Tag Archives: Financial interests

European Anti-Fraud Office

European Anti-Fraud Office

Outline of the Community (European Union) legislation about European Anti-Fraud Office

Topics

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

Fight against fraud > Anti-fraud offices

European Anti-Fraud Office (OLAF)

Acts

Commission Decision 1999/352/EC, ECSC, Euratom of 28 April 1999 establishing the European Anti-Fraud Office (OLAF).

Operating modalities:

Regulation (EC) No 1073/1999 of the European Parliament and of the Council of 25 May 1999 concerning investigations conducted by the European Anti-Fraud Office (OLAF).

Council Regulation (EURATOM) No 1074/1999 of 25 May 1999 concerning investigations conducted by the European Anti-Fraud Office (OLAF).

Interinstitutional Agreement of 25 May 1999 between the European Parliament, the Council of the European Union and the Commission of the European Communities concerning internal investigations by the European Anti-Fraud Office (OLAF).

Summary

This Decision establishes the European Anti-Fraud Office (OLAF), which is part of the European Commission with a special independent status for conducting anti-fraud investigations. Two Regulations and an Interinstitutional Agreement stipulate how it is to operate.

OLAF’s competences

The Commission Decision establishes OLAF and sets out its powers, which are to:

  • carry out external administrative investigations as part of the fight against fraud, corruption and any other illegal activity that adversely affects the Community’s financial interests and for the purpose of combating fraud involving any other act or activity in breach of Community provisions;
  • carry out internal administrative investigations for the purposes of:
    1. combating fraud, corruption and any other illegal activity that adversely affects the Community’s financial interests,
    2. investigating serious situations relating to the discharge of professional duties that may constitute a failure to comply with the obligations of officials and servants of the Communities liable to result in disciplinary or, where appropriate, criminal proceedings, or a failure to comply with the analogous obligations of the members of the institutions, bodies, offices or agencies or their staff who are not subject to the Staff Regulations of Officials of the European Communities and the Conditions of Employment of Other Servants of the European Communities,
  • carry out investigative assignments in other areas at the request of Community institutions and bodies;
  • help strengthen cooperation with the Member States in the field of fraud prevention;
  • develop strategies for the fight against fraud (preparing legislative and regulatory initiatives in the areas of activity of the Office);
  • set in motion any other operational activity in the fight against fraud (developing infrastructure, collecting and analysing information, providing technical support);
  • maintain direct contact with the national law enforcement and judicial authorities;
  • represent the Commission in the field of fraud prevention.

OLAF’s external investigative powers are mainly those that were conferred upon the Commission under Regulations (EC, Euratom) Nos 2988/95 (the European Communities’ financial interests) and 2185/96 (on-the-spot checks and inspections carried out by the Commission in order to protect the European Communities’ financial interests). Furthermore, OLAF works on the basis of Regulation (EC) 515/97 on mutual administrative assistance.

How OLAF goes about its investigations

The two Regulations on investigations by OLAF, one applying to the EC and the other to Euratom, restate the Office’s main functions and define the practical arrangements for carrying out the administrative investigations for which it is responsible.

The checks and verifications OLAF carries out externally (in the Member States and in certain non-member countries with which the Community has cooperation agreements) and internally (inside the institutions and bodies established by or on the basis of the Treaties) do not affect the powers of the Member States in the area of criminal prosecution.

The Director of OLAF launches and directs investigations on his own initiative or at the request of a Member State with an interest in the matter (in the case of external investigations) or of the institution or body concerned (in the case of internal investigations).

As part of its external investigations, OLAF carries out the on-the-spot checks for which the Commission is responsible under Regulations (EC, Euratom) Nos 2988/95 and 2185/96.

For its internal investigations, OLAF has the right of immediate and unannounced access to any information held by the Community institutions, bodies, offices and agencies. It may also ask anyone concerned for oral information, and carry out on-the-spot checks on economic operators.

Where the Office discovers, in the course of an internal investigation, that a member, manager, official or other servant may be personally involved, it informs the institution, body, office or agency to which that person belongs, unless divulging such information is incompatible with the need to maintain complete strict confidentiality for the purposes of the investigation or a possible national investigation.

At the request of OLAF or on their own initiative, the Member States, institutions, bodies, offices and agencies are required to provide the Office with any document or information they hold that relates to an investigation under way.

All information passed on to the Office will be properly protected.

On completion of an investigation, OLAF draws up a report including recommendations as to the action to be taken. The report is sent to the Member States in the case of external investigations and to the institutions, bodies, offices and agencies in the case of internal investigations.

Information may also be sent to the competent authorities in the Member States and to the institutions, bodies, offices and agencies concerned, while an investigation is still under way (the Office is in direct contact with the national law enforcement and judicial authorities).

