ECA: Blacklisting underused in protecting EU funds against fraud

Blacklisting is not used effectively to prevent EU funds from being paid out to of individuals, businesses or public organisations involved in illegal acts such as fraud and corruption, according to a new report by the European Court of Auditors. The European Commission has blacklisted very few names because of weaknesses in arrangements for identifying those who should be excluded from applying for EU funds. In addition, Member States – despite implementing most EU spending – are not required to set up blacklisting systems per se and have different approaches to protecting the EU’s financial interests. This patchwork of exclusion arrangements undermines the overall effectiveness of blacklisting and results in uneven protection of the EU budget across Europe.

Blacklisting – or exclusion – is a key tool that governments and international organisations use to protect their finances. Since 2016, the Commission has operated an early detection and exclusion system (EDES) – the only exclusion system at EU level – to flag risky counterparties to those responsible for authorising the spending that the Commission manages directly or with partners. The EDES does not apply in areas such as agriculture and cohesion, which are under shared management by the Commission and the Member States and account for the bulk of EU spending. 

Blacklisting can help ensure that EU funds do not fall into the wrong hands, but it is not being used effectively: we have a patchwork of different approaches to exclusion at EU and Member States level,” said Helga Berger, the ECA member in charge of the audit. “On the other hand, relevant data is either not available or not used in compiling the EU’s blacklist, which undermines its usefulness and deterrent effect. A system is only as good as the information fed into it,” she added.

Read the Special report of The European Court of Auditors in its entirety here.