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ORGANIZATION CHART OF THE ITALIAN A.F.CO.S.

LAW 142/1992REGULATION (EU, EURATOM) NO 883/2013 OF THE EUROPEAN

PARLIAMENT AND OF THE COUNCIL OF 11 SEPTEMBER 2013

MINISTRIES

• Ministry of Economy and Finance

• Agriculture, Food and Forestry

• Infrastructure

• Education, University and Research

• Interior

• Economic development

• Job

• Foreign Affairs

LAW ENFORCEMENT and AGENCIES

• Guardia di Finanza

• Carabinieri

• Revenue Agency

• Customs and Monopoly Agency

• Agency for territorial cohesion

REGIONS

• Managing Authorities

• Certifying Authority

• Audit Authority

“EXTERNAL” CONTROL BODIES

• Judicial authority

• Judicial Police

• Court of Auditors

Italian AFCOS

Prime Minister office

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THE MAIN TASKS OF THE ITALIAN A.F.CO.S.

Performs the functions of "Technical Secretariat" with functions of support to the COLAF (chaired by the Minister for European Affairs)

Participation to the meetings of the Anti-Fraud Group (GAF) of the Council of the European Union, as well as the European Committee for the Coordination of Anti-Fraud Fight (COCOLAF) of the European Commission

Monitoring the flow of information on undue European funds and on their recovery with the European Anti-Fraud Office (OLAF) of the data relating to the cases of irregularity/fraud (IMS)

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THE MAIN TASKS OF THE ITALIAN A.F.CO.S.

Organisation of training, study visits, bilateral meetings and twinning with the competent anti-fraud structures of other Member States, Candidate / potential Candidate countries and Neighboring countries

Carries out numerous partnership activities aimed at the sharing and exchange of operative experiences and best practice with all the other Member States, Candidate / potential Candidate countries and Neighboring countries

Participates in works of the European institutions through the elaboration of specific proposals that can contribute to the best arrangement of a valid National Anti-Fraud Strategy (according to the provisions of art. 325 TFEU)

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THE NATIONAL ANTI-FRAUD STRATEGY (NAFS) AND LINES OF ACTION

GUARDIA DI

FINANZA

OLAF

EPPO

Member States

(potential) Candidates countries

Neighbouring countries

A.F.Co.S.

National Anti-Fraud

Strategy

Cooperation

Investigation

Prevention

Training

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MAIN RESULTS ACHIEVED AT NATIONAL LEVEL

Closure of cases of irregularities /

fraud

Decreased of the cases of

irregularities / frauds detected

Sector

Number of closed

cases of

irregularities/fraud in

agreement with the EC

Amounts (€ million)

NOT charged by the EC

to the national budget

European Regional Development Fund

(ERDF)282 214,9

European Social Fund (ESF)

9 1,1

EAGGF / Guidance 38 7,1

TOTALE 329 223,1

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MAIN RESULTS ACHIEVED AT EUROPEAN LEVEL

“Cooperation Project in the Anti-Fraud Sector” and “Cooperation Project 2”

“EU Funded actions: Detecting, Handling, Learning how to prevent

Frauds and Irregularities in International Cooperation and

Development Projects (ENI and IPA) ”

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“COOPERATION PROJECT IN THE ANTI-FRAUD SECTOR”

AND “COOPERATION PROJECT 2”

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deepening the issue of fraudulent activities -

national and transnational -for prevent irregularities

and fraud to the EU budget, corruption and other illegal activities

consolidation of relationship

among A.F.Co.S.

raise awareness of the countries of the ENI

program and IPA countries on the

importance of creating or strengthening existing

anti-fraud structures

strengthening the mechanisms of investigative

cooperation

increase the protection of the

financial interests of the Union against

fraud, facilitating the exchange of

experiences and best practices

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“EU FUNDED ACTIONS: DETECTING, HANDLING, LEARNING HOW TO

PREVENT FRAUDS AND IRREGULARITIES IN INTERNATIONAL COOPERATION

AND DEVELOPMENT PROJECTS (ENI AND IPA)”

