EU Anti-Corruption Declaration Systems: Current State and Development Perspectives

The Asset and Interest Disclosure (AID) system is a key instrument for countering corruption in the public sector used across the world. Its main objective consists in ensuring transparency, strengthening accountability of officials and fostering public trust.

The qAID project implemented with the support of the European Union is the first comprehensive European initiative aimed at enhancing the effectiveness of AID systems. The study carried out in the framework of the project focused on the analysis of the responses to a survey from 19 EU member and candidate states (the missing data were collected throughout desk reviews) with the aim to have a detailed picture of the current state of these systems in the region, identify good practices and key trends in the development of the AID systems, as well as to formulate recommendations on how to increase their effectiveness with a view to preventing corruption.

The authors stress that in spite of the fact that most EU member states have asset and interest declaration rules in place, considerable differences in the form of and procedure for filing the declarations, their verification and analysis persist from the point of view of corruption risks.

1. Form of and procedure for submitting declarations

The analysis of the existing systems unveiled that most EU member states use an independent centralised body to collect declarations. However, some countries resort to other approaches: for example, Germany employs the system where the collection is undertaken within the bodies themselves, Greece combines the gathering by independent decentralized and independent centralized bodies, and Poland mixes the collection by an independent decentralized body and the in-house collection in specific bodies (organisations). The dominant model in EU candidate countries is also that of delegating the functions of collecting declarations to an independent centralised authority. The exceptions are Bosnia and Herzegovina that uses decentralized bodies, and Montenegro and Ukraine that use combined approaches (collection by an independent centralised body supported by the gathering by an independent decentralized body or the in-house collection in specific bodies respectively).

The method of filling out declarations can differ and have paper, electronic or combined formats. Most countries use the combination of electronic and paper declarations. This combined approach can be implemented in different ways: in some cases (for instance, Albania and Ukraine) domestic law requires that the declaration is submitted in the paper and electronic formats simultaneously; officials in Ireland can opt for either a paper or scanned copy of their declarations to be sent via email to the competent body; the submission form in Latvia depends on the declarant: most civil servants must file declarations electronically, while certain categories subject to the state secret protection requirements must submit them on paper. The report highlights that there is a digitalization trend: many countries implement electronic declarations systems that can facilitate their filing, verification and public access thereto. At the same time, the authors point out that in spite of the advantages, it is necessary to consider that the electronic submissions require important technical and financial resources in order to implement them effectively.

The categories of persons obliged to file declarations also differ from jurisdiction to jurisdiction. In general, the obligation to declare is normally imposed on public officials, but the list of specific persons falling under this category varies.

In EU member states, both public officials and politically exposed persons are normally obliged to file declarations (except for Croatia and Germany). A number of countries can extend this obligation to other individuals who are qualified neither as officials nor as politically exposed persons under domestic law: for example, the persons participating in public procurement who are not civil servants (Slovenia); presidents of professional associations (for instance, those of lawyers, chartered accountants, certified accountants, architects, solicitors etc.) due to specific legislation (Portugal); holders of certain electoral offices (Italy).

The situation in the candidate countries is similar: most require public officials and politically exposed persons to file their declarations, except for North Macedonia and Ukraine that do not oblige politicians to file declarations. In most candidate countries all officials must file asset and interest declarations. However, there are exceptions: the obligation can be imposed only on specific categories of officials – for example, those included in dedicated registries (Georgia), holding managerial positions in entities (Bosnia and Herzegovina) or as determined by domestic laws and by-laws (Serbia). In many cases the obligation is extended to other categories of individuals, for instance, to the heads of the companies at least 50% of the shares of which are owned by the state and whose staff exceed 50 persons (Albania); the individuals exercising managerial functions in the divisions of state budget institutions, and the individuals exercising managerial functions in the divisions, and the individuals exercising control functions in the state and municipal enterprises and in commercial organisations with the full or controlling share of the state (Moldova).

