On the Protection of the European Union’s financial interests - combating fraud - annual report 2022

–having regard to the study entitled ‘Strengthening the fight against organised crime: Assessing the legislative framework’, published in December 2022,

–having regard to the report entitled ‘Assessing the Threats to the NextGenerationEU (NGEU) fund – A Joint Europol-OLAF Report’, made public on 6 June 2023,

–having regard to the European Ombudsman’s ‘Closing note on the Strategic Initiative concerning the transparency and accountability of the Recovery and Resilience Facility’ of 12 September 2023 in relation to Case SI/6/2021/PVV, opened on 24 February 2022,

–having regard to the European Court of Auditors (ECA) Review 04/2023 of 6 July 2023 entitled ‘Digitalising the management of EU funds’,

–having regard to the ECA Special Report 06/2023 of 13 March 2023 entitled ‘Conflict of interest in EU cohesion and agricultural spending – Framework in place but gaps in transparency and detection measures’,

–having regard to Regulation (EU) 2021/785 of the European Parliament and of the Council of 29 April 2021 establishing the Union Anti-Fraud Programme and repealing Regulation (EU) No 250/2014,

–having regard to its resolution of 23 November 2021 with recommendations to the Commission on digitalisation of the European reporting, monitoring and audit,

–having regard to its resolution of 19 January 2023 on the protection of the European Union’s financial interests – combating fraud – annual report 2021,

–having regard to Rule 54 of its Rules of Procedure,

–having regard to the report of the Committee on Budgetary Control (A9-0000/2023),

A.whereas, in line with the obligation laid down in Article 325(5) TFEU, each year the Commission, in cooperation with the EU Member States, submits a report to the European Parliament and to the Council on the measures taken for the implementation of the article (known as the PIF Report);

B.whereas sound public spending and the protection of the EU’s financial interests should be key elements of EU policy in order to increase citizens’ confidence by ensuring that taxpayers’ money is used properly and effectively;

C.whereas the PIF Report is based on information provided by the Member States, including data on irregularities and fraud detected;

D.whereas the number of fraudulent irregularities detected and reported demonstrates the results of Member States’ efforts to counter fraud and other illegal activities and should not be interpreted as an indication of the level of fraud in the Member States;

E.whereas there are different levels and actors involved in the protection of the EU budget through prevention (interruption and suspension of payments), detection, financial corrections and the recovery of money unduly paid;

F.whereas the Early Detection and Exclusion System protects the EU budget from risks of insolvency, negligence, fraud or irregularity committed by private actors;

G.whereas the rule of law conditionality mechanism allows measures to be taken in cases of breaches of the rule of law principles that affect or seriously risk affecting the sound financial management of the EU budget or the EU’s financial interests;

H.whereas the Article 22 of Regulation (EU) 2021/241 of the European Parliament and of the Council of 12 February 2021 establishing the Recovery and Resilience Facility (the RRF Regulation) contains provisions concerning the protection of the EU’s financial interests;

I.whereas the varying levels of digitalisation in the Member States needs to be addressed by the creation of more unified, interoperable and comparable administrative and reporting systems in the EU, which are functional and necessary for a solid comprehensive analysis and for the effective prevention of irregularities and countering of fraud and corruption;

J.whereas cooperation with international partners is crucial to protect EU funds spent outside Europe and the revenue side of the EU budget;

General remarks

1.Welcomes the PIF Report 2022 and the analyses presented therein;

2.Shares the view that fraud prevention and detection must rely on further digitalisation in order to increase the accessibility and use of data; points out that efficient anti-fraud governance and effective result-oriented processes and adequately equipped structures must be in place to ensure cooperation and coordination between all the components of the anti-fraud architecture and the relevant actors;

3.Appreciates the efforts made by the Commission to anticipate the publication of the annual PIF Report, which allows Parliament’s resolution to be adopted within year n+1 and makes the remarks and recommendations contained therein more topical;

4.Appreciates the improved overall coherence of the anti-fraud legislation across the EU, following the actions undertaken to transpose the EU rules into national systems correctly; observes that, in some respects, the situation is still sub-optimal, in particular as regards the detection and reporting of suspected fraud and irregularities and their follow-up, for which the differences between Member States are still very notable;

