Convention on the Protection of EU Financial Interests

The Convention on the Protection of EU Financial Interests was adopted in 1995 but entered into force only in 2002. Subsequently, it has been amended by three protocols which expanded its scope to cover not only fraud, but also corruption and money laundering, as well as to provide for interpretation of its text by the Court of Justice of the EU in the framework of the preliminary reference procedure. New EU Member States – most recently Croatia – have acceded to the Convention automatically, by virtue of their Act of Accession. However, the exact date on which the Convention enters into force for a new Member State is set by the Council of the EU.

The Convention does not apply directly; it sets Member States the requirement to implement it. It obliges them, in particular, to introduce criminal sanctions against three types of crimes affecting EU financial interests: fraud, corruption (both active and passive) and money laundering. Member States must also provide for the liability of legal persons for such criminal acts, which may include imposing fines but also other sanctions, such as exclusion from state aid, prohibition of business activity, placing under judicial supervision or even liquidation. Criminal sanctions for individuals must be effective, dissuasive and proportionate. Importantly, Member States are obliged to provide for the equal treatment of crimes affecting their own financial interests and those of the Union, for instance, in terms of periods of limitation. Finally, the Convention imposes on Member States far-reaching duties of cooperation, both between themselves and with the Commission. In such cases, the applicable EU rules on data protection must be observed, and if the European Commission is to transmit data outside the EU, it must warn the national authorities about that.

Author: Rafał Mańko