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Whereas it is essential, for the credibility of the Community, to step up the efforts to counter fraud and other irregularities committed against the Community budget;

(2) Whereas Article 209a of the Treaty establishing the European Community makes it clear that the protection of the Communities' financial interests is primarily the responsibility of the Member States, without prejudice to other provisions of the Treaty;

(3) Whereas Council Regulation (EC, Euratom) No 2988/95 of 18 December 1995 on the protection of the European Communities' financial interests established a common legal framework for all the fields of the Communities' activity, (4) Whereas Article 1 (2) of the said Regulation includes a definition of ‘irregularity’ and whereas the sixth recital of that Regulation stipulates that irregular conduct includes fraudulent actions as defined in the Convention on the protection of the European Communities' financial interests;

(5) Whereas Article 10 of that Regulation provided for subsequent adoption of additional general provisions relating to on-the-spot inspections and checks; (6)

Whereas, without prejudice to the checks carried out by the Member States in accordance with Article 8 of Regulation (EC, Euratom) No 2988/95 and in the interests of efficiency, it is appropriate to adopt additional general provisions concerning on-the-spot checks and inspections by the Commission that do not affect the application of Community sectoral rules as referred to in Article 9 (2) of the said Regulation;

(7) Whereas implementation of the provisions of this Regulation is subject to identification of the objectives that justify their application, especially where, owing to the scale of fraud, which is not confined to one country and frequently involves organized rings, or where, on account of the special nature of the situation in a Member State, those objectives cannot, in view of the seriousness of the damage done to the Communities' financial interests or to the credibility of the Union, be fully realized by the Member States alone and can therefore be better achieved at Community level;

(8) Whereas on-the-spot checks and inspections may not exceed what is necessary to ensure the correct application of Community law; (9)

Whereas they shall also be carried out without prejudice to the provisions applicable in each Member State relating to the protection of the essential interests of State security, (10) Whereas, in accordance with the principle of sincere cooperation of the Community implicit in Article 5 of the EC Treaty and in the light of the case-law of the Court of Justice of the European Communities, it is important that Member States' administrations and Commission departments cooperate genuinely and provide one another with the necessary assistance in the preparation and performance of on-the-spot checks and inspections;

(11) Whereas it is necessary to define the conditions under which Commission inspectors are to exercise their powers; (12)

Whereas those on-the-spot checks and inspections are carried out with due regard to the fundamental rights of the persons concerned and to the rules on professional secrecy and the protection of personal data; whereas in that regard it is important that the Commission ensure that its inspectors comply with Community and national provisions on the protection of personal data, in particular those laid down in Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data; (13)

Whereas, if action to combat fraud and irregularities is to be effective, the Commission must carry out inspections on the premises of those economic operators who may have been involved, directly or indirectly, in the irregularity in question and on the premises of other economic operators who might be concerned by that irregularity; whereas, in the event of the application of this Regulation, the Commission should ensure that those economic operators are not simultaneously subjected, in respect of the same acts, to similar checks and inspections carried out by the Commission or by the Member States on the basis of Community sectoral rules or national legislation; (14)

Whereas the Commission inspectors must have access to all the information on the transactions concerned on the same terms as national administrative inspectors; whereas the reports by the Commission inspectors, signed, if appropriate, by the national inspectors, must be drawn up taking into account the procedural requirements laid down in the law of the Member State concerned; whereas they must be admitted as evidence in the administrative and judicial proceedings of the Member State where it proves necessary to use them and have an identical value to the reports drawn up by national administrative inspectors;

(15) Whereas, in cases where there is a risk of evidence disappearing, or where economic operators oppose on-the-spot checks or inspections by the Commission, it is for the Member States to take the necessary precautionary or implementing measures in accordance with their legislation;

(16) Wheres this Regulation affects neither Member States' powers regarding the prosecution of criminal offences nor the rules governing mutual assistance between Member States on criminal matters; (17)

Whereas the Treaties contain no powers for the adoption of this Regulation other than those provided for in Article 235 of the EC Treaty and Article 203 of the Euratom Treaty, HAS ADOPTED THIS REGULATION: