Debate: The impact of organised crime on own resources of the EU and on the misuse of EU funds
Date: MONDAY, 13 DECEMBER 2021
Speaker: Stella Kyriakides
Language: EN

In its 2021 Serious and Organised Crime Threat Assessment (SOCTA) report, Europol warned that serious and organised crime has never posed as high a threat to the EU and its citizens as it does today. As President von der Leyen said in the State of the Union speech in September, EU funds should not seep away into dark channels. A revamped EU anti—fraud architecture has been put into place over the last years, relying on the investigative powers of the European Public Prosecutor’s Office (EPPO) and the European Anti—Fraud Office (OLAF), the coordinating role of Eurojust, the analytical capacity of Europol and close cooperation with and between national authorities.  The upcoming targeted revision of the Financial Regulation will be an opportunity to further enhance transparency and public scrutiny with regard to the use of the EU budget and to enhance its protection against irregularities, fraud, corruption and conflicts of interest by developing the digitalisation of controls and audits and improving the quality and interoperability of the data on recipients of EU funding.  However, criminals will keep trying to exploit EU funds so we need to investigate any possible irregularity. As pointed out in the report, the COVID—19 outbreak has offered new opportunities for fraudsters. OLAF has warned governments against fake offers for 1.2 million vaccine doses, with a price of over EUR 16.4 billion, and its inquiries have allowed the confiscation of 100 million items of personal protection equipment.  EPPO and the new European Financial and Economic Crime Centre (EFECC) of Europol will enhance support for Member States in VAT fraud as well. In 2019, the loss of revenues in VAT, according to the VAT Gap study, which estimates the difference between expected revenues in EU Member States and the revenues actually collected, was estimated at EUR 134 billion.  As regards traditional own resources and undervaluation fraud, in May this year, the Commission sent to Member States a preliminary calculation of losses and invited them to make the amounts available to the EU budget under reservation in order to avoid further accumulation of interest. Thirteen Member States have already made available the relevant amounts and more are expected to follow. To tackle fraud against COVID—19 EU recovery funds, Europol has set up Operation Sentinel, coordinating the work of law enforcement authorities, OLAF and EPPO. Those who alert about breaches in Union law enjoy effective reporting channels and robust protection, thanks to the Whistle—blower Protection Directive. It contributes to the effective application of EU rules on public procurement, anti—money laundering and counter—terrorism financing, to the prevention and deterrence of fraud and to other illegal activities affecting the EU’s financial interests.  Next year, under the European Democracy Action Plan, the Commission will propose an initiative to protect journalists and rights defenders against strategic lawsuits against public participation. Our aim is to strengthen media pluralism and freedom. But EU funds are only the tip of the iceberg. More than 80% of criminal networks active in the EU use legal business structures for these criminal activities. One of the axes of the EU organised crime strategy of April 2021 is how to dismantle the criminal structures and disrupt their infiltration in the economy. The first step is to map out the criminal networks, identify their infiltration methods and the sectors targeted by criminals from real estate and construction to transportation or hospitality. Then we must ensure that national and local authorities have the tools to prevent criminal infiltration.  Finally, we need to tackle corruption and cut the financial means that allow criminal groups to pollute our economy. Criminal revenues amount to EUR 139 billion annually, and only one percent is confiscated. We need to protect the EU budget and society as a whole from organised crime infiltration. The Commission stands ready to do its share and will continue monitoring the effectiveness of all the measures taken.