Operation Warehouse Customs Operation

21 January 2014
by eub2 -- last modified 21 January 2014

Almost 45 million smuggled cigarettes, nearly 140,000 litres of diesel fuel and about 14,000 litres of vodka were seized during a major Joint Customs Operation (JCO). The Operation code-named "Warehouse" was carried-out in October 2013 by the Lithuanian Customs Service and the Lithuanian Tax Inspectorate in close cooperation with the European Anti-Fraud Office (OLAF), and with the participation of all 28 EU member states. As a result of Operation "Warehouse", a significant potential loss to the budgets of the European Union and its Member States was prevented. According to preliminary estimates, this would have amounted to about € 9 million in the form of evaded customs duties and taxes. The final results of the Operation were discussed by the participants last week at a debriefing meeting in Vilnius and were made public today across Europe.

What is a "Joint Customs Operation"?

Joint Customs Operations (JCO) are carried out to specifically target smuggling and customs fraud in certain high-risk areas (e.g. EU Eastern border) or along identified trade routes (e.g. incoming trains from Asia, ship containers arriving in EU ports with cargo from third countries). These operations help to improve cooperation between the countries involved in tackling smuggling and customs fraud. They also help to develop greater insight into where the risks lie on specific trade routes. JCOs not only safeguard the EU's financial interests, but also protect the citizens and legitimate businesses by intercepting illegal products entering the EU.

Who participated?

The Lithuanian customs administration organised this JCO jointly with the European Anti-Fraud Office (OLAF). 28 EU Member States participated (Austria, Belgium, Bulgaria, the Czech Republic, Denmark, Estonia, Finland, France, Greece, Germany, Hungary, Latvia, Lithuania, Luxembourg, Malta, The Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Italy, Ireland, Cyprus, United Kingdom and Croatia). The Commission's Directorate General for Taxation and Customs Union and EUROPOL provided their analytical support.

OLAF provided logistical, financial and technical support to allow for an exchange of information and intelligence in real-time throughout the operation. The operation was coordinated from the Physical Operational Coordination Unit (P-OCU) in the OLAF premises in Brussels. This facilitated direct communication with the national contact points. Liaison officers, representing all participating EU Member States, worked from here during the operation.

What happens to the seized goods?

Smuggled cigarettes are seized and usually destroyed on the basis of the Community Customs Code (Council Regulation (EC) No. 2913/92) by customs authorities. The same happens to the seized alcohol.

Other seized goods, e.g. mineral oil, are sold to recover the evaded taxes.

What sanctions/fines do companies and individuals who are caught face?

The persons involved in the detected fraud schemes face prosecution and/or recovery actions from customs and tax authorities. The means of transport used, like cars and lorries can also be seized according to national legislation.

Penalties for smugglers and traffickers are fixed at national level, and tax liabilities of persons involved in committed fraud differ according to European legislation and national legal acts.

What is next?

JCO "Warehouse" was the first operation provided in close cooperation with tax authorities to target excise and VAT fraud.

The outcome of JCO Warehouse highlights the necessity to organize similar types of operations in the near future, preferably in cooperation with tax authorities and selected third countries since this can increase the overall effectiveness and success of JCOs.

Further operations should probably have:

• a longer operational phase;
• target a limited number of states/regions;
• concentrate on certain specific group of goods (mineral oil/alcohol/cigarettes);
• include other means of transport (air/rail, etc).