  (FCTC),  which  was 
ratified by the EU in 2016, and the laboratory for the chemical analysis of seized tobacco 
samples.  The  new  programme  would  support  these  activities  and  other  policies  against 
tobacco smuggling in a coherent and streamlined way. 

Hercule  is  the  only  EU  programme  solely  dedicated  to  support  the  fight  against  fraud 
affecting  the  financial  interests  of  the  EU.  The  Hercule  evaluations  have  demonstrated 
that, despite the fact that some other Commission programmes could be seen as possibly 
competing  with  the  Hercule  activities  (Customs  2020,  Fiscalis,  the  Internal  Security 
Funds,  and  the  Justice  Programme)  this  was  in  practice  not  the  case.  Currently,  each 
Commission  service  is  called  on  to  approve  relevant  work  programmes  through  inter-
service consultations. Via this mechanism, potential overlaps are avoided, as each service 
is  given  the  opportunity  to  review  the  upcoming  activities  and  identify  possible 
duplication. Other relevant services are also part of the committees evaluating proposals 
for  Hercule  grants.  Finally,  under  Hercule  III,  to  limit  the  potential  for  overlaps  and 
enhance  synergies,  applicants  are  requested  to  disclose  all  EU  grants,  procurement 
contracts or loans obtained directly or indirectly from a European institution or agency in 
the three years before the submission. 

levels  of  endowment  with  control  equipment  available 

Under  the  next  MFF,  the  Commission  is  proposing  the  creation  of  a  new  instrument 
dedicated to the purchase of customs control equipment, as part of the Integrated Border 
Management  Fund.  The  instrument  will  seek  to  address  the  current  imbalance  between 
the  customs 
the 
administrations.  Thus,  it  will  support  the  provision  (acquisition,  maintenance  and 
evolution)  of  relevant,  state-of-the-art  and  reliable  control  equipment  primarily  to 
customs authorities, but also, even in cases of possible dual use, to other law enforcement 
authorities carrying out customs related duties. 

to 

Over  the  years,  part  of  Hercule  funds  has  been  spent  on  customs  equipment,  including 
large  ones,  such  as  scanners.  In  view  of  the  above  development,  the  EU  Anti-Fraud 
Programme  will  move  away  from  this  type  of  activities  under  Hercule  and  will  avoid 
making  funds  available  to  finance  the  purchase  of  the  same  type  of  customs  control 
equipment which will take place under the new instrument. Instead, in the customs area, 
the EU Anti-Fraud Programme will typically focus on lower-budget equipment which is 
specifically targeted at the protection of the EU's financial interests, and for the benefit of 
customs and non-customs authorities.  

For example, the following types of equipment will in principle fall only under the EU 
Anti-Fraud  Programme  remit:  digital  forensic  equipment,  surveillance  equipment, 
intelligence  equipment,  equipment  for  combatting  cigarettes  trafficking,  such  as  sniffer 
dogs,  beacons  and  others.  In  addition,  unlike  the  instrument  for  Customs  Control 

12 

 
 
Equipment,  the  EU  Anti-Fraud  Programme  will  afford  support  to  non-customs 
authorities,  such  as  tax  authorities,  judicial  authorities,  police  inspectorates  and  border 
police, ministries, various investigative bodies, anti-corruption bodies etc. 

Furthermore,  in  practice,  avoiding  duplication  and  ensuring  coherence  between  the 
programmes  will  be  ensured  through  inter-service  consultations  on  the  annual  work 
programmes (AWPs). When the action supported involves the acquisition of equipment, 
the  Commission  shall,  where  appropriate,  set  up  a  coordination  mechanism  ensuring 
efficiency and interoperability between all the equipment purchased with the support of 
Union Programmes. 

The  AFIS  operational  activity  is  not  a  traditional  financing  programme  and,  as  such, 
the question of internal coherence has to be tackled from a different angle i.e. that of the 
coherence of the activities prescribed by Regulation 515/97 and paid for by AFIS. 

The  activities  financed  by  AFIS  are  described  in  Annex  1.  These  activities,  aiming  at 
enhancing  administrative  customs  cooperation  in  the  fight  against  customs  fraud  and 
irregularities,  are  carried  out  in  a  complementary  way  ensuring  coherence  in  the 
enforcement of the defined legal provisions: 

•  The technical and coherent collection, storage and analysis of the AFIS data are 
the basic source for the identification of fraud trends and the definition of fraud 
preventive measures. 

•  The  meetings  between  Commission  and  Member  States  and  the  trainings 
organised,  make  possible  the  planning,  execution  and  evaluation  of  the  related 
investigative or operational actions. 

•  The permanent technical infrastructure and AFIS resources made available to the 
Member States by the Commission, allow for the secure and rapid exchange of 
anti-fraud  related  information,  essential  in  the  achievement  of  the  investigative 
and operational goals. 

IMS  is  the  IT  tool  designed  to  allow  Member  States  to  comply  with  reporting 
obligations, laid down in EU law, concerning irregularities, including fraud, to the shared 
management expenditure of the EU budget. As such it does not raise any issues in terms 
of  internal  coherence.  In  terms  of  external  coherence,  IMS  complements  the  policy 
arsenal for the fight against fraud to the EU financial interests by providing a facts-based 
picture  of  irregularities,  including  fraud,  in  Member  States  and  their  follow-up 
(sanctioning). Going forward, external coherence will be further strengthened in light of 
the  activities  identified  for  the  EU  Anti-Fraud  Programme  in  connection  with  IMS:  for 
instance, improving IMS data analysis with the help of the EU Anti-Fraud Programme's 
funding  should  contribute  to  better  preventing  and  detecting  fraud  at  EU  and  Member 
State  level,  but  would  also  feed  into  other  strands  of  activities  within  this  programme, 
such as training, seminars, and conferences. 

A procedure will be in place to contribute to guaranteeing the external coherence of 
the EU Anti-Fraud Programme. Like with the current Hercule III, as evidenced in the 
mid-term  evaluation,  both  formal  and  informal  mechanisms  will  be  in  place  across 
Commission  services  to  avoid  overlaps  and  ensure  synergies  between  EU-funded 

13 

 
 
programmes. In addition, the consultations of the technical and expert meetings, such as 
the Expert Group on Mutual Assistance in Customs Matters or the Customs Cooperation 
Working  Party  for  AFIS,  as  well  as  the  COCOLAF  for  expenditure-related  activities, 
also contribute to strengthening external coherence. 

2.2.  Objectives of the programme for the next MFF 

The Programme will have two general objectives: 

1.  The protection of the financial interests of the Union. 

2.  Support  to  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. 

Deriving directly from the general objectives, the specific objectives of the Programme 
will be threefold: 

1.  Preventing and combatting fraud, corruption and any other illegal activities affecting 

the financial interests of the European Union. 

2.  Supporting the reporting of irregularities, including fraud, with  regard to the shared 

management and pre-accession assistance funds of the Union budget. 

3.  Providing tools for information exchange and support for operational activities in the 

field of mutual administrative assistance in customs matters. 

More concretely, the Programme could address the following categories of activities25: 

 

 

 

 

 

 

 

 

to  improve  the  prevention  and  investigation  of  fraud  and  other  illegal  activities 
by fostering transnational and multi-disciplinary cooperation; 
to  identify,  promote  and  support  existing  and  new  avenues  for  cooperation, 
including across borders, between the relevant authorities in the Member States, 
third countries and EU bodies; 
to  promote  and  support 
the  provision  of  mutual 
the  cooperation  and 
administrative assistance between the customs administrations in EU, as well as 
providing assistance to the customs authorities in third countries; 
to  support  data  analysis  initiatives  and  targeted  studies  about  new  trends  and 
phenomena; 
to  increase  the  protection  of  the  financial  interests  of  the  EU  against  fraud  by 
facilitating the exchange of best practices, including staff exchanges; 
to  provide  the  national  authorities  and  the  Commission  with  the  necessary 
information  systems  and  databases  allowing  for  efficient  information  exchange 
and effective cooperation; 
to  facilitate  access  to  know-how  in  anti-fraud  investigations  for  the  relevant 
national authorities and EU bodies; 
to  strengthen  the  fight  against  fraud  and  other  illegal  activities  by  providing 
technical  and  operational  support  to  national  investigations,  and  in  particular 
customs and law enforcement authorities; 

25 This list is indicative only. 

14 

 
 
                                                            
 

 

to  limit  the  currently  known  exposure  of  the  financial  interests  of  the  EU  to 
fraud,  corruption  and  other  illegal  activities,  with  a  view  to  reducing  the 
development  of  an  illegal  economy  in  key  risk  areas  such  as  organised  fraud, 
including cigarette smuggling and counterfeiting; 
to enhance the degree of development of the specific legal and judicial protection 
of the financial interests of the EU against fraud by promoting comparative law 
analysis. 

The  above  operational  objectives  as  well  as  the  suggestions  received  during  the 
workshop with stakeholders will be further defined in the AWPs and in connection with 
the delivery mechanisms (e.g. calls for grant proposals). 

3.  PROGRAMME STRUCTURE AND EU ADDED VALUE 

Legal basis 

The proposal will be based on Articles 33 and 325 TFEU. 

Article 325 TFEU concerns the protection of the financial interests of the EU and is the 
current legal basis for the Hercule III Regulation. 

Regulation  515/97,  which  provides  for  the  activities  financed  under  AFIS,  is  based  on 
Article  33  TFEU  on  customs  cooperation  and  Article  325  TFEU.  AFIS  covers  certain 
activities  which  do  not  all  fall  under  article  325  TFEU  (e.g.  customs  cooperation  in 
connection  with  regulated  products  such  as  drug  precursors).  Therefore,  the  proposal 
should be based on both Article 33 and Article 325 TFEU. 

The CIS is established by Regulation 515/97, adopted on the basis of Articles 33 and 325 
of  the  Treaty  on  the  Functioning  of  the  European  Union  for  the  administrative 
cooperation  aspects,  and  Council  Decision  2009/917/JHA,  adopted  on  the  basis  of 
30(1)(a)  and  34(2)(c)  of  the  Treaty  on  the  European  Union  for  the  police  cooperation 
aspects. The CIS covers both administrative and police cooperation cases under a single 
information system. The police cooperation dimension of the CIS can technically not be 
dissociated  from  the  administrative  one  as  both  aspects  are  operated  under  one  single 
information technology system. Considering that the number of police cooperation cases 
is significantly lower than the number of administrative cooperation cases in the CIS and 
that the CIS itself is only one of several information systems run under AFIS, the police 
cooperation dimension of AFIS is deemed accessory to its administrative one. The legal 
basis  for  the  AFIS  component  of  the  new  Regulation  should  therefore  be  limited  to 
Article 33 and 325 TFEU. 

The IMS is based on the relevant sectorial legislation, while also serving the objective of 
the protection of the EU financial interests. 

Programme structure 

Considering that Hercule, AFIS and IMS have all proved overall positive, the EU Anti-
Fraud  Programme  will  largely  roll  them  over  in  a  single,  combined,  programme. 

15 

 
 
Bringing  together  these  three  instruments  under  a  single  programme  has  the  advantage 
that, on the one hand, each of them will continue to provide the specialised service for 
which it has been created while, on the other hand, the conditions for simplification and 
maximising  synergies  will  be  put  in  place,  towards  the  overarching  objectives  of 
supporting fight against fraud affecting the financial interests of the EU as well as mutual 
administrative assistance. This would entail continuing and deepening existing synergies 
between  the  three  instruments  (as  described  in  Section  2,  sub-section  on  Internal  and 
external coherence). 

To  ensure  enough  flexibility  in  the  future  programme  so  as  to  allow  it  to  tackle  new 
challenges and needs, the activities delivered by the EU Anti-Fraud Programme will be 
essentially  specified  in  the  AWPs,  in  accordance  with  the  new  Financial  Regulation, 
which  is  currently  in  the  adoption  process  and  which  will  be  in  force  during  the 
implementation  phase  of  the  Programme.  As  far  as  Hercule  is  concerned,  the  activities 
provided for by Hercule III (see Annex 1) have been positively evaluated, in particular in 
the  recent  mid-term  evaluation.  They  will  therefore  be  largely  maintained,  and 
complemented by new activities that have been identified (Annex 2 and 3), in particular 
on the basis of the targeted stakeholders’ consultation with national competent authorities 
from both the anti-fraud coordination services (AFCOS) for the expenditure and revenue 
parts  of  the  EU  budget  and  customs  administrations  for  the  revenue  and  mutual 
administrative  assistance  aspects.  The  outcome  of  this  consultation  process  covers  new 
activities relevant to the three components of the future programme and can be found in 
Annexes 2 and 3.  

The bulk of AFIS costs relate to the AFIS IT system. In order to ensure continuity with 
current  practice  under  Regulation  515/97,  the  EU  Anti-Fraud  Programme  Regulation 
needs to provide the list26 of the AFIS costs that are covered, today, under Article 42a of 
Regulation  515/97  and  should  continue  being  covered  under  the  new  programme.  This 
will  also  an  adequate  level  of  predictability  for  the  users  and  beneficiaries  of  AFIS,  be 
they the Member States’ authorities or Commission services in charge of the IT systems 
underpinning  AFIS.  Such  systems  require  stable  financing  over  the  years  to  retain 
critical, experienced IT staff and to cover maintenance and necessary developments. The 
AFIS envelope under the Programme will need to ensure such stability and predictability, 
which will be pursued during the implementation phase.  

