AWF MTIC

VAT hearing of the European Court of Auditors

Committee on Budgetary Control

Brussels, 14 July 2008

Carlo van Heuckelom

HoU Property and financial crime unit – SC4

DMS # 326522

Europol

• Mission− European Union’s law enforcement organisation that processes criminal

intelligence− To support the law enforcement agencies in the EU member states in

their fight against serious forms of organised crime

• Objectives− Facilitating information exchange− Providing Operational Analysis− Providing expertise and technical support

• Legal Framework - Article 2 Europol Convention− Activity involves 2 or more MS− Indication of organised crime− Activity is part of Europol’s mandated crime area

Europol’s Fraud Mandate

• Legal Framework− Art 29 and art 30 of the European Union Treaty− Art 280 of the European Community Treaty

• Declaration to the Council Decision (OJ C362/2 of 18/12/2001)

− Re tax and customs fraud, Europol competency to improve the effectiveness and cooperation of MS competent authorities for the functioning of the criminal law enforcement system

− Must take account of OLAF’s competency for fraud

• Extension of Europol mandate− 1 January 2002 – mandate extended to deal with fraud

AWF MTIC (open since 2 April 2008)

• Purpose of the file−Missing trader intra-community fraud−Related offences

• AWF members−Belgium, Czech Republic, Denmark, France, Hungary, Greece, Ireland, Italy, the Netherlands, Romania, Spain, UK, Eurojust and Norway

• Groups of persons on whom data are stored−Criminals, Suspects, Witnesses, Contacts and Associates, Victims, Informants

• Additional information stored−Details on Companies, Means of Transport, Means of Communication, Financial Information, Means of Identification

Analytical Work File (AWF)a platform for Pan European integrated crime analysis

Storage of Nominativedata

Dynamic process to link objects, entities and documents

•To identify links between national inquiries•To enable the production of strategic and operational reports•To support investigations•Detection of recurrent patterns•OC groups identification

DOCUMENTS

INDEX

AWF

AWF

AWF

AWF

AWF

AWF

Europol LiaisonOfficer …

Data protection

Project Plan

• Aim of the AWF is:−To contribute in the identification of the organisers and dismantling of their criminal networks/groups in committing MTIC fraud and related criminal activities−To prioritise the scope of the AWF in targeting the most prevalent modus operandi of MTIC fraud

• 2008 main objectives:−Support and co-ordinate at least 2 criminal investigations −Support the tracing of proceeds from MTIC fraud to the total of at least 5 million € (or equivalence)

• Constraints:−Data quantity and quality

Data Collection Plan

• Contributions:− Category

• operational facts and intelligence (hard/soft data) generated by controls and/or investigations

− Context:• Every contribution should provide

sufficient contextual information such that the relevance of the facts submitted is clear – especially for new cases)

− Raw Materials:• AWF MTIC wants to receive working

documents created during the course of investigations/controls

− Evaluation:• Use of handling/evaluation codes

− Transmission• Info-Ex via Liaison Bureaux

Analysis Group Structure/Role

• Europol AWF Project Team−Experts, analysts, seconded officers

• The Member States−National Contact Points−ENU−ELO’s

• Associated Members−Eurojust/Norway

• Terms and acronyms−Target Groups−Typologies*:

• Missing Trader, Buffer Trader, Broker, Conduit Trader, Defaulting Trader, Crossed Invoicer, Third Party Payments

(*FATF – report ‘laundering the proceeds of VAT carousel fraud’ – Feb 2007)

Practical Benefits

• Clear strategy• Better Intelligence• Real Time support (Mobile office solution)• Greater understanding• Partnership working• Co-ordinated action against the OCGs• Complementary action to 1st Pillar dispositions

Complementarity of AWF MTIC

Administrative Investigation

• EU regulation 1798/2003 (multi lateral controls), Naples II convention

• Focus on detection of fraud− Identification of companies− deregistration of VAT numbers− little or no focus on the identification and arrest of the masterminds− restricted coercive powers

Criminal Investigation

• Criminal laws, bi- or multilateral agreements for mutual legal assistance, Europol convention, Eurojust, Naples II convention

• Focus on repression of fraud− Full range of coercive powers− Identification of the individuals orchestrating the fraud− Analysis of the modus operandi applied− Priority is the dismantling of organised crime groups− Tracing and recovery of the proceeds from MTIC crime

UK Defaulter

Buffer 1

Broker

3rd Country Customer

EU Conduit 1

EU Conduit 2

EU Conduit 3

EU Supplier

Buffer 2

Buffer 4

Buffer 3

3rd Country Freight

Forwarders

UK Freight Forwarders

EU Freight Forwarders

By AirFerry

By Air

Off Shore Bank

Third Party Payment

£1,000,000

Tax Loss£149,111 Sells: £853,064

VAT £149,286 Total: £1,002,350Profit: £1000 Net VAT: £175

Sells: £855,064 VAT £149,636Total: £1,004,700Profit: £2000 Net VAT : £350

Sells: £857,064 VAT £149,986Total: £1,007,050Profit: £2000 Net VAT: £350

Sells: £859,064 VAT £150,336Total: £1,009,400Profit: £2000Net VAT: £350

Sells: £910,607 VAT: NilTotal: £910,607 Profit: £51,543Net VAT:- £150,336

Sells: £1,000,000 VAT: Nil Total: 1,000,000

Questions - Comments