Author: Stefano Quintino Milelli
Committee: Banking insurance and financial authorities
Date: 22/05/2025
EPPO plays an important role in preventing many crimes, notably frauds involving the use of false statements and documents, especially the VAT fraud (also known as carousel fraud) which are considered to be serious where they are connected with the territory of two or more
Member States and the total damage caused by the offences is at least EUR 10 000 000, active and passive corruption of public officials and instigation to commit crimes through the participation in criminal organizations.
The legal framework can be found in the Directive (EU) 2017/1371,[1] which explains in its 3° recital that “the protection of the Union’s financial interests calls for a common definition of fraud falling within the scope of this Directive, which should cover fraudulent conduct with respect to revenues, expenditure and assets at the expense of the general budget of the European Union (the ‘Union
budget’), including financial operations such as borrowing and lending activities.
Financial Institutions such as banks or insurance companies have a crucial role as gatekeepers of the financial system, monitoring its integrity and stability. They must identify suspicious activities that may indicate fraud, money laundering or financial crimes. However, they have to follow and apply EU laws and regulations to prevent financial crime.
According to the Annual Report 2024[2], around 6% of crimes involved money laundering derived from criminal offences within the EPPO’s remit; suspects may launder the unduly obtained sums by transferring them to overseas corporate bank accounts or managed by family members, potentially followed by withdrawing the money in cash.
Accordingly, AMLA has been established in 2024 to reinforce the EU’s legal framework in fighting money laundering and terrorism financing.
The Anti-Money Laundering Authority (Regulation EU 2024/1620)[3] ensures the application of the legal framework against financial crimes by directly supervising high-risk financial entities, including credit institutions and crypto-asset suppliers.
Furthermore, it can apply sanctions to all the entities that fail to comply with AML laws, creating a centralized database of banking information, facilitating access by competent authorities.
The EPPO and the AMLA play a vital role in strengthening the EU’s fight against financial crime. Their coordinated efforts ensure effective investigation and prosecution, while financial institutions serve as key players in detecting and preventing illicit activities.
Indeed there are also other methods used by credit institutions to prevent financial fraud, including AI systems, which are becoming increasingly widespread and sophisticated. First, the use of SCA which requires the use of two-factor authentication for online services; then, the transaction monitoring by software to reveal suspicious activities; data cryptography with the aim to to secure communications and sensitive information; staff training to prevent fraud attempts; savers education because ordinary savers are not able to evaluate a bank’s safety and soundness. They do not have access to the necessary information and perhaps lack the required
background knowledge. Therefore, supervisors act in the public interest by regularly checking
banks’ risk culture and corporate governance, and by granting or withdrawing banking licenses.
[1] https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32017L1371
[2] https://www.eppo.europa.eu/assets/annual-report-2024/index.html