The European police agency Europol has today revealed that the fraudulent trade in carbon credits that affected a number of countries over the past few months is far more widespread than previously thought and could have cost EU taxpayers up to €5bn in lost revenue over the past 18 months.
The agency said in a statement that it believed that in some countries up to 90 per cent of the trading of EU emissions allowances (EUAs) was subject to fraudulent activity.
EUA's which are traded under the EU emission trading scheme have been involved in so-called carousel fraud whereby fraudsters sell carbon credits and collect the accompanying VAT, but then disappear before the money is handed over to the tax man.
Europol said that suspicions of carousel fraud, so named because the fraudster can often buy back credits and then repeat the practice several times over, first arose in late 2008.
Market volumes then peaked in the summer, at which point France, the Netherlands and the UK changed their VAT rules to crack down on the practice. Europol said that after the reforms the market volume in each country fell by up to 90 per cent, indicating that the problem was extremely widespread.
Spain and Denmark have subsequently introduced similar rules that ensure VAT is collected from the purchaser, rather than the organisation buying the credits.
Europol said that it was now working with Belgium, Denmark, France, the Netherlands, Spain and the United Kingdom to set up a specific project to collect and analyse information in order to identify and disrupt the organised criminal structures that are believed to be behind these fraud schemes.
"These criminal activities endanger the credibility of the European Union Emission Trading System and lead to the loss of significant tax revenue for governments," said Europol director Rob Wainwright. "Europol is using its expertise and information capabilities to help target the organised crime groups involved."
The agency added that there were reasons to believe that fraudsters might soon migrate towards the gas and electricity branches of the energy sector.
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