A French policeman serving at Europol headquarters in Holland has been arrested in connection with allegations of financial irregularities and fraud. It is alleged he illegally placed money in a Bermuda bank account.

The Frenchman is a senior officer in Europol's IT department at its headquarters in the Hague, Holland. His house and office were raided last week. It is alleged he moved at least $85,000 from Europol's budget into his bank account in Bermuda.

A spokesman for the Bermuda Financial Investigation Unit of the Bermuda Police said last week that they had no knowledge of the allegations and had not been asked to carry out any investigation. This still pertains to date.

The alleged offences are to do with a contract to hire an IT consultant for the department. Other contracts handled by the officer are being investigated.

These moves follow detection of financial irregularities in part of the IT unit by Europol's internal financial controls. The management board established an independent committee which ''found some evidence of illegal activities of one staff member.'' Evidence was then passed to the Dutch authorities to investigate and the suspect officer was suspended and his diplomatic immunity lifted.

It is believed no criminal intelligence held in Europol's databases was compromised by the alleged actions. But the case is damaging and embarrassing for Europol as it comes at a time when the organisation has gained the lead role in co-ordinating the fight against money laundering and counterfeiting linked to the introduction of euro notes and coins. But there is no suggestion this had any link to the euro cash operation.

Europol staff members are pooled from all EU member states, with its director from Germany and deputy directors from Belgium, Italy, UK and France. It is accountable to the EU Council of Ministers for Justice and Home Affairs and its management board comprises one representative from each member state.

The organisation supports member states by facilitating the exchange of information, providing operational analysis to back up member states' operations, generating strategic reports and crime analysis and providing expertise and technical support for investigations and operations carried out within the EU.

The possibility of corruption in the data collection office is a sensitive issue at this time. Civil rights groups have begun expressing concern over the fact that Europol is gaining powers to store soft data on ordinary citizens, whether or not they are accused of a crime.