International Regulatory Enforcement (PHIRE)
2021 will be the year of a new enforcement framework for the protection of the EU financial interests
By Nicola Bonucci
With the formal entry into force of the new European Public Prosecutor’s Office (EPPO) on January 1, 2021, the EU—as well as countries having joined EPPO—are adjusting to the new reality.
Just before Christmas, the EU issued a new regulation (Regulation 2020/2223F) as regards cooperation with the European Public Prosecutor’s Office and the effectiveness of the investigations to be carried out by the European Anti-Fraud Office (the “Office,” also known as the OLAF). The Regulation amends and complements existing texts and is crucial in setting up the new framework
The Regulation recalls that, in order to protect the financial interests of the Union, OLAF conducts administrative investigations into both administrative irregularities and criminal conduct. Until now, the Office, at the end of its investigations, was to make judicial recommendations to the national prosecution authorities, in order to enable them to pursue indictments and prosecutions in Member States. The Regulation provides that, as of January 2021, the Office shall report suspected criminal offences to the Member States participating in the EPPO and collaborate with the EPPO in the context of any EPPO investigations that may result.
The Regulation further stresses that the Office should, in principle, not open an administrative investigation in parallel with an investigation by the EPPO into the same facts. However, in certain cases, the protection of the financial interests of the Union may require that the Office carry out a complementary administrative investigation before the conclusion of criminal proceedings initiated by the EPPO. According to the Regulation, such a complementary investigation may be appropriate, inter alia: (1) to recover amounts due to the Union budget that are subject to specific time-barring rules;(2) where the amounts at risk are very high, or (3) where there is the need to avoid further expenditure in risk situations through administrative measures.
Importantly, Article 3 of the new Regulation introduces a duty on the part of economic operators to cooperate with the Office in the course of its investigations and notes that the Office may request written and oral information, including through interviews.
This duty of cooperation is in line with the fact that any person or entity receiving Union funds is due to fully cooperate in the protection of the financial interests of the Union, including in the context of investigations by the Office.
The Regulation further clarifies OLAF powers to conduct on-the-spot checks and inspections, including access to the premises and documentation of “economic operators” in the framework of its investigations into suspected fraud, corruption or other illegal conduct affecting the financial interests of the Union. The Regulation provides that OLAF powers for on-the-spot checks and inspections are limited under “the same conditions as those that apply” to limit access to information and documentation by “national administrative inspectors.”
In light of these reinforced powers, the Regulation also introduces new guarantees. Thus, article 9a) of the Regulation creates an independent “Controller of procedural guarantees,” to be appointed for a non-renewable term of office of five years.
Article 9b) provides a right to lodge complaints to the Controller regarding “the Office’s compliance with the procedural guarantees referred to in Article 9, as well as on the grounds of an infringement of the rules applicable to investigations by the Office, in particular infringements of procedural requirements and fundamental rights.”
Article 12 of the Regulation deals with the coordination and cooperation between OLAF and EPPO, including both how the Office shall report criminal conduct to EPPO as well as how it should support and coordinate with EPPO to avoid duplication of investigations.
Finally, yet importantly, the Regulation provides that OLAF “shall agree on working arrangements with the EPPO” that include “practical arrangements for the exchange of information, including personal data, operational, strategic or technical information and classified information, and complementary investigations.”
The Regulation further specifies that such arrangements shall cover “continuous exchange of information during the receipt and verification of allegations for the purpose of determining the competence over investigations” and “the transfer of information between the Office and the EPPO, when the Office acts in support or in a complementary manner to the EPPO.”
The Regulation, which shall be binding in its entirety and directly applicable in all Member States, is of major importance not only for those countries that have joined the EPPO, but also for all EU Members in light of the clarification and reinforcement of OLAF powers of investigation.
The practical impact of the Regulation is amplified by the political agreement of EU members on December 18, 2020, setting up the Recovery and Resilience Facility (the “Facility”) to make €672.5 billion in loans and grants in support of reforms and investments by Member States.
While the EU framework is being established, the national frameworks are also being modified accordingly. Hence, on December 24, the French Parliament adopted a law to adjust its legal framework to the new European Public Prosecutor’s Office.
With this framework now in place, it remains to be seen how it will work in practice. In a recent interview, EPPO Head Laura Kovesi discussed the concurrent resource and staffing expansion under way at EPPO:
“[W]ith 3,000 cases expected to land on our desks when we start, we now have funding for 140 European delegated prosecutors, but we are still missing resources for key Luxembourg-based staff, who will be key to the success of our mission. We need financial investigators and case analysts. With their expertise, we can aggregate and analyze information to investigate cross-border crime more efficiently. Until now, all the prosecutors were focused on their own internal criminality, and they didn’t always have access to information outside their borders—like bank accounts and specific financial transactions. The EPPO makes this possible.”
Companies operating in the European Union will therefore be well advised to consider this new framework and become familiar with EPPO as well as with the new powers and prerogatives provided to OLAF.
 There are currently 22 EU member states participating in the EPPO (Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Estonia, Finland, France, Germany, Greece, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Romania, Slovenia, Slovakia, Spain).
 Loi n° 2020-1672 du 24 décembre 2020 relative au Parquet européen, à la justice environnementale et à la justice pénale spécialisée in https://www.legifrance.gouv.fr/jorf/id/JORFTEXT000042737977