EU added value of Hercule 

The many years of experience with the implementation of the EU budget have revealed 
that  fraud  is  not  a  local  phenomenon,  but  often  and  increasingly  has  a  cross-border 
dimension,  with  many  fraudulent  schemes  involving  participants  from  two  or  more 
Member States.  The future  programme is  meant to  address this  cross-border  dimension 
that can only insufficiently be tackled by Member States alone. 

26 See Annex I of the proposal. 

16 

 
 
                                                            
The independent mid-term evaluation of Hercule III showed that 76% of the beneficiaries 
and all of the Commission and national services interviewed recognised the added value 
of the Hercule programme and its essential contribution to generating unique results and 
benefits. The analysis per type of added value further reveals the positive role played by 
the programme in the Member States: 

 

  almost 60% of the users of services provided by the Hercule III who participated 
in the online survey emphasised that their organisation would (either probably or 
definitely) not be able to benefit from the same service without the support of the 
Programme; 
the majority of informed stakeholders from all categories also confirmed that the 
Programme allows for better protection of EU external borders from smuggling 
with positive spill over effects for other Member States; 
the  majority  of  beneficiaries  and  institutions  consulted  stressed  that  the 
Programme  enables  cross-border  cooperation,  cross-border  exchange  of 
information and cross-border exchange of best practices either to a high extent or 
to the fullest extent. 

 

Other  elements  of  EU  added  value  are  a  result  of  the  way  the  programme  itself  was 
designed.  For  example,  the  Hercule  III  Regulation  provides  for  the  collective 
procurement of specialised equipment and databases to be used by the stakeholders and 
those derived from specialised training (Article 2), which would not be achieved had the 
national authorities and the EU acted in isolation. 

EU added value of AFIS 

Uniform  and  effective  application  of  customs  rules,  in  the  context  of  the  EU  customs 
union,  calls  for  close  cooperation  and  mutual  assistance  between  the  responsible 
administrative authorities in each Member State and between these and the Commission. 
Such effective cooperation also strengthens the protection of the financial interests of the 
EU, mainly  on the  revenue side. To ensure the effectiveness of this cooperation and of 
control procedures,  the relevant data  must  be  made available centrally both  to  Member 
States and the Commission in a secure and rapid manner. 

AFIS  was  set  up  by  the  Commission  in  1997,  essentially  as  the  single  technical 
infrastructure  hosting  the  various  IT  applications  for  the  storage  and  exchange  of  the 
information for the purposes of Regulation 515/97. The AFIS system is available to more 
than 8 600 registered end-users in nearly 1 800 competent services from Member States, 
partner  third  countries,  international  organisations,  Commission  services  and  other  EU 
institutions.  The  costs  of  these  activities  are  borne  by  the  Commission  as  provided  by 
Regulation 515/97. 

The EU added value of AFIS is linked to the critical importance of the good performance 
of  the  national  customs  authorities’  missions,  together  with  the  Commission,  and  also 
considering  that  the  coordination  dimension  provided  by  AFIS,  especially  in  terms  of 
collection and access to data, could not be achieved at national level. 

17 

 
 
EU added value of IMS 

IMS  is  established  under  separate  sectorial  legislation.  The  instrument  is  used  by 
Member  States  and  candidate  countries  to  report  cases  of  irregularities,  including 
suspected  and  established  fraud  in  the  areas  of  shared  management  and  pre-accession 
assistance. IMS is the only database in the EU which consolidates reported information 
about irregularities, including fraud, in the shared management and pre-accession funds, 
per field of EU action and per Member State. It allows for various types of analyses and 
helps develop an evidence-based EU anti-fraud policy. The added value of such an EU-
wide  picture  resides  in  the  opportunity  it  provides  for  identifying  common  risks  and 
patterns, defining and implementing common approaches to fighting fraud, in view of the 
effective and equivalent protection of the EU financial interest. 

In  addition,  since  January  2017,  IMS  is  also  used  to  feed  the  Early  Detection  and 
Exclusion  System  (EDES).  EDES  is  the  new  system  established  to  reinforce  the 
protection  of  the  EU’s  financial  interests  and  to  ensure  sound  financial  management. 
From January 2016 it replaced the previous Early Warning System and Central Exclusion 
Database  as  a  repository  of  information  on  potentially  unreliable  contractors  and 
beneficiaries. 

As of 1 January 2017, the Commission (an authorising officer/contracting authority), and 
other institutions, agencies, and bodies are able to verify, through EDES, in the context 
of  e.g.  a  procurement  procedure,  if  there  is  a  ‘hit’  for  that  economic  operator  with  the 
information contained in IMS. 

4.  DELIVERY MECHANISMS OF THE INTENDED FUNDING 

One of the goals of the future EU Anti-Fraud Programme is to strengthen and streamline 
the  support  to  the  efforts  to  protect  the  EU's  financial  interests  and  identify  synergies, 
simplification and flexibility between various actions (see Section 2). The ultimate aim is 
to ensure a cohesive and coherent approach to fighting fraud related to the EU budget and 
customs cooperation. 

As demonstrated by the mid-term evaluation of Hercule III and the results of the AFIS 
operations,  there  is  a  clear  EU  added  value  of  the  actions  supported  under  these 
instruments.  They  have  proven  relevant,  mechanisms  are  in  place  to  ensure  their 
coherence, the activities of the programme have been found largely sustainable and it has 
been  effective  and  efficient.  In  view  of  this  positive  track-record,  the  EU  Anti-Fraud 
Programme  will  replicate  to  a  large  extent  the  existing  framework  of  the  Hercule  III 
programme, as proven and tested, to assist the Member States in the fight against fraud 
affecting  EU  budget  (see  Section  1.2  on  Lessons  learned)  with  the  addition  of  the 
financing  mechanisms  foreseen  to  cover  the  AFIS  operational  activities  and  IMS.  This 
will also be the case for the delivery mechanisms. 

18 

 
 
For the Hercule component, the programme will continue to provide support to eligible 
actions which are grouped in three categories, as was done under Article 8 of Hercule III 
Regulation, with the aim of reaching the general and specific objectives: 

a)  provision of specialised technical assistance for the competent authorities of the 

Member States; 
b)  organisation  of 

targeted  specialised 

training,  and  risk  analysis 

training 

workshops, as well as, where appropriate, conferences; 

c)  any other action not covered under point (a) or (b). 