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STRATEGIC ACTION LINES

National Anti-Fraud Database (PIAF-IT)• in partnership with the General Accounting Office of the State - Ministry

of Economy and Finance

Anti-Fraud Project “C.A.T.O.N.E.”• in partnership with the Court of Auditors

Anti-fraud project for strengthening 1st level control

• In partnership with the Consiglio Nazionale dell’Ordine dei Dottori Commercialisti ed Esperti Contabili

"Euro Planning" training activities• University “Sapienza” and “LUISS” of Rome

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NATIONAL ANTI-FRAUD DATABASE (PIAF-IT)

Without prejudice to national legislation, managing authorities mayrequest access to databases or information from institutions that holdindependent and distinct relevant information (eg state financialinstitutions for budgetary obligations and related documents, theinstitutions cadastral publics for land ownership or land identification,chambers of commerce for the structure and history of companies, otherspecific authorities for activities that require authorizations, etc.).

Cross-checks of cross-border transactions may be more difficult. Evengeneral Internet searches can lead to useful results.

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NATIONAL ANTI-FRAUD DATABASE (PIAF-IT)

Piattaforma nazionale antifrode

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NATIONAL ANTI-FRAUD DATABASE (PIAF-IT)

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ANTI-FRAUD PROJECT “C.A.T.O.N.E.”

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The definition of irregularity is contained in the Euratom Regulationof 1995 n.2988 / 95 art. 1 paragraph 2:

“Irregularity shall mean any infringement of a provision of Communitylaw resulting from an act or omission by an economic operator, whichhas, or would have, the effect of prejudicing the general budget of theCommunities or budgets managed by them, either by reducing or losingrevenue accruing from own resources collected directly on behalf of theCommunities, or by an unjustified item of expenditure”

The definition of irregularity is contained also in the REGULATION(EU) No 1303/2013 OF THE EUROPEAN PARLIAMENT AND OF THECOUNCIL of 17 December 2013 art. 2 par. 36:

“irregularity means any breach of Union law, or of national lawrelating to its application, resulting from an act or omission by aneconomic operator involved in the implementation of the ESI Funds,which has, or would have, the effect of prejudicing the budget of theUnion by charging an unjustified item of expenditure to the budget ofthe Union”

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A definition of fraud is in the DIRECTIVE (EU) 2017/1371 OF THEEUROPEAN PARLIAMENT AND OF THE COUNCIL of 5 July 2017 onthe fight against fraud to the Union's financial interests by means ofcriminal law

[Whereas # 4] The protection of the Union's financial interests callsfor a common definition of fraud falling within the scope of thisDirective which should cover fraudulent conduct with respect torevenues, expenditure and assets at the expense of the general budgetof the European Union (the ‘Union budget’), including financialoperations such as borrowing and lending activities

The notion of serious offences against the common system of valueadded tax (‘ as established by Council Directive 2006 112 /EC (the‘common VAT system’) refers to the most serious forms of VAT fraud.This Directive aims to contribute to the efforts to fight those criminalphenomena

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RED FLAGS

Red flags in the format of

documents

Red flags in the content of documents

Circumstances

Inconsistencybetween

documents / information

available

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Red flags in the

format of

documentsInvoices, letters with no logo of the company

Invoices printed on paper other than prepared forms

Visible differences in type, size, sharpness, color, etc. of font in the document

Erased or crossed-out figures, write-offs without signatures of authorised persons

Handwritten amounts without signatures of authorised persons or elements in a printed document where not a priori justified

Lack or surplus of letters, lack of continuity in the text lines

Number of handwritten signatures made in a similar style or by identical pen on documents related to different time periods

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Red flags in the

content of

documentsUnusual dates, amounts, notes, phone numbers, and calculations

Missing records (from sequential checks)

Miscalculation in an invoice or in a payslip produced by a computer: e.g. total amounts not corresponding to the sum of the transactions

Missing obligatory element in an invoice: date, Tax Identification Number, invoice’s number, etc.

