European Prosecutor: Organized Crime Groups Target EU Funds

Published: 05 March 2024

Laura Codruta KovesiEuropean Chief Prosecutor Laura Kövesi stressed that EPPO’s strategy should aim to cripple the financial resources of these serious organized crime groups. (Photo: AGERPRES/Youtube screenshot, Wikimedia, License)

By Zdravko Ljubas

The European Public Prosecutor’s Office (EPPO) warned in its 2023 Annual Report that serious organized crime continues to inflict substantial harm on the EU budget, estimating the damage at 19.2 billion euro (US$20.84 billion) in 2023.

Of that amount, approximately 11.5 billion euros (equivalent to $12.48 billion) or 59 percent, was associated with “serious, cross-border VAT (value added tax) fraud,” EPPO stated on Friday.

The EPPO – responsible for investigating, prosecuting, and bringing to judgment crimes against the financial interests of the EU – also highlighted a growing trend: new sources of EU funding being targeted by fraudsters.

Out of 1,927 investigations conducted by EPPO last year, 206 were tied to the initial projects funded by NextGenerationEU, the EU’s 800-billion euro initiative aimed at economic recovery from COVID-19 and fostering a greener, more digital, and resilient future. Just these 200-plus investigations incurred an estimated loss exceeding 1.8 billion euro ($1.95 billion).

The scams targeting new EU funding sources represented about 15 percent of the cases investigated by EPPO, while vacuuming up about  25 percent of the money lost.

The EPPO cautioned that this figure is likely to rise, given the planned growth of NextGenerationEU funding and the increasing involvement of organized crime groups in such fraudulent activities.

The criminal organizations appear to favor VAT carousel fraud schemes and customs fraud, the EPPO investigators say.

Laura Kövesi, European Chief Prosecutor, says serious organized crime groups are financing VAT fraud operations with proceeds from their other criminal activities.

“We are not dealing with two separate criminal worlds [with] dangerous criminals smuggling drugs [and] trafficking people in one; and supposedly less dangerous white collar criminals, ‘merely’ corrupting and laundering money, in the other,” Kövesi wrote in the report’s foreword.

“They go hand in hand. They grow together. As long as we do not understand this fundamental link, we will not be able to stop the growth and expansion of serious organized crime groups,” she said.

She emphasized EPPO’s findings that the same people are engaged in laundering funds obtained from both VAT fraud and the diverse criminal activities of these groups.

Kövesi also said that EPPO’s strategy should aim to cripple the financial resources of these serious organized crime groups.

“Just look at the numbers: does it seem like we are on the winning side? According to available estimates, judicial authorities in the EU manage to seize 4.1 billion euro ($4.45 billion) worth of criminal assets on a yearly basis. Best case scenario, this represents less than 2 percent of yearly proceeds of organized crime in the EU!” Kövesi concluded.