5.Shares the Commission’s view that fraud risk analysis should be enhanced in order to assess whether reporting low levels of fraud is a consequence of a genuinely low occurrence of misconduct or a consequence of weak detection;

6.Regrets the fact that in many Member States national authorities do not always follow up on the Commission’s recommendations, report exhaustively or adopt acknowledged good practices in a timely manner; points out that in many Member States, the percentage of irregularities that are still classified as suspected fraud many years after they were initially reported is extremely high, even in relation to cases indicated as closed; believes that such situations might suggest a lack of adequate follow-up, insufficient or inadequately trained resources, communication gaps or inefficient reporting channels, weak cooperation and coordination, or even the unjustified postponement of reclassifying irregularities as fraudulent in order to adjust the statistical reporting;

7.Notes that the number of cases of fraud and irregularities reported by the competent EU and national authorities – 12 455 in total – slightly increased in 2022 compared to 2021; observes that the affected financing related to these cases in 2022 decreased to EUR 1.77 billion (from EUR 3.24 in 2021);

8.Is aware that the year-to-year comparison of the reporting of irregularities does not always offer a reliable analysis of trends and patterns because of the multiannual cycle of implementation of numerous programmes; considers that the comparison with a five-year average is more suitable for identifying real-time situations; appreciates in this context that, in the PIF Report 2022, reference is frequently made to the results of the 2018-2021 period;

9.Believes that involvement of civil society and the private sector in the efforts to combat fraud would enhance prevention and detection, and that this implies support to confidential channels and/or whistleblowers and investigative journalists, and that the latter can be effective insofar as access is given to information on projects, beneficiaries and payments;

10.Welcomes the joint communication from the Commission and the High Representative of the Union for Foreign Affairs and Security Policy of 3 May 2023 on the fight against corruption (JOIN(2023)0012), acknowledging the seriousness of corruption, as it undermines the efficiency of public spending, the effectiveness of the single market and the sustainability of economic growth; points out that the fight against corruption is one of the commitments of the Union, on a par with transparency and integrity;

11.Is concerned about the fact that it is difficult to estimate the extent to which organised crime is benefiting illegally from the EU’s finances with any great precision; maintains that a common approach to assess the impact of organised crime on EU funds and to evaluate the effectiveness of the measures taken to tackle the problem is needed across the Member States; calls on the Commission to swiftly launch all necessary actions to pursue this harmonisation;

12.Maintains that the lack of efficient transposition of national legislation in many Member States offers opportunities to organised crime for a number of illegal cross-border activities in areas affecting the Union’s financial interests; reiterates, therefore, its previous calls for the revision of Council Framework Decision 2008/841/JHA on the fight against organised crime;

13.Observes that the EU Strategy to tackle Organised Crime 2021-2025 aims to set out the tools and measures to disrupt the business models and structures of criminal organisations across borders, both online and offline; calls on the Member States to contribute on the Commission’s efforts and to establish regional cooperation networks for sharing information on cases and strategies to combat fraud perpetrated by organised criminals; recalls, in this regard, the importance of the proposed new Directive on Asset Recovery and Confiscation whose effective implementation would provide authorities with better tools to deprive organised crime groups of the financial means to carry out further criminal activities;

14.Points out that in relation to corruption cases, the EPPO reported 87 investigated offences at the end of 2022 (compared to 40 cases investigated in the first seven months of operational activities in 2021); remarks that in the Irregularity Management System (IMS), from 2018-2022, 30 cases were reported by 10 Member States, 5 relating to agriculture, 22 to cohesion and 3 to pre-accession with an overall financial impact estimated at about EUR 50 million;

15.Stresses once again that corruption, particularly high-level corruption, including in EU institutions, is a particularly serious crime with the potential to extend across borders, affecting the Union’s financial interests and the EU economy as a whole, and undermining citizens’ trust in democratic institutions in the EU and in the Member States; reiterates that within the EU institutions there must be a zero-tolerance policy towards corruption; supports mainstreaming anti-corruption into EU policy design;

