Cigarette smuggling... counterfeiting of euro coins... evasion of import duties on shoes and clothes... subsidies for growing oranges on farms that don't exist — all are examples of fraud that cost European taxpayers money.
The main EU body for combating these activities is the European Anti-Fraud Office (OLAF).
National customs authorities, both inside and outside the EU, carry out regular joint operations with OLAF (and other EU agencies) to stop smuggling and fraud in certain high-risk areas and on identified routes.
One example was in October 2014, when over 1.2 million counterfeit goods and 130 million cigarettes were seized in an international customs operation. The operation, code-named REPLICA, targeted the import of counterfeit goods including cigarettes, perfumes, car and bicycle spare parts, toys, fashion accessories and electric devices by sea.
Avoidance of excise and customs duties on cigarettes - generally by smuggling - is one of the major types of fraud in the EU. OLAF receives notifications from its partner agencies about suspicious movements of cargo vessels and cross-checks national intelligence to produce insights into smuggling methods.
For example, over the period 2012-14, joint OLAF operations tracking vessels with national agencies led to the seizure of:
Counterfeiting of the euro has caused financial damage of at least €500m since the currency was introduced in 2002.
The EU tackles this through:
Action to combat fraud in the EU is still hampered by differences in rules and practices in member countries - which results in differing degrees of protection for public money .
To address these issues, the EU is currently debating a new Directive to protect EU financial interests through criminal law , which would further align the definitions of offences and penalties.
If established, the EPPO should improve the investigation and prosecution of offences affecting the EU budget. The idea is to provide EU-wide enforcement - given the complexity of many types of large-scale fraud, which often involve more than a single country and so go beyond national jurisdiction.
Published in November 2014
This publication is part of the 'European Union explained' series