Interactions Between Administrative and Criminal Law in the Context of the Enforcement of Bank Prudential Regulations

Whether seen as a factual event, a normative situation or just a discursive artefact, the recent financial crisis has undeniably triggered major political developments in the European Union and has led to a considerable reshaping of several aspects of EU law. New rules, institutions and mechanisms have been established, often through unconventional and controversial procedures, in order to protect the European Union from further economic damage, or even from radical political collapse. Although still in its infancy, the European Banking Union (EBU) not only constitutes one of the most far-reaching innovations in this context, but it can be considered as a milestone in the whole procedure of European integration to date.

Amongst other innovations, the EBU includes a highly complex shared enforcement system – to a certain extent comparable to the one found in EU competition law – where stricto sensu supervisory, investigatory and sanctioning powers are shared between European and national authorities. The main criteria for the division of prerogatives between them are the “significant” or “non-significant” character of the supervised entities, the legal personality of the addressees of the measures and sanctions (natural or legal persons), and the legal characterisation of the misconduct (administrative or criminal).

As far as the last criterion is concerned, the solution adopted (unified administrative punitive sanctions applied at the European level, combined with harmonised administrative and barely harmonised criminal sanctions applied at the national level) should not be a surprise to anyone who has even superficially followed the development of EU “punitive” law. Moreover, centralising the control of systemically important entities at the EU level, and leaving the control of “less significant” entities and natural persons to national authorities seems legally, politically and economically coherent.

Nevertheless, in our paper “Enforcing prudential banking regulations in the Eurozone: A reading from the viewpoint of criminal law”, we argue that, despite this ostