Changes from report parliamentary committee draft to plenary report

MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION

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on the protection of the European Union’s financial interests – combating fraud – annual report 2023

(2024/2083(INI))

The European Parliament,

– having regard to Articles 310(6) and 325(5) of the Treaty on the Functioning of the European Union (TFEU),

– having regard to the Commission report of 25 July 2024 entitled ‘35th Annual Report on the protection of the European Union’s financial interests and the fight against fraud – 2023’ (COM(2024)0318) (2023 PIF Report),

– having regard to the European Anti-Fraud Office (OLAF) 2023 annual report and the Activity report of the Supervisory Committee of OLAF – 2023,

– having regard to the European Public Prosecutor’s Office (EPPO) 2023 Annual Report published on 1 March 2024,

– having regard to Regulation (EU, Euratom) 2020/2092 of the European Parliament and of the Council of 16 December 2020 on a general regime of conditionality for the protection of the Union budget (the Conditionality Regulation),

Removed– having regard to the study entitled ‘Compliance assessment of measures adopted by the Member States to adapt their systems to Council Regulation (EU) 2017/1939 of 12 October 2017 implementing enhanced cooperation on the establishment of the European Public Prosecutor’s Office’ (the EPPO Regulation) and its extension, both published in December 2023,

– having regard to Directive (EU) 2019/1937 of the European Parliament and of the Council of 23 October 2019 on the protection of persons who report breaches of Union law (the Whistleblower Directive) and to the Commission report of 3 July 2024 on its implementation and application (COM(2024)0269),

Changed– having regard to the Commission communication of 5 July 2023 on theentitled 2023‘2023 Rule of Law Report – theThe rule of law situation in the European UnionUnion’ (COM(2023)0800), and to the European Parliament resolution of 28 February2024 entitled ‘report‘Report on the Commission’s 2023 Rule of Law report’,

Added– having regard to the Commission’s decision of 16 December 2024 not to lift the measure imposed in application of Article 2(2) of Council Implementing Decision (EU) 2022/2506 of 15 December 2022 on measures for the protection of the Union budget against breaches of the principles of the rule of law in Hungary,

Added– having regard to the judgments of the Court of Justice of the European Union (CJEU) of 16 February 2022 in Cases C-156/21 and C-157/21 and to Council Implementing Decision (EU) 2022/2506 of 15 December 2022 on measures for the protection of the Union budget against breaches of the principles of the rule of law in Hungary, all of which refer to the Conditionality Regulation,

– having regard to Regulation (EU, Euratom) 2024/2509 of the European Parliament and of the Council of 23 September 2024 on the financial rules applicable to the general budget of the Union (the Financial Regulation),

Added– having regard to Regulation (EU) 2024/1624, Regulation (EU) 2024/1620 and Directive (EU) 2024/1640, all of the European Parliament and of the Council, all adopted on 31 May 2024 and all concerning the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, including through the establishment of the Authority for Anti-Money Laundering and Countering the Financing of Terrorism,

– having regard to Directive (EU) 2017/1371 of the European Parliament and of the Council of 5 July 2017 on the fight against fraud to the Union’s financial interests by means of criminal law (the PIF Directive),

– having regard to the Commission report of 16 September 2022 entitled ‘Second report on the implementation of Directive (EU) 2017/1371 of the European Parliament and of the Council of 5 July 2017 on the fight against fraud to the Union’s financial interests by means of criminal law’ (COM(2022)0466),

Changed– having regard to the Commission report of 3 July 2024 on the implementation and application of Directive (EU) 2019/1937 of the European Parliament and of the Council of 23 October 2019 on the protection of persons who report breaches of Union law (COM(2024)0269),

Removed– having regard to the Commission communication of 5 July 2023 entitled ‘2023 Rule of Law Report – The rule of law situation in the European Union’ (COM(2023)0800),

Added– having regard to Regulation (EU) 2021/1060 of the European Parliament and of the Council of 24 June 2021 laying down common provisions on the European Regional Development Fund, the European Social Fund Plus, the Cohesion Fund, the Just Transition Fund and the European Maritime, Fisheries and Aquaculture Fund and financial rules for those and for the Asylum, Migration and Integration Fund, the Internal Security Fund and the Instrument for Financial Support for Border Management and Visa Policy (the Common Provisions Regulation),

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

Added– having regard to the Commission communication of 24 July 2024 entitled ‘2024 Rule of Law Report – The rule of law situation in the European Union’ (COM(2024)0800),

Changed– having regard to the study entitled ‘Strengthening the fight against corruption:organised assessingcrime: Assessing the legislative and policy framework’, published onin JanuaryDecember 2023,2022,

Added– having regard to the study entitled ‘Strengthening the fight against corruption: assessing the legislative and policy framework’, published in January 2023,

Added– having regard to the study entitled ‘Compliance assessment of measures adopted by the Member States to adapt their systems to Council Regulation (EU) 2017/1939 of 12 October 2017 implementing enhanced cooperation on the establishment of the European Public Prosecutor’s Office (‘the EPPO’)’ and its extension, both published in December 2023,

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– having regard to 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) and to the Commission proposal of 3 May 2023 for a directive of the European Parliament and of the Council on combating corruption, replacing Council Framework Decision 2003/568/JHA and the Convention on the fight against corruption involving officials of the European Communities or officials of Member States of the European Union and amending Directive (EU) 2017/1371 of the European Parliament and of the Council (COM(2023)0234),

– having regard to the joint Europol-OLAF report of 6 June 2023 entitled ‘Assessing the Threats to the NextGenerationEU (NGEU) Fund’,

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

– having regard to the European Court of Auditors (ECA) report entitled ‘Our activities in 2023’, published on 9 October 2024,

Changed– having regard to the European Court of AuditorsECA Review 04/2023 of 6 July 2023 entitled ‘Digitalising the management of EU funds’,

Changed– having regard to Special Eurobarometer 534 entitled ‘Citizens’ attitudes towards corruption in the EU in 2023,2023’,

Changed– having regard to the European Court of AuditorsECA Specialspecial 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 18 January 2024 on the protection of the European Union’s financial interests – combating fraud – annual report 2022,

– having regard to Rule 55 of its Rules of Procedure,

Changed– having regard to the report of the Committee on Budgetary Control (A10-0000/2024),(A10-0049/2025),

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

B. whereas PIF reports are based mainly on information provided by the Member States, including data on irregularities and fraud detected, via the Irregularity Management System (IMS), and on data extracted from the Commission’s accounting system (ABAC);

C. whereas effective measures to protect the EU’s financial interests at EU level have to be implemented on the basis of data-based knowledge of the specific situation in each Member State, particularly in cases involving complex criminal activity;

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ChangedD. whereas the number of irregularities detected and reported demonstrates the results of Member States’ efforts to counter illegal activities in this area and is not to be interpretedinterpreted, by itself, as an indication of the level of mismanagement or fraud in the Member States;

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AddedE. whereas the links between irregularities’ occurrence, their detection and the reporting level require a wider overall assessment;

F. whereas sound management of public resources and protecting the EU’s financial interests across all EU policies should be key to increasing citizens’ confidence by ensuring the proper and effective use of taxpayers’ money;

G. whereas protecting the EU budget involves multiple actors at various levels who can only achieve their mandate through a structured network of relationships and coordination within the anti-fraud architecture (AFA);

H. whereas the diversity of legal and administrative systems in the Member States and their varying levels of digitalisation need to be adequately addressed with the creation of more unified, interoperable and comparable administrative and reporting systems in the EU in order to effectively prevent and counter fraud, corruption, irregularities and other infringements;

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AddedI. whereas solid cooperation between authorities conducting administrative investigations and those conducting criminal investigations at both EU and Member State levels should be encouraged;

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J. whereas the Early Detection and Exclusion System (EDES) and ARACHNE are effective tools to protect the EU budget from risks of insolvency, negligence, fraud or irregularity committed by private actors, in the case of the EDES, and via a data-mining and risk-scoring approach, in the case of ARACHNE;

K. whereas criminal networks operating in the EU are fully embracing the entire range of cutting-edge information technology, including artificial intelligence (AI), to facilitate their criminal activities, posing an even more complex threat to the EU budget and a new challenge for law enforcement and requiring the AFA to fast-track its exploration of AI use in the fight against fraud;

L. whereas respect for the values on which the EU is founded and for fundamental rights, as well as compliance with the Charter of Fundamental Rights of the European Union, are prerequisites for accessing EU funding;

M. whereas the rule of law conditionality mechanism applies across the entire EU budget as a prerequisite for accessing all EU funds and 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;

N. whereas 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;

General remarks on PIF reporting and on major threats

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Changed1. Welcomes the 2023 PIF Report and its analyses on the relevant findingsfindings, and endorses its recommendations;

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Changed2. Shares the view that effective protection of the Union’s financial interests requires the acceleration of the digitalisation that facilitates knowledge-sharing,knowledge sharing, data accessibility and data processing and that would enhance the governance of the overall AFA; maintains that both the EU and national authorities should intensify the use of digital tools with a view to facilitating cooperation;

