; and (ii) by inserting , except that a State may retain a percentage of any amounts recovered as described in subparagraph (C) before the period at the end; and (B) by adding at the end the following new subparagraph: (C) Retention of percentage of recovered funds The State agency may retain 25 percent of any amount recovered from overpayments of Federal Pandemic Unemployment Compensation or Mixed Earner Unemployment Compensation that were determined to be made due to fraud. Amounts so retained by the State agency shall be used for any of following: (i) Modernizing unemployment compensation systems and information technology to improve identity verification and validation of applicants. (ii) Reimbursement of administrative costs incurred by the State to identify and pursue recovery of fraudulent overpayments. (iii) Hiring fraud investigators and prosecutors. (iv) Other program integrity activities as determined by the State. . (3) Pandemic emergency unemployment compensation Section 2107(e)(3) of the CARES Act ( 15 U.S.C. 9025(e)(3) ) is amended— (A) in subparagraph (A)— (i) by striking 3-year and inserting 10-year ; and (ii) by inserting , except that a State may retain a percentage of any amounts recovered as described in subparagraph (C) before the period at the end