VAT Fraud

VAT fraud "101"

Estimation of the VAT fraud

MTIC fraud focus: Full Report

The Value Added Tax(VAT) fraud is one of the most endemic economic crimes within the European Union. Its most disruptive form, the Missing Trader Intra-Community (MTIC) scam represents a real threat for the further economic and fiscal integration of the Union.

This research explains the mechanisms and to assess the magnitude of the MTIC fraud based on macroeconomic data. A macroeconomic model using panel regression is developed in order to link the amount of VAT collected across the member countries to their respective trade gaps. Using this model the VAT gap is identified based on the difference between the theoretical VAT and the observed amounts. The results emphasize that the MTIC fraud alone accounts for almost 94 B€ in 2014 across the 28 Union members representing 0.67% of Union's GDP.

2014 MTIC VAT Gap: Country breakdown. The 2014 MTIC VAT Gap represents 0.67% of the GDP of the European Union. The top countries in terms of MTIC VAT fraud are the United Kingdom, Germany, Italy, Spain and France which are also in the top of all VAT frauds.

Find more insights about the cost of the MTIC VAT fraud in the European Union in the Full Report

Uber-terrorism

Boston, Charlie Hebdo, Bataclan, Sharm ElCheik, San Bernardino, ... Facing an unprecedented wave of Islamist terrorism, modern society is confronted with a new public enemy who is both invisible and ubiquitous. But the Western society and especially Europe has experienced since the end of World War II several episodes of terrorism. The actions of the Red Brigades in Italy or those of the Irish Republican Army in Great Britain are still living memories in the collective unconscious. The Irish Republican Army, the Basques and Corsican separatists or the Al-Qaeda had a solid long-term financing, a defined hierarchy and an effective chain of commands. In addition, they were operating in a defined geographic area where they had a support network. An organization similar to the Islamic State was the "Emirate of Caucasus", ephemeral entity born from the ashes of the second Chechen war. The Chechen militants tried to govern a geographical area in the Caucasus according to Islamic law. And to achieve this, they deployed terrorist actions all over Russian Federation.

To fight Al Qaeda or the Emirate of Caucasus, tackling the terrorism financing has become a priority for the intelligence services. The aim was to weaken the power of terrorist groups by dismantling the financing network and cutting financial flows needed for operations, logistics and support network. Clearly, the rapid expansion of the Islamic State brings a paradigm shift in the terrorist phenomenology. Thus Daech differs from its predecessors who sowed terror in United States and Europe and operates on a different model. Indeed the Islamic State "oversees" de facto today an area of about 215,000 km2, but is able to support terrorist actions on several continents. Presumably the Islamic State has learned valuable lessons from the experience of others. His vision of terrorism focuses on low-cost actions and strong media impact. Why ? Probably because to finance and to organize a global extremist network, managed by a centralized chain of commands has become a difficult task.

Consequently Daech aims to a lesser extent for complex actions such as the attacks of September 11, 2001 that would require lengthy preparations and implicitly substantial financial resources. Rather, it focuses on actions organized by local groups managed in a decentralized manner requiring minimal funding. The logistics of the attacks may be financed by means that do not involve significant fund transfers, which would be easily detectable by the banking network.


Introduction to uber-terorrism

Uber-terorrism and compliance risk

Uber-terorrism and VAT fraud

Bitcoin and financial crime


Crypto-currency focus

Financial crime investigation


How to conduct research into financial fraud?

Fraud on Financial Markets


Typologies of crime on financial markets


Hedge Funds