Change the fraud legislation, or a referral to the European Court of Justice

The European Commission has announced that it has sent a letter of reasoned opinion to Greece, as it did not correctly transpose the Directive on combating fraud to the detriment of the Union’s financial interests (known as the FRA Directive) into national law.

These rules, on the one hand, strengthen the level of protection of the EU budget by harmonizing the definitions, penalties and limitation periods for criminal offenses affecting the financial interests of the Union. On the other hand, they establish the creation of the European Public Prosecutor’s Office (EPPO).

In December 2021, the Commission sent a letter of warning to Greece for the first time. After analyzing the responses of the Greek authorities, it was concluded that Greece has not correctly transposed into its national law the provisions of the directive defining the concept of “passive bribery” and “public official”.

In addition, it observed that certain provisions adopted by Greece limit the effectiveness and deterrence of sanctions provided for criminal offenses falling within the scope of the Directive.

The Commission therefore decided to issue reasoned opinion to Greecegiving her a period of two months to respond and correct the deficiencies observed. Otherwise, the Commission may decide to refer the case to Court of Justice of the European Union.

What is the purpose of the directive?

The purpose of the directive is to create a stronger and more harmonized system with a minimum of common rules, with the aim of effectively fighting crime affecting the European Union (EU) budget and better protecting the EU’s financial interests and its taxpayers’ money EU.

The following are covered:

• fraud and other criminal offences, such as corruption, embezzlement or money laundering, which affect the EU’s financial interests – i.e. the EU budget, the budgets of the EU institutions and bodies established by the Treaties, or the budgets directly or indirectly managed and supervised by those bodies and agencies;
• serious offenses against the common value added tax (VAT) system, such as VAT chain fraud* i.e. offenses are considered serious when they are linked to the territory of two or more EU Member States and involve a total loss of at least 10 000 000 euros.

In addition, the Directive establishes common rules on penalties and limitation periods for the criminal offenses it covers.

Each of the following offenses is defined at EU level:

• Intentional fraud in relation to procurement and non-procurement expenditure, as well as in respect of VAT own resources and other revenues.
• Money laundering as defined in Directive (EU) 2015/849.
• Passive and active bribery, when done intentionally.
• Embezzlement, when done intentionally.

In addition, the Directive defines “public officials”, including EU officials and national civil servants in Member States, and this definition relates to money laundering, bribery and embezzlement.

Under the directive, criminal offenses fall under the remit of the European Public Prosecutor’s Office, an independent EU body empowered to investigate and prosecute such crimes. In addition, the European Public Prosecutor’s Office has the power to refer cases to justice before the competent national courts.

In all Member States except Denmark and the United Kingdom, the above offenses shall be punishable as criminal offencesincluding attempting, inciting, aiding and abetting their commission.

In addition, legal persons should be liable for any criminal offense committed for their benefit, including the possibility of criminal prosecution of the persons who are the perpetrators or who bear sole responsibility.

As regards sanctions, the directive defines minimum criminal penalties as “effective, proportionate and dissuasive”.

These penalties include a maximum term of imprisonment of at least four years in three main cases:

• When the financial loss to the EU budget exceeds the threshold of 100,000 euros.
• In cases of serious offenses against the common VAT system.
• In other serious circumstances defined by national law.
• In cases where the financial loss does not exceed EUR 10,000, Member States may impose non-criminal sanctions.

As regards legal persons, the Directive provides for various types of sanctions other than financial penalties, including penalties of a non-criminal nature.