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Protection of the financial interests of the Union

1. In implementing the Facility, the Commission and Ukraine shall take all the appropriate measures to protect the financial interests of the Union, taking into account the principle of proportionality and the specific conditions under which the Facility will operate, the precondition set out in Article 5(1) and conditions set out in the Framework Agreement and specific financing or loan agreements, in particular regarding the prevention, detection and correction of fraud, corruption, or any other illegal activity affecting the financial interests of the Union, conflicts of interest and irregularities, as well as the investigation and prosecution of offences affecting the funds provided under the Facility. Ukraine shall commit to progressing towards effective and efficient internal control systems and ensure that amounts wrongly paid or incorrectly used can be recovered. Ukraine shall also commit to ensure that the competent Ukrainian authorities treat, without delay, mutual legal assistance requests and extradition requests by the EPPO and Member States’ competent authorities concerning criminal offences affecting the funds under the Facility.

2. The agreements referred to in Articles 9, 10 and 22 shall provide for the obligations of Ukraine:

(a) to regularly check that the financing provided has been used in accordance with the applicable rules, in particular regarding the prevention, detection and correction of fraud, corruption, conflicts of interest and irregularities or any other illegal activity affecting the financial interests of the Union;

(b) to protect whistleblowers;

(c) to take appropriate measures to prevent, detect and correct fraud, corruption, conflicts of interest and irregularities, as well as to investigate and prosecute criminal offences affecting the financial interests of the Union, to detect and avoid double funding and to take legal actions to recover funds that have been misappropriated, including in relation to any measure for the implementation of reforms and investment projects under the Ukraine Plan and to take appropriate measures to treat mutual legal assistance requests by the EPPO and Member States’ competent authorities concerning criminal offences affecting the funds provided under the Facility, without delay;

(d) to accompany a request for payment as set out in Chapter III by a declaration of assurance that the funds were used in accordance with the principle of sound financial management and for their intended purpose and managed appropriately in particular in accordance with Ukrainian rules complemented by international standards on prevention, detection and correction of irregularities, fraud, corruption and conflicts of interest;

(e) for the purpose of paragraph 1, in particular for checks on the use of funds in relation to the implementation of reforms and investments under the Ukraine Plan, to ensure the collection of, and access to, in compliance with Union data protection principles and with applicable data protection rules, adequate data on persons and entities receiving funding, including beneficial ownership information, for the implementation of measures of the Ukraine Plan;

(f) to expressly authorise the Commission, OLAF and the European Court of Auditors to exert their rights as provided for in Article 129(1) of Regulation (EU, Euratom) 2018/1046, in application of the principle of proportionality;

(g) to ensure that the competent Ukrainian authorities report to the EPPO any criminal conduct affecting the funds provided under the Facility that might fall within its competence.

3. The Commission shall strive to make available to Ukraine an integrated and interoperable information and monitoring system including a single data-mining and risk-scoring tool to access and analyse the relevant data, in compliance with Union data protection principles and with applicable data protection rules, including the data listed in paragraph 2, point (e). Where such a system is available, Ukraine shall use and feed the relevant data into the system, including with assistance granted under Chapter V.

5. Persons and entities implementing funds provided under the Facility shall report any suspected or actual cases, of fraud, corruption, conflict of interest and irregularities or any other illegal activities affecting financial interests of the Union without delay, to the Audit Board referred to in Article 36, the Commission, OLAF, and, where applicable, the EPPO. Those persons and entities shall be able to effectively report those cases through appropriate channels.

4. The agreements referred to in Articles 9, 10 and 22 shall also provide for the right of the Commission to reduce proportionately the support provided under the Facility and recover any amount spent to achieve the objectives of the Facility or to ask for early repayment of the loan, in cases of irregularities, fraud, corruption or conflicts of interest affecting the financial interests of the Union that have not been corrected by Ukraine, or of a serious breach of an obligation resulting from such agreements. When deciding on the amount of the recovery and reduction, or the amount to be repaid early, the Commission shall respect the principle of proportionality and shall take into account the seriousness of the irregularity, fraud, corruption or conflict of interest affecting the financial interests of the Union, or of a breach of an obligation. Ukraine shall be given the opportunity to present its observations before the reduction is made or early repayment is requested.