16.Welcomes the fact that the Commission has included a specific section on anti-corruption in its report on the rule of law in order to provide an in-depth comparative analysis of the approaches, procedures and tools used by the Member States in their fight against corruption and to help to assess which areas are most at risk;

17.Observes that, via IMS, in the period 2018-2022, 375 cases related to conflicts of interest were reported, which is often detected in environments similar to those where corrupt practices occur; underlines that the large majority of reported cases of conflicts of interest are linked to the implementation of cohesion policies (86 % compared to 9 % for agriculture and 5 % for pre-accession), involving almost EUR 117 million overall for this period; underlines that the reported conflicts of interest mainly point to relations between recipients of the funds and their contractors and sub-contractors, while only 7 % of cases refer to conflicts of interest during the stage of awarding and/or evaluating projects, thereby involving members of evaluation committees;

18.Believes that this could be an indicator of the positive impact and deterrent effect of the amendments to the financial rules, which have been made applicable to all national authorities handling EU funds, together with the fact that one third of the cases were detected through sources external to the management and control system, including whistleblowers and investigative journalists, which suggests an adequate level of transparency and accessibility and contributions from civil society;

19.Is also aware that the overall occurrence of cases of conflicts of interest is higher than reported in the IMS, as indicated by the additional information received by the Commission’s Directorates-General for Regional and Urban Policy and for Employment, Social Affairs and Inclusion about conflict of interest cases and related recoveries in public procurement in the European Social Fund, Cohesion Fund and European Regional Development Fund, reported directly from the Member States via the EU’s fund management system (known as the SFC, which in 2014-2020 presented 31 additional cases related to 16 programmes in 11 Member States with an impact of EUR 3.4 million);

Revenue

20.Observes that, in 2022, the overall number of fraudulent and not fraudulent irregularities related to Traditional Own Resources (TOR) (4 661) was 7.6 % higher compared to the five-year average (2018-2022); notes with concern that the overall amounts affected by such irregularities, as estimated and established by Member States, also noticeably increased (by 47 %, reaching EUR 783 million); highlights, on the same issue, that the overall recovery rate in 2022 for both fraudulent and non-fraudulent cases was only 48 % (compared with 54 % in 2021) and that the figure for fraudulent cases was only 25 %, which was distributed across Member States very heterogeneously;

21.Points out that, in 2022, for only 19 new write-off reports submitted to the Commission by six Member States, the Commission considered that it had been satisfactorily demonstrated that TOR had been lost for reasons not imputable to the Member States in question and that they were not financially responsible for the loss, while in 82 cases amounting to almost EUR 39 million, the Commission considered that the Member States had not satisfactorily demonstrated that TOR had been lost for reasons not imputable to them and they were kept financially responsible for the loss (the Commission assessed 135 cases totalling EUR 76.8 million in 2022); encourages the Commission to retain this effective mechanism of revising the write-off cases in order to foster the effectiveness of national administrations’ recovery actions;

22.Notes that, again in 2022, inspections by anti-fraud services and post-release controls were the most successful detection tools for fraudulent and non-fraudulent irregularities, respectively, combined, increasingly, with tax audits and release controls; stresses that in 2022, smuggling, incorrect value and incorrect classification and misdescription of goods were the main modi operandi in fraudulent cases, with a particular increase in reported cases of cigarette smuggling;

23.Notes that, in monetary terms, China remained the major country of origin of goods affected by irregularities, the United States and Vietnam being second and third, and that textiles and footwear were the goods most affected, in terms of both the number and the value of the cases detected and reported;

24.Reiterates its call to mitigate the VAT gap by addressing the lack of resources, the limited digital efficiency in tax administrations and the legislative loopholes which limit the efficacy of the measures to counter tax evasion and tax avoidance; recalls that strengthening administrative cooperation is the most effective way to counter cross-border VAT fraud;

25.Highlights that the EPPO has the competence to investigate serious offences against the common VAT system, connected with the territory of two or more Member States and involving total damage of at least EUR 10 million; is concerned about the data reported in the EPPO annual report for 2022, indicating that 16.5 % of its active investigations (185) were linked to VAT fraud, but that these account for 47 % of the estimated damage (EUR 6.7 billion);

