A milestone in European integration

EPPO was established by the Council Regu­lation of 12 October 2017, on the basis of Article 86 TFEU, and has been fully opera­tional since 2021. It is the first EU entity to be given its own powers to initiate criminal proceedings. EPPO is also the only genuinely supranational dimension introduced under the Treaty of Lisbon. Its establishment was facilitated by the work of Eurojust which has since 2002 gradually con­vinced the member states’ justice ministries of the benefits of joint criminal prosecutions. Whereas Eurojust merely coordinates co­operation between national judicial author­ities, EPPO possesses its own investigative and prosecutorial powers.

Although EPPO represents a potentially powerful prosecution service, its sole task to date is to prosecute offences affecting the EU’s own finances: all revenue, expenditure and assets attributable to the budgets of the Union and its institutions, bodies, offices and agencies. The relevant offences include cross-border VAT fraud in excess of € 10 mil­lion, as well as misappropriation of EU funds. The scope of EPPO’s activities is defined in Directive 2017/1371 on the fight against fraud to the Union’s financial interests by means of criminal law (the PIF Directive, from the French “protection des intérêts financiers”), which defines the relevant criminal offences and establishes a harmonised minimum standard of criminal law. EPPO’s competence over cases involv­ing criminal organisations is restricted to those where the primary purpose of the alleged act was to commit an offence listed in the PIF Directive.

The issue of sovereignty is clearly the reason why it took so long to establish EPPO. In 2013, the European Commission proposed a highly centralised, quasi-supra­national model: a single prosecutorial authority reporting directly to the College of European Public Prosecutors in Luxembourg. This was rejected by the member states, which were reluctant to cede sover­eignty over their criminal jurisdiction.

EPPO was finally established in 2017 under the enhanced cooperation framework (initially involving 20 of the 27 mem­ber states), as a two-tier hybrid model. The central level is based in Luxembourg and supported in particular by the College of European Public Prosecutors. The decentralised level consists of the so-called delegated European prosecutors, who are integrated into the respective national judicial systems of the participating EU member states, where they conduct investigations and bring charges.

Following Russia’s full-scale invasion of Ukraine in 2022, the question of the effec­tiveness of EU sanctions loomed ever larger in Brussels, and with it the debate over ex­panding the mandate of the newly estab­lished EU Public Prosecutor’s Office.

The Franco-German initiative of 2022

The EU’s first package of sanctions against Russia was adopted on 23 February 2022, immediately after Moscow recognised the separatist entities in Donetsk and Luhansk. This marked the beginning of a massive expansion of existing sanctions that had been in place since March 2014. A second, much more extensive package followed on 24 February, the day the invasion began. Although the European response was swift and politically coordinated from the outset, a structural problem soon became apparent. The sanctions were implemented (and circumvented) differently in the different member states, and enforcement was weak. There was a lack of credible deterrence.

On 29 November 2022, the French and German justice ministers published a joint opinion piece calling for EPPO’s jurisdiction to be expanded to cover sanctions violations. It was not enough to impose sanc­tions: they also had to be policed. This, the ministers argued, required coordinated in­vestigations and prosecution of violations. Transferring the necessary powers to EPPO appeared to offer an efficient means to enforce Euro­pean decisions and values. In conclusion, they called on the Commission to put for­ward appropriate proposals and asked the other EU member states for their support.

A relevant approach

The Franco-German initiative is relevant because EPPO was specifically designed to handle complex cross-border cases, particu­larly in the economic sphere. This creates potential added value for enforcement of EU sanctions.

Until EPPO was established to guard the Union’s financial interests it was difficult even to assess the scale of the losses in­volved, because jurisdiction and prosecution were fragmented across the member states. National authorities identified and prosecuted cases within their respective jurisdictions, such as intra-Community carousel fraud, but they were always seeing only a fragment of the overall picture.

