EPPO Italy: RRF Fraud Investigation Freezes €2.6M Assets

• The EPPO in Milan froze €2.6 million in assets as part of a €4.9 million order against four companies and their legal representatives.
• The investigation targets suspected fraud involving Italy's RRF funds, including fictitious invoices and unlawful labor arrangements.
• Suspects allegedly created €2.38 million in fictitious tax credits for unperformed employee training, reducing worker tax and social security payments.
• A separate fraud involved two companies obtaining €7.3 million in state-guaranteed financing based on false information.
• An international money laundering scheme, transferring hundreds of millions of euros to China and Hong Kong via companies in several countries, was also uncovered.

The investigation further revealed a sophisticated international money laundering operation, allegedly involving companies across multiple countries and facilitating the transfer of hundreds of millions of euros to destinations including China and Hong Kong.

The European Public Prosecutor's Office (EPPO) in Milan, Italy, announced on September 18, 2026, that it has conducted searches and frozen assets totaling €2.6 million as part of a significant investigation into suspected fraud. This probe specifically targets the misuse of resources allocated under Italy's National Recovery and Resilience Plan (PNRR), which is financed through the European Union's Recovery and Resilience Facility (RRF).

The asset freeze is part of a broader €4.9 million order issued by the judge for preliminary investigations at the Court of Milan. This order targets four companies and their legal representatives, who are suspected of benefiting from a complex scheme involving fictitious invoices and unlawful labor arrangements. The initial findings suggest a deliberate effort to defraud the system designed to support economic recovery.

This action by the European Public Prosecutor's Office Milan underscores the intensified scrutiny on the legitimate deployment of EU recovery funds. The investigation aims to ensure accountability for any illicit activities that undermine the integrity of these crucial financial instruments intended for national development and resilience.

The investigation has uncovered multiple layers of alleged fraudulent activity. A primary focus is on the creation of fictitious tax credits amounting to €2.38 million. These credits were purportedly generated by falsely claiming to have provided employee training courses that, in reality, were never conducted. These fabricated tax credits were then allegedly used to reduce the tax and social security payments for hundreds of workers, who were subsequently supplied illegally to third-party companies.

Further findings reveal a separate instance of suspected fraud involving two additional companies. These entities allegedly secured €7.3 million in state-guaranteed financing by providing false information in their applications. Evidence suggests that both the fictitious tax credit scheme and the state-guaranteed financing fraud relied heavily on the use of shell companies and fictitious invoices for non-existent transactions, indicating a sophisticated and coordinated effort to deceive authorities.

Adding another dimension to the case, the investigation further revealed a sophisticated international money laundering operation, allegedly involving companies across multiple countries and facilitating the transfer of hundreds of millions of euros to destinations including China and Hong Kong. This extensive inquiry, led by the EPPO, is being carried out with the operational support of the Economic and Financial Police Unit of the Italian Financial Police (Guardia di Finanza) in Milan, highlighting the collaborative effort to combat financial crime.

This EPPO Italy RRF fraud investigation serves as a stark reminder of the risks associated with large-scale public funding initiatives and the robust measures in place to protect the European Union's financial interests. The European Public Prosecutor's Office operates as the independent public prosecution office of the EU, specifically tasked with investigating, prosecuting, and bringing to judgment crimes that affect the financial interests of the Union.

The scale and complexity of the alleged schemes, encompassing fictitious invoices RRF funds, unlawful labour arrangements Italy, and international money laundering EPPO, demonstrate the persistent challenges in safeguarding significant financial allocations like those under Italy's PNRR. While all individuals concerned are presumed innocent until proven guilty in competent Italian courts of law, the ongoing actions by the EPPO and the Guardia di Finanza Milan investigation signal a firm commitment to combating fraud and ensuring the legitimate use of recovery funds.

Lawyers and compliance officers advising clients involved in EU-funded projects, particularly those under Italy's PNRR/RRF, must review internal controls for invoicing, tax credits, and labour arrangements. This EPPO action signals heightened scrutiny on the legitimate use of recovery funds and the need for robust due diligence to mitigate exposure to fraud and money laundering risks.

Source: Reporting based on EPPO announcements.