These  delivery  mechanisms  could  entail  challenges  for  small  beneficiaries  due  to  the 
administrative  burden  involved  in  the  application  process  and  regarding  financing  of 
smaller  actions  (such  as  conferences),  which  have  to  be  above  a  certain  amount.  The 
solutions  for  these  challenges  will  be  pursued  following  the  adoption  of  the  new 
Financial Regulation in the course of 2018. The proposed changes which would have an 
impact on the delivery mechanisms under the Hercule component of the programme are 
i.a.:  simplified  forms  of  grants  (i.e.  lump  sums,  unit  costs,  flat-rate  financing),  and  the 
fact  that  beneficiaries  will  be  required  to  provide  less,  but  more  targeted,  information. 
Any  simplification  process  will  have  to  be  weighed  against  the  resources  required  to 
implement the required solutions and the effect it would have on the overall application 
process. The AWPs will provide more detail in this regard. 

The current AFIS financing mechanisms27 will be replicated. They are mainly in the 
form  of  procurement  contracts 
(implemented  under  direct  management)  and 
reimbursement  of  costs  of  Member  States  representatives  taking  part  in  the  activities 
foreseen by Regulation 515/97. 

For  AFIS,  the  eligible  financed  actions  are  currently  defined  under  Article  42a  of 
Regulation 515/97,  to  ensure  the  correct  application  of  EU  customs  and  agriculture 
legislation and in particular, preventing and combating fraud: 

a)  all  costs  of  installing  and  maintaining  the  permanent  technical  infrastructure 
making  available  to  the  Member  States  the  logistical,  office  automation  and  IT 
resources to coordinate JCOs; 

b)  the  reimbursement  of  transport,  accommodation  and  daily  allowance  costs  of 
representatives  of  the  Member  States  taking  part  in  the  Community  missions, 
JCOs organised by or jointly with the Commission and training courses, ad hoc 
meetings  and  preparatory  meetings  for  administrative 
investigations  or 
operational actions conducted by the Member States, where they are organised by 
or jointly with the Commission; 

c)  expenditure  relating  to  the  acquisition,  study,  development  and  maintenance  of 
computer infrastructure (hardware), software and dedicated network connections, 
and  to  related  production,  support  and  training  services  for  the  purpose  of 
carrying out the actions provided for in the Regulation, in particular preventing 
and combating fraud; 

27 Based on the yearly Commission Decision on the adoption of the work programme and the financing for 
the implementation of AFIS. 

19 

 
 
                                                            
d)  expenditure  relating  to  the  provision  of  information  and  expenditure  on  related 
actions allowing access to information, data and data sources for the purpose of 
carrying out the actions provided for in the Regulation, in particular preventing 
and combating fraud 

e)  expenditure relating to use of the CIS provided for in instruments adopted under 
Article  87  TFEU  and  in  particular  in  Decision  2009/917/JHA  on  the  use  of 
information  technology  for  customs  purposes,  in  customs  matters  drawn  up  by 
the Council Act of 26 July 1995, in so far as those instruments provide that that 
expenditure shall be borne by the EU's general budget. 

As  well  as  expenditure  relating  to  the  acquisition,  study,  development  and 
maintenance of the Union components of the common communication network used 
for the purposes of point (c). 

IMS is delivered through the AFIS IT-system. It allows for: 

•  expenditure relating to the maintenance and development of the system; 
•  maintaining a help-desk function to assist Member States and candidate countries 

• 

in complying with their obligations; 
the  reimbursement  of  transport,  accommodation  and  daily  allowance  costs  of 
representatives of the Member States taking part in workshops; 

•  keeping the supporting documentary material; 
• 

training of country and liaison-officers. 

5.  PERFORMANCE MONITORING AND EVALUATION 

The number of indicators under all programmes for the next MFF will be simplified to 
reduce the burden and improve the impact of reporting on the results achieved with the 
EU budget. 

5.1. 

Performance indicators under the 2014-2020 financial cycle 

The  Hercule  III  Regulation  measures  its  success  through  four  key  performance 
indicators  (KPI)  spelled  out  in  Article  4  (see  below).  The  mid-term  evaluation  of  the 
Hercule  III  regulation  has  found  that  the  beneficiaries’  experience  the  first  three 
indicators as burdensome and difficult to measure: 

a)  the  number  of  seizures,  confiscations  and  recoveries  following  fraud  cases 

detected by joint actions and cross- border operations; 

b)  the added value and effective use of the co-financed technical equipment; 
c)  the exchange of information among Member States on the results achieved with 

the technical material; 

d)  the  number  and  type  of  training  activities,  including  the  amount  of  specialised 

training. 

In addition to the administrative burden of collecting relevant data for reporting purposes, 
outcomes  cannot  be  always  and  entirely  attributed  to  the  Hercule  III  intervention.  The 
independent  study  underpinning  the  mid-term  evaluation  suggested  that  ad  hoc 
performance indicators could be left to the calls for proposals or grant agreements, thus 
ensuring the selection of indicators that are fit to measure the outcome of specific actions, 

20 

 
 
reducing  the  burden  of  the  reporting  phase.  This  finding  was  also  echoed  by  the 
participants of the targeted workshop with relevant stakeholders in the Member States in 
March 2018. 

For the MFF 2014-2020 two specific objectives have been defined for AFIS: supporting 
mutual  assistance  in  customs  and  agricultural  matters  and  facilitating  the  reporting  of 
irregularities, including fraud, by Member States. For the support of mutual assistance in 
customs and agricultural matters the following KPIs have been defined: 

a)  the number of active customs fraud cases for which information is available in the 

Mutual Assistance databases; 

b)  the number of JCOs (including EU wide and regional operations) supported/year; 
c)  the coverage of A-TIS (Anti-Fraud Transit Information System). 

These key performance indicators rather measure certain outputs of the programme than 
its effectiveness, efficiency and impact. Direct indicators such as the number of seizures, 
value  of  goods  seized  and  prevented  revenue  loss  resulting  from  AFIS  information, 
knowledge  acquired  from  training  or  recommendations  from  an  investigative  or 
operational  meeting  seem  to  be  more  appropriate  to  evaluate  the  effect  of  the 
programme's  intervention.  However,  it  is  difficult  for  the  Member  States  authorities  to 
determine  the  number  of  seizures  and  their  financial  impact  which  are  resulting  from 
information  provided  by  AFIS,  if  they  are  not  performed  in  the  context  of  a  JCO,  and 
burdensome to feed this information back to OLAF. Therefore it will be necessary to rely 
on indirect performance indicators, such as the number of fraud cases or the coverage of 
imports, exports or transits on which information is available in AFIS. 

The  success  in  achieving  the  second  specific  objective  for  AFIS  (related  to  IMS),  the 
facilitation of the reporting of irregularities by Member States, for the MFF 2014-2020, 
is measured through the following key performance indicators: 

a)  the availability of new irregularities reporting modules for the new programming 

period 2014-2020; 

b)  the  number  of  Member  States  complying  with  obligations  for  reporting  of 

irregularities, including fraud. 