26.Welcomes the Commission’s second report, published on 16 September 2022, on the implementation of the PIF Directive (COM(2022)0466), but regrets the fact that the Commission refrained from intervening on the revision of the threshold of EUR 10 million, which has a major impact on the EPPO’s activities in VAT fraud cases; stresses that the recurrent and still pending questions on the different interpretations of the methods applied to calculate the threshold (whether the damage occurring in several Member States should be aggregated, whether the countries included in the calculation should be confined to those participating in the EPPO) make the situation unclear; strongly believes that the current threshold limits dissuasiveness, allows perpetrators to seek out the weakest jurisdiction to evade the EPPO and has a detrimental effect on investigations, as the national authorities often do not have a full picture of the magnitude of the criminal activities at the initial stage of the investigation; calls on the Commission to reconsider its position in the next PIF Directive transposition report and remove the threshold, or substantially lower it, while in the meantime providing adequate guidance on the calculation method;

Expenditure

27.Observes that the number of fraudulent and non-fraudulent irregularities reported as affecting the rural development implementing actions increased in the period 2018-2022, mainly owing to the increased detection rate in respect of actions within the programming period 2014-2022; points out, however, that the number of fraudulent cases detected and reported is still lower than expected, and that this calls for increased monitoring of the situation;

28.Remarks that even if in 2022 the fraudulent irregularities reported under support to agriculture increased in comparison with 2021, the detection rates for rural development were noticeably higher than for support to agriculture; notes that within support to agriculture, the highest level of fraud was reported for market measures and that several complex cases related to the promotion of agricultural products were investigated by OLAF;

29.Regrets that during the period 2018-2022, in both rural development and direct payments, the contributions to the detection of fraudulent cases provided by risk analysis, whistleblowers, informants and investigative journalists has been very limited; is also concerned about the length of the administrative procedures opened to deal with the fraudulent cases reported, which, on average and during 2014-2022, required nearly four years from the start of the irregularity to arrive at a suspicion of fraudulent activity, and nearly three more years to close the case after reporting it to the Commission; points out that, for cohesion, it took about a year and a half to arrive at a suspicion that a fraudulent irregularity had been committed and more than two years to close the fraudulent case after reporting it to the Commission;

30.Notes that the greatest number of irregularities reported in 2022, both fraudulent and non-fraudulent, affected the European Regional Development Fund (ERDF, for respectively 59 % and 67 %) and, to a minor extent, the European Social Fund (ESF, for respectively 27 % and 20 %); points out that the areas most at risk are transport and environmental protection, owing to the large amounts of money affected by the misconduct, and Research, Technological Development and Innovation (RTD&I), where the recurrence of fraudulent irregularities is the highest;

31.Is concerned about the fact that in 2022 the number of reported irregularities affecting the Instrument for Pre-Accession (IPA) peaked, and is aware that the cases concern the 2007-2013 Instrument for Pre-Accession Assistance I (IPA I) and 2014-2020 Instrument for Pre-Accession Assistance II (IPA II); calls on the Commission to build on the lessons learnt in relation to these instruments to fraud-proof the future actions and initiatives with identical or similar goals, such as in the case of Ukraine, which is expected to receive very relevant resources from IPA and Horizon Europe, and where the correct deployment of resources, even in very difficult conditions, is paramount for the efficacy and effectiveness of the accession process;

32.Emphasises that in the area of cohesion policy, the number and financial amounts of the non-fraudulent irregularities that had been reported during the first nine years of the programming period 2007-2013 were much higher than those being reported during the programming period 2014-2020 and that this trend concerns all funds and most of the Member States;

33.Observes that for cohesion policy, the most frequent type of fraudulent violation reported in the IMS concerns the supporting documents (incorrect, missing, false or falsified), while for non-fraudulent irregularities, the infringement of public procurement rules is the most reported;

34.Notes that, in 2022, the recovery items registered for irregularities were 770 (compared to 879 in 2021), of which 37 were for fraudulent cases (compared to 54 reported as fraudulent in 2021) amounting to EUR 61.28 million (of which EUR 5.67 million were for fraud, compared to EUR 7.04 million in 2021);

