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Mutual administrative assistance in the fight against fraud

Organised crime often extends into several Member States. Cooperation between Member States and the Commission is therefore necessary to fight fraud and illegal activities. This mutual administrative assistance framework thus lays down the rules on the exchange of information between the Member States and the Commission.

PROPOSAL

Amended proposed regulation of the European Parliament and of the Council of 14 September 2006 relating to mutual administrative assistance to protect the financial interests of the Community against fraud and any other illegal activities (presented by the Commission under Article 250 (2) of the EC Treaty).

SUMMARY

This proposed regulation is intended to fight fraud and any other illegal activities which harm the financial interests of the Community. For this to happen, the Member States and the Commission need to cooperate and exchange information, particularly in the areas of money laundering, VAT fraud and Community expenditure. This proposed regulation therefore establishes the Community framework for mutual administrative assistance.

The Commission emphasises that it offers its assistance to Member States but that this regulation does not give it any investigative powers.

The regulation applies only to fraud cases or any other illegal activities which are of particular importance at Community level. The cases must therefore have an impact in other Member States or connections with other Member States and must exceed certain levels of financial loss.

Competent authorities

The competent authorities to obtain information are the Commission, including OLAF and the public authorities of the Member States which are:

  • responsible for managing funds originating from the Community budget; or
  • responsible for fighting fraud and any other illegal activities which harm the financial interests of the Community; or
  • the central liaison offices and liaison departments and other investigating authorities competent to deal with VAT fraud; or
  • financial information units responsible for gathering and analysing information received concerning money laundering.

Difference in status between the competent authorities of the Member States must not hinder their cooperation.

Assistance on request

On request, the competent authorities will assist one another. The authority receiving the request * must send the requesting authority * any information that is relevant for the prevention and detection of irregularities *, as well as financial information * relating to those irregularities. It has six weeks within which to send the information requested. The deadline is four weeks when it is already in possession of the information when it receives the request. If the requesting authority asks it to do so, the authority receiving the request must carry out or arrange for the administrative investigations to be carried out * regarding any operations which could constitute an irregularity.

An officer of a competent authority may carry out his activities in another Member State and obtain information at the offices of the authority to which the request is made.

The Commission may be granted access to the information from the Member States by means of the system for exchanging information on VAT.

Spontaneous assistance

Member States must supply the Commission spontaneously, in other words without a prior request on its part, with any useful information relating to fraud or other irregularities, as well as financial information about such irregularities.

The competent authorities and the Commission send general information to one another in order to improve the legislation in the fight against fraud. This information covers, for example, the new methods used to commit irregularities, as well as the detection and prevention of irregularities.

For its part, the Commission analyses the information gathered and sends the results of its analysis to the Member States.

Using the information

Every item of information communicated may have a number of uses, including the following:

  • to serve as evidence in each Member State's administrative or judicial proceedings. The Commission must be kept informed of progress in administrative or judicial enquiries, investigations and proceedings resulting from mutual assistance under this regulation;
  • to be disclosed to a third country, under certain circumstances, and with the agreement of the authorities from whom the information originated. Additionally, information disclosed by a third country must be sent to the competent authorities of the Member States and the Commission, which therefore performs a coordinating function;
  • to be the subject of risk analysis by the Commission.

Only information used to fight fraud and other irregularities can be exchanged. The sending of information must comply with the rules governing confidentiality, such as professional secrecy and data of a personal nature.

Strengthening the possibility of recovery

To facilitate the recovery of debts resulting from irregularities, the authority receiving the request must gather any relevant financial information from banks, financial establishments and the following legal entities or natural persons, in the performance of their professional activities:

  • auditors, external accountants and tax advisers;
  • notaries and other member of independent legal professions;
  • persons providing services to companies who are not covered by the above two items;
  • estate agents;
  • other natural persons or legal entities who deal in assets, where payments are made in cash for a minimum sum of fifteen thousand euro;
  • casinos.

Member States must take the necessary steps to recover benefits illegally obtained from irregularities. Recovery relates to sums of a minimum of fifty thousand euro.

Final provisions

The competent authorities have the option not to cooperate for reasons of public policy.

Enforcement measures are provided for the purposes of the implementation of this regulation and will be adopted by the Commission in accordance with the comitology procedure. The Commission will thus be assisted by a regulatory committee.

Context

On 20 July 2004, the Commission submitted a first proposed regulation on mutual assistance against fraud [COM(2004) 509 final]. This proposal amends the initial proposal and includes some amendments made by the European Parliament

Key terms used in the act

  • Authority receiving the request: a competent authority to which a request for mutual assistance is sent.
  • Requesting authority: a competent authority which makes a request for assistance.
  • Irregularity: the concept of irregularity covers practices harmful to the financial interests of the Community and also extends to money laundering and VAT fraud.
  • Financial information: any information relating to suspect transactions received by the competent national contacts and any other information relevant to the detection of financial transactions connected with the irregularities covered by this regulation.
  • Administrative investigation: all checks, verifications and actions carried out by the competent authorities in the performance of their duties in order to determine whether irregularities have been committed, except for actions undertaken at the request or under the direct control of a judicial authority.

REFERENCES AND PROCEDURE

Proposal Official Journal Procedure
COM(2006) 473 - COD/2004/0172
 
Last updated: 20.04.2007
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