5.2. 

Performance indicators for the EU Anti-Fraud Programme 

Under the MFF 2014-2020 there were nine indicators (four for Hercule, three for AFIS 
and  two  for  IMS)  measuring  performance  of  the  three  components  which  will  be 
combined in the new Programme.  

Taking  into  account  the  objective  to  reduce  the  overall  number  of  indicators  under  the 
next  MFF  and  to  address  the  feedback  received  during  the  mid-term  evaluation  of 
Hercule III and from AFIS stakeholders, the achievement of the specific objectives of the 
Programme will be monitored and evaluated according to three comprehensive indicators 
linked to the activities.  

(1) 

Support  in  preventing  and  combatting  fraud,  corruption  and  any  other  illegal 
activities affecting the financial interests of the Union, as measured by: 

21 

 
 
 

 

Satisfaction  rate  of  activities  organised  and  (co-)financed  through 
the programme. 

Percentage  of  Member  States  receiving  support  each  year  of  the 
programme. 

(2) 

(3) 

User satisfaction rate for the use of Irregularities Management System. 

The number of mutual assistance information made available and the number of 
supported mutual assistance-related activities.  

The  more  specific  performance  indicators  for  all  three  components  of  the  new 
programme  may  be  detailed  in  the  AWPs.  These  could  include:  number  of  times 
equipment  was  used,  prevented  revenue  loss,  volume  and  value  of  goods  seized,  cross 
border  cooperation  (number  of  events),  number  of  investigations  opened,  number  of 
prosecutions,  savings  (purchase  of  equipment  compared  to  leasing  the  equipment  and 
vice-versa),  and  number  and  type  of  entities  involved  in  anti-fraud  control.  The 
identification of ad hoc indicators could in addition be left to the calls for proposals or 
grant  agreements,  thus  ensuring  the  selection  of  indicators  that  are  fit  to  measure  the 
outcome  of  specific  actions,  reducing  the  burdensomeness  of  the  reporting  phase.  This 
was suggested by the external evaluator as part of the mid-term evaluation of Hercule III 
programme. 

5.3.  Evaluations under the EU Anti-Fraud Programme 

In line with paragraphs 22 and 23 of the Interinstitutional Agreement of 13 April 201628, 
where the three institutions confirmed that evaluations of existing legislation and policy 
should  provide  the  basis  for  impact  assessments  of  options  for  further  action,  the 
Commission  will  carry-out  an  interim  and  a  final  evaluation.  The  evaluations  will 
assess  the  Programme's  effects  on  the  ground  based  on  the  Programme  indicators  and 
targets  and  a  detailed  analysis  of  the  degree  to  which  the  Programme  can  be  deemed 
relevant, effective, efficient, provides enough EU added value and is coherent with other 
EU policies. The evaluations will include lessons learnt to identify any lacks/problems or 
any  potential  to  further  improve  the  actions  or  their  results  and  to  help  maximise  their 
exploitation/impact.  The  conclusions  of  the  evaluations  accompanied  by  observations 
will be communicated to the European Parliament, the Council, the European Economic 
and  Social  Committee,  the  Committee  of  the  Regions  and  the  European  Court  of 
Auditors. 

The timing of the interim evaluation of the Hercule III programme was one of the main 
limitations  identified  by  the  external  evaluator,  as  the  evaluation  came  at  a  time  when 
relatively  few  results  of  the  funded  actions  were  available.  Nonetheless,  the  mid-term 
evaluation of the EU Anti-Fraud Programme will be concluded not later than four years 
into  the  programme  and,  possibly,  combined  with  the  ex-ante  evaluation  of  the  next 
generation  of  the  programme.  Joining  the  two  evaluations  will  ensure  better  results  as 
more data will be available, as well as save costs and reduce administrative burden to the 
beneficiaries contributing to these exercises. 

28 Interinstitutional Agreement between the European Parliament, the Council of the European Union and 
the European Commission on Better Law-Making of 13 April 2016 (OJ L 123, 12.5.2016, p. 1). 

22 

 
 
                                                            
Annex 1 

Description of Hercule, AFIS and IMS 

Hercule  

The Hercule Programme is the sole EU programme  specifically designed to protect the 
EU financial interests by fighting fraud, corruption and irregularities, through support to 
national  and  regional  administrations,  and  activities  that  strengthen  cross-border 
cooperation.  First  established  in  2004,  under  the  current  MFF  the  programme  is  at  its 
third generation: Hercule III.  

The programme covers both the expenditure and revenue sides of the EU budget. With a 
budget  of  approximately  EUR  105  million  over  7  years,  the  financial  support  mostly 
consists  of grants  awarded  to  Member  States'  authorities  to  strengthen their  capacity  to 
carry out investigations into activities affecting the EU financial interests. 

The Programme contributes to: 
developing activities at EU level and the Member States’ level to counter fraud, 
- 
corruption  and  any  other  illegal  activities  affecting  the  financial  interests  of  the  EU, 
including the fight against cigarette smuggling and counterfeiting; 
increasing  transnational  cooperation  and  coordination  at  EU  level,  between 
- 
Member States' authorities, OLAF, and in  particular  the  effectiveness and efficiency of 
the cross-border operations; 
the  effective  prevention  of  fraud,  corruption  and  any  other  illegal  activities 
- 
affecting the financial interests of the EU, by offering joint specialised training for staff 
of national and regional administrations, and to other stakeholders. 

Legal base 

The  legal  base  for  the  programme  is  Regulation  250/2014  establishing  Hercule  III 
programme29.  

Delivery method 

The  Programme  has  a  budget  of  EUR  104.9  million  for  the  period  2014-2020.  It  is 
implemented on the basis of AWPs setting out the budget and the funding priorities for a 
given calendar year. The AWP for 2018 made available a budget of EUR 14.95 million.  

The eligible actions are grouped in three categories: 

provision  of specialised technical  assistance  for the competent authorities of the 

a) 
Member States; 

29  Regulation  (EU)  No  250/2014  of  the  European  Parliament  and  of  the  Council  of  26  February  2014 
establishing a programme to promote activities in the field of the protection of the financial interests of the 
European Union (Hercule III programme) and repealing Decision No 804/2004/EC (OJ L 84, 20.3.2014, p 
.6).  

23 

 
 
                                                            
organisation of targeted specialised training, and risk analysis training workshops, 

b) 
as well as, where appropriate, conferences; 
c) 

any other action not covered under point (a) or (b). 

