Disputes – Investigations and White Collar Crime: A new era for enforcement against white collar crime in the EU

There are concerns that fraud and corruption remains under investigated in the EU both at national level and cross-border. In response to a growing sense of impunity for offenders, the EU has established the European Public Prosecutor’s Office.

The European Public Prosecutor’s Office (the “EPPO”) is a new supranational prosecutorial body.1 It will investigate and prosecute crimes affecting the financial interests of the EU in each of the 22 participating Member States.2 It is due to commence work in late 2020.

Structure of the EPPO

The EPPO will be located in Luxembourg where there will be a college made up of one European Chief Prosecutor along with 22 European Prosecutors (one for each participating Member State). In addition, in each of those Member States, there will be a minimum of two European Delegated Prosecutors. While there will be central supervision from Luxembourg, investigations and prosecutions will be carried out at national level.

Competence of the EPPO

Under Article 22 of the EPPO Regulation, the EPPO will be competent to investigate and prosecute offences set out in the PIF Directive as implemented by national law.3 This Directive sets out minimum common rules to fight crime affecting the EU’s financial interests. The Directive deals with offences such as fraud, corruption, misappropriation by a public official and related money laundering. As a general rule, the damage caused to the EU should exceed €10,000, however, exceptions may be made, for example, where the case has repercussions at EU level which require an investigation by the EPPO.

The PIF Directive also deals with offences against the common VAT system. Cross-border VAT fraud alone is estimated to cause damage of €50 billion to the budgets of the Member States and the EU annually and the EPPO will also deal with serious VAT offences.4

The EPPO will also have competence in respect of criminal activity that is inextricably linked with a PIF offence if certain conditions are fulfilled. Finally, the EPPO may investigate and prosecute offences relating to participation in a “criminal organisation"5 if the focus of the criminal activity is to commit a PIF offence.

In certain circumstances, the EPPO may refrain from exercising its competence. This could occur, for example, where there is reason to assume that the damage caused to the EU’s financial interests by an offence does not exceed the damage caused to another victim such as a Member State.

Into the future, Article 86 TFEU permits the extension of the powers of the EPPO.

Practice and Procedure

As mentioned above, investigations and prosecutions will occur at national level. National law will apply unless a matter is specifically dealt with by the EPPO Regulation.

The EPPO Regulation recognises the particular difficulties that can arise when prosecuting a cross-border case involving multiple jurisdictions. To this end, it sets out criteria for determining the appropriate forum for any particular prosecution.

Also, under Article 37 of the EPPO Regulation, evidence presented by EPPO prosecutors or a defendant to a court will not be denied admission merely because that evidence was gathered in another Member State or in accordance with the law of another Member State. However, the general power of the trial court to freely assess that evidence will not be affected.

What are the implications for non-participating Member States?

While the advent of the EPPO will have an immediate effect for the participating Member States, that does not mean that NPMS remain outside the fray. It may well be that in carrying out its role, the EPPO will seek cooperation from one or more of them. This is provided for in the EPPO Regulation.

Article 99 sets out the general principle that the EPPO may establish and maintain cooperative relations with its partners insofar as necessary for the performance of its tasks. This includes NPMS.6 To this end, it may directly exchange information with those partners, unless otherwise provided for in the EPPO Regulation.7 The EPPO may conclude technical and/or operational working arrangements with its partners to facilitate this cooperation and the exchange of information.8

Article 105 expressly deals with relations between the EPPO and NPMS. Following on from the general principles of cooperation set out in Article 99, it provides that the working arrangements with NPMS may in particular concern the exchange of “strategic information” and the secondment of liaison officers to the EPPO. The EPPO may also designate, in agreement with the competent authorities concerned, contact points in the NPMS in order to facilitate cooperation in line with the EPPO’s needs. Finally, Article 105 concludes by saying that, when dealing with a NPMS, a Member State who participates in the EPPO must notify that body of cases that they encounter which fall within the competence of the EPPO.

It remains to be seen how this will all work out in practice.  For example, it is unclear how NPMS will react if ultimately told that the EPPO proposes to exercise competence in relation to the investigation and prosecution of a PIF offence where that NPMS also has competence in this area. Also, how will the NPMS respond to requests for cooperation from the EPPO? It is a new entity and is not a competent Member State authority.

In this regard, Article 105 expressly acknowledges the absence of a legal instrument relating to cooperation in criminal matters and surrender between the EPPO and the NPMS. Recital 110 acknowledges that NPMS are not bound by the EPPO Regulation and that the European Commission should, if appropriate, submit proposals in order to ensure effective judicial cooperation in these areas. In June 2017, the Council invited the Commission to do so. This has not occurred so far.

These issues may be particularly relevant in an Irish context. Ireland is home to many technology companies who are potential repositories of electronic evidence. While we await clarification of the legal position, requests for information may well be made to the Irish authorities by the EPPO. How will they respond? Time will tell.

  1. See Council Regulation (EU) 2017/1939 of 12 October 2017 implementing enhanced cooperation on the establishment of the European Public Prosecutor’s Office, OJ L 283, 31.10.2017, p. 1, (the “EPPO Regulation”).
  2. The non-participating Member States (“NPMS”) can join at any point. These are currently Ireland, Hungary, Poland, Denmark and Sweden though Sweden has indicated that it intends to participate.
  3. 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, OJ L 198, 28.7.2017, p. 29. It had to be implemented by Member States by 6 July 2019. Denmark did not take part in the adoption of this Directive.
  4. An offence will be serious where it is connected to the territory of two or more participating Member States and involves damage of at least €10,000,000.
  5. As defined in Council Framework Decision 2008/841/JHA of 24 October 2008 on the fight against organised crime, OJ L 300, 11.11.2008, p. 42.
  6. Other partners listed in Article 99 are EU institutions, bodies, offices or agencies, the authorities of third countries and international organisations.
  7. Subject to EPPO internal rules on the protection of sensitive non-classified and classified information to be developed under Article 111 of the EPPO Regulation.
  8. However, the working arrangements may neither form the basis for allowing the exchange of personal data nor have legally binding effects on the EU or its Member States.

This document has been prepared by McCann FitzGerald LLP for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.