On June 1, 2021, the European Public Prosecutor's Office ("EPPO") launched its operations as an independent public prosecution office tasked with investigating and prosecuting economic crimes against the financial interests of the European Union ("EU"). Based in Luxembourg, the EPPO is led by a European Chief Prosecutor supported by a College of Prosecutors comprising one European Prosecutor from each participating Member State. The EPPO has the power to monitor and direct investigations and prosecutions by European Delegated Prosecutors ("EDPs") from, and operating within, the national judicial systems of the 22 Member States currently participating in the EPPO. The EPPO thus becomes the first supranational prosecution authority.
To date, 20 of the 22 European Prosecutors that will oversee investigations and participate in the EPPO's governance through the College of Prosecutors have been appointed, as well as 88 of the EDPs who will carry out investigations in the Member States.
Pursuant to a 2017 EU Directive (DIRECTIVE 2017/1371 on the fight against fraud to the Union's financial interests by means of criminal law, the so-called "PIF Directive"), which sets forth the minimum provisions that must be adopted and transposed into national law by the participating Member States, and to the 2017 EU Regulation establishing the EPPO (REGULATION 2017/1939, the "EPPO Regulation"), the EPPO is empowered to investigate and prosecute the following offenses against EU financial interests:
- Fraud relating to EU expenditures and revenues;
- Cross-border value-added tax ("VAT") fraud involving total damages of at least EUR 10,000,000;
- Passive and active corruption (covering both requesting/receiving bribes by a public official and offering/giving bribes to a public official) that damages, or is likely to damage, the EU’s financial interests;
- Misappropriation of EU funds or assets by a public official;
- Money laundering involving property derived from one of the above-listed offenses; and
- Incitement, aiding and abetting, or attempted commission of the above-listed offenses.1
The EDPs on behalf of the EPPO will independently prosecute these offenses in the national courts of the participating Member States in accordance with the EPPO Regulation and applicable national laws and procedures, including those adopted pursuant to the PIF Directive. The procedural acts of the EPPO are subject to review by national courts, though the European Court of Justice also has jurisdiction to provide preliminary rulings on such acts if national courts have doubts about the validity of such procedural acts under EU law.
The PIF Directive targets conduct by legal entities and individuals, and provides for a range of penalties, including monetary fines, temporary or permanent debarment, and imprisonment for individuals.2 The Directive also empowers EPPO prosecutors to obtain freezing or confiscation orders related to the proceeds of crime.
On July 6, 2021, the EPPO will submit a report to the European Parliament assessing how effectively Member States have implemented the Directive.3 Although there has been broad participation by 22 of the 27 EU Member States, for the time being, Hungary, Ireland, Poland, and Denmark have declined to participate, and Sweden reportedly has stated its intention to join in 2022. The European Anti-Fraud Office (“OLAF”) will continue to protect the EU's financial interests in non-participating Member States through investigation and cooperation with national enforcement authorities.
EPPO enforcement of the PIF Directive is expected to impact both EU and non-EU based entities and individuals that engage in projects funded in whole or in part by EU funds. Even at inception, the EPPO anticipates starting with at least 3,000 cases (based on an estimate of the eligible cases that may be transferred from national prosecutors). As an example, France anticipates referring 60 to 100 cases to the EPPO every year. While it remains to be seen how the EPPO will carry out its mandate in practice, particularly in cross-border cases involving conduct in multiple Member States, the EPPO signals a new era in the investigation and prosecution of financial crime and is likely to be an increasingly significant player on the European enforcement landscape.
1 EPPO Regulation, Article 22; PIF Directive, Articles 3-5
2 PIF Directive, Articles 6, 7, 9.
3 PIF Directive, Article 18.
White & Case means the international legal practice comprising White & Case LLP, a New York State registered limited liability partnership, White & Case LLP, a limited liability partnership incorporated under English law and all other affiliated partnerships, companies and entities.
This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.
© 2021 White & Case LLP
