SC4 – Financial Crimes Unit

COCOBU Public Hearing on MTIC Fraud

Brussels, 5 May 2008

Europol’s Fraud Mandate

• Legal Framework−Art 29 and 30 of EU Treaty−Art 280 of the EC Treaty

• Declaration to Council Decision (OJ C362/2 18 December 2001)- re tax fraud 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

• 1 January 2002 - formal extension of Europol mandate to deal with fraud

The Road to AWF MTIC

• 31 May 2006 – EU Commission (COM(2006) 254)

• 25/26 October 2006 – G6 Summit, UK

• 11 December 2006 – Europol MTIC Conference

• Feasibility studies supported by MS and partners

• OCTA 2007

• 12/13 June 2007 - 2807th JHA Council OCTA conclusions

• 12 September 2007 – Europol OSG agree to initiate AWF

• 16 November 2007 - Europol MTIC meeting to draft

opening order and collection plan

AWF MTIC Aims

• Opening AWF −Opened on 2nd of April 2008

• Aim−..the identification of MTIC fraud organisers and dismantling of

their criminal networks..−..targeting the most prevalent modus operandi of MTIC fraud..

• Explicit objectives for 2008−..support/coordinate at least 2 criminal investigations−..support the tracing of at least 5 million € proceeds from MTIC

fraud

INDEX

AWF

AWF

AWF

AWF

AWF

AWF

Europol LiaisonOfficer …

18 AWF’s

Cross-matches

Data protection

Feasibility study AWFMTIC

• United Kingdom • France• Belgium• Italy• Spain• Latvia• Norway• Denmark

• Ireland• Hungary• Estonia• Greece• Romania• The Netherlands• Portugal

• Eurojust

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

Tax

Loss

Tran

sact

ion

Chai

n

£30 Million Input Tax

Tax Loss

ContraBroker

Europe 1

Europe 2

Defaulter

Buffer

Buffer

Buffer

Europe 1

Europe 2

Off Shore Bank

Money

Trail

Tax

Lo

ss

Tra

nsa

ctio

n C

hai

n

Co

ntr

a C

hai

n

Off

Set£30 Million

Input Tax£30 Million Output Tax

Tax Loss

Contra Broker

Nil Net Tax

Broker 1 2 3

£10 Million x 3 Brokers Input Tax Claims

Europe 1

Europe 2

Defaulter

Buffer

Buffer

Buffer

Buffer

Europe 1

Europe 2

Europe 1

Europe 1

Europe 2

Europe 2

Off Shore Bank

Money

Trail

Tax

Lo

ss

Tra

nsa

ctio

n C

hai

n

Co

ntr

a C

hai

n

Off

Set

£30 Million Input Tax

£30 Million Output Tax

Tax Loss

Contra Nil Net Tax

Broker 1 2 3

£10 Million x 3 Brokers Input Tax Claims

Europe 1

Europe 2

Defaulter

Buffer

Buffer

Buffer

Buffer

Europe 1

Europe 2

Europe 1

Europe 1

Europe 2

Europe 2

Off Shore Bank

Money

Trail

Mo

ney

Tra

il

Money

Trail

Money

Trail