OLAF’s operational independence is protected by a Supervisory Committee consisting of five independent outsiders appointed by common agreement of the European Parliament, the Council and the Commission. Furthermore, if the Director considers that a measure taken by the Commission calls his independence in question, he is entitled to bring an action against it before the Court of Justice.

Any member of the staff of a Community institution, body, office or agency who feels that his interests are adversely affected in the course of an internal investigation may submit a complaint to the Director of OLAF or bring an action before the Court of Justice.

Interinstitutional Agreement between the Parliament, the Council and the Commission

The object of the Interinstitutional Agreement between the European Parliament , the Council and the Commission is to guarantee that internal investigations can be carried out under equivalent conditions in the three institutions and in all the other Community bodies, offices and agencies, including the European Investment Bank (EIB) and the European Central Bank (ECB).

To bring this about, the three institutions have agreed to adopt an internal decision based on the standard model annexed to the Agreement, and to call on the other institutions, bodies, offices and agencies to accede to the Agreement.

The model decision requires the Secretary-General, departments and all members of staff of the institution, body, office or agency concerned to cooperate fully with OLAF’s agents and to supply all useful information.

Where there is a presumption of fraud, corruption or any other illegal activity detrimental to the Communities’ interests:

  • any member who becomes aware of such evidence must without delay inform his Head of Service or Director-General or, if he considers it useful, his Secretary-General or OLAF directly;
  • the Secretary-General, the Directors-General and the Heads of Service or managers must transmit to OLAF without delay any evidence from which the existence of irregularities may be presumed;
  • members of the institutions, bodies, offices or agencies must inform the President or, where appropriate, OLAF directly.

Where it becomes clear during an internal investigation that a member, manager, official or other servant is involved, the person concerned is informed rapidly. He/she will be called upon to give his/her views on the matters concerning him/her. The invitation may be deferred where necessary for the purposes of the investigation or any subsequent national judicial inquiries.

OLAF delivers an opinion on any request for a waiver of immunity from the police or judicial authorities in a Member State, if the request relates to a manager, official or other servant of an institution, body, office or agency. If a request concerns a member of an institution or body, the Office is informed.

Background

The EC Treaty provides an explicit legal basis for operations by the Community and the Member States to combat fraud and other unlawful activities that are damaging to the Community’s financial interests (Article 280). The entry into force of the Amsterdam Treaty has given the Community much more substantial means for combating fraud and stamping out economic and financial crime.

The Commission’s Task Force for the Coordination of Fraud Prevention was thus replaced by the European Anti-Fraud Office (OLAF), which, in addition to carrying out investigations, is responsible for devising and preparing legislation for the protection of the Community’s financial interests and the fight against fraud. OLAF enjoys greater independence than its predecessor in conducting investigations.

References

Act Entry into force Deadline for transposition in the Member States Official Journal
Decision 1999/352/EC, CECA, Euratom

28.4.1999

OJ L 136 of 31.5.1999

Regulation (EC) No 1073/1999

1.6.1999

OJ L 136 of 31.5.1999

Regulation (Euratom) No 1074/1999

1.6.1999

OJ L 136 of 31.5.1999

Interinstitutional Agreement

1.6.1999

OJ L 136 of 31.5.1999

Related Acts

Proposal for a European Parliament and Council Regulation amending Regulation (EC) No 1073/1999 concerning investigations conducted by the European Anti-Fraud Office (OLAF) [COM(2006) 244 final – Not published in the Official Journal].

In substance, the proposal has the following main objectives:

  • Governance, cooperation between the institutions and the Supervisory Committee. The Commission sees a need for political governance regarding priorities related to investigative activities. It proposes regular meetings between the Supervisory Committee and the other European institutions as part of a structured dialogue, without interfering in the investigative activities.
  • Guarantee of the rights of persons implicated. The Commission proposes including in the Regulation a detailed provision on the procedural guarantees to be respected in the conduct of internal and external investigations.
  • Improved monitoring of investigations. Monitoring that ensures the specific procedures are followed should be improved and the possibility of requesting an opinion should be introduced. A review adviser is provided for to fulfil such a role.
  • Improving the information flow. With this proposal, the Commission intends to improve the flow of information between OLAF and European bodies and institutions, between OLAF and the Member States, as well as between OLAF and whistleblowers.
  • Strengthening OLAF’s operational efficiency. The Commission is proposing measures that will allow OLAF to concentrate on its priority actions. For example, the opening and closing of investigations need clarification.
  • Improving the effectiveness of OLAF’s investigations. The Commission proposes to clarify OLAF’s powers of investigation in the context of external investigations involving economic operators receiving Community funds on the basis of contracts, agreements or grant awards (direct expenditure).
  • Term of office of the Director-General. A non-renewable term of office should be introduced for the OLAF Director-General in order to strengthen independence.

