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Protection of the financial interests of the Union

1. Member States shall, within the framework of the CAP, while respecting the applicable governance systems, adopt all laws, regulations and administrative provisions and take any other measures necessary to ensure effective protection of the financial interests of the Union, including effective application of the eligibility of expenditure criteria laid down in Article 37. Those acts and measures shall relate in particular to:

(a) checking the legality and regularity of operations financed by the EAGF and EAFRD, including at the level of beneficiaries and as set out in the CAP Strategic Plans;

(b) ensuring effective prevention against fraud, especially in areas with a higher level of risk, which will act as a deterrent, having regard to the costs and benefits and the proportionality of the measures;

(c) preventing, detecting and correcting irregularities and fraud;

(d) imposing penalties which are effective, proportionate and dissuasive in accordance with Union law, or failing this, national law, and bring legal proceedings to that effect, as necessary;

(e) recovering undue payments plus interest and bring legal proceedings to that effect, as necessary, including for irregularities within the meaning of Article 1(2) of Regulation (EC, Euratom) No 2988/95.

2. Member States shall set up efficient management and control systems in order to ensure compliance with the Union legislation governing Union interventions. Member States shall take the actions necessary to ensure the proper functioning of their management and control systems and the legality and regularity of expenditure declared to the Commission. To assist the Member States in this respect, the Commission shall make available to the Member States a data-mining tool to assess risks presented by projects, beneficiaries, contractors and contracts while ensuring minimal administrative burden and effective protection of the Union financial interests. That data-mining tool may also be used in order to avoid circumvention of rules as referred to in Article 62. By 2025, the Commission shall present a report which assesses the use of the single data-mining tool and its interoperability with a view to its generalised use by Member States.

3. Member States shall ensure the quality and reliability of the reporting system and of data on indicators.

4. Member States shall ensure that beneficiaries of the EAGF and EAFRD provide them with the information necessary for their identification, including, where applicable, the identification of the group in which they participate, as defined in Article 2, point (11), of Directive 2013/34/EU of the European Parliament and of the Council ().

5. Member States shall take appropriate precautions ensuring that the penalties applied as referred to in paragraph 1, point (d), are proportionate and graduated according to the severity, extent, permanence or reoccurrence of the non-compliance detected. The arrangements set out by Member States shall ensure, in particular, that no penalties are imposed where:

(a) the non-compliance is due to force majeure or exceptional circumstances in accordance with Article 3;

(b) the non-compliance is due to an error of the competent authority or another authority, and where the error could not reasonably have been detected by the person concerned by the administrative penalty;

(c) the person concerned can demonstrate to the satisfaction of the competent authority that he or she is not at fault for the non-compliance with the obligations referred to in paragraph 1 of this Article or where the competent authority is otherwise satisfied that the person concerned is not at fault. Where the non-compliance with the conditions for the granting of the aid is due to force majeure or exceptional circumstances in accordance with Article 3, the beneficiary shall retain the right to receive aid.

6. Member States may in their management and control systems include the possibility for aid applications and payment claims to be corrected after their submission without an effect on the right to receive aid, provided that the elements or omissions to be corrected were made in good faith as recognised by the competent authority, and that the correction is made either before the applicant is informed of being selected for an on-the-spot check or before the competent authority has taken its decision in respect of the application.

7. Member States shall introduce arrangements for ensuring the effective examination of complaints concerning the EAGF and EAFRD and shall, upon request by the Commission, examine complaints submitted to the Commission falling within the scope of their CAP Strategic Plans. Member States shall inform the Commission of the results of those examinations. The Commission shall ensure that complaints directly lodged with it are adequately followed up. Where the Commission forwards a complaint to a Member State and the Member State fails to follow it up by the deadline set by the Commission, the Commission shall take the necessary steps with a view to ensuring that the Member State respects its obligations under this paragraph.

8. Member States shall inform the Commission of the measures and actions taken pursuant to paragraphs 1 and 2. Any conditions established by Member States to supplement the conditions laid down by Union rules for receiving support financed by the EAGF or the EAFRD shall be verifiable.

9. The Commission may adopt implementing acts laying down rules necessary for the uniform application of this Article relating to:

(a) the procedures, deadlines, exchange of information, requirements for the data-mining tool and information to be collected on the identification of beneficiaries in relation to the obligations as set out in paragraphs 1, 2 and 4;

(b) the notification and communication to be made by the Member States to the Commission in relation to the obligations set out in paragraphs 5 and 7. Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 103(3).