Fighting fraud: Fall in suspected fraud against EU funds Fraud affecting the EU budget fell by 35% in 2011, according

to the Commission's annual report on the "Protection of the EU's Financial Interests". In cohesion policy, there were 41% fewer cases of suspected fraud compared to 2010, while in agriculture reported fraud cases fell by 66%. In addition to stronger measures and better controls implemented for EU funding, there are also a number of technical explanations for the drop in fraud rate in 2011. The closure of a programming period in cohesion policy and more stabilised reporting in the new control system for agriculture also contributed to lower reported fraud than in 2010. In total, 295 million in EU funds were affected by fraud, or 0.2% of the budget, which must be recovered in line with EU rules. In its report, the Commission underlines the need to further reduce fraud affecting the EU budget, and makes a number of recommendations to Member States which could help achieve this. Algirdas emeta, Commissioner for Taxation, Customs, Audit and Anti-Fraud, said: The decrease in fraud against the EU budget shows that our determined efforts to tackle this problem are starting to pay off. But the fight is far from over. The Commission maintains its policy of zero-tolerance to fraud, and not one cent of taxpayers' money should be lost to fraudsters. The Commission will continue to take every measure it can to protect the EU budget, and Member States must also raise their game." The recovery of EU funds affected by irregularity and fraud has improved, with the Commission reclaiming around 2 billion euro in financial corrections and recoveries last year. Member States have also made some improvement in terms of recoveries from the final beneficiaries, in particular in the area of pre-accession assistance. The Commission's report urges Member States which still have low recovery rates to make the necessary improvements, and to seize assets when the beneficiaries do not re-pay the money affected by irregularities and fraud. The recent Commission proposal on the protection of the financial interests of the EU by criminal law (IP/12/767) could considerably help in the recovery of funds, as well as in deterring fraudsters. In 2011, the Commission put forward over a dozen legislative proposals or new initiatives aimed at improving the fight against fraud in EU funds (see MEMO/12/577). Background In line with Article 325 of the Treaty, the Commission produces the Annual Report on the Protection of the EUs Financial Interests to report on measures taken to counter fraud affecting EU funds. By detailing the level of suspected and confirmed fraud reported by the Member States across the entire EU budget (i.e. both revenue and expenditure), the report also helps to assess which areas are most at risk, which in turn helps to target action at both EU and national level. In addition to data on reported fraud and irregularities, recoveries and reporting levels in the Member States, the Commission also chooses an area for in-depth analysis each year. This year, it focuses on cohesion policy. It notes improvements in the financial control and risk management systems, for example legal provisions and guidelines, administrative procedures and cooperation between national authorities in this area. However, the Member States need to improve the monitoring of results of administrative and criminal investigations, including recovery from the final beneficiary in cohesion funds.