Codecision procedure (COD/2006/0084)

Activity reports:

Report of the European Anti-Fraud Office – Eighth Activity Reportfor the period 1 January 2007 to 31 December 2007 [Not published in the Official Journal].
This eighth activity report substantiates the principal trends of previous years. The volume and quality of information received by OLAF has steadily increased in the past years, confirming the public’s confidence in the Office. In the course of 2007, OLAF opened more cases than in 2006. Similarly, the number of cases closed increased as well, as opposed to previous years that have been characterised by a declining number of closed cases. Furthermore, the amount of “own investigations” OLAF carries out has exceeded the amount of investigations in which it merely provides assistance to national authorities. The average duration of cases increased slightly in 2007, due to the complexity of the cases the Office faces nowadays and to the necessity of involving Member States or outside partners in the investigations. OLAF has actively continued its cooperation with Member States, EU bodies in charge of police and judicial cooperation and international partners in the fight against fraud.

Report of the European Anti-Fraud Office – Seventh Activity Reportfor the period 1 January 2006 to 31 December 2006 [Not published in the Official Journal].

This report follows on from the sixth activity report. In it, the Commission assesses the irregularities committed and presents the most important measures taken in 2006 by the Member States and by itself to improve fraud prevention and the fight against fraud. The report also describes in detail the way OLAF decides to open an anti-fraud investigation and explains how cases are managed.

Report of the European Anti-Fraud Office – Sixth Activity Reportfor the period 1 July 2004 to 31 December 2005 [Not published in the Official Journal].

Evaluation report: Commission Report of 2 April 2003 – Evaluation of the activities of the European Anti-Fraud Office (OLAF) [COM(2003) 154 final – Official Journal C 76 of 25.3.2004].

Decisions by the institutions:

Council Decision 1999/394/EC of 25 May 1999 concerning the terms and conditions for internal investigations in relation to the prevention of fraud, corruption and any illegal activity detrimental to the Community’s interests [Official Journal L 149 of 16.6.1999].

As laid down in the Interinstitutional Agreement, this Decision states that the Council is to cooperate with the Office and keep it informed; it also requires the Security Office to assist OLAF’s staff in their work. In return, OLAF is required to inform anyone implicated in one of its investigations.

Commission Decision 1999/396/EC of 2 June 1999 concerning the terms and conditions for internal investigations in relation to the prevention of fraud, corruption and any illegal activity detrimental to the Community’s interests [Official Journal L 149 of 16.6.1999].

As laid down in the Interinstitutional Agreement, this Decision states that the Commission is to cooperate with the Office and keep it informed; it also requires the Security Office to assist OLAF’s staff in their work. In return, OLAF is required to inform anyone implicated in one of its investigations.

Decision of the European Parliament of 18 November 1999 concerning the terms and conditions for internal investigations in relation to the prevention of fraud, corruption and any illegal activity detrimental to the Community’s interests [European Parliament Rules of Procedure, Annex XI – Official Journal L 44 of 15.2.2005].

As laid down in the Interinstitutional Agreement, this Decision states that the European Parliament is to cooperate with the Office and keep it informed. The Decision obliges Parliament’s Security Office to assist OLAF staff in their work. It also obliges OLAF to inform anyone who is implicated in one of its investigations.

Decision 1999/726/EC of the European Central Bank of 7 October 1999 on fraud prevention – [Official Journal L 291 of 12.11.1999].

The Decision seeks to provide adequate protection against fraud and other illegal activities at the European Central Bank (ECB), while maintaining the distribution and balance of responsibilities between the ECB and the European institutions.
Accordingly, the Decision sets up an anti-fraud committee to be responsible for monitoring the independence and functioning of the ECB Directorate for Internal Audit. The anti-fraud committee is also responsible for relations with the Supervisory Committee of OLAF. These relations are governed by the principles established by an ECB decision.

Decision of the Court of Justice of 26 October 1999 concerning the terms and conditions for internal investigations in relation to the prevention of fraud, corruption and any illegal activity detrimental to the Community’s interests [Not published in the Official Journal].

In accordance with the provisions of the Regulations setting up OLAF, this Decision requires the Court to cooperate with the Office and to keep it informed. It also lays down the procedures to be followed by OLAF staff when carrying out internal investigations. In line with the principle of confidentiality, it denies OLAF access to documents held in connection with legal proceedings that are in progress or have been terminated.

Judgment of the Court of Justice of 10 July 2003 setting aside Decision 1999/726/EC of the European Central Bank on fraud prevention and protection of the Communities’ financial interests (Case C-11/00).