Many countries expand the declaration area, extending the obligations to the associated persons such as spouses, household members or children, to prevent concealment of illicit assets. This approach, in particular, is used in all EU candidate countries; as for the EU member states, the declaration requirement is limited to officials only in Germany, Greece, Portugal and Slovenia – in the other countries the obligation is extended, as a minimum, to the spouses of declarants and to their minor children. At the same time, the authors stress that this approach should be, in the first place, balanced with the right to privacy of the holders of public positions being respected, and, in the second place, it should take into account the actual capacities and resourcefulness of the bodies responsible for collecting and/or verifying information in terms of processing these additional data.

The content of declarations also varies. Such main categories of information as income, movable and immovable property, financial obligations, securities, participation in commercial organisations and other paid or unpaid work are provided in declarations in all or almost all states. However, EU candidate countries often require the disclosure of a wider range of data. In Moldova for example, the declaration contains information about the charges for services (accommodation, travels, construction, reparations, medical services) and gifts (in a separate register of the employer); in Serbia, the declarants indicate the assets they dispose of both in the country and abroad; in Ukraine, declarations contain information about the assets under construction and not already in operation or the ownership title to which is not registered, as well as the transactions closed in the reporting period (for instance, the acquisition or termination of ownership).

As for the frequency of submissions, most EU member states require the submission upon assumption of office and/or after the assumption and/or annually while in office and/or upon termination. Except for Slovenia and Poland respectively, the declarants are normally not required to disclose the information before assuming office and/or after termination. As a rule, while in office, the declarants file their declarations more than once. Some EU member states (Bulgaria, Germany, Italy and Portugal) also require the disclosure of information in case of a potential conflict of interest. Almost all candidate countries require to submit declarations at least once a year (except for North Macedonia) and upon termination (except for Bulgaria); only Montenegro requires to file declarations more than once. Certain jurisdictions provide for more specific deadlines for submissions, for example, upon reinstatement after a maternity leave (Moldova), in applying to different posts in justice bodies (Albania) or upon termination [when the termination is not initiated by the servant] (Ukraine). At the same time, no EU candidate country requires officials to file declarations in a potential conflict-of-interest situation.

Under certain conditions, countries can provide for the possibility to exempt individuals from the obligation to file declarations. These conditions may include the thresholds (the amount of income, the value of property), geographic location (for example, the assets and interests located abroad) or the moment of acquisition (for instance, before assuming a civil service office, while in office or after termination). This possibility is often encountered in EU member states, whereas such provisions are less widespread in candidate countries and are limited to certain circumstances.

2. Verification and analysis of declarations

The submission of declarations to the competent body is followed by a verification procedure. Depending on the country, the verification can be focused on different aspects: timeliness of filing, accuracy of filling, reliability of data, consistency and completeness of information, presence of potential divergences (for example, expenses unconfirmed by the income disclosed), respect for the anti-corruption legal requirements.

Although the authors stress that in selecting the persons responsible for the verification of declarations, the preference is given to the appointment of a dedicated body, in all EU member and candidate states the body responsible for collecting declaration is the same that is responsible for their verification with the only exception being Italy, where declarations are collected by each body autonomously, while the National Anti-Corruption Authority verifies them.

Most countries use a combined method for verifying declarations, mixing the automated and manual verification. In Moldova for example, not all national databases are compatible with the e-Integrity IT-system. This is why the operators are forced to work manually with a number of existing bases. In Latvia, the verification system consists of two stages: the first one is fully automated and is executed by the Payment Administration Information System (MAIS) that automatically approves and publishes declarations if no inconsistencies are detected; the second stage includes manual verifications undertaken by employees of the State Revenue Service in case the System refuses to automatically approve a declaration filed. Fully automated verifications are in place only in Georgia and Greece, only manual verifications are undertaken in Germany, Slovenia, Poland, Albania, Bosnia and Herzegovina and Serbia.

