VAT fraud clampdown: international scam with memory cards uncovered in the Netherlands

The criminal network defrauded Dutch tax authorities of an estimated €9 million

On 10 February 2021, the investigation service of the Dutch tax authorities -FIOD (Fiscale Inlichtingen en OpsporingsDienst) busted a criminal network involved in international VAT fraud with electronic devices traded via an online company. Fraudsters established a complex trading scheme with Secure Digital (SD) memory cards for electronic devices, which is believed to have defrauded the Dutch treasury of an estimated €9 million between 2017 and 2019. The international sting involved the collaboration of judicial and law enforcement authorities in Croatia, Czech Republic, Hungary, and Poland with the support of Europol and Eurojust. During the action day, investigators carried out thirteen house searches and seized communications equipment and documents. 

A complex missing trader intra-community fraud (MTIC) 

The illegal VAT scheme consisted in the suspicion of a fake trading circuit of memory cards involving a string of companies in the EU. The criminal gang purchased SD cards with VAT from Dutch companies identified as missing traders. The goods were then sold to companies in Croatia, and the Czech Republic and exempted of VAT according to intra-EU tax rules. To evade tax payment, the scheme finally used conduit companies based in Croatia and Poland to sell back the VAT-exempt goods to the missing traders in the Netherlands. 

The organised crime group also used “buffers” to conceal the illicit transaction chain. These companies purchased the SD cards from the missing traders and only paid VAT on a small margin made from the transactions. As a common practice in MTIC fraud the payment for the transactions was made in advance. It is believed that over the past three years, at least eight missing traders in the Netherlands were involved in this fraud. The criminal gang integrated this so-called ‘VAT carousel fraud’ into the regular commercial activity of an online company selling electronic devices in order to avoid paying VAT. 

Europol Support

Europol actively supported the operation by providing analytical support and operational coordination for an effective cross-border cooperation. Moreover, Europol deployed a mobile office in the field to support the Dutch authorities in real-time. 

Europol’s European Financial and Economic Crime Centre (EFECC) helps with identifying and dismantling organised criminal networks involved in cross-border VAT fraudand the tracing and confiscating of the proceeds of MTIC fraud. MTIC is committed through a chain of linked companies when the fraudsters sell goods or services from one EU country to another, taking advantage of the fact that it is legitimate not to charge VAT on such cross-border transactions. MTIC scammers obtain €60 billion in criminal profits every year in the EU by avoiding the payment of VAT or by corruptly claiming repayments of VAT from national authorities.
 



Rights training during interoperability webinar

The EU Law Enforcement Training Agency (CEPOL) hosted the webinar, which ran from 2 to 5 February.

The training targeted the law enforcement community.

FRA focused on the opportunities and risks for fundamental rights when processing personal data through the interoperability of EU IT systems. 



EIOPA addresses measures to improve the insurability of business interruption risk in light of pandemics

The European Insurance and Occupational Pensions Authority (EIOPA) published today its staff paper on measures to improve the insurability of business interruption  in light of pandemics. Building on the Issues paper on shared resilience solutions for pandemics published in July, EIOPA analyses options relating to prevention measures to reduce losses, capital markets risk transfer, and multi-peril solutions for systemic risk. It also addresses the general challenges related to modelling and triggers for claims in the context of pandemics.

EIOPA emphasizes that a key element of shared resilience solutions is prevention. By promoting prevention measures, insurers can improve society’s capacity to reduce losses. Improving clarity on the scope of coverage as well as integrating prevention measures in risk-based pricing of the insurance cover can contribute to showing the true cost and create incentives for preventive behaviour. Prevention can be supported by regulatory incentives, as well as by public-private initiatives for sharing data. Aligning public-private measures for risk prevention can help in reducing moral hazard and improve the insurability of the risk. 

To improve society’s capacity for bearing business interruption risk beyond traditional insurance mechanisms, capital markets can be an additional layer of risk transfer and diversification. Designing new and successful capital markets instruments for financing business interruption risk in a pandemic crisis pose challenges, and require legal certainty, predictability and swiftness in the payment of claims. Progress on pandemic risk modelling and pricing is needed, where possible incentivizing risk prevention through relevant claim triggers. 

Multi-peril solutions can provide opportunities for addressing the systemic risk of ‘following’ events. While pandemic-specific schemes are being discussed today, the option to introduce future-focused multi-peril pools should be considered going forward. This could support the development of common prevention measures, as well as address the opportunity cost of separate peril solutions. 

EIOPA invites all interested stakeholders to provide their views to the paper until Wednesday, 31 March 2021 to sharedresiliencesolutions@eiopa.europa.eu.

Go to the staff paper



Irish family-based gang targeted in probe into €4 million laundering

On 10 February, the Criminal Asset Bureau of the Irish National Police (An Garda Síochána) took action against a criminal gang suspected of large-scale money laundering. 

Fund transfers in excess of €4 million were identified from other jurisdictions to Irish bank accounts linked to members of this criminal network. The gang is believed to have made this money from illegal activity across Europe. 

The search operation in the cities of Tipperary and Kilkenny involved searches of 4 residential properties and 1 business premises, as a result of which €100 000 in cash and a car worth €75 000 were seized. A total of 16 bank accounts linked to members of the crime group were also frozen. The accounts contained cumulative funds of €540,000. 

Such results were made possible thanks to the model of non-conviction based forfeiture operated by the Irish Criminal Assets Bureau.

International Asset Recovery

International cooperation is essential for the successful recovery of assets hidden abroad. Europol’s position at the heart of the European security architecture helps facilitate such a mechanism.

In this case, Europol’s European Financial and Economic Crime Centre (EFECC) pieced together the intelligence provided by different countries on this one same criminal network and put all the involved countries around one table. 

The partners have since worked closely together on this case to uncover the actual magnitude of the criminal activity of this gang and to establish a joint strategy for the final phase of the investigation.  
 



The first EUIPO self-produced short film released: The IP Link

February 12, 2021 About the EUIPO

The first EUIPO self-produced short film released: The IP Link

Every picture tells a story and the EUIPO’s is one of accessible IP registration services for EU businesses, whether large or small. This is the starting point of The IP Link, a 7-minute short film which was made with the help of over 80 EUIPO staff members.

The film stars a freelance designer and his baby daughter and shows the life of a trade mark from its conception through the application process. We see intellectual property rights in motion, how they are used and registered by companies and professionals. We also get a glimpse of the EUIPO staff, their collaborative ways of working and their workplace in Alicante.

The IP Link is part of the Office’s move to make IP information more user-friendly and relevant for companies, linking it to real business needs. In fact, it is one of the promotional tools used for the array of SME initiatives that the EUIPO has launched in the past few months.

In an international context where small and medium-sized businesses (SMEs) are most hit by the pandemic, helping companies to secure IP rights in an easy and straightforward manner is more important than ever. The film can be seen on the About EUIPO page and the Ideas Powered for Business section of the EUIPO website, which provides a one-stop shop for EU businesses looking to gain a competitive edge with IP.

From information on trade marks and designs to personalised free intellectual property support and e-learning courses, the section also gives access to the SME Fund. This EUR 20 million grant scheme has been created in cooperation with the European Commission to help SMEs access their intellectual property rights.

All in all, supporting SMEs has received a passionate response from the EUIPO’s staff. The IP Link film tries to pay tribute to this public service commitment and to all the companies and professionals who entrust their trade marks and designs to the EUIPO. Shot entirely in Alicante, the film was produced internally, demonstrating a real cross-departmental effort with staff working as actors, production experts, casting assistants and scriptwriters. Don’t miss it.