On 6 September 2021 the Commission published its report regarding the implementation of the PIF Directive. This report has reflected that as of 1 April 2021 all Member States have fully transposed the PIF Directive, with the exception of the ones that have decided to opt-out.

In the same manner, some Member States have also opted out of being a part of EPPO (Hungary, Poland, Sweden, Denmark, Ireland). With these Member States, EPPO will develop separate working arrangements in order to define the way in which they will cooperate with the institution.

If we take a closer look at the work that EPPO has done, it has not hesitated to quickly deliver the first arrests in its investigations, as well as a first local conviction following an EPPO investigation.

The first arrest took place on 4 November, during a joint operation, where six people were arrested and assets worth 23 million EUR were seized on the territories of Czechia, Romania and Slovakia. These were suspected to be part of a criminal organization which put in place a VAT-carousel, which led to an estimated tax loss of 23 million on German territory.

The first conviction took place on 23 November, issued by the Special Penal Court of the Slovak Republic, regarding a mayor who has pleaded guilty for an attempted offense against EU’s financial interest. The mayor has falsified documents in order to illegally obtain funding. The total damage prevented would have amounted to 93.000 EUR. The Slovak court sentenced him to 3 years of imprisonment with probation and a 5 year disqualification from public office.

A very active Member State for EPPO investigations has been Italy, where several EU budget fraud schemes have taken place. The most recent investigation related to a counterfeit cigarette trafficking scheme between North Africa and Italy, during which 12 arrests and other asset seizures took place. Another relevant investigation involved a smuggling scheme of FFP2 medical masks between China and Europe, which led to two Italian companies committing aggravated fraud against healthcare facilities, putting hospital staff at risk during a pandemic. The investigation led to the seizure of over 11 million EUR and over 3.5 medical masks.

Part of the same medical mask scheme, investigations have also taken place in Austria, relating to cross-border customs fraud. The masks were imported to Austria via Frankfurt, Germany and it was suspected that the masks were deliberately undervalued in order to avoid customs duties.

After looking through some of the most important investigations, we see that the activity of EPPO continues to grow and to have a lasting impact on multiple stakeholders and multiple Member States. Now that in only less than six months we have reached our first conviction, it’s not long until the investigations will reach even further into the financial sector and also target financial institutions that go against the provisions of the PIF Directive. Even though EPPO is a young organization, it will be the main actor to watch when it comes to financial criminal accountability.

Footnote:

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on the implementation of Directive (EU) 2017/1371 of the European Parliament and of the Council of 5 July 2017 on the fight against fraud to the Union’s financial interests by means of criminal law
https://eur-lex.europa.eu