Niall Hearty of financial crime specialists Rahman Ravelli examines its most notable points.

Fraud and financial irregularities in European Union (EU) revenue and expenditure fell by a fifth last year.

According to a report issued by the European Commission, the EU's national authorities reported a total of 1,056 fraudulent irregularities, with a combined value of €371 million.

The figures reflect the reduction in such incidents over the past five years. Yet the EU Commission is still encouraging member states to devise and adopt their own anti-fraud strategies and control systems to reduce new risks related to the EU budget.

The EU Commission report says that Hungary, Poland, Sweden, Denmark, and Ireland should reconsider joining the European Public Prosecutor's Office (EPPO), which is responsible for investigating and prosecuting EU funds-related fraud. At present, Cyprus, Denmark, Finland, Germany, Ireland, Netherlands, Slovenia and Spain do not have internal anti-fraud plans.

The report warns that EU countries will continue to lose billions due to tax fraud and inadequate tax collection systems.

EU Commissioner for budget, Johannes Hahn, said: "The EU's unprecedented response to the pandemic makes more than €2 trillion available to help member states recover from the impact of the coronavirus. Working together at the EU and member state levels to keep this money safe from fraud has never been more important."

Most fraudulent cases affecting EU revenue involved the undervaluing, wrong classification or smuggling of goods, most notably textiles, footwear, vehicles and electrical machinery and equipment. Detection rates in Belgium, Bulgaria, Germany, Croatia, Hungary, Poland, Slovenia and Sweden were at their highest last year compared to the previous five years, whereas they were at their lowest in Italy, the Netherlands, Austria, Portugal and Slovakia.

EU member states reading the report will welcome news of the drop in the instances of fraud and irregularities. But the need for additional anti-fraud strategies has been emphasised to them. It now remains to be seen what action will be taken by individual EU members.

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