Anti-fraud policy

Drawing on its accumulated knowledge and experience, OLAF helps the authorities responsible for managing EU funds – inside and outside the EU – to understand fraud types, trends, threats and risks, and to protect the EU's financial interests by preventing fraud of all kinds.

2011 Commission Anti-Fraud Strategy

Aims:

  • improve and update  fraud prevention, detection and investigation techniques
  • recover a higher proportion of funds lost due to fraud
  • deter future fraud through appropriate penalties.

Methods:

  • introduce anti-fraud strategies per sector in the Commission
  • clarify and enforce the different responsibilities of the various stakeholders
  • ensure that these strategies cover the whole expenditure cycle, and that anti-fraud measures are proportionate and cost-effective

Links:

  • 2011 Commission anti-fraud strategy in full
  • Eastern border action plan on the Commission Anti-Fraud Strategy
  • Press release on 2011 anti-fraud strategy
  • FAQs about the 2011 anti-fraud strategy

Legislating against fraud

A number of legislative proposals are currently being considered by EU institutions and national governments:

From 2012:

  • Protecting EU financial interests through criminal law
    Directive proposed by the Commission on 11 July 2012, aimed at establishing minimum penalties and common definitions for crimes against the EU budget in all EU countries.
    • Press release
    • Q&A
    • Impact Assessment: Executive Summary - Part 1 - Part 2 - Part 3   
  • Freezing & confiscation of crime proceeds in the EU
    Directive proposed by the Commission on 12 March 2012, aimed at facilitating it for Member States to confiscate and recover the profits derived from serious and organised crime.
    • Press release
    • Q&A

From 2011:

  • Policy paper – protecting EU financial interests through criminal law & administrative investigations adopted by the Commission on 26 May 2011.

Planned:

  • Legislative initiative on criminal & other penalties against euro counterfeiting (second half of 2012).
  • Proposed procedural framework - mutual administrative/judicial assistance & admissibility of evidence (2013).
  • Proposal for a European Public Prosecutor's Office, applying standard rules on fraud & other offences against EU financial interests (2013).

Speech by Viviane Reding, 2010. 

Commission annual reports on the Protection of EU financial interests

  • Reports

2007 Commission’s policy on fraud prevention

  • Commission's 2007 policy on fraud prevention

Fraud strategies by policy area

Several Commission departments have cooperated in implementing a strategy to prevent fraud involving structural funding (since 2008) – considered an example of best practice.

In addition, several Commission departments have adopted their own fraud-prevention strategies (e.g. departments dealing with information society & media, and research & innovation). 

Methods and Results

Gathering & sharing information

OLAF gathers data from its own operational experience and a variety of other sources, including Commission audits, Court of Auditors reports, national partner authorities, open and commercial sources.
As well as using this information for its own investigations and analyses, OLAF shares it through these databases and applications:

  • Irregularity management system (IMS)
    • contains details of fraud & irregularities relating to funds managed  by the Commission and the national authorities in beneficiary countries, such as agricultural-policy funding, structural and cohesion funds, and funds to help countries prepare for EU membership (pre-accession funds)
    • open to Commission departments – on a need-to-know basis
    • used for analysis and reporting, e.g. compiling the 'statistical evaluation of irregularities', annexed to Commission's annual fraud report (report on the Protection of the European Union's financial interests-Fight against fraud-Annual report; preparing for audits; deciding whether the accounts for old operational programmes can be signed off
  • Central exclusion database (CED)
    • contains details of people, companies and organisations banned from receiving EU funding because they are bankrupt or have been convicted of fraud or corruption, involving EU funds or revenue
    • open to EU institutions and Member States’ authorities
  • Early Warning System (EWS)
    • contains information on people, companies and organisations that could pose a fraud threat to EU funds or revenue
    • open to the Commission and its executive agencies around the EU
  • Transparent Aid (TR-AID) – IT tool still under development enabling aid donors to share information and avoid double-funding of the same projects.
  • Strategic analysis – OLAF carried out analyses of its investigations in order to identify a number of threats and vulnerabilities the EU's finances and reputation are exposed. The results of the analyses provided input for recommendations aimed at the Commission services for their day-to-day activities and the preparation of policy activities and legislative acts.

Recommendations

OLAF issues recommendations for anti-fraud measures to Commission departments, EU bodies and institutions:

  • on the basis of analyses
  • following investigations or
  • in response to draft Commission legislative proposals.

When systemic problems are detected, the Commission's internal auditors are alerted.
Examples of past recommendations concerned:

  • conflict of interest situations in staff-selection procedures
  • research projects (inflated staffing costs, plagiarism, fraudulent use of company names to obtain grants)
  • customs transit procedures
  • EU staff entitlement to reimbursement of removal costs.

Case compendiums

OLAF produces compendiums of anonymised cases which comprise a short description of the techniques used by fraudsters, vulnerabilities and fraud indicators ('red flags'):

  • the first, on cases relating to research, It was made available to Commission departments and executive agencies.
  • a second – focused on structural funds – has been made available to all Commission departments and relevant authorities in EU countries.
  • a third compendium is under preparation and concerns external aid cases.

Training

OLAF organises training on fraud detection and prevention for Commission auditors (internal and external), and contributed to fraud awareness seminars for EU countries.
It also provides initial training on analytical tools and, for officers and financial managers, training on how to identify risk indicators.