The financial and co-financing mechanisms under the programme: 
a) 
b) 
c) 
incurred by the representatives from non-EU countries. 

grants; 
public procurement; 
the  reimbursement  of  costs  for  participation  in  activities  under  the  Programme 

The Anti-Fraud Information System (AFIS) 

AFIS is an umbrella term for a set of anti-fraud IT applications operated by the European 
Commission  (OLAF)  which  create  contacts  with  the  competent  authorities  in  the 
Member  States.  These  ensure  the  timely  and  secure  exchange  of  fraud-related 
information  between  national  and  EU  competent  administrations.  The  AFIS  Project 
encompasses two major areas: Mutual Assistance in Customs Matters and Irregularities 
Management. 

AFIS  supports  Mutual  Assistance  in  Customs  Matters  with  the  secure  real-time 
information  exchange  system  V-OCU  (Virtual  Operations  Coordination  Unit)  used  for 
JCOs,  secure  web  mail  (MAB-Mail),  specific  information  exchange  modules  and 
databases like MAB (Mutual Assistance Broker), CIS and FIDE (Customs Investigation 
Files Identification Database); and analysis tools like A-TIS. AFIS delivers its services to 
more than 8 600 users in nearly 1 800 competent services.  

AFIS is not an EU spending programme in the traditional sense, whose implementation is 
done via calls for proposals, with rules for national and EU co-financing, like in the case 
of Hercule. 

AFIS is  being offered to  the national authorities on a permanent basis, unrelated to the 
MFF  cycle.  It  is  also  continuously  developed  to  meet  the  needs  of  customs 
administrations.  For  example,  since  1  September  2016,  a  new  application  allowing  the 
tracing and tracking of containers is available by means of the AFIS platform (CSM). It 
contains movements of containers entering and leaving the EU territory reported directly 
to a central repository by sea-carriers. 

Legal bases 

Legal  bases  for  AFIS  are  Council  Regulation  515/97,  as  lastly  amended  by  Regulation 
2015/152530, and Council Decision 2009/917/JHA. 

30  Regulation  (EU)  2015/1525  of  the  European  Parliament  and  of  the  Council  amending  Council 
Regulation  (EC)  No  515/97  on  mutual  assistance  between  the  administrative  authorities  of  the  Member 
States and cooperation between the latter and the Commission to ensure the correct application of the law 
on customs and agricultural matters (OJ L 243/1, 18.9.2015, p. 1). 

24 

 
 
 
                                                            
Delivery method 

The financial appropriations for AFIS are made available on the basis of AWPs, which 
describe the priorities for the upcoming years taking into account the requirements of the 
relevant legal act. 

The budgetary envelope foreseen for the AFIS programme in 2018 increases from EUR 
7.2 million in  2017  to  EUR  7.7 million  (+7.17%),  but  in  2019  it  will  decrease  again  to 
the  level  of  2017,  according  to  the  financial  programming  adopted  by  the  budgetary 
authority. In comparison to the previous years, the budget allocated in 2018 to technical 
assistance/training  to  Member  States  and  application  development  (+11%  compared  to 
2017)  increased,  while  the  budget  for  production  services  constantly  decreased  (-11% 
compared to 2017). 

Irregularity Management System (IMS) 

IMS  is  a  secure  electronic  tool  for  the  reporting,  management  and  analysis  of 
irregularities,  including  fraud,  affecting  the  financial  interests  of  the  EU.  The  IMS  is 
currently  being  technically  delivered  as  part  of  the  AFIS  platform.  The  Electronic 
Communication  Registry  (ECR  -  predecessor  of  IMS)  was  created  in  2001  within  the 
AFIS  portal  for  the  reporting  of  irregularities,  which  provided  the  national  authorities 
with  a  secure  electronic  communication  tool  for  the  reporting  of  irregularities.  In  2006 
IMS replaced the previous system, but continued to be delivered via the AFIS platform. 

In  accordance  with  the  relevant  sectorial  legislation,  the  competent  national  authorities 
report  in  IMS  irregularities,  including  fraud,  related  to  the  EU  funds  in  the  areas  of 
agriculture, structural and cohesion policy, fisheries, the funds in the field of asylum, the 
European  Fund  for  the  most  deprived  people,  as  well  as  in  the  area  of  pre-accession 
assistance. 

The IMS has over 3 500 users in the Member States and candidate countries and about 58 
500  cases  of  irregularities  have  been  reported  to  it  over  the  last  5  years.  The  nature  of 
reporting has evolved over time, moving from a tool resembling an accounting system of 
the amounts unduly paid to beneficiaries, to a collection of targeted data and information 
to perform risk analysis. 

According  to  the  reporting  provisions  IMS  data  is  used  to  perform  risk  analysis,  using 
information  technology  support,  and  may,  on  the  basis  of  the  information  obtained, 
produce reports and develop systems serving to identify risks more effectively. 

More concretely, the Commission used the IMS data for the following purposes: 

• 
They  constitute  the  statistical  basis  for  the  Commission  Annual  Report  on  the 
protection  of  the  EU  financial  interests  and  the  fight  against  fraud.  The  underpinning 
statistical  analysis  highlights  major  trends  in  the  fight  against  fraud  and  other 
irregularities  affecting  the  EU  funds  and  allows  pointing  out,  among  others,  emerging 

25 

 
 
 
patterns  and  areas  at  higher  fraud  risk.  On  the  basis  of  the  results  of  the  statistical 
analysis specific recommendations are issued to Member States. 

• 
Focussed analysis are regularly performed and presented by OLAF in occasion of 
seminars  and  meetings  with  national  authorities.  For  example,  in  2017  the  results  of  a 
specific  analysis concerning  conflict of interests and infringements linked to  ethics and 
integrity was presented in the framework of the "Annual coordination meetings" with the 
Audit Authorities of the ESI funds. 

26 

 
 
 
 
 
ANNEX 2 

Possible new activities which could be financed by the future anti-fraud programme, post-
202031 

(based on the views expressed during the Workshop with national competent authorities on 13 
March 2018 - see Annex 3 – and Commission internal assessment) 

1.  Data  analysis:  to  make  better  use  of  the  information  currently  reported  to  / 
collected  in  various  databases  to  increase  fraud  detection  and  step  up  fraud 
prevention.  Possibly  launch  pilot  projects  and  create  focus  groups  to  analyse 
specific  aspects.  Identify  synergies  between  the  data  collected  under  various 
components of the programme (AFIS-IMS). 

2.  Overall need to incentivise cross-border cooperation: 

a.  Staff exchanges: to reinforce cooperation between the national authorities. 
b.  Participation  of  third  countries:  to  deepen  regional  cooperation,  use  the 
Hercule  component  to  finance,  i.a.  certain  Regulation  515/97  activities 
(JCOs).  Make  possible  applications  from  groups  of  Member  States  and 
third countries (candidates or neighbourhood countries - joint applications 
for  regional  initiatives).  Especially  targeted  assistance  to  strengthen 
customs anti-fraud cooperation with relevant third countries, especially in 
the  EU's  Eastern,  South-Eastern  and  Southern  wider  neighbourhood, 
including through relevant events. 