In 2021, the European Anti-Fraud Office (OLAF) identified € 527.4 million in recover­able EU funds lost to irregularities, fraud or customs offences. EPPO, by contrast, was investigating VAT cases worth € 45 billion in 2025. The discrepancy suggests structural underreporting at the EU level. Unlike OLAF, EPPO was able to determine the actual loss using bank records, witness state­ments and seizures. Incidentally, according to EPPO’s 2026 annual report, Germany is one of the member states most seriously affected by VAT fraud, with around 300 ongoing investigations and estimated losses exceeding €10 billion. By way of comparison, France has just over 150 ongoing investigations and estimated losses of around € 5 billion.

The link between sanctions violations and VAT fraud is often overlooked (along with the associated money laundering). Both offences frequently employ the same complex trading structures. For example, prior to 2022 Russia was already setting up shell companies within the EU to establish potential circumvention networks. Such structures correspond to the typical pat­terns of VAT fraud, in particular “carousel fraud” where fictitious supply chains are created for purposes of tax fraud. For ex­ample, Company A sells goods VAT-free to Company B in another member state; Com­pany B resells them with VAT, and then disappears without passing the tax on to the authorities. The same goods are then sold on again, via further intermediaries, to a company linked to A – often across borders and VAT-free. VAT is systematically skimmed off with each turn of the carousel.

While EPPO already possesses juris­diction in cases where sanctions evasion is accompanied by VAT fraud or misuse of EU funds, breaches with no connection to the EU’s own financial interests fall outside its remit. To date, there is no documented case in which EPPO has initiated investigations or a prosecution in connection with the sanctions regime against Russia.

The hurdle of unanimity for mandate expansion

The Franco-German proposal to expand EPPO’s mandate failed to gain traction. Although it had been established under enhanced cooperation, such a decision would have to be taken unanimously by the European Council after consulting the European Parliament (pursuant to Article 86(4) TFEU). The process can be initiated by a group of member states or by the Commission.

While a qualified majority could amend the PIF Directive – but not the 2017 EPPO Regulation – to include sanctions-related offences, that would not be sufficient to grant EPPO additional powers. To extend EPPO’s mandate in practice, it would have to be argued that the offences in question already fell within the scope of the Union’s financial interests, or the consent of all member states (including those not current­ly participating in the enhanced cooperation) would have to be obtained (as per Article 86(4) TFEU).

The lack of unanimity in the Council was not solely attributable to the position of Hungary under Viktor Orbán. Other par­ticipants in the enhanced cooperation had their own doubts about expanding the mandate. This applied, for example, to the Netherlands, which in 2024 drafted a non-paper on strengthening European cooperation on sanctions enforcement without mentioning EPPO. Nevertheless, the recent change of government in Budapest could prove decisive.

A new political dynamic

Even in the absence of progress on its man­date, EPPO’s membership has grown steadi­ly. It was established by 20 member states in 2017. By 2022, the year of the Franco-German initiative, another two had joined. Poland and Sweden signed up in 2024, making a total of 24 participating member states. Ireland and Denmark have opt-out clauses: Hungary now intends to join.

Immediately after joining EPPO, Poland used its Council Presidency to advance the discussion on prosecution of breaches of EU sanctions, at the informal meeting of jus­tice and home affairs ministers on 30 and 31 January 2025.

Péter Magyar announced that Hungary would be joining EPPO at his first press conference as prospective prime minister, in April 2026. This opens up new horizons. Budapest’s participation would in principle be irreversible, as there is no mechanism to withdraw from enhanced cooperation. This could prove significant in the future if Hungary were to shift back to a pro-Russian stance, especially if EPPO’s mandate is expanded to cover sanctions violations.

Maintaining the political momentum for a sanctions-related mandate expansion is especially relevant given that EPPO’s man­date is due to be evaluated by the European Commission in 2026 and if necessary re­vised (as laid out in Regulation 2017/1939).

Increased activity since 2021

EPPO has seen gains in its efficiency and credibility. It certainly represents an im­provement on the prior system of national prosecutions, and has significantly reduced the number of parallel prosecutions and conflicts of jurisdiction. Centralised case management and coordination of national investigations has enhanced the utilisation of prosecutorial capacity.

