For a brief overview of the key points of the adopted text and its significance for the citizen, please see the corresponding summary note.

On 30 May 2018 – as part of the new Multiannual Financial Framework (MFF) - the Commission published a proposal for a new Regulation establishing the EU Anti-Fraud Programme. The proposal aims to replace Hercule III programme (Regulation 250/2014) and combine it with the financing basis for the Anti-Fraud Information System (AFIS) and the Irregularity Management System (IMS).

AFIS is an operational activity consisting in a set of customs IT applications set up to perform the tasks entrusted to the Commission by Regulation 515/97 on mutual assistance between the administrative authorities of the Member States and cooperation between the latter and the Commission to ensure the correct application of the law on customs and agricultural matters.

The IMS is a secure electronic communications tool which facilitates the Member States' obligation to report detected irregularities, including fraud, and which supports the management and analysis of these.

The EU Anti-Fraud Programme will have two general objectives:

- Protecting the financial interests of the European Union.

- Support to mutual assistance between the administrative authorities of the Member States and cooperation between the latter and the Commission to ensure the correct application of the law on customs and agricultural matters.

The specific objectives of the programme will be:

- Preventing and combating fraud, corruption and any other illegal activities affecting the financial interests of the Union.

- Supporting the reporting of irregularities, including fraud, with regard to the shared management and pre-accession assistance funds of the Union budget;

- Providing tools for information exchange and support for operational activities in the field of mutual administrative assistance in customs and agricultural matters.

Within the European Parliament, the proposal was referred to the Budget Control Committee (CONT). On 29 January 2019, CONT adopted its final report. The position of the European Parliament adopted at first reading during the plenary session on 12 February 2019 modifies the Commission proposal in several aspects:

Budget

Members proposed that the financial envelope for the implementation of the programme for the period 2021-2027 should be set at EUR 321 314 000 at 2018 prices (EUR 362 414 000 in current prices), compared with EUR 181 207 000 in current prices proposed by the European Commission.

This envelope would be distributed as follows:

- EUR 202 512 000 at 2018 prices (EUR 228 414 000 in current prices) to prevent and combat fraud, corruption and any other illegal activity affecting the Union's financial interests;

- EUR 12 412 000 at 2018 prices (EUR 14 000 000 in current prices) to encourage the reporting of irregularities, including fraud, with regard to shared management and pre-accession aid funds from the Union budget;

- EUR 106 390 000 at 2018 prices (EUR 120 000 000 at current prices) to provide tools for the exchange of information and support for operational activities in the field of mutual administrative assistance in customs and agricultural matters.

The Commission would be given the power to redistribute funds between the different objectives. In view of the need to protect the EU’s financial interests, the indicative breakdown should give due consideration to the fact that the programme is the only one specifically to protect the expenditure side of the EU budget.

Eligible actions

To be eligible for funding, the actions supported should include:

- provide technical knowledge and provide specialized and technically advanced equipment and effective IT tools improving transnational and multidisciplinary cooperation and cooperation with the Commission;

- intensify staff exchanges in the context of specific projects and facilitate investigations, including the establishment of investigation teams and joint cross-border operations;

- provide technical and operational support to national surveys;

- strengthen the IT capacities of all Member States and third countries;

- organize specialized training, risk analysis workshops, conferences and studies aimed at improving cooperation and coordination between the services concerned.

Co-financing rates

The maximum rates for co-financing for grants under the programme should not exceed 80 % of the eligible costs except for exceptional and duly justified cases.

Synergies

The Commission should explore possible synergies between the programme and other relevant programmes in areas such as Justice, Customs and Home Affairs, and ensure that duplication is avoided. 

On 8 October 2019 the Committee on Budgetary Control (CONT) decided to enter into inter-institutional negotiations concerning the EU Anti-Fraud Programme. According to the conclusions of the European Council held on 20 July 2020 the Commission is invited to present measures to ensure the collection and comparability of information on the final beneficiaries of EU funding for purposes of control and audit to be included in the relevant basis acts.

On 11 January 2021 the Committee on Budgetary Control recommended the approval of the text which had been agreed at early 2nd reading interinstitutional negotiations. On 16 March 2021, the Council formally adopted its position at first reading, accordingly setting the financial envelope for the programme at €181.2 million in current prices. The co-financing rate for grants will not exceed 80 % of eligible costs (90 % in exceptional cases). Upon recommendation by CONT, the plenary of the European Parliament approved the text in plenary on 29 April 2021. The final act was published in the Official Journal on 17 May 2021 and applied from 1 January 2021.

References:

• EP Legislative Observatory, Procedure file on a Regulation on the EU anti-fraud programme 2021–2027, 2018/0211(COD)
• European Commission, Proposal for a Regulation of the European Parliament and of the Council establishing the EU Anti-Fraud Programme, COM(2018) 386
• European Parliament, EPRS, EU anti-fraud programme 2021-2027, February 2019
• Provisional agreement resulting from interinstitutional negotiations, 7 January 2021
• 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

Author: Karoline Kowald, Members' Research Service, legislative-train@europarl.europa.eu