Effects of foreign legislation on the Union's financial interests

Effects of foreign legislation on the Union’s financial interests

Outline of the Community (European Union) legislation about Effects of foreign legislation on the Union’s financial interests

Topics

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

Internal market > Single market for capital

Effects of foreign legislation on the Union’s financial interests

Document or Iniciative

Council Regulation (EC) No 2271/96 of 22 November 1996 protecting against the effects of the extra-territorial application of legislation adopted by a third country, and actions based thereon or resulting therefrom [See amending acts]

Summary

The aim of the Regulation is to protect the economic and/or financial interests of natural or legal persons against the effects of the extra-territorial application of legislation. The laws in question are specified in the Annex to the Regulation. The protection concerns international trade and/or the movement of capital and related commercial activities between the Community and third countries.

The Regulation applies to:

  • any natural person being a resident in the Community and a national of a Member State;
  • any legal person incorporated within the Community;
  • nationals of the Member States established outside the Community and to shipping companies established outside the Community and controlled by nationals of a Member State, if their vessels are registered in that Member State in accordance with its legislation;
  • natural persons being a resident in the Community, unless that person is in the country of which he is a national;
  • any other natural person within the Community, including its territorial waters and air space and in any aircraft or on any vessel under the jurisdiction or control of a Member State, acting in a professional capacity.

Any persons whose economic and financial interests are affected by foreign legislation person must inform the Commission accordingly within 30 days from the date on which it obtained such information.

If a court or tribunal or an administrative authority located outside the Community handed down a decision giving effect, directly or indirectly, to the laws specified in the Annex (such as the USA’s “Iran and Libya Sanctions Act” of 1996), it would not be recognised or enforceable in any manner. The persons referred to in this Regulation shall not comply with any requirement or prohibition based on the laws specified in the Annex. Nonetheless, a person may be authorised to comply with the said requirements or prohibitions. This authorisation is given by the Council on a proposal from the Commission which is assisted by a Committee composed of the representatives of the Member States.

The Member States determine the sanctions to be imposed in the event of breach of any relevant provisions of this Regulation.

References

Act Entry into force Deadline for transposition in the Member States Official Journal
Regulation (EC) No 2271/96 29.11.1996 OJ L 309 of 29.11.1996
Amending act(s) Entry into force Deadline for transposition in the Member States Official Journal
Regulation (EC) No 807/2003 05.06.2003 Official Journal No L 122 of 16.05.2003

Action Plan 2004-2005

Action Plan 2004-2005

Outline of the Community (European Union) legislation about Action Plan 2004-2005

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

Action Plan 2004-2005

Document or Iniciative

Communication from the Commission of 9 August 2004 on Protecting the Communities’ financial interests – Fight against fraud – Action Plan for 2004-2005 [COM(2004) 544 final – Not published in the Official Journal].

Summary

The 2004-2005 action plan corresponds to the second stage of implementation of the overall strategic approach adopted in June 2000. It testifies to the Commission’s ongoing commitment to the fight against fraud and constitutes one of its responses to the new challenges linked to the development of the Union in 2004 and 2005.

The action plan draws its legitimacy from Article 280 EC introduced by the Amsterdam Treaty. On that basis, on 15 May 2001 the Commission adopted a first action plan that saw a highly satisfactory rate of implementation.

Over the period 2001-2003, the legal framework for protecting the Community’s financial interests and fighting fraud and all other illegal activities adversely affecting those interests was supplemented in order to enable effective action to be taken in the fields of fraud prevention and fraud-proofing of legislation, protecting the euro, making public procurement procedures more secure and setting up coordination structures in the ten new Member States and the candidate countries. Cooperation between the relevant administrations was enhanced, thanks in particular to the capacity for analysis of fraud and irregularities and the magistrates unit set up within the European Anti-Fraud Office (OLAF); such cooperation is assessed each year in the report provided for by Article 280 of the EC Treaty. In addition to various measures to prevent and counter corruption, the Commission performed an evaluation of OLAF’s activities and put forward seventeen recommendations for reinforcing its structure and operations, while the Court of Justice confirmed on several occasions the legality and consistency of the inter-institutional framework for internal investigations. The criminal-law protection of the Community’s financial interests was strengthened with the entry into force in October 2002 of the first Convention instruments for the fight against fraud. Major steps were also taken towards setting up a European Public Prosecutor’s Office, and the objective was written into the constitutional treaty.

The new action plan follows the four main lines of action laid down in 2000 for the ensuing five years:

  • an overall anti-fraud legislative policy: making regulations more effective and consistent;
  • a new culture of cooperation: full participation of and collaboration between national and Community authorities;
  • an inter-institutional approach to preventing and fighting corruption: making the European institutions more credible;
  • strengthening the criminal-law dimension: adapting the legal and judicial framework for the protection of the financial interests of the European Union.