EPPO’s annual reports show dynamic growth in its activities, following the start-up phase. For instance, the 2025 report (covering activities in 2024) recorded 2,666 ongoing investigations into offences worth an estimated € 28.8 billion. A year later, the March 2026 report saw the number of in­vestigations up by 35 per cent to 3,602, and the estimated value at stake more than doubled, to € 67.3 billion. The “Moby Dick” case attracted great attention in February 2026. This major investigation into a cross-border financial fraud network (primarily involving VAT) was coordinated by EPPO and uncovered total losses estimated at around € 520 million; the courts confiscated assets worth approximately € 40 million. As the case demonstrated, EPPO is gaining trac­tion in the fight against increasingly pro­fessional and transnational economic crime.

In light of such successes, various proposals for expanding EPPO’s mandate have been discussed. Environmental crime and corruption have been mentioned, but the greatest opportunities currently lie in the sphere of sanctions violations. The latter meets two key conditions: sanctions have direct economic and security significance for the EU, and European law already provides a legal framework (such as the aforementioned EU Directive 2024/1226 on the definition of criminal offences and penalties for the violation of Union restric­tive measures). Furthermore, Directive 2024/1260 on asset recovery and confiscation significantly expanded the possibilities to seize and confiscate proceeds of crime. This underscores the growing strategic importance of effective enforcement of EU sanctions, in particular in the context of the discussions about moving from “freezing to seizing” Russian assets.

Greater awareness of breaches of EU restrictive measures

Although there have been no new moves to expand the jurisdiction of EPPO since 2022, the Commission has worked to maintain interest in sanctions enforcement. Together with the member states, it has created a coherent European criminal law framework (Directive 2024/1226) that could one day serve as the basis for an expanded EPPO mandate. If EPPO was given responsibility for sanctions violations, it would be able to conduct investigations and initiate prosecu­tions without having to deal with excessive legal differences between member states (as is already the case for offences covered by the PIF Directive). Instead it would be able to rely on a harmonised European criminal law framework.

In 2024, the European Parliament signalled its interest in the issue as it cooperated actively to pass the aforementioned directive on enforcement of EU sanctions. Within the Parliament, the liberal Renew Europe group has also regularly advocated for EPPO’s mandate to be expanded to cover sanctions violations.

In 2025, the Parliament and the Council decided to expand Europol’s mandate to cover breaches and circumvention of EU sanctions. Cooperation between Europol and OLAF was strengthened the same year. Both moves underscore the EU’s ongoing interest in combating sanctions offences at the operational level – and open up opportunities for EPPO to further deepen its already close cooperation with Europol and expand its role in this area.

Germany established the Central Office for Sanctions Enforcement (ZfS) in 2023, as a federal body responsible (alongside the customs administration) for coordinating and strengthening the administrative im­plementation of international sanctions, in particular the EU’s. That responsibility had hitherto rested primarily with Germany’s Länder, which limited the effectiveness of controls. The ZfS centralises information, supports complex financial investigations, and facilitates the tracing and freezing of assets. Its establishment signals a strengthening of Germany’s commitment to effec­tive implementation of European sanctions.

Interaction with the EU’s anti-fraud architecture

Closer integration of financial, trade and security information repositories and systematic closure of the opportunities for circumvention and evasion would allow the EU to significantly enhance its ability to implement sanctions. The sanctions issue is driving discussions and developments in the sphere of European anti-fraud architecture, in particular around the interactions between OLAF, EPPO and other control and coordination mechanisms.

On 5 May 2026, the Council of the EU agreed on new rules to combat VAT fraud, including a further institutionalisation of cooperation between OLAF and EPPO. The aim is to improve coherence between ad­ministrative investigations and criminal prosecutions in the area of financial crime.

In parallel, the EU’s new Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA) in Frankfurt am Main and the future EU Customs Author­ity based in Lille are being expanded. This opens up opportunities to structurally improve and strategically realign the Euro­pean Union’s enforcement of sanctions.