Financial Crime World

EU Fraud Watchdog Warns of Rising Irregularities in Cohesion and Fisheries Policies

The European Union’s anti-fraud office (OLAF) has sounded the alarm over a surge in irregularities in cohesion and fisheries policies. According to OLAF’s latest report, non-fraudulent irregularities related to the 2014-2020 programming period have been increasing since 2017, but at a slower pace than expected.

Fraudulent Activity Remains a Concern

Despite efforts to improve risk analysis, fraudulent activity remains a concern, particularly in areas such as:

  • Transport and environment protection
  • Research and innovation
  • Social inclusion

Analysis suggests higher risks for investments in:

  • Energy efficiency
  • Waste management
  • Healthcare infrastructure

Types of Irregularities

The most common type of irregularity is related to supporting documents. High financial amounts are involved in cases where contract provisions were infringed or not implemented. Infringements of public procurement rules are the most frequently reported non-fraudulent irregularities.

Detection and Reporting

Despite efforts to improve risk analysis, tips from informants and whistle blowers remain the primary source of fraud detection. Risk analysis only marginally contributed to detecting fraud during 2018-2022.

  • The time it takes to detect and close fraudulent cases is significant:
    • Average of one year and a half to suspect fraud
    • Over two years to close the case after reporting to the Commission
  • Fraud Detection Rate for the 2014-2020 programming period: 0.48%
  • Irregularity Detection Rate: 0.61%

Variations in Member States’ Approaches

Detection and reporting vary significantly between Member States, with some countries showing a higher incidence of fraud or irregularities that are still classified as suspected fraud.

The report highlights significant differences in the way Member States approach fraud detection and reporting, with some countries having a much lower incidence of fraud or irregularities than others.

OLAF’s Recommendations

OLAF has called on Member States to improve their efforts to detect and prevent fraud, particularly in areas where risks are higher. The agency also urged closer cooperation between national authorities and the European Commission to tackle the issue effectively.