It also takes into account the new guidelines set out in the progress report on the activities of OLAF and the measures announced in the State of the Union Address delivered by the Commission President before the European Parliament on 18 November 2003.

In the context of an overall anti-fraud legislative policy, the action plan provides for the development of a culture of prevention and the tightening-up of legal texts through the following measures:

  • defining OLAF’s objectives and reinforcing its legal framework in order to consolidate its structure;
  • stepping up cooperation with the Member States, with special reference to money laundering and VAT fraud;
  • assessing the black list mechanism in the EAGGF Guarantee Section;
  • definitively setting up the European Technical and Scientific Centre (ETSC) for protecting the euro against counterfeiting;
  • continuing and adapting the Pericles programme.

Still within the same context, the aim is also to strengthen means of detection, controls and sanctions. To that end, the Commission plans to:

  • clarify fraud investigation powers at Community level, particularly in the area of direct expenditure;
  • extend the administrative penalty system, in particular to the areas of customs, the Structural Funds, direct expenditure and OLAF investigations;
  • issue technical guidelines to national authorities wishing to supervise the authentification of euro coins in their territory.

Lastly, the plan is aimed at ensuring more effective management of administrative and financial follow-up, and thus provides for the following action:

  • proposing amendments to the Regulation on the financing of the CAP in order to improve the recovery of sums wrongly paid under the EAGGF Guarantee Section;
  • clearing the backlog of cases concerning irregularities reported before 1999.

As part of the second line of approach, which focuses on a new culture of cooperation, the intention is to enhance the use and analysis of information (“intelligence”). The Commission aims to establish better operational cooperation between customs administrations and to simplify the procedure for notifying irregularities in the areas of the Structural Funds, the Cohesion Funds and the EAGGF Guarantee Section.

In addition, to develop a closer partnership with Member States and non-member countries, the Commission plans to:

  • strengthen relations with Member States by updating the Decision establishing the Advisory Committee for the Coordination of Fraud Prevention (COCOLAF);
  • improve information from Member States on the follow-up given to OLAF’s investigations;
  • enhance synergy by drawing up an inventory of the services that the Commission and OLAF can provide to the institutions and Member States and implementing the multidisciplinary service platform;
  • help the new Member States to reinforce their capacity for fighting fraud;
  • reinforce anti-fraud coordination services in candidate countries;
  • conclude negotiations with Switzerland on the fight against fraud;
  • negotiate international agreements on mutual assistance in customs matters with non-member countries;
  • include anti-counterfeiting clauses in cooperation and association agreements.

Rounding off this second line of approach, the Commission will evaluate anti-fraud measures on an ongoing basis through an inventory of new measures at Community and Member State level.

The third line of action, an inter-institutional approach to prevent and combat corruption, includes the following measures aimed at developing a culture of cooperation at all levels:

  • examining the usefulness of adopting a memorandum of understanding between OLAF and the Commission and between the Commission and the other institutions;
  • re-examining the memorandum of understanding between OLAF and the Investigation and Disciplinary Office (IDOC);
  • setting up a high-level interdepartmental group to improve transparency and the flow of information between OLAF and other directorates-general.

To improve the legal framework for administrative investigations, the Commission intends to amend certain provisions in the interests of clarity and harmonisation.

The fourth and last line of approach focuses on enhancing the criminal-law judicial dimension. Here, the Commission plans to:

  • draft a White Paper on strengthening the effectiveness of criminal prosecutions by establishing a European Public Prosecutor ;
  • bring out a report on implementation of the Convention on the protection of the European Community’s financial interests by the Member States;
  • conclude a protocol with Europol;
  • draw up with the Member States a practical guide for cooperation with criminal prosecution authorities.

To sum up, the new action plan highlights three top-priority objectives:

  • reinforcing the regulatory framework of May 1999 for OLAF’s activities and competencies;
  • improving the flow of information between the Member States and the Commission;
  • developing the criminal-law protection of the Community’s financial interests with the Member States, following the proposal to create a European Public Prosecutor with competence for protecting the financial interests of the Union.

The measures planned for the period 2004-2005 take into account the findings of the progress report on the activities of OLAF and comprise actions that were not completed in the previous period as well as measures designed to respond to specific needs and reinforce OLAF’s legal framework, in particular in the light of the weaknesses revealed by the Eurostat case.

In the document, the Commission also assesses the overall results of the 2001-2003 action plan, which can be regarded as positive.