35.Observes that, overall, for direct management, the detected fraudulent irregularities have remained stable over the 2018-2022 period; appreciates that, for direct management in the period 2018-2022, OLAF is indicated as the source of detection for 88 % of the recovery items linked to irregularities reported as fraudulent, corresponding to 92 % of the total recovery amounts; observes that about 97 % of the irregularities not reported as fraud were detected through Commission controls;

36.Notes that, between 2018 and 2022, average recovery remains at positive levels, with an average recovery rate of 56 % (resulting from 34 % for ‘irregularities reported as fraudulent’ and 59 % for ‘irregularities not reported as fraudulent’);

NextGenerationEU (NGEU) and the Recovery and Resilience Facility (RRF)

37.Is aware that the implementation of the RRF is reaching its peak and that the regulation governing its deployment requires Member States to put in place effective and efficient control systems, with a view to protecting the Union’s financial interests and ensuring compliance with EU and national rules; points out that, in particular, the countering of fraud, corruption, conflicts of interest (defined as ‘serious irregularities’) and double funding should receive appropriate resources and attention;

38.Observes that the Commission assessed these control systems prior to the approval of the plans, and subsequently, in 2022, carried out 16 system audits targeting the protection of the EU’s financial interests, covering the coordination and implementing bodies, such as ministries and agencies; expresses appreciation that the Commission is planning to audit all Member States at least once by the end of 2023, and welcomes the selection of the audit targets on the basis of a risk assessment;

39.Remarks that the Commission’s audit work has confirmed variations in the internal control systems across the implementing and coordinating bodies, identifying good practices in some of the procedures in place to verify and prevent fraud, corruption, conflicts of interest and double funding;

40.Reiterates that the effective prevention, detection and investigation of illegal activities threatening the implementation of the NGEU depend on the effective collection and sharing of data, including the rapid handling of access requests from investigative services within a Member State, as well as from other countries or at EU level, by OLAF and the EPPO to whom access is to be granted;

41.Welcomes the joint analysis by Europol and OLAF assessing the risks of fraud and irregularities in relation to the NGEU; welcomes the recommendations made by Europol and OLAF and calls on the Commission, the specialised EU agencies and bodies, as well as Member States, to actively cooperate and interact to ensure the protection of the EU’s financial interests when implementing the NGEU;

42.Welcomes the Ombudsman’s strategic initiative, launched in February 2022, conducted to examine the transparency of the national recovery and resilience plans, public information and communication strategies on the RRF, and on how the funds are supervised;

Digitalisation and transparency to enhance the fight against fraud

43.Welcomes the ECA Review 04/2023 entitled ‘Digitalising the management of EU funds’, which stresses that digitalisation has the potential to make the auditing of EU funds more efficient; highlights ECA’s observations that there are many variations in the degree of digitalisation of EU spending, most centralised where the Commission has direct management and more fragmented for the other management modes, such as under shared management;

44.Is aware that the efforts made by the Commission and other implementing bodies to digitalise the EU budget have to overcome many obstacles in order to enhance compatibility between the IT systems used by the many entities involved; appreciates, in this regard, the consistency of the communication to the Commission of 30 June 2022 entitled ‘European Commission digital strategy – Next generation digital Commission’ (C(2022)4388);

45.Maintains that digitalisation has boosted the prevention and detection of fraud, simplified administrative procedures and that it needs to be at the heart of every anti-fraud strategy, including the National Anti-Fraud Strategies (NAFS); calls on the Commission to reiterate and follow up on its recommendations to the Member States which have not yet adopted NAFS to do so, and to keep the NAFS updated, taking advantage of the opportunities offered by new technologies;

46.Notes that among the available options, Arachne was by far the most widely-used IT system (by 21 Member States), in support of the European Structural and Investment Funds (ESIF) and the RRF; observes that many Member States used their own dedicated anti-fraud IT tools, often in conjunction with EU tools, although those tools were rarely interoperable;

47.Reiterates its support for the single integrated IT system for data-mining and risk-scoring envisaged by the Financial Regulation recast, which should ensure better protection of the Union’s financial interests;

