Italian and Chinese mafias involved in VAT fraud in Romania, EPPO head says

The chief prosecutor of the European Public Prosecutor’s Office, or EPPO, Laura Codruţa Kovesi, stated in an interview that the Italian and Chinese mafias may be involved in VAT fraud in Romania.

The Italian mafia has already committed fraud with European funds in the country, including money from the post-pandemic Recovery and Resilience Facility, Kovesi told journalists at Libertatea.

The group exploited vulnerabilities in the country's tax system. “In Romania, regarding VAT fraud, we have seen an involvement of the Italian mafia, which has moved part of its activities there. We have seen these online markets that are organized in Romania. So I could say that Romania is not protected,” Kovesi declared.

She also specified that Romania is not excluded when it comes to the use of artificial intelligence for nefarious purposes. “We see a lot of cryptocurrency trading, for example. We see this in Romania as well, because investing in cryptocurrencies seems to be a resource through which money laundering is attempted, but also a way to preserve the criminal proceeds. The problem is VAT fraud, namely how it can be better detected and, if it is detected, why it is not being reported,” stated the head of the European Public Prosecutor’s Office.

Asked to explain why Romania has become a fertile territory for the Italian mafia, Kovesi noted that there are groups from third countries that are “practically invading Europe.” She gave the example of the Chinese mafia, which may see Romania as a fertile territory.

“When we generally look at all VAT frauds, I could say that organized groups and mafias are no longer national, they are complex, you have all nationalities there, both from the EU and outside of it,” the Romanian prosecutor said.

Highly mobile and well-funded, the groups have access to experts such as accountants and lawyers who explain what vulnerabilities exist in each member state, where it is better to establish their headquarters, so that the risk of being detected is as low as possible.

During the same interview, the EPPO head said that although Romania has the largest deficit regarding VAT collection, the level of detection and reporting of VAT frauds, at least to the European Public Prosecutor’s Office, is very low.

She stated that last year, out of nearly 400 cases investigated by the European Public Prosecutor’s Office in Romania, only 12 involved VAT. “Romania has the largest deficit when it comes to VAT collection. It is something I have said several times. Over 90% of this can be explained only through fraud,” she added.