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Changed3. Reiterates that a more measurable and results-oriented governance of the activities of the AFA’s many components is key both to effectively protecting the Union’s financial interests;interests and to assessing the AFA’s efficiency;

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Changed4. Recalls that solid cooperation between the administrative and judicial authorities conducting investigations at both EU and Member State levels is essential; reiterates its concerns over the still suboptimal situation, in particular as regards the detection and reporting of suspected fraud and irregularities and their follow-up, in which there are marked differences between Member States; encourages the Member States, therefore, to take a proactive approach to protecting the Union’s financial interests and to enhance the exchange of information between their national authorities and with EU bodies and agencies, including in order to identify and address emerging risks and fraud trends in a timely manner; underlines the fact that the fight against fraud requires a holistic and comprehensive approach, covering all stages of the anti-fraud cycle and reflecting the multiple, interconnected and interdependent actors and processes in place for the protection of the financial interests of the Union;

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Changed5. Notes that the overall number of cases of fraud and irregularities reported by the competent EU and national authorities slightly increased significantly, by 9 %, in 2023 (13 563) compared to 2022 (12 455); regrets the fact that this is an all-time high and is the continuation of a growing trend over the last five years; observes, further, that the overall financing concerned in relation to these cases in 2023 (EUR 1.90 billion) was markedly higher than in 2022 (EUR 1.77 billion) and that this indicates a significant risk ofbillion), losshaving forincreased theby EU7.3 budget;%; acknowledges that the multiannual cycle of implementation of numerous programmes makes comparisons based on a five-year average more appropriate than year-to-year comparisons for identifying real-time situations and obtaining reliable analysis of trends and patterns; appreciates, accordingly, that the 2023 PIF Report refers to the results of the 2019-2023 period; observes that the rise in the number of irregularities and in funding that achieves no positive results highlights the need to correlate budgets with the performance indicators of the competent institutions;

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Changed6. Is concerned by the overall scenario depicted by the multiannual analysis in the 2023 PIF Report; emphasises that the current situation justifies the efforts made to ensure more effective deployment of adequate resources and their more efficient use, which requires better governance and cooperation; underlines that fraud, corruption and violations of democracy, justice and the rule of law are deeply interconnected and cannot be tackled in isolation; calls on the Commissioners on budget, fraud and public administration and on democracy, justice and the rule of law to work closely and immediately on launching initiatives to make the actions and the results of the AFA measurable and more tangible and to present them to Parliament, in line with the commitment made at the confirmation hearings; suggests that stronger synergies be created between the Commission’s Directorate-General for Budget and other Commission directorates-general working on the rule of law and the protection of other EU values, particularly the Directorate-General for Justice and Consumers, the Directorate-General for Employment, Social Affairs and Inclusion and the Directorate-General for Regional and Urban Policy, to ensure that all the departments work together, rather than in silos, to address these systemic challenges more effectively;

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Changed7. Reiterates the call for a holistic approach in PIF reports, which are also considered an AFA governance tool;tool, in order to provide a comprehensive overview of the synergies between all the relevant actors, identify best practices and address shortcomings; is aware that, as emphasised in the 2023 PIF Report, the operational protection of the Union’s financial interests from fraud, irregularities and other illicit activities is entrusted to national authorities, OLAF and the EPPO, and welcomes the integration of OLAF and EPPO findings in the 2023 PIF Report; asks for a deeper analysis of the interaction between the AFA components;components, and for the introduction of measures to increase the efficiency of the competent institutions with a view to reducing fraud and irregularities; calls for the further improvement of this holistic approach to provide a clearer, more complete and more concrete picture of the overall state of play of the protection of the Union’s financial interests, encompassing the entirety of anti-fraud action at both national and EU levels;

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Changed8. Welcomes OLAF’s investigative performance, in particular the increased number of recommendations issued (309 compared to 275 in 2022) and the overall amount recommended for financial recovery (1(EUR 1 043.8 million compared to EUR 426.8 million in 2022) against a stable number of cases opened (190 in 2023 and 192 in 2022) and concluded (265 in 2023 and 256 in 2022); points out, in particular, that over the 2019-2023 period, more than 88 % of the irregularities identified as potentially fraudulent and related to expenditure disbursed under direct management were detected following OLAF investigations; regrets that the long duration of the investigations can have a negative impact regarding the consequential late launching of remedial measures; reiterates its request to receive comprehensive and adequately detailed figures on the amounts effectively recovered by the Commission on the grounds of the financial recommendations issued by OLAF; calls on the Commission also to integrate in the next PIF reports ad hoc sections on OLAF in order to develop a more granular analysis and reporting of its activities and of the financial recoveries carried out;