Fraud against the European Union

Fraud against the European Economic Community and the present European Union is not a question of petty pilfering but of large scale organized financial crime. The most frequent type of fraud is the one involving tobacco and cigarettes. It occurs in Germany, Belgium, Spain, France, Ireland and Italy. Fraud concerning agricultural products is carried out in most Union countries; specifically for beef (Belgium, Germany, France and the United Kingdom), cereals (Germany, Italy and Portugal), milk products (Germany, Spain, Italy and the United Kingdom), and olive oil (Spain, Italy and Portugal). Industrial goods are rarely used for fraud, with the exception of textiles.

Fraud against the European Union - student2.ru It is a fact that organized criminals increasingly avoid payment of customs duty and fraudulently exploit the European Community's Transit System.

The procedure is the following: the owner of goods is responsible for the payment of duty. However, the destination of some goods requires the freight forwarder to become responsible for the payment of customs duty instead of the owner. These goods are classified as Community Transit ones. All imported goods for consumption within the European Union are subject to customs duty. However, the EU does not require the payment of customs duty when the goods are classified as Community Transit goods. Since they ordinarily originate outside the EU but always pass through one or several member states. The system allows a consignor to transport goods without repeatedly having to Fraud against the European Union - student2.ru pay and reclaim customs duty with every country.

When goods are transported, the EU requires a guarantee to cover any potential customs duty loss in cases where goods are thought to have been consumed within a member state country not designated as the final destination. The freight forwarder provides the guarantee because he has legal possession of the goods and is responsible for duty and taxes.

The freight forwarder is able to absolve himself of the guarantee after proving that the goods reached their destination. This is usually done when the EU customs official at port of entry is shown documentary proof that the goods have left an EU customs port of exit.

The documentation that regulates the Community Transit, the "T1 Form', is the official customs stamp on page five of the document. Its return to the port of entry relinquishes the freight forwarder from responsibility. If page five of the form does not arrive or is proved fraudulent, customs enforce the guarantee.

Criminals abuse the system by pretending to be legitimate consignors who ship goods through the EU customs area to a consignee outside. The consignor asks the freight forwarder to put up a guarantee to cover any customs duty. The goods arrive at a port of entry and customs are told these are Community Transit Goods destined for a consignee outside the EC customs area. The goods are then transported. It is common for a cargo trailer to be towed by a chain of different haulers and this part of the system is open to abuse. Before the goods leave the EU customs area they are diverted and sold.

The most common method adopted by criminals is to involve a driver in the chain of haulers. The driver deliberately delays declaring the loss of the cargo. If a freight forwarder makes inquires the driver might falsely say that he has been delayed because of mechanical problems.

Once customs officials at the port of entry become aware of the situation they enforce the guarantee and the freight forwarder has to pay the customs duty for the fraudulent consignor. The freight forwarder might then claim on his insurance which, in turn, will result in higher premiums or refusal of future cover.

These are variations of this fraud. The freight forwarder may be a part of the scheme and when customs try to enforce the guarantee they find it worthless. Alternatively, a customs official may be corrupted with bribes and issue fraudulent the T1 documents or criminals may use a counterfeit stamps.

The last two methods are designed to mislead the customs officials at port of entry into believing the goods have left the EU. Criminals, in almost the same way, abuse the Transport International Routes (TIR) system. The system is regulated by the International Road Transport Union. But, unlike the EU, the TIR system includes 57 members. Many countries have emerging democracy and their lack of stability encourages fraud.