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Powers of the ECB to impose sanctions

The European Central Bank (ECB) operates the Union's monetary policy in pursuit of its primary objective of maintaining price stability in the euro zone. To that end it adopts mandatory monetary policy guidelines for national central banks. This Regulation defines to what extent the European Central Bank (ECB) is entitled to impose fines or periodic penalty payments on undertakings for failure to comply with its regulations and decisions. It ensures uniform and effective imposition of sanctions through full collaboration with the ECB by the national central banks of the euro area.

ACT

Council Regulation (EC) No 2532/98 of 23 November 1998 concerning the powers of the European Central Bank to impose sanctions [Official Journal L 318 of 27.11.1998, Corrigendum: Official Journal L 234 of 04.09.1999].

SUMMARY

Aim. The Regulation is necessary in order to give practical effect to Article 34.3 of the Statute of the European System of Central Banks (ESCB), which provides that, within the limits and under the conditions adopted by the Council, the ECB is entitled to impose fines or periodic penalty payments on undertakings for failure to comply with its regulations and decisions.

Definitions. "Undertakings" means "those natural or legal persons, private or public, with the exception of public persons in the exercise of their public powers, in a participating Member State, which are the subject of obligations arising from ECB regulations and decisions" and includes "branches or other permanent establishments located in a participating Member State, the head office or registered office of which is outside a participating Member State".

Sanctions. The fines and periodic penalty payments imposed by the ECB are subject to the following limits:

  • fines: the upper limit is EUR 500 000;
  • periodic penalty payments: the upper limit is EUR 10 000 per day of infringement. Periodic penalty payments may be imposed in respect of a maximum period of six months following the notification of the decision to the undertaking.

The decision on the appropriate sanction is based on the principle of proportionality. The ECB therefore takes into consideration:

  • the good faith and the degree of openness of the undertaking in the interpretation and fulfilment of the obligation arising from an ECB regulation or decision and the degree of cooperation shown;
  • the seriousness of the infringement;
  • the repetition, frequency or duration of the infringement;
  • the profits obtained by the undertaking;
  • the economic size of the undertaking;
  • sanctions imposed by other authorities on the same undertaking for the same infringement.

Decision-making powers. Under the Regulation, the Executive Board of the ECB has the power to decide whether an infringement has occurred and whether sanctions should be imposed; however, the national central banks may initiate and also conduct part of the infringement procedure. The ECB and the national central bank have the right to:

  • require the submission of documents;
  • examine the books and records of the undertaking and take copies;
  • obtain written or oral explanations.

The undertaking has thirty days in which to present its defence.

Having consulted the national central bank that initiated the procedure, the Executive Board of the ECB must adopt a decision.

Notification of the decision must be given to the undertaking, to relevant supervisory authorities and to the national central bank. The undertaking concerned may request a review of the decision by writing to the Governing Council within thirty days of the original decision.

The Governing Council of the ECB must submit its decision in writing, within two months, to the undertaking, the national central bank and the relevant authorities. If no decision has been taken within two months, the undertaking concerned may request a judicial review of the decision of the Executive Board in accordance with the Treaty.

Sanctions may not be enforced until the decision has become final. The proceeds from such sanctions belong to the ECB.

The right to initiate an infringement procedure on the basis of the Regulation is independent of any right of a competent national authority to initiate separate procedures in relation to areas outside the competence of the ESCB.

Procedures. The procedures laid down for the imposition of sanctions and the limits indicated make for a balance between the legal certainty of the undertakings subject to the regulations or decisions of the ECB and the need to allow the ECB some room for manoeuvre.

The right to take the decision to initiate an infringement procedure expires:

  • one year after the existence of the alleged infringement first became known either to the ECB or to the national central bank;
  • five years after the infringement occurred;
  • in the case of a continued infringement, five years after the infringement was terminated.

The right to enforce sanctions expires one year after the procedure was initiated.

The Court of Justice has unlimited jurisdiction in accordance with Article 172 of the Treaty over the review of final decisions.

In the event of a conflict between the provisions of the Regulation and those of other Council regulations allowing the imposition of sanctions, the provisions of the latter prevail.

The ECB may adopt regulations to specify further the arrangements whereby sanctions may be imposed.

Entry into force. Article 6(2) on general provisions and regulatory power is applicable from the date of entry into force of this Regulation. The other articles are applicable from the 1st January 1999.

REFERENCES

ActEntry into forceDeadline for transposition in the Member StatesOfficial Journal
Regulation (EC) No 2532/9827.11.9898-Official Journal L 318 of 27.11.1998

RELATED ACTS

European Central Bank Regulation (EC) No 2157/1999 of 23 September 1999 on the powers of the European Central Bank to impose sanctions [Official Journal L 264 of 12.10.1999].
Article 6(2) of Council Regulation (EC) No 2532/98 confers on the ECB the power to adopt regulations specifying the arrangements whereby sanctions may be imposed. This Regulation therefore establishes the principles and procedures for the imposition of sanctions.
The ECB and the national central bank which is competent in the framework of the infringement procedure must carry out a thorough investigation of the alleged infringement in such a way as to ensure effectiveness, cooperation, transparency and confidentiality.
The Executive Board of the ECB and the competent national central bank must inform each other before any decision is taken to initiate an infringement procedure. They should cooperate during the procedure by exchanging information. The ECB and the national central bank are empowered to search for information on the premises of the undertaking concerned on production of formal authorisation.
The undertaking concerned is informed in writing, by the ECB or the national central bank, of the results of the investigation and has the right to reply within 30 days. The two institutions may where necessary carry out further inquiries. The undertaking concerned must submit any document necessary for the investigation and has the right to legal representation. It is also entitled to an oral hearing conducted in private on the premises of the ECB or the competent national central bank. The ECB establishes the manner in which payment of the sanction is to be made and may decide to publish the decision in the Official Journal.
In the event of a minor infringement the sanction may not exceed EUR 25 000.

The procedure in the event of non-compliance with minimum reserve requirements is as follows:
Before any sanction is imposed, the ECB or the competent national central bank notifies the undertaking concerned of the alleged non-compliance and of the corresponding sanction. The undertaking has five working days in which to react by either:

  • acknowledging the non-compliance,
  • presenting its written objections to the sanction.

Where no written objections are raised within the established time limit, the sanction is deemed to be imposed by decision of the Executive Board of the ECB and the undertaking concerned is charged the amount of the sanction.

Amended by the following act:

European Central Bank Regulation (EC) No 985/2001 of 10 May 2001 [Official Journal L 137 of 19.05.2001].

This Regulation simplifies the procedures for the storage of information relevant to the determination and enforcement of sanctions.

Last updated: 29.09.2005
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