48.Notes that the digitalisation of the fight against fraud is also one of the focuses of the revision of the action plan launched in 2022 accompanying the Commission Anti-Fraud Strategy (CAFS), adopted in 2019 and which needs to be adjusted to the rapidly shifting economic and social scenarios and to the new challenges; is aware that the Commission successfully implemented 60 of the total of 63 actions and that some of these are continuous in nature and ongoing; invites the Commission to present to Parliament the underlying standards and criteria that the revised action plan will endorse;

The EU anti-fraud architecture and key measures in 2022

49.Welcomes the actions launched by the Commission in 2022 to enhance the level of protection of the EU’s financial interests;

50.Points out that the Union’s anti-fraud programme (UAFP) has been set up for a period of seven years, from 2021 to 2027, and 2022 is its second year of implementation, under direct management mode with OLAF as the lead service for programme implementation;

51.Observes that the 2022 Financing Decision allocated EUR 15.4 million to the Hercule component, EUR 9 million for the Anti-Fraud Information System (AFIS) component and about EUR 1 million for the IMS component, which resulted in awarding of grants to the relevant implementing bodies and in the financing of specialised training, databases, support for research, monitoring and analyses;

52.Points out that the IMS is now being used by 35 countries, encompassing Member States and other beneficiary countries, with around 700 reporting organisations, covering over 3 000 IMS users and several fields, including the RRF and other fields such as asylum, neighbourhood and pre-accession, in addition to the traditional areas of agriculture, cohesion and fisheries;

53.Appreciates the complementary roles of the Fiscalis, customs and customs control equipment instrument programmes and believes that the synergistic effects of the deployment of this financial support brings tangible improvements in the fields of taxation, the sharing of risk-related information and the upgrading to state-of-art customs control equipment;

54.Remarks that, in 2022, 22 Member States already participated in the EPPO, with the same five countries as in 2021 abstaining; insists that Member States which have not yet participated, must do so without delay;

55.Welcomes the EPPO annual report for 2022, providing the results of the first full calendar year of operational activities; observes that the EPPO processed 3 318 crime reports (compared to 2 832 received in the seven months of operational activity in 2021) and opened 865 investigations in 2022 (576 were opened in June-December 2021); underlines the freezing of EUR 359.1 million (compared to EUR 157.3 in 2021) following EPPO investigations, representing more than seven times the EPPO’s budget and that, by the end of 2022, the EPPO estimated damages of EUR 14.1 billion resulting from misconduct on which it had a total of 1 117 active investigations;

56.Calls on the Commission to engage in a constructive dialogue with the EPPO, with a view to strengthening the Office’s capacity to tackle the constantly increasing challenges in the anti-fraud landscape;

57.Welcomes the increased detection efforts and their results, which follow the calls from the EPPO and Parliament, indicated by a number of investigations into EU fraud initiated in the 22 participating Member States, which is higher than the historical average before the EPPO’s establishment; praises, in this regard, Operation Admiral which brought to light a VAT carousel fraud perpetrated by an organised group of criminals operating in several Member States, responsible for an estimated EUR 2.2 billion fraud;

58.Praises the cooperation between OLAF and the EPPO, which is highlighted in both OLAF’s and the EPPO’s annual reports; understands that regular exchanges of information occur between the two offices, notably the EPPO having replied to 133 hit/no-hit requests sent by OLAF in order to avoid parallel investigations into the same facts; calls on OLAF and the EPPO to coordinate their reporting on the actions launched to make their cooperation tangible, having specific regard to the number of complementary investigations requested by OLAF (ex Article 12(f) EPPO Regulation) and the number of cases to support EPPO investigations requested by the EPPO (ex Article 12(e) EPPO Regulation);

59.Is aware that the first annual high-level review of the cooperation between the EPPO and the Commission took place in September 2022, addressing, among others, issues on mutual reporting, access to databases and the institutional status of the EPPO;

