ECA Report: Fraud of MRR funds underestimated at EU level

The fraud of the euro650 billion allocated by the European Commission through the Recovery and Resilience Mechanism (RRM) offers considerable potential for fraudulent activities and, therefore, the fight against fraud of these funds needs to be as effective as possible, said Katarina Kaszasova, a member of the European Court of Auditors (ECA), yesterday, on the occasion of the presentation of the audit report on the RRM.

Katarina Kaszasova said: "Fraud protection in the EU's euro650 billion post-COVID recovery fund is uneven. As a result, EU finances are less well protected than they could be. Why? While the Commission has gradually taken steps to fill the gaps in the MRR legislation, the current framework still has shortcomings in detection, reporting and correction. Member States have been relatively slow to introduce anti-fraud measures, and some tools, such as data analytics and whistleblowing mechanisms, are not consistently used. The Commission cannot always apply quick and effective corrective measures. This means that the EU may not recover funds spent fraudulently. These weaknesses keep the EU exposed to fraud in the MRR, due to gaps in recovery rules, incomplete fraud data and reporting issues.”

In practice, the European auditors describe without reserve a picture in which the protection of the EU budget, in a program valued at 650 billion euros, remains "uneven", and anti-fraud systems are marked by persistent deficiencies in detection, reporting and correction. The central message is sharp: although the anti-fraud framework has gradually improved, the European Union is still exposed to serious risks of fraud, due to incomplete data, legislative gaps and control limitations.

The cited document starts from an essential reality: the MRR is an exceptional, temporary instrument, launched in February 2021, built on a "financing not linked to costs" model, in which payments are not conditional on actual expenditure verified in blood, but on the achievement of milestones and targets assumed through national plans. This architecture, designed for speed and flexibility, radically changes the classic budgetary control paradigm and creates fertile ground for vulnerabilities. One of the most sensitive findings concerns the mechanism for recovering funds used fraudulently. Member States are obliged to recover money from final beneficiaries, but are not obliged to return the amounts to the EU budget. The auditors point out that this legal construction leaves the European budget exposed: the Union bears the financial risk, but has no guarantee of direct recovery of the money. In addition, the report draws attention to the fact that, with the end of the MRR at the end of 2026, the current reporting channels on fraud and recoveries could disappear, precisely at a time when the largest investments are scheduled towards the end of implementation. The data presented by the ECA are also revealing. In its 2024 annual report, the European Public Prosecutor's Office (EPPO) indicated that it had investigated 307 fraud cases related to the MRR since the launch of the mechanism. However, the ECA states that "the extent of fraud within the MRR cannot be accurately estimated”, precisely because of incomplete data and the non-uniformity of reporting between Member States. In practice, the EU operates with a fragmented picture of the phenomenon, which reduces the capacity for real risk assessment.

This fact is also evident from the answer of Ms Katarina Kaszasova to a question received during yesterday's press conference, which stated that the states with the most fraud reports can be considered the places where the most European funds are wasted.

Katarina Kaszasova said: "As long as we have states that do not report all the cases in which they have suspicions of fraud, we cannot say that the states that have reported the most cases are also the ones where European funds are defrauded the most. We cannot make such classifications, because we do not have a complete, real picture for the 27 EU Member States”.

The ECA report also details how Member States manage fraud prevention. A survey by the European Court of Auditors shows that 80% of implementing bodies declare that they carry out fraud risk assessments for MRR measures, but beyond declarative compliance, auditors find delays and corrective rather than preventive reactions. In Italy, Romania and Spain, the Commission's fraud risk assessment model is used, but "with one exception, in the case of one implementing body in Romania, fraud risk assessments were not carried out from the start of the MRR, but later, in response to Commission recommendations”, the ECA report says.

This message is clear: some national structures acted late, under pressure from the European audit.

As regards fraud detection, the Court insists on the insufficient use of data analysis tools. Although the Commission has made the Arachne platform available to Member States, its use is not mandatory. The result: only 65% of the audit and implementing bodies that responded to the survey use Arachne, 16% use national tools and 19% do not use any data mining tool for fraud detection. Romania is among the countries that use Arachne as their main tool, but the overall assessment indicates "progress, but improvements are needed" in terms of access to relevant staff and the uploading of sufficient and accurate data.

The European Court of Auditors' report questions the sufficiency of current anti-fraud guarantees in a budgetary context dominated by innovative, rapid and massive financial instruments. It is not only colossal sums that are at stake, but the very credibility of the European model of fiscal solidarity. For the European Union, the report sends a message that is impossible to ignore: without a more rigorous, uniform and transparent anti-fraud framework, any future MRR-type financial instrument risks repeating the same structural vulnerabilities.