In a recent high-profile case (anonymized for confidentiality), a European chemical manufacturer faced significant financial and reputational damage due to a sophisticated VAT fraud scheme involving a high-value commodity. The fraud, which spanned nearly a decade, exploited gaps in due diligence, supply chain opacity, and compliance monitoring.
We outlines how AXIANTIS solutions usually help prevent such risks, safeguarding both revenue and reputation.

Case Overview (Anonymized)

Between 2004–2011, a criminal network orchestrated a VAT carousel scheme across EU jurisdictions. Commodities were purchased tax-free in one member state, transported under diplomatic cover to a second country, and sold below market price to a manufacturer. The manufacturer later incurred double VAT payments after a tax audit, while the state lost €23M in revenue.

Key Vulnerabilities identified :

1. Weak Due Diligence: The manufacturer failed to verify supplier legitimacy, including ties to diplomatic entities.
2. Opaque Supply Chains: Fraudsters acted under diplomatic privileges to mask commodity origins and transport routes.
3. Unmonitored Pricing Anomalies: Transactions occurred at 4% below market rates, unflagged by internal alert systems.
4. Compliance Gaps: Manual VAT reporting led to errors, generating double payments.

AXIANTIS Solutions: Mitigating Risks at Every Stage

Enhanced Due Diligence & KYC

• Challenge: Fraudulent suppliers leveraged diplomatic connections to avoid scrutiny.
• AXIANTIS Action: Compliance360 Program automates Know Your Customer (KYC) checks, cross-referencing entities against global sanctions lists, political exposure databases, and trade registries. Red flags (e.g., shell companies, atypical diplomatic ties) trigger alerts for further review.

Supply Chain Transparency

• Challenge: Commodities were moved via untracked diplomatic channels.
• AXIANTIS Action: ChainGuard IoT+Blockchain provides real-time tracking of high-value goods, with immutable records of custody changes, transport routes, and storage conditions. Suspicious deviations (e.g., undocumented stops) are flagged instantly.

Transaction Monitoring & Pricing Analytics

• Challenge: Below-market pricing went undetected for years.
• Action of AXIANTIS : MarketWatch program analyses global commodity pricing trends, VAT regimes, and transaction patterns. Deviations exceeding 2% from benchmarks trigger automated alert and audits.

VAT Compliance Automation

• Challenge: Manual processes led to double VAT payments and audit failures.
• AXIANTIS input TaxLogic Suite: integrates with ERP systems to auto-calculate VAT obligations, generate audit trails, and ensure compliance with cross-border regulations. Real-time updates adapt to legislative changes.

Benefits Realized
By deploying AXIANTIS’ solutions, clients can:

• Avoid Financial Losses: Prevent double VAT payments, tax penalties, and fraud-related revenue leaks.
• Strengthen Compliance: Reduce legal exposure with automated, audit-ready reporting.
• Protect Reputation: Mitigate risks of association with illicit activities through proactive monitoring.
• Streamline supply chain and financial workflows with integrated tools.
• Optimize Operations safety

This case underscores how VAT carousel schemes exploit fragmented compliance systems. AXIANTIS transforms risk management by embedding intelligence at every transactional layer—from supplier vetting to real-time VAT tracking.

Next Steps
Contact AXIANTIS today to schedule a CALL on fraud prevention suite solutions . Let us tailor a risk review to secure your operations against evolving financial crimes.

Contact@axiantis.com , Tel: +33 1 62 32 03 05

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