3.  Awareness-raising:  

a.  About general matters related to the protection of EU's financial interests. 
b.  To  better  inform  the  national  authorities  about  the  existing  EU-support, 

including the opportunities offered by AFIS and IMS. 

4.  Support for small customs equipment,32 
5.  Support  EU-wide  cooperation  in  the  field  of  the  protection  of  EU's  financial 
interests, with a view to bring together all actors involved: the national authorities 
in all Member States, the EPPO, OLAF, as well as other EU bodies (e.g. Eurojust 
and Europol), in particular to facilitate the exchange of expertise. 

6.  Support the fight against the illicit tobacco trade including support for the FCTC 

Protocol and its Secretariat. 

7.  Technical,  logistical  and  financial  support  to  operational  activities  to  address 
customs anti-fraud challenges, such as JCOs and joint customs-police operations 

31 This list is indicative only, as the policy orientation for the programme’s actions will be provided for in 
the AWPs. 
32 Currently, the Hercule III programme provides grants for equipment including large customs equipment 
(scanners)  for  the  benefit  of  customs  authorities.  Considering  that  a  new  programme  will  be  established 
under  the  next  MFF  for  customs  equipment,  the  EU  Anti-Fraud  Programme  will,  as  a  rule,  no  longer 
support the acquisition of large equipment for customs authorities. 

27 

 
 
                                                            
(JPCO)  including  relevant  preparatory,  briefing,  debriefing  and  training  events, 
developed in cooperation with third countries. 

8.  Technical,  logistical  and  financial  support  to  investigations,  including  special 
forms of cooperation, and joint investigation teams (JIT) to address fraud on the 
expenditure and revenue side. 

28 

 
 
 
 
 
ANNEX 3 

Summary minutes of the workshop on the proposal for the future anti-fraud 
programme  

On 13 March 2018, OLAF organised a workshop on the future anti-fraud programme in 
Brussels, which gathered competent authorities from the Member States to cover both the 
expenditure and revenue sides of the protection of the EU financial interests. Participants 
included  officials  from  the  AFCOS  services  and  custom  authorities.  The  workshop 
delivered  forward-looking  outcomes  and  a  fruitful  discussion  on 
the  current 
shortcomings and future needs of the new anti-fraud programme, which are summarised 
below33: 

Expenditure-side support 

  Data analysis: 

o  In general, the future anti-fraud programme should support activities to better 
use  data  available  in  existing  databases,  including  in  IMS.  The  future 
programme could finance activities to improve the collection and analysis of 
IMS data, as well as simplified IT tools that allow for better communication 
and dissemination of information between Member States.  

o  Explore  possibilities  created  by  e-government  initiatives: in  particular  in  the 
context  of  public  procurement  information  e-tools  in  particular,  participants 
suggested the  future  anti-fraud  programme  could  make  use  of  e-government 
data in the form of new tools for better anti-fraud prevention and detection. 

  The  future  anti-fraud  programme  should  improve,  simplify  and  facilitate  the 
exchange of information amongst Member States, which includes fraud trends and 
best practices, by funding joint investigative activities. 

  Cooperation  with  third  countries:  Participants  acknowledged  the  importance  of 
cooperation  with  third  countries  and  suggested  regional  cooperation  as  a  solution, 
especially on the revenue side. 

  Awareness-raising: 

o  "Off-the-shelf"  or  information  packages  for  all  the  Member  States  to  be 
funded by the future anti-fraud programme. These products could contain sets 
of best practices in different Member States and they could be subscribed to. 
This  would  contribute 
raising  and  better  horizontal 
communication.  

to  awareness 

o  Trainings  and  conferences  on  the  different  anti-fraud  tools  and  IT  databases 

available to increase awareness and effectiveness.  

o  Specific awareness-raising activities in connection with IMS. 

  Cross border cooperation between Member States:  
  The  future  anti-fraud  programme  should  consider  incentivising  Member  States  to 

collaborate amongst each other when applying for funding.  

33  The  workshop  was  also  the  opportunity  to  discuss  general  issues  relevant  to  the  procedures  and 
performance  of  Hercule.  These  minutes  summarise  only  those  discussions  which  are  relevant  to  the 
activities under the future EU Anti-Fraud Programme. 

29 

 
 
                                                            
o  Staff exchange was mentioned as important and an under-used opportunity to 

reinforce cooperation between Member States authorities. 

 

Introduction  of  the  Simplified  Cost  Options  approach  with  regards  to  the 
implementation of projects. 

Revenue-side support 

  General  agreement  to  maintain  the  current  possibility  to  finance  small  customs 
equipment within the future anti-fraud programme (example: beacons). Gaps in the 
availability  of  funding  should  be  avoided  when  transitioning  to  the  future  customs 
equipment programme.  

  Activities  concerning  AFIS:  Participants  stressed  the  importance  of  continuity  of 
AFIS services and activities in support of national authorities by ensuring budgetary 
stability.  Furthermore,  the  next  programme  should  finance  the  promotion  of  AFIS 
possibilities  among  the  Member  States.  The  new  programme  should  develop  or 
finance an AFIS interface for Member States currently lacking one – suggested b2b 
interface to increase access and usage.  

  Cooperation  with  third  countries:  Strong  support  for  financing  participation  of 

non-EU countries in JCOs. 

  Big  data  analysis:  the  programme  could  finance  tailor-made  software  for  Member 
States  to  conduct  big  data  analysis  where  there  is  none  existing  on  the  EU  level. 
These should be PIF related. For example: on e-commerce (import taxes and VAT – 
affecting the revenue side of the budget) as there is no database at the EU level. 

  Purchasing  of  access  to  databases:  participants  underlined  it  would  be  useful  to 
consult the beneficiaries ahead of the purchase, in order to ensure that the most useful 
datasets are included in the purchase.  

Delivery Mechanisms for the future anti-fraud programme 

  The  current  delivery  mechanisms  under  Hercule  III  were  considered 

appropriate, given the objectives of the programme. 

  Renting  or  leasing  equipment:  The  participants  mentioned  Europol's  EMPACT 
programme which allows to rent or leasing equipment, instead of purchasing it. This 
service is appreciated by the national authorities as it is flexible and can be requested 
on a short term.  

