EPPO Freezes €2.6 Million in Italian Recovery Fund Fraud and Money Laundering Investigation

The European Public Prosecutor’s Office (EPPO) in Milan has conducted searches and frozen assets worth €2.6 million as part of an investigation into suspected fraud involving resources from Italy’s National Recovery and Resilience Plan (PNRR), which is financed through the European Union’s Recovery and Resilience Facility (RRF).

The frozen assets form part of a €4.9 million order issued by the judge for preliminary investigations at the Court of Milan against four companies and their legal representatives. The investigation concerns allegations involving fictitious invoices, false tax credits and unlawful labour arrangements. All persons concerned are presumed innocent until proven guilty by the competent Italian courts.

According to the investigation, the suspects allegedly created €2.38 million in fictitious tax credits by falsely claiming that employee training courses had been provided. The courses were allegedly never carried out. The resulting tax credits were then used to reduce tax and social security payments associated with hundreds of workers who were subsequently supplied unlawfully to third-party companies.

The investigation also uncovered a separate suspected fraud involving two companies that allegedly obtained €7.3 million in state-guaranteed financing after providing false information in their applications. Investigators identified shell companies and fictitious invoices for transactions that allegedly did not take place in connection with both suspected schemes.

In addition to the suspected fraud involving recovery funds and state-backed financing, investigators identified a suspected international money laundering scheme involving companies in several countries. According to EPPO, the investigation found evidence that hundreds of millions of euros were transferred to China and Hong Kong through the network of companies under investigation.

The international transfers form part of a separate money laundering component of the investigation. The information publicly released by EPPO does not identify the full amount transferred, the individual transactions involved or the ultimate recipients of the funds. It also does not establish that all of the transfers to China or Hong Kong constituted criminal proceeds.

The investigation is being conducted by the Economic and Financial Police Unit of the Italian Financial Police, or Guardia di Finanza, in Milan, under the direction of EPPO. The investigative measures include searches and the freezing of assets connected with the companies and individuals under investigation.

The €2.6 million currently frozen is distinct from the €4.9 million judicial order. The latter represents the amount covered by the court order issued against the four companies and their legal representatives, while the assets actually frozen following the order were reported at approximately €2.6 million. Neither figure represents a final determination of the amount of criminal proceeds involved in the case.

The latest investigation follows earlier EPPO proceedings in Milan concerning suspected fraud involving Italy’s New Skills Fund and RRF resources. In July 2026, EPPO reported the seizure of approximately €20 million held in bank accounts and insurance policies linked to five companies in a related investigation involving alleged fictitious employee training activities.

That earlier investigation concerned allegations that EU funding intended for employee training had been obtained on the basis of training activities that did not actually take place. At that stage, EPPO estimated the suspected fraud at approximately €40 million, including around €33 million in RRF funding, and said that 84 legal representatives of companies across Italy had been notified that they were under investigation for suspected aggravated fraud affecting the financial interests of the European Union.

The July investigation also identified suspected attempts to conceal criminal proceeds through transfers into bank accounts and insurance products, with part of the proceeds allegedly invested in assets including real estate. Two suspects had already been placed under precautionary measures for suspected aggravated fraud involving public funds and self-laundering.

The September investigation concerns a separate set of investigative measures and additional suspected fraudulent activity. The newly reported case involves four companies and their legal representatives, while the investigation also identified the separate €7.3 million state-guaranteed financing allegation and the suspected international laundering activity.

The National Recovery and Resilience Plan is Italy’s framework for implementing investments and reforms financed through the EU’s Recovery and Resilience Facility. Fraud affecting those funds falls within EPPO’s mandate because the office is responsible for investigating, prosecuting and bringing to judgment offences affecting the financial interests of the European Union.

The suspected use of fictitious invoices appears in each of the principal elements disclosed in the September investigation. Investigators allege that invoices were used in connection with non-existent transactions and that shell companies formed part of the structures through which the suspected schemes operated. The public information does not provide details of the individual companies, invoice counterparties or the specific jurisdictions involved in each transaction.

The investigation therefore covers several forms of suspected financial misconduct: alleged misuse of tax credits connected with training activities, alleged fraudulent access to state-guaranteed financing, alleged use of shell companies and fictitious invoices, and suspected international money laundering involving transfers to China and Hong Kong. These allegations remain subject to the Italian judicial process.

The latest asset freeze represents an investigative measure rather than a final confiscation or financial penalty. The €2.6 million in frozen assets remains subject to the proceedings, while investigators continue to examine the suspected fraudulent activity and international movement of funds.

No final judicial determination has been made concerning the alleged offences, and the individuals and companies involved remain presumed innocent unless and until their guilt is established by the competent Italian courts.