What is more, a number of countries, including those using manual verifications, verify all or almost all declarations submitted (Albania, Georgia, Latvia, Portugal and Serbia – over 70% of declarations, Bulgaria and Croatia - 91-100%). In the other countries that use the combined approach to verifying declarations (Italy, Moldova, North Macedonia and Romania), less than 10% of declarations are verified. The small proportion of declarations verified, in the authors’ opinion, can illustrate either the effective operation of risk analysis systems selecting the declarations to be verified, or the inability of a country to verify a great number of declarations, because it requires considerable financial and human resources and can be time-consuming, especially in case of manual verifications.

The grounds for initiating a verification, according to the findings of the study, can be:

The initiative of the authorised body that decides autonomously how to verify declarations based on certain information (for example, outcomes of criminal investigations or media monitoring);
Whistleblowers’ reports – public accessibility of declarations allows citizens, journalists, public organisations to detect and report potential violations;
Information about alleged infringements submitted by another body;
Risk analysis findings – in the countries that use this mechanism, the verification is focused (or, as a minimum, prioritizes) the declarations of the officials from the “risk groups”;
Random sample.

The declarations to be verified are selected either at the initiative of the authorized body or based on whistleblowers’ reports or information submitted by other bodies in all EU candidate countries and almost all EU member states (except for Greece). The verifications undertaken after risk analysis are rare (specifically, Georgia reported the consideration of best practices of such verification procedures).

The verification of the content of declarations, primarily of the accuracy and completeness of the data provided, is undertaken by comparing them with external sources (cross-check). The cross-check is critical for detecting violations and, as a consequence, for enforcing domestic legislation: without it the verification of the content of a declaration and detection of potential discrepancies and, as a consequence, corruption cases are impossible. Almost all countries reviewed (except for Ireland) recognize the importance of cross-check of the information gathered and carry it out.

The sources for cross-check can be:

Public registries and databases – they are used everywhere;
The media and open source intelligence (OSINT) – are rarely used in the EU member states (Italy, Latvia, Poland and Portugal), and more often in the EU candidate states;
Private registries and databases – are used selectively in certain countries (among EU member states – Greece, Italy, Latvia, Romania; can be used more frequently in candidate countries);
Foreign databases – are used in a very limited manner: in the EU – in Italy and Latvia; in the EU candidate states – in Serbia (only open data) and Ukraine (a wide list of open sources also with a restricted access).

In most countries, the cross-check of the content of declarations is conducted in the combined format (automatically and manually). In Ukraine for example, the method depends on the risk level (low – automatic exchange between registries, high – manual requests). In Portugal, manual cross-checks are conducted only manually (even if the general verification is combined); in Slovenia, the basic verification of declarations is manual, while the cross-check can be either manual or automated, upon request.

As for the depth of verifications, the study highlights that in all EU member states it covers, as a minimum, the accuracy of data, detection of potential discrepancies between the sections of the form and, except for Croatia, completeness of information. In Portugal, the verification is also applicable to the potential presence of a conflict of interest or other restrictions on holding an office for the declarant (i.e. facts of failure to comply with the anti-corruption standards). In EU candidate countries, verifications cover a wider range of data, for example: verification of the undeclared assets and private interests (Albania), presence of potential restrictions on undertaking public functions (Montenegro), cases of illicit enrichment (North Macedonia), conflicts of interest and unjustified income (Ukraine), as well as timeliness of submission of a declaration (Moldova). Furthermore, the authors point out that due to the fact that the information regarding senior officials is published annually after the deadline for submissions, some declarants often file their applications after the deadline to avoid the attention of the media.

If violations are detected, many countries provide declarants with the time necessary to amend the content of their declarations and make another submission (except for Greece, Italy, Poland, Albania, Moldova, Montenegro and Serbia) or to provide explanations concerning alleged violations to the verifying body (except for Poland).

