Convention on the protection of the European Communities’ financial interests

Outline of the Community (European Union) legislation about Convention on the protection of the European Communities’ financial interests

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Fight against fraud > Protecting the European Union’s financial interests

Convention on the protection of the European Communities’ financial interests

Document or Iniciative

Council Act of 26 July 1995 drawing up the Convention on the protection of the European Communities’ financial interests [Official Journal C 316 of 27.11.1995].

Summary

With this act, the Council has drawn up a convention to tackle fraud affecting the financial interests of the European Communities. Under the convention, fraud affecting both expenditure * and revenue * must be punishable by effective, proportionate and dissuasive criminal penalties in every European Union (EU) country.

The convention requires each EU country to take the necessary measures to ensure that the conduct referred to above, as well as participating in, instigating, or attempting such conduct, are punishable by effective, proportionate and dissuasive criminal penalties. In cases of serious fraud, these penalties must include custodial sentences that can give rise to extradition.

Each EU country must also take the necessary measures to allow heads of businesses or any persons having power to take decisions or exercise control within a business to be declared criminally liable, in accordance with the principles defined by its national law, in cases of fraud affecting the European Communities’ financial interests.

Each EU country must take the necessary measures to establish its jurisdiction over the offences it has established in accordance with its obligations under the convention.

If a fraud constitutes a criminal offence and concerns at least two EU countries, those countries must cooperate effectively in the investigation, the prosecution and the enforcement of the penalties imposed by means, for example, of mutual legal assistance, extradition, transfer of proceedings or enforcement of sentences passed in another EU country.

In the event of disputes between EU countries as to the interpretation or application of the convention, the case must first be examined within the Council. If the Council has not found a solution within six months, a party to the dispute may petition the Court of Justice of the European Union. The Court of Justice also has jurisdiction over disputes between EU countries and the Commission.

Background

Adopted under Title VI of the Treaty on European Union (following the entry into force of the Treaty of Lisbon on 1 December 2009, the provisions now fall under Title V of the Treaty on the Functioning of the European Union), the convention and its protocols are aimed at creating a common legal basis for the criminal-law protection of the European Communities’ financial interests.

The convention entered into force on 17 October 2002, along with its first protocol and the protocol on its interpretation by the Court of Justice. The second protocol entered into force on 19 May 2009. The convention and its protocols are open for signing by any country that joins the EU.

Key terms used in the act

Expenditure fraud: any act or deliberate omission involving the use or presentation of false, incorrect or incomplete statements or documents, which has as its effect the misappropriation or wrongful retention of funds from the general budget of the European Communities or budgets managed by, or on behalf of, the European Communities, non-disclosure of information in violation of a specific obligation, with the same effect; the misapplication of such funds for purposes other than those for which they were originally granted. Revenue fraud: any act or deliberate omission involving the use or presentation of false, incorrect or incomplete statements or documents, which has as its effect the illegal diminution of the resources of the general budget of the European Communities or budgets managed by, or on behalf of, the European Communities, non-disclosure of information in violation of a specific obligation, with the same effect; misapplication of a legally obtained benefit, with the same effect.

Related Acts

Council Act of 19 June 1997 drawing up the Second Protocol of the Convention on the protection of the European Communities’ financial interests [Official Journal C 221 of 19.7.1997].
This protocol is aimed at the liability of legal persons, confiscation, money laundering and cooperation between EU countries and the Commission for the purpose of protecting the European Communities’ financial interests and personal data related thereto. This protocol entered into force on 19 May 2009.

Council Act of 29 November 1996 drawing up, on the basis of Article K.3 of the Treaty on European Union, the Protocol on the interpretation, by way of preliminary rulings, by the Court of Justice of the European Communities of the Convention on the protection of the European Communities’ financial interests [Official Journal C 151 of 20.5.1997].
This protocol allows national courts to petition the Court of Justice for preliminary rulings interpreting the Convention on the protection of the European Communities’ financial interests and its Protocols. It entered into force on 17 October 2002.

Council Act of 27 September 1996 drawing up a Protocol to the Convention on the protection of the European Communities’ financial interests [Official Journal C 313 of 23.10.1996].
This protocol focuses on the definition of the concepts of “official” and “active and passive corruption”, as well as on the harmonisation of penalties for corruption offences. An explanatory report to this protocol was adopted on 19 December 1997. The protocol entered into force on 17 October 2002.

Council Decision 2008/40/JHA of 6 December 2007 concerning the accession of Bulgaria and Romania to the Convention, drawn up on the basis of Article K.3 of the Treaty on European Union, on the protection of the European Communities’ financial interests, the Protocol of 27 September 1996, the Protocol of 29 November 1996 and the Second Protocol of 19 June 1997 [Official Journal L 9 of 12.1.2008].
With this decision, Bulgaria and Romania acceded to the convention and its protocols.

Reports

Second Report from the Commission – Implementation of the Convention on the Protection of the European Communities’ financial interests and its protocols [COM(2008) 77 – Not published in the Official Journal].
Following up the first report, drawn up in 2004, the Commission examines the progress made by the 27 EU countries in ratifying and implementing the instruments for protecting the European Communities’ financial interests. The report highlights the problems arising from the frequent delays in ratification and cases of incorrect implementation.

Report from the Commission – Implementation by Member States of the Convention on the Protection of the European Communities’ financial interests and its protocols [COM(2004) 709 – Not published in the Official Journal].
This report focuses on the implementation of the convention and its protocols by the 15 EU countries prior to the enlargement of 1 May 2004. It considers that progress has been made in the criminal-law protection of the European Communities’ financial interests thanks to the national legislation adopted in EU countries, but regrets that none of them have taken all the measures needed to fully comply with the convention. The Commission recommends that the Council invites EU countries to step up their efforts to strengthen national criminal legislation and ratify the second protocol without delay.