  Simplification  of  application  process:  the  existing  application  process  is  too 
restrictive in terms of deadlines and should be simplified. Participants also requested 
earlier  publications  of  AWPs  to  prepare  better  applications  and  meet  the  relevant 
deadline. Additionally, some applicants are still in the process of getting used to the 
E-grants  system,  which  is  why  further  guidance  would  be  needed.  Participants 
suggested that the Commission could provide better guidance on (annual) priorities in 
order to give a specific emphasis on the types and themes of projects that will be 
more likely to qualify for the grants in the calls for applications.  

  Increased  transparency:  participants  asked  for  better 

feedback  on 

their 

applications. 

30 

 
 
  Staff exchanges: participants insisted on the relevance and the added-value of staff 
exchanges.    The  future  anti-fraud  programme  should  simplify  the  application 
process  and  try  to  incentivize  more  cross  border  staff  exchange  in  the  future  by 
extending costs covered.  

  Low  budget  applications:  the  future  anti-fraud programme  should  consider  raising 
the  EU  co-financing  rate  for  smaller  projects,  in  order  to  facilitate  access  of 
authorities with limited resources. 

Measuring Performance 

  Performance  indicators  suggested:  prevented  revenue  loss,  volume  and  value  of 
goods seized, cross border cooperation (number of events), number of investigations 
opened, number of prosecutions, number of convictions, number of times equipment 
was used, savings (purchase of equipment compared to leasing it and vice-versa), and 
number and type of entities involved in anti-fraud control. 

  The current key performance indicator in Article 4(a) of Hercule III regulation could 

be modified to "Meeting the operational objectives of the JCOs". 

31 

 
 
 
 
ANNEX 4: PROCEDURAL INFORMATION 

1.  LEAD DG 

OLAF  is  the  lead  Commission  service  in  charge  of  the  proposal  for  a  new  anti-fraud 
programme. The three components of the proposed programme (Hercule, AFIS and IMS) 
are all currently managed by OLAF.  

2.  ORGANISATION AND TIMING 

Four  inter-service  steering  group  (ISSG)  meetings  were  held  on  13  March,  11  and  26 
April and 15 May  2018. The following services participated in  at least one: Secretariat 
General, Legal Service, Directorate-Generals for Budget, Taxation and Customs Union, 
Home  Affairs,  Justice  and  Consumers,  Maritime  Affairs  and  Fisheries  and  the  Joint 
Research  Centre.  The  final  drafts  of  the  legislative  proposal  and  the  ex-ante  evaluation 
were  circulated  prior  to  the  launch  of  the  inter-service  consultation  (ISC)  to  the  ISSG 
members.  

Two  stakeholders’  consultations  were  carried  out,  an  open  public  consultation  for  the 
preparation of  several  future  sectorial  legislations  that  will  accompany  the  proposal  for 
the MFF post 2020and a targeted one. More details can be found below under Point 4. 

Ex-ante evaluation chronology: 

Upstream meeting with the Regulatory 
Scrutiny Board  

First meeting of the ISSG 

Workshop with stakeholders from Member 
States' authorities 

Second meeting of the ISSG 

Third meeting of the ISSG 

Fourth meeting of the ISSG 

ISC 

Adoption COM (Explanatory Memorandum, 
Ex-ante evaluation SWD, Draft legal act and 
Budgetary impact statement) 

6 February 

12 March 

13 March 

11 April 

26 April 

15 May 

4 – 17 May 

[TBC] 

3.  CONSULTATION OF THE REGULATORY SCRUTINY BOARD 

Due  to  the  continuity  in  terms  of  content  and  structure  and  size  of  the  budget  of  the 
proposal, an ex-ante evaluation was requested instead of an impact assessment. Therefore 
no further consultation with the Regulatory Scrutiny Board was needed.  

32 

 
 
 
 
4.  EVIDENCE, SOURCES AND QUALITY 

The  ex-ante  evaluation  underpinning  the  legislative  proposal  is  based  on  the  existing 
instruments  and  the  information  available  on  their  performance.  The  Section  1.2  on 
Lessons  learned  from  previous  experiences  provides  a  comprehensive  overview  of  the 
relevant evidence and sources used in the evaluation. Below is a summary overview: 

For Hercule: the Commission ex post report on the evaluation of Hercule II programme34 
and the Commission mid-term evaluation report of Hercule III35. Both evaluations have 
been  concluded  and  transmitted  to  the  co-legislators,  in  May  2015  and  January  2018 
respectively.  

For  AFIS:  the  European  Court  of  Auditors  special  report  no  19/2017  on  "Import 
procedures:  shortcomings  in  the  legal  framework  and  an  ineffective  implementation 
impact  the  financial  interests  of  the  EU",  OLAF's  Internal  Audit  Capability  audit 
assessing the  performance  of  AFIS and  the  relevant  part  of  the  Commission reports  on 
the  protection  of  the  EU's  financial  interests  (the  PIF  Report),  where  the  Commission 
reports annually on AFIS activities, pursuant to Article 51a of Regulation 515/97.  

For  IMS:  the  European  Court  of  Auditors  special  reports  no  10/2015  on  "Efforts  to 
address  problems  with  public  procurement  in  EU  cohesion  expenditure  should  be 
intensified"  and  24/2016  "More  efforts  needed  to  raise  awareness  of  and  enforce 
compliance with State aid rules in cohesion policy". Furthermore, the PIF Report is based 
on irregularity reporting by the Member States through IMS.  

(representatives  of 

On  13  March  2018,  a  targeted  consultation  of  relevant  stakeholders  in  the  Member 
States 
the  anti-fraud  coordination  services  and  customs 
administrations)  was  conducted  through  a  one-day  workshop.  It  aimed  at  consulting 
stakeholders on options for the activities of the future programme. The workshop yielded 
ideas  for  new  activities which  could  be  supported  in  addition  to  the  activities  currently 
performed under Hercule III, AFIS and IMS (see Annex 2).   

The  Commission  conducted  an  open  public  consultation  for  the  preparation  of  the 
future sectorial legislation that will accompany the proposal for the MFF post 2020. EU 
citizens had a possibility to express views right from the start of the Commission's work 
by  providing  answers  to  the  questionnaires  per  policy  area  and  available  in  all  EU 
languages. Only four contributions were received which had very limited relevance to the 
proposal for a new anti-fraud programme.  

34  Report  from  the  Commission  to  the  European  Parliament  and  the  Council  on  the  achievement  of  the 
objectives of the Hercule II Programme, COM(2015) 221 final 
35 Report from the Commission to the European Parliament and the Council, Mid-Term evaluation of the 
Regulation  (EU)  No  250/2014  of  the  European  Parliament  and  of  the  Council  of  26  February  2014 
establishing a programme to promote activities in the field of the protection of the financial interests of the 
European Union (Hercule III programme) and repealing Decision No 804/2004/EC, COM(2018) 3 final 

33