The sanctions imposed in case of detection of violations include:

Fines and/or initiation of administrative proceedings against the declarant – the most widespread sanctions; according to the study, fines are not foreseen only in Ireland (except for the local level) and Poland, administrative proceedings - in North Macedonia;
Disciplinary liability measures – are enforced in roughly a half of countries;
Criminal liability measures – are enforced in certain EU member countries and almost in all EU candidate states (except for Moldova and Montenegro);
“Soft” liability measures – public condemnation – are sometimes encountered both in the EU member (Bulgaria, Germany, Latvia, Slovenia) and candidate countries (Bosnia and Herzegovina, Montenegro, Serbia, Ukraine).

The sort of sanctions imposed depends, as a rule, on the type of violation. In Moldova for example, in case of incomplete data submission their subsequent filing is requested (with no sanctions), in case of considerable differences between the income and expenses – administrative proceedings are launched, failure to submit data or failure to submit data in a timely manner can be punished by a fine.

The study also pays attention to the mechanisms for analysing declarations from the point of view of corruption risks. Even though risk analysis and verification differ conceptually, in practice they often intertwine. Risk analysis often precedes the verification and launches it. Risk analysis assesses the probability of violations, whereas the verification ensures precision and possibility to undertake corrective action with regard to violations.

Suspicious or “risky” declarations are detected on the basis of risk indicators (the so-called “red flags”) that determine the risk level of a declaration. The risk analysis is used to prioritise the verifications and save resources, but it does not prove violations itself. Over a half of the countries reviewed provide for certain risk analysis mechanisms (except for Albania, Bosnia and Herzegovina, Croatia, Ireland, North Macedonia, Poland, Portugal and Slovenia).

The methods for conducting analysis can be both manual and automated, as well as combined. It is noteworthy that the selection of the form of analysis is not always related to the form of filing of declarations: in Greece and Georgia for example, in case of electronic verifications of declarations the combined method is used for risk analysis; in Germany, Italy and Moldova, the risk analysis is manual; in Bulgaria, an inspector checks with public registries; in Serbia, the automated assessment is combined with random sample; in Ukraine, logical-arithmetic control with the possibility to expand to a full verification is used.

General risk indicators include: inconsistency of data, lack of information, delays in submission and discrepancies between the lifestyle of an official and the content of his/her declaration. However, formalised and regularly updated lists of “red flags” are in place only in Ukraine and Latvia.

3. Recommendations on how to improve the AID System

The authors of the study also put forward some general recommendations on how to improve asset and interest declaration systems:

Define the architecture and distribution of roles (centralized/decentralized level) and establish clear areas of responsibility and rules of interaction;
Ensure a comprehensive scope and precise definitions, guaranteeing that the normative acts cover all existing types of assets and income, as well as all types of conflicts of interest;
Expand the list of persons (spouses, minor children and other dependants) provided that there are safeguards for protecting data and providing justification;
Implement electronic submission of declarations with pre-filled spaces, automated verification of completeness/logic and possibility of a prompt publication;
Ensure that the data are machine-readable for automated cross-checks and analysis;
Implement risk analysis with “red flags”, weighted scoring and prioritization of verifications (combined model: automation and expert assessment);
Establish relevant procedures after the detection of even probable violations and determine the authorities to be responsible for investigating alleged infringements;
Ensure the integration of cross-checks with public registries (taxes, property, vehicles, participation in companies) and, where feasible, with private databases and foreign registries;
Develop interoperability and secure sharing of data between agencies, including cross-border exchange subject to the presence of the legal ground;
Develop a proportionate scale of sanctions (fines, administrative and criminal measures);
Balance transparency and privacy: publish the data in the volume sufficient for accountability, limiting access to the “sensitive” data;
Undertake regular assessment of effectiveness (metrics, KPI, impact-assessment), publish aggregated statistics of verifications and violations;
Ensure a step-by-step implementation (pilots, feedback, readjustment of algorithms), internal control and recording of IT-processes (including access rights);
Provide sufficient human and financial resources to the verifying bodies, training and professional development;
Develop guidance and advice channels for officials on the matters of declaration and conflict-of-interest management.