Powers of the European Central Bank to impose sanctions

SUMMARY OF:

Council Regulation (EC) No 2532/98 concerning the powers of the European Central Bank to impose sanctions

European Central Bank Regulation (EC) No 2157/1999 on the European Central Bank’s powers to impose sanctions (ECB/1999/4)

WHAT IS THE AIM OF THE REGULATIONS?

Regulations (EC) No 2532/98 and (EC) No 2157/1999 (ECB/1999/4) set out the framework on the basis of which the European Central Bank (ECB) may impose sanctions* in the form of fines* or periodic penalty payments* on any undertakings* that do not comply with obligations arising from ECB and European Union (EU) legal acts in the various fields of competence of the ECB.

KEY POINTS

Limits for fines / periodic penalty payments which the ECB may impose as a consequence of an infringement*

The upper limit for fines on undertakings is €500,000 or, in the case of sanctions imposed in relation to the ECB’s supervisory tasks, twice the amount of the profits gained or losses avoided because of the infringement or 10% of the total annual turnover of the undertaking.
The upper limit for periodic penalty payments is €10,000 per day of infringement or, in the case of sanctions imposed in relation to the ECB’s supervisory tasks, 5% of the average daily turnover per day of infringement. Periodic penalty payments can be imposed for a maximum of 6 months from the day of the notification of the decision imposing such penalties.

Publication

The ECB publishes any decision imposing sanctions on its website after the notification. The publication of the decision is anonymised if it is likely to:
- jeopardise the stability of the financial markets or an ongoing criminal investigation;
- cause disproportionate damage to the undertaking concerned;
- result in the publication of confidential information which would put at risk legitimate public interests in security, such as the security and protection of the integrity of euro banknotes or the secure management of cyber or operational risks to systemically important payment systems* (see summary).
Where the above circumstances are likely to cease within a reasonable period of time, publication may be postponed for that period of time. However, in the case of the publication of confidential information which would put at risk legitimate public interests in security, the ECB may choose not to publish a decision imposing a sanction where it considers that the risk to legitimate public interests in security may not be mitigated by publishing the relevant decisions on an anonymised basis or by postponing their publication.
If an appeal to the Court of Justice of the European Union in respect of a decision imposing a sanction is pending, the ECB publishes, without unnecessary delay, information on the status of the appeal in question and the outcome thereof on its official website.
The information published remains available for at least 5 years.

Criteria taken into account

When considering a sanction, the ECB is guided by the principle of proportionality and takes into account:

the good faith and openness of the undertaking concerned and its degree of diligence and cooperation, or, conversely, its wilful deceit;
the seriousness of the impact of the infringement;
the repetition, frequency or duration of the infringement;
the profits obtained by the undertaking from the infringement;
the economic size of the undertaking;
any prior sanctions imposed on the undertaking for the same infringement by other competent authorities.

Infringement procedure

The decision on whether to initiate an infringement procedure must be taken by the ECB, acting on its own initiative or on the basis of a motion to that effect addressed to it by the national central bank of the EU Member State in whose jurisdiction the alleged infringement has occurred.
The same decision can be taken, on its own initiative or on the basis of a motion to that effect addressed to it by the ECB, by the national central bank of the Member State in whose jurisdiction the alleged infringement has occurred.
The undertaking concerned must be given no fewer than 30 days to present its defence.
The Executive Board adopts a reasoned decision on whether to impose sanctions on the undertaking.
Within 30 days of receiving the reasoned decision, the undertaking may request that the Governing Council review the decision. If no decision has been taken within 2 months, the decision becomes final.
The Governing Council may ask the undertaking concerned, the Executive Board or the competent national central bank to provide additional information in order to review the Executive Board’s decision. The Governing Council may amend the Executive Board’s decision and modify the amount of the sanction to be imposed, the grounds giving rise to an infringement and whether and to what extent the sanction is published.
The undertaking concerned is notified of the conclusion and of its right of judicial review.
The infringement procedure must be initiated within 1 year of the existence of the infringement becoming known to the ECB or to the national central bank of the jurisdiction where it occurred and, in any case, within 5 years of the infringement occurring. Furthermore, the right to take the decision to impose a sanction in respect of an infringement expires 1 year after the decision to initiate the procedure.
Specific rules apply for sanctions imposed in the exercise of the ECB’s supervisory tasks. On completion of an investigation, the ECB notifies the undertaking concerned, sets a reasonable time limit for submissions and may invite it to an oral hearing. The ECB’s Supervisory Board proposes a draft decision to the Governing Council. After adoption, the decision can be reviewed by the Administrative Board of Review.
The time limit for sanctions imposed by the ECB in the exercise of its supervisory tasks is 5 years. It can be interrupted and extended by actions taken by the ECB for the purposes of the proceedings.

FROM WHEN DO THE REGULATIONS APPLY?

Regulation (EC) No 2532/98 has applied since 1 January 1999, apart from Article 6(2), which has applied since 27 November 1998.
Article 6(2) allowed the ECB to adopt regulations to specify further the arrangements whereby sanctions may be imposed, together with guidelines to coordinate and harmonise the procedures in relation to the infringement procedure.
Regulation (EC) No 2157/1999 (ECB/1999/4) has applied since 23 September 1999.

BACKGROUND

On the basis of Article 34.3 of the Statute of the European System of Central Banks and of the European Central Bank, within the limits and under the conditions adopted by the Council of the European Union, the ECB is entitled to impose fines or periodic penalty payments on undertakings for failure to comply with obligations under its regulations and decisions. The regulations aim to ensure a uniform approach towards the imposition of sanctions in the various fields of competence of the ECB and lay down the principles and procedures relating to the imposition of such sanctions.

For further information, see:

Sanctions (European Central Bank).

KEY TERMS

Sanctions. Fines and periodic penalty payments.

Fine. A single amount of money that an undertaking is obliged to pay as a sanction.

Periodic penalty payments. Amounts of money that, in the case of a continued infringement, an undertaking is obliged to pay either as a punishment or with a view to forcing the persons concerned to comply with ECB supervisory regulations and decisions.

Undertakings. Natural or legal persons, private or public, with the exception of public persons in the exercise of their public powers, which are the subject of obligations arising from ECB regulations and decisions.

Infringement. Any failure by an undertaking to fulfil an obligation arising from ECB regulations or decisions.

Systemically important payment systems. Major payment systems such as TARGET2, a payment system that enables EU banks to transfer money between each other in real time (see summary).

MAIN DOCUMENTS

Council Regulation (EC) No 2532/98 of 23 November 1998 concerning the powers of the European Central Bank to impose sanctions (OJ L 318, 27.11.1998, pp. 4–7).

Successive amendments to Regulation (EC) No 2532/98 have been incorporated into the original text. This consolidated version is of documentary value only.

European Central Bank Regulation (EC) No 2157/1999 of 23 September 1999 on the powers of the European Central Bank to impose sanctions (ECB/1999/4) (OJ L 264, 12.10.1999, pp. 21–26).

See consolidated version.