Organized crime groups are moving from riskier drug rackets to fraud in the EU and many do not hesitate to use violence to protect their activities, the bloc’s attorney general said in an interview with AFP.
Laura Kovesi said value-added tax (VAT) fraud accounted for 59% of the estimated €19 billion ($21 billion) in damage to the EU budget stemming from cases opened for investigation last year by the European Public Prosecutor’s Office (EPPO). .
“Behind this fraud generally there are a few organized crime groups operating all over Europe. They are very flexible,” he said.
“We have to deal with the most dangerous criminals,” he added.
“And our concern is that if we let them grow, if we let them have more economic power, of course they can become more violent and they can become a real threat to our security.”
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Kovesi’s comments, made in a telephone interview with AFP on Thursday, ahead of the publication of his annual report on activities in 2023.
Her relatively new office — which began operating in June 2021 — is tasked with investigating and prosecuting fraud involving European Union money.
“In the last period of time, criminal groups have rearranged their activity,” Kovesi said, moving from “very dangerous” drug smuggling to “easier” economic crimes — where both punishments and the level of detection are lower.
“You just need an accountant, a lawyer or a person who knows how to talk and you can make a lot of money,” he said.
Minimized financial crimes
The annual report said the European Public Prosecutor’s Office opened 1,371 investigations in 2023 — 58 percent more than the previous year — representing an estimated damage to the EU budget of €19.2 billion.
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Suspected VAT fraud accounted for only 339 of these cases.
However, the estimated financial loss in the EU — which is based on VAT payments made to member states — was €11.5 billion out of a total of €19 billion lost, underscoring how lucrative it could be for criminals.
Fraud can involve false or incorrect VAT documents to falsify the origin of goods to avoid tax on goods such as motor vehicles, electronics, pharmaceuticals, e-bikes and alcohol.
The office also noted an increase in suspected fraud involving €1.8 billion linked to EU money from a Covid recovery fund. Payments from the fund only started in 2023 and are set to continue in the following years.
The EPPO’s work was not made easier by some EU member states minimizing or abolishing criminal punishment for financial crimes involving EU money, Kovesi said.
Slovakia, for example, sought to reduce the statute of limitations for investigating such crimes.
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And in Greece and Romania there were provisions for financial fraudsters to get off the hook simply by paying back ill-gotten gains, Kovesi said.
Italy’s “dedicated” police
In terms of newly opened investigations in 2023, Italy stood out, having opened 556 cases — by far the most among the participating countries.
But Kosevi stressed that this was thanks to the country’s “very active” Guardia di Finanza police unit that deals specifically with financial crimes.
“We believe that in all member states we should have dedicated police officers to handle EPPO cases,” Kovesi said, and her office was ready to provide training if needed.
The agency has European prosecutors appointed in 22 of the 27 EU member states.
The staff are to be appointed in Poland in a few months, once the European Commission procedures have been completed. Talks are also underway on Sweden’s accession to the EPPO.
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With Poland joining the EPPO and 24 appointed prosecutors in four offices, Kovesi said “this means we will have a big strengthening of the EPPO zone”.
The budget of the European Public Prosecutor’s Office in 2023 was 66 million euros and in 2024 it is currently set at 72 million euros.
Denmark and Ireland do not participate in the European Public Prosecutor’s Office, having exemptions from EU justice policy.
Hungary — criticized by Brussels for corruption — refuses to participate even though it has a cooperation agreement with the office.
Source: AFP