Same mutual position of a stamp and a signature of person on a set of documents suggesting the use of an image documents

Lack of contact details of companies or persons, like phone number

Description of goods or services in a vague manner

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Circumstances

Contractor’s address same as employee address

Unusual number of payments to one payee or address

Invoices and bills issued by entities not registered in business activity register

Unusual delays in providing information

The data contained in the document differ visually from a similar document issued by the same body

Beneficiary not being able to provide originals upon request

Email addresses of the company issuing an invoice on foreign internet server

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Inconsistency

between documents

or information

available Inconsistency between the dates of invoices produced by the same entity and their number

Invoices not recorded in the bookkeeping

Invoices not matching the quotations in terms of price, quantity and quality, type of product and/or description of product or service

provided

Letter/contract/document signed by an individual acting as a representative of the company where he/she is not designated as such

in the national company register

Inconsistencies between information provided on the website of an entity and the invoice issued

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Method of

detection

Do the companies involved in an economic operation really exist?

Did this public institution really issue

this document?

Who really are the people who

supposedly took part in an

activity?

Who is the real owner of an

asset?

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Certificates of tax and social contributions

Bankstatements

Balance sheets

As regards risky

documents

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As regards

some risky

sectorsConstruction

Delivery of

goods

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Non-delivery of goods or delivery of only

part of goods

Supply of goods of lower quality at the price agreed

for higher quality

Supply of second-hand goods instead of new ones

at the same price

Construction

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Non-performance of the work or

completion of only part of the work

Performance of works that do not correspond to the

technical specifications but

are still invoiced at the price foreseen

Submission of invoices from

subcontracting companies that do not exist or do not perform any real

business

Overchargingof the costs

Training,

conferences,

seminars,

missions

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Overcharging of costsFalse attendance list to cover

ineligibility of an event

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ANONYMISED CASE / 1

Area ERDF

Classification irregularity False declaration

IMS Irregularity Code 818

Danger RED

Descriptionfraud pattern

Retrospective projects are projects that have been alreadyimplemented or are in progress and funded with national financialresources which the Managing Authority decides, ex post, to fund usingthe resources of the Structural Funds under the condition that thefinancial resources in question meet the aim of the measure and complywith the rules established by the EU Regulation on implementation ofthe Cohesion Policy.

Modus operandi: A final beneficiary (a public body) submitted to theManaging Authority a project for renovating an old property and using itfor ‘public purposes’. The investigations highlighted the fact that, in orderto comply with the eligibility criteria, the final beneficiary had submittedfalse declarations to the Managing Authority.

Vulnerability detectedLegislative: absence of anti-fraud rules for retrospective projects.Reporting irregularity system not reliable as the irregularity has notbeen reported by the Member State.

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ANONYMISED CASE / 2

Area ESF

Classification irregularityFalse declaration – Falsified documents – Beneficiary not having therequired quality

IMS Irregularity Code 214 – 408 – 818

Danger ORANGE

Descriptionfraud pattern

An economic operator applied for a subsidy for vocational trainingsessions without satisfying the general conditions on expertise,organisation and qualification required by the call for proposals.However, the operator submitted false documentation and falsedeclarations to the Managing Authority in order to prove that it compliedwith the requirements of the call for proposals. Moreover, it overstatedits costs by presenting an inflated declaration of expenditure to theManaging Authority.The fraud was facilitated by an acquaintance of the final beneficiary, whowas a member of the evaluation board of the Managing Authority.

Modus operandi: at the awarding stage, the economic operator appliedfor a subsidy, presenting to the Managing Authority false declarationsand falsified documents relating to its eligibility criteria.

Vulnerability detectedDeclarations without supporting documents provided by the finalbeneficiary concerning eligibility requirements and/or expenditureincurred.

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ANONYMISED CASE /3

Area ESF

Classification irregularity False and Falsified supporting documents

IMS Irregularity Code 213 – 214

Danger ORANGE

Descriptionfraud pattern

The final beneficiary inflated its costs, submitting false invoices to theManaging Authority for costs never incurred.