60.Is concerned by the lack of information on the administrative recovery of sums due to the Union budget, carried out by the Commission following input from the EPPO, as provided for by Article 103(2) of the EPPO Regulation, referring to the EPPO’s obligation to inform the Commission without delay and without prejudice to confidentiality, and as provided for by Article 6(4)(c) of the EPPO-COM Agreement signed on 18 June 2021, referring to protective and corrective measures; asks the Commission and the EPPO to inform Parliament about the implementation of this important tool;

61.Notes that the EPPO and Europol have efficiently cooperated on various operational matters, under the aegis of the EPPO-Europol Steering Committee; understands that Europol provided support (information exchange, analytical support, expertise) on 28 cases upon the EPPO’s request and that the EPPO has become part of the Secure Information Exchange Network Application (SIENA), which ensures a secure communication channel in operational cooperation;

62.Notes that, in 2022, cooperation between the relevant actors occurred in a satisfactory way, with the EPPO-Eurojust liaison teams meeting twice in 2022, with 15 ongoing EPPO cases handled at Eurojust, and the investigative division of the European Investment Bank (EIB IG/IN) making 63 referrals to OLAF, the EPPO and other agencies within the multilateral development banks and the national development agencies entrusted with inherent activities; remarks that in September 2022 around 100 EPPO prosecutors and staff participated in an online awareness-raising session about EIB and EIF activities to increase the effectiveness of the cooperation between the EPPO and IG/IN as established under the 2021 working arrangement;

63.Observes that in 2022 the exclusion proceedings launched by the EIB following IG/IN investigations resulted in the exclusion of four economic operators from participating in any EIB-financed projects or activities; calls on the Commission to explore the possibility of making more uniform the exclusion criteria used by the EIB and the EIF in respect of those used in the Early Detection and Exclusion System (EDES), considering that the Financial and Administrative Framework Agreements with the EIB and the EIF cover only five of the seven EDES exclusion situations;

64.Reiterates that Member States’ ineffective or untimely cooperation or non-cooperation with the EPPO and OLAF constitute grounds for action under the Conditionality Regulation; calls on the EPPO and OLAF to therefore report each case where Member States have failed to comply with their obligations to inform, to assist, to take appropriate action and precautionary measures and to ensure an appropriate and timely follow-up of reports and recommendations;

65.Understands that the overall level of implementation of the Commission’s recommendations issued in the PIF Report 2021 across the Member States is considered satisfactory as regards the integration of dedicated IT anti-fraud tools into their fight against fraud, the strengthening of risk analysis and, in general, the development of IT systems both on the revenue and expenditure sides;

66.Endorses the Commission’s intention to launch a monitoring exercise on the state of play of the Anti-Fraud Coordination Services (AFCOS) established in the Member States; recalls that the definition of AFCOS’ structure, role, responsibilities and mandate should be better clarified to guarantee homogeneous and harmonised situations across the Union, thereby facilitating their cooperation and exchange of information; asks the Commission once again to update the AFCOS guidelines initially formulated in 2015, which are no longer adequate to effectively assist the national authorities in developing a well-structured coordination service; asks the Commission, furthermore, to report about the work in progress in this regard and the results of the monitoring exercise to the discharge authority;

67.Remarks that the NAFS need to be adopted or updated by many Member States, and reiterates that the need for such revisions stems from the new anti-fraud landscape, with the EPPO now fully operational, and from the opportunity to reflect new significant risks in the increasingly complex fraud landscape;

68.Reiterates its appreciation for the Commission’s encouragement to Member States to adopt NAFS, which has so far resulted in an increase in the number of NAFS adopted;

69.Notes that, by the end of 2022, only three Member States (Finland, Ireland and Poland) indicated that they had not adopted any strategy for protecting the EU’s financial interests and five (Belgium, Spain, Luxembourg, the Netherlands and Romania) indicated that they were in the process of establishing one, while the other Member States have alternative strategies at national, regional or sectoral level or, in some cases, combine them;

70.Believes that Member States would benefit from a periodic evaluation of their anti-fraud frameworks, with EU guidance as appropriate, oriented towards establishing their effectiveness, identifying best practices and reviewing their anti-fraud strategies to address any emerging risks; calls on the Commission to encourage Member States to run independent or peer reviews of the anti-fraud frameworks to enhance consistency and high standards;

