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Fraud prevention


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).

Report suspected fraud to OLAF

Officer checking goods © OLAF

Identifying smuggled goods.

What does OLAF do?

  • investigate fraud, corruption and other illegal activities
  • detect and investigate serious misconduct by EU staff
  • help the European Commission formulate & implement policies to prevent and detect fraud.

Investigations

  1. Investigations can involve interviews and inspection of premises - including outside the EU. OLAF also coordinates inspections by national anti-fraud agencies.
  2. After an investigation, OLAF then recommends action to the EU institutions and national governments concerned: criminal investigations, prosecution, financial recoveries or other disciplinary measures.
  3. OLAF also monitors how these recommendations are implemented.

Customs operations

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 Operation Romoluk in April and May 2013 - to counter cigarette smuggling by rail and road along the Romanian border with Moldavia and Ukraine. Agencies from all 3 countries were involved, and ultimately some 20 million cigarettes were seized.

Key issues

Cigarette smuggling

Avoidance of excise and customs duties on cigarettes - generally by smuggling - is one of the major types of fraud in the EU. In 2012-14, joint OLAF operations with national agencies led to the seizure of:

  • 9 vessels containing some 215 million cigarettes (evading duties worth €43m).
  • containers holding 93 million cigarettes (evading duties worth €15m).
Euros © Carofoto

Watch out for the fakes.

Counterfeiting

Counterfeiting of the euro has caused financial damage of at least €500m since the currency was introduced in 2002.

The EU tackles this through:

  • legislation - to coordinate action by national authorities and ensure adequate penalties for counterfeiters under national law.
  • Pericles programme - funding training for national agencies, banks and others involved in combating euro-counterfeiting - both in the EU and outside.
  • European Technical & Scientific Centre - analyses counterfeit coins (most commonly the €2 coin).

More concerted EU action?

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.

This directive would provide the legal basis for the operation of the proposed European Public Prosecutor's Office (EPPO), which is currently being discussed by EU governments.

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.

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Fight against fraud

Published in March 2014

This publication is part of the 'European Union explained' series


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