Modus operandi: The shareholders of the final beneficiary (limitedcompany) created another limited company which had no other aim thanto issue false invoices to be passed on to the final beneficiary in order toinflate its costs. This non-operational limited company was based at thesame premises and allegedly had the same staff as the final beneficiary.

Vulnerability detected

Management/Control system: no system or analysis making it possible toflag up inconsistencies between the supporting documents submitted bythe final beneficiary to justify its expenditure and other data collected bythe Managing Authority (in this case there was a major inconsistencydue to the fact that the address of the final beneficiary was the same asits main supplier).

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ANONYMISED CASE / 4

Area ERDF

Classification irregularity Falsified supporting documents

IMS Irregularity Code 213

Danger RED

Descriptionfraud pattern

A final beneficiary submitted false invoices to the Managing Authority inorder to inflate its costs and thereby to obtain higher reimbursements.

Modus operandi: The final beneficiary acted as follows:a) she/he forged the invoices received from suppliers by simply adding azero to the amount indicated on the purchasing invoice (e.g.: invoice of €100 falsified to become € 1000);2) she/he paid out the overstated amount to the supplier (in ourexample € 1000). This was because, in the event of a check, the bankstatement and the bookkeeping of the final beneficiary would have beenfound to be consistent;3) she/he submitted the forged invoice for receiving the undue payment(€ 1000 instead of € 100) to the Managing Authority;.

Vulnerability detected

Invoice with amounts in round figures.Same supplier or many different suppliers.Supplier based abroad when the goods/services can be purchased on thelocal market for the same or lower price.Price far higher than the average market price.

ANONYMISED CASE / 5

Classification Irregularity ERDF - Double funding

Danger RED

Descriptionfraud pattern

A final beneficiary (a municipality) applied for a subsidy for a project thatwas already implemented (a so-called ‘retrospective project’).The project related to the renovation of an old property to convert it into apublic building. During the same period, a second beneficiary (a privatecompany which turned out to be the contractor of the first beneficiary)applied for another subsidy to be financed from the resources of the 2000-2006 programming period, in order to renovate a property and turn it intoa hotel. The investigations revealed that the works carried out under thefirst project (retrospectively accounted for in the programme period 1994-1999) were part of the works of the second project, which receivedanother subsidy for the programming period 2000-2006.Modus operandi: two final beneficiaries present two projects to twodifferent Managing Authorities. At first glance, the two projects do appeardifferent because they are submitted by two different final beneficiaries,they declare different aims (the first was a public aim, the second was aprivate business) and they fall under two different programming periodsand measures. However, the two projects concerned the same works forthe same property. The two final beneficiaries submitted false declarationsand certificates to the Managing Authorities in order to avoid the fraudbeing detected.

Vulnerability detectedShareholder of a final beneficiary having an economic interest in anotherfinal beneficiary. Supporting documents constituting declaration issued bythe final beneficiary instead of certificate issued by public authorities.

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ANONYMISED CASE /6

Area ESF

Classification irregularity Infringement of public procurement rules

IMS Irregularity Code 213 – 214

Danger RED

Descriptionfraud pattern

The Managing Authority, using the resources of the technical assistancemeasure, committed IT service contracts directly to a specific privatecompany without organizing a call for tender, thus disregarding both EUand national legislation on public procurement.The Managing Authority acts as an economic operator (final beneficiary)in cases where it uses the technical assistance funds.

Modus operandi: awarding IT service contracts directly to a contractorwithout organizing any call for tender, and thereby disregarding thepublic procurement rules.

Vulnerability detectedTypology and amount of the contract falling within the obligation forlaunching a tender procedure.Price paid for the services higher than the average market price.

________________________Vincenzo BRANCHI

Presidency of Council of Ministers (Prime Minister's Office)Department for European PoliciesComitato per la lotta contro le frodi nei confronti dell'Unione Europea (Co.L.A.F.) - Anti-Fraud Coordination Service (Italian A.F.Co.S.)

+39 06 67795482+39 3288645269

mailto:u.liberatore@governo.it