 

On-the-spot checks and inspections on the premises of economic operators

On-the-spot checks and inspections on the premises of economic operators

Outline of the Community (European Union) legislation about On-the-spot checks and inspections on the premises of economic operators

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

On-the-spot checks and inspections on the premises of economic operators

Document or Iniciative

Council Regulation (Euratom, EC) No 2185/96 of 11 November 1996 concerning on-the-spot checks and inspections carried out by the Commission in order to detect fraud and irregularities affecting the European Communities’ financial interests.

Summary

1.The Regulation applies to the on-the-spot checks and inspections carried out by the Commission in order to counter fraud, in particular where there are grounds for suspecting that irregularities * have been committed against the Community budget by economic operators *. The regulation, which establishes additional general provisions to Regulation (EC, Euratom) No 2988/95, applies to all areas of the Community’s activities. It does not affect the Member States’ powers to prosecute criminal infringements under national law.

Carrying out on-the-spot checks and inspections

The European Commission is to carry out on-the-spot checks and inspections on the premises of economic operators:

  • to investigate possible serious or cross-border irregularities or irregularities involving economic operators acting in several Member States;
  • to reinforce on-the-spot checks and inspections in a Member State in order to protect the Community’s financial interests more effectively and ensure an equivalent level of protection within the European Union;
  • at the request of a Member State.

Prior to the on-the-spot checks and inspections the Commission is required to inform the Member State(s) concerned in good time in order to obtain all the assistance required. The on-the-spot checks and inspections are to be prepared and carried out by the Commission in close cooperation with the competent authorities of the Member State concerned. They will be carried out under the authority and responsibility of “Commission inspectors”, i.e. duly authorised officials or other staff, who will comply with the rules of procedure in the Member State concerned.

The economic operators must allow the inspectors access to their premises, land and other places used for business purposes, and means of transport. If an economic operator resists an on-the-spot check or inspection, the Member State concerned will give the Commission’s inspectors such assistance as they need to allow them to discharge their duty. This assistance will be given by the competent authorities of the Member State in compliance with national law.

In the interests of efficiency, the Commission will ensure that similar checks and inspections are not carried out at the same time in relation to the same matters on the premises of the economic operators concerned under sectoral rules. It will take into account inspections that are being or have been carried out by the Member State under national law.

Ensuring access to the necessary information and documentation under national law

Commission inspectors are to have access, in compliance with national criminal procedure law, to all the information on the operations concerned which are required for the proper conduct of the checks and inspections. They may avail themselves of the same inspection facilities as national administrative inspectors and in particular copy relevant documents.

On-the-spot checks and inspections may concern, in particular:

  • business books and documents such as invoices, lists of terms and conditions, pay slips, statements of materials used and work done, and bank statements,
  • computer data;
  • production, packaging and dispatching systems and methods;
  • physical checks as to the nature and quantity of goods or completed operations;
  • the taking and checking of samples;
  • the progress of works and investments for which financing has been provided, and the use made of completed investments;
  • budgetary and accounting documents;
  • the financial and technical implementation of subsidised projects.

Where necessary, it will be for the Member States, at the Commission’s request, to take the appropriate precautionary measures under national law, in particular in order to safeguard evidence.

Information acquired in relation to the on-the-spot checks and inspections is covered by professional secrecy and by the Community provisions on data-protection.

The Commission inspectors’ reports constitute admissible evidence in administrative or judicial proceedings of the Member State in which their use proves necessary.

Key terms used in the act
  • economic operator means: natural or legal person or any other entity on which national law confers legal capacity (Article 7 of Regulation No 2988/95);
  • “irregularity”: any infringement of a provision of Community law resulting from an act or omission by an economic operator, which has, or would have, the effect of prejudicing the general budget of the Communities or budgets managed by them, either by reducing or losing revenue accruing from own resources collected directly on behalf of the Communities, or by an unjustified item of expenditure (Article 1(2) of Regulation No 2988/95).

References

Act Entry into force – Date of expiry Deadline for transposition in the Member States Official Journal
Regulation (EC) No 2185/96. 18.11.1996 OJ L 292 of 15.11.1996

Agreement with the Swiss Confederation

Agreement with the Swiss Confederation

Outline of the Community (European Union) legislation about Agreement with the Swiss Confederation

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

Agreement with the Swiss Confederation

Document or Iniciative

Council Decision 2009/127/EC of 18 December 2008 concerning the signature, on behalf of the European Community, of the Cooperation Agreement between the European Community and its Member States, of the one part, and the Swiss Confederation, of the other part, to combat fraud and any other illegal activity to the detriment of their financial interests.

Summary

The agreement aims to extend administrative assistance and mutual judicial assistance in criminal matters between the European Community (EC) and Switzerland. With this decision, the Commission approves the agreement on behalf of the EC. Title I of the agreement deals with the general provisions applicable to the following two titles: administrative assistance (Title II) and mutual legal assistance (Title III). The last Title (IV) contains the final provisions. The Final Act contains a joint declaration on money laundering and on cooperation by the Swiss Confederation with Eurojust and, if possible, with the European Judicial Network, as well as an Agreed Minute to combat fraud and any other illegal activity to the detriment of the parties’ financial interests.

