CONTROL SYSTEMS AND PENALTIES

CHAPTER I

General rules

Article 59

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;

(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 (30).

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;