71.Maintains that the Conditionality Regulation is a permanent instrument which goes beyond the limits of a given multiannual financial framework and is to be applied horizontally, as a requirement for enforcing sound financial management principles, in general, and for the efficient and effective management of EU resources, in particular, and that it is a prerequisite for accessing all EU funds;

72.Takes note of the Council decision of 16 December 2022 to suspend the disbursement of EUR 6.3 billion of EU funds to Hungary; expects the Commission and the Council to lift the adopted measures only where evidence is collected that the remedial measures adopted by the Hungarian Government have proven effective in practice and, in particular, that no regression has been detected on already adopted measures; reiterates, however, its opinion that the 17 measures alone, as negotiated by the Commission and the Hungarian Government, are not sufficient to address the existing systemic risk to the EU’s financial interests and regrets that the Commission did not request sufficient substantial changes and safeguards to restore the independence of the judiciary and reduce the level of corruption;

73.Calls on the Commission to inform Parliament and the Council swiftly and regularly about any relevant developments and reminds the Commission, in particular, of its legal obligations set out in Article 25(2) of the RRF Regulation and Article 8 of the Conditionality Regulation;

74.Is concerned by the findings of the Third Rule of Law Report on the critical situation in Poland, in particular as regards the serious shortcomings in the judiciary and the media sector; recalls that Poland’s non-compliance with the rulings of the Court of Justice of the European Union has resulted in the payment of EUR 360 million in fines since 2021 and strongly encourages the Commission to keep withholding payments from the RRF until all the conditions for a full integration of the rule of law have been fully satisfied;

External dimension of the protection of the EU’s financial interests

75.Believes that the proposal for the establishment of a horizontal common foreign and security policy sanction framework is complementary to the existing tools and internal and external policy actions against corruption, already endorsed in the enlargement process or within the Eastern Partnership; takes the view that a stronger engagement in international forums such as United Nations Convention Against Corruption (UNCAC) and Group of States Against Corruption (GRECO) will help to promote good governance and the rule of law as one of the major priorities of the enlargement process;

76.Remarks that from 2021 to 2022, both the number of non-fraudulent irregularities and the financial amounts involved experienced exceptional increases; notes that the increased number of cases was due to irregularities related to the 2014-2020 IPA II in relation to pre-accession assistance for rural development (IPARD) in North Macedonia and Türkiye, and that for most of these irregularities the financial amounts involved were below EUR 10 000, while the increase in financial amounts was due to irregularities concerning IPARD in Albania; underlines that about 10 % of the irregularities were reported as fraudulent and that this percentage, which changes over time, increased significantly in 2020 (17 %), peaking in 2021 at 20 %; calls on the Commission to maintain an adequate monitoring level on these funding initiatives and to report to Parliament about possible systemic issues detected in the deployment of the resources;

77.Believes that funds under the Neighbourhood, Development and International Cooperation Instrument – Global Europe (NDICI-Global Europe) for assistance in non-EU countries and the resources allocated for Europe’s response to the war in Ukraine are not adequately monitored and controlled;

78.Highlights the fact that cooperation with international partners is crucial to protect EU funds spent outside Europe and the revenue side of the EU budget; welcomes, therefore, the working arrangements that the EPPO concluded in 2022, with the Prosecutor General’s Office of Ukraine, the Prosecutor General’s Office of the Republic of Albania, the Prosecutor General’s Office of the Republic of Moldova, the Supreme State Prosecutor’s Office of Montenegro, the Prosecution Service of Georgia and the State Public Prosecutor’s Office of the Republic of North Macedonia and the Memorandum of Understanding (MoU) and Working Arrangement on Cooperation signed with the United States Department of Justice and Department of Homeland Security;

79.Reaffirms its strong belief that only by strengthening the EU anti-fraud architecture can the protection of the EU’s financial interests be effectively and efficiently pursued and enhanced, overcoming the inherent limits of the national systems which are not sufficient to counter the increasingly transnational attacks against the Union’s financial interests;

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80.Instructs its President to forward this resolution to the Council and the Commission.