Application of the agreement only to specific cases

The agreement is designed to combat fraud at every stage: administrative and criminal prevention, detection, investigation, prosecution and enforcement. However, it is only applicable in very specific cases, such as:

  • trade in goods contrary to customs and agricultural legislation;
  • trade contrary to tax legislation applicable to value added tax, special taxes on consumption and excise duties;
  • the charging or retention of funds, such as grants and refunds, from the budget of the contracting parties or budgets managed by them or on their behalf, including their use for purposes other than those for which they were initially granted;
  • procedures for the awarding of contracts by the contracting parties.

The agreement also provides for the seizure and recovery of amounts due or wrongly received as a result of the illegal activities referred to above. Administrative or judicial assistance may not be withheld on the ground that the request relates to an offence treated as a tax offence by one of the parties. The same is true if the legislation of one party does not provide for the same type of levy or expenditure or does not contain the same type of rules or legal characterisation.

In minor cases, however, the competent authorities may refuse a request for cooperation. These are cases where the amounts of un-paid or evaded duty do not exceed EUR 25 000or where the value of any goods concerned does not exceed EUR 100 000. Cooperation may also be withheld if the requested party considers that execution of the request would be contrary to its sovereignty, security, public policy or other vital interests. The text also includes other possibilities for refusing a request, for example if the number of requests imposes disproportionate administrative burdens.

The scope of the agreement includes laundering of the proceeds of the illegal activities covered by it, provided the activities are punishable under the law of the two contracting parties (custodial sentence or measure restricting freedom for more than six months).

Direct taxes are excluded from the scope of the agreement.

Reinforcing administrative assistance between the European Union and Switzerland

The agreement does not affect obligations arising from other agreements, in particular the Additional Protocol on mutual administrative assistance in customs matters of 9 June 1997. The authorities of the contracting parties apply the agreement within the limits of the powers conferred upon them by their domestic law. Each party designates a central unit to process requests for administrative assistance.

The agreement contains provisions on the form and content of requests for assistance. Among others, it covers requests for information, surveillance and investigations.

However, spontaneous assistance without prior request is also possible. In that case, the authority transmitting the information may, in accordance with its domestic law, attach conditions to the use of the information.

Special forms of cooperation

In order to implement the agreement effectively, special forms of cooperation are provided for:

  • joint cross-border operations on imports, exports or transit of goods, when the financial interests of one of the contracting parties are at risk;
  • joint special investigation teams;
  • liaison officers that may be seconded to the competent departments of the other contracting parties.

Supplementing existing agreements on mutual judicial assistance

The purpose of the agreement is to supplement the European Convention on mutual assistance in criminal matters of 20 April 1959 and the Convention on laundering, search, seizure and confiscation of the proceeds from crime of 8 November 1990, as well as to facilitate their application between the contracting parties. The two conventions were signed under the aegis of the Council of Europe in Strasbourg. The agreement also ensures that more favourable provisions of bilateral or multilateral agreements between the contracting parties are not affected.

Judicial assistance under the agreement is given:

  • in proceedings for offences that are punishable under the domestic law of at least one of the contracting parties as infringements of rules of law. It must be possible for such infringements to give rise to proceedings before a court having jurisdiction in criminal matters;
  • in civil actions joined to criminal proceedings, as long as the criminal court has not given a final judgement;
  • for facts or offences for which a legal person of the requesting contracting party may be liable;
  • for the purposes of investigations and proceedings for the seizure and confiscation of the instruments and products of the illegal activities.

The agreement details the steps to be followed for the transmission of requests (letters rogatory), which includes service by post. The authorities of the requesting contracting party may be authorised to attend the execution of the request for judicial assistance, but their presence does not require the consent of the person concerned by the measure. Conditions may be attached to the authorisation. The persons present, however, have access to the same premises and the same documents as the representatives of the other party, provided that judicial confidentiality is respected.

The agreement provides that letters rogatory for searches and seizures must not be dependent on conditions other than the following:

  • that the act giving rise to the request is punishable under the law of both contracting parties by a penalty involving deprivation of liberty or a detention order of a maximum period of at least six months, or is punishable under the law of one party by an equivalent penalty and under the law of the other party as an infringement of the rules of law that is prosecuted by the administrative authorities where the decision may give rise to proceedings before a criminal court;
  • that execution of the letters rogatory is consistent with the law of the party receiving the request for judicial assistance. As regards laundering offences covered by the agreement, letters rogatory for purposes of search and seizure are also admissible, provided that the activities making up the precursor offence are punishable under the law of the two parties by a penalty involving deprivation of liberty or a detention order of a maximum of more than six months.

Provision is also made for rules to speed up mutual assistance and the use of evidence.

Banking and financial information

The agreement also covers requests for banking and financial information where the conditions referred to above have been met. “Banking and financial information” includes information on bank accounts opened at banks established in the territory of one of the parties. The requester must state the reasons why the information requested is vital to the investigation. Banking secrecy is not a ground for rejecting all cooperation.

A joint committee, composed of representatives of the parties, is set up in order to apply the agreement and to settle any disputes between the parties. The Commission acts as the representative of the Community in this committee.

REFERENCES

Act Entry into force Deadline for transposition in the Member States Official Journal
Decision 2009/127/EC

18.12.2008

OJ L 46 of 17.2.2009

Agreement with China

Agreement with China

Outline of the Community (European Union) legislation about Agreement with China

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

Agreement with China

Document or Iniciative

Council Decision 2004/889/EC of 16 November 2004 on the conclusion of an Agreement between the European Community and the Government of the People’s Republic of China on cooperation and mutual administrative assistance in customs matters.

Summary

This Agreement improves cooperation between the administrative authorities responsible for the application of customs legislation *. Action to tackle operations in breach of EU and Chinese customs legislation is more effective if it is backed up by mutual assistance in customs matters. The operations concerned are those prejudicial to the economic, fiscal and commercial interests of the Parties: it is essential to any State to ensure the accurate assessment of customs duties and other taxes.

Developing customs cooperation

The Parties to the Agreement undertake to develop customs cooperation, in particular by:

  • establishing channels of communication;
  • facilitating effective coordination between administrative authorities;
  • providing for joint action on administrative matters;
  • facilitating the legitimate movement of goods;
  • exchanging information and expertise on customs procedures;
  • providing each other with technical assistance, e.g. exchanges of personnel and experts, training and the exchange of professional data, etc.;
  • seeking a coordinated position when customs topics are discussed in international organisations.

Mutual administrative assistance

Under the Agreement, customs authorities will assist each other by providing information to ensure the proper application of customs legislation: this does not prejudice the application of existing rules governing mutual assistance in criminal matters. Nor does it apply to information obtained at the request of judicial authorities. However, assistance to recover duties, taxes or fines, the arrest or detention of any person and the seizure or detention of property is not covered by this Agreement. The Agreement with China provides both for assistance on request and spontaneous assistance.

Assistance on request: The requested authority must provide the applicant authority with all information which may enable it to ensure that customs legislation is correctly applied. Such information may relate to:

  • activities that may result in offences within the territory of the other Party, for example, the presentation of incorrect declarations or other falsified documents;
  • the authenticity of official documents produced in support of a goods declaration;
  • the legality of exports and imports of goods from the territory of one of the Contracting Parties to the territory of the other and the customs procedure applied.

The requested authority must also, within the framework of its competence and at the request of the applicant authority, take the necessary steps to ensure special surveillance. Surveillance relates to persons in respect of whom there are reasonable grounds for believing that they have committed an infringement of the customs legislation of one of the Parties. It can also cover places, stocks and goods transported, as well as means of transport that may have been used under fraudulent conditions.

6. Spontaneous assistance: In cases where a formal request is not possible in view of the urgency of a situation that could involve substantial damage to the economy, public health, public security or similar vital interest, the Parties will assist each other at their own initiative.

Formal aspects and exceptions to the obligation to provide assistance

Requests must comply with certain requirements of form and substance in relation to: the formal endorsement of the applicant authority, the action requested, the object of and the reason for the request, etc. The requested authority proceeds, within the limits of its competence and available resources, as though it were acting on its own account. It executes the requests in accordance with the legally binding instruments applicable in its own jurisdiction. The response must be in writing.

Exceptions to the obligation to provide assistance are allowed: assistance may be refused or may be subject to certain requirements if it is likely to prejudice:

  • the sovereignty of the People’s Republic of China or that of an EU Member State which has been requested to provide assistance;
  • public order, security or other essential interests.

The Agreement contains confidentiality clauses in relation to the information provided. The Agreement applies to the customs territory of the People’s Republic of China and to the territories in which the Treaty establishing the European Communities is applied, i.e. in the 25 EU Member States. It entered into force on 1 April 2005.

Key terms

Customs legislation: customs legislation includes any legal provisions of the European Community or of China which govern the import, export and transit of goods or their placing under any other customs regime or procedure, including measures of prohibition, restriction and control (Article 1(a)).

References

Act Entry into force Deadline for transposition in the Member States Official Journal
Decision 2004/889/EC 01.04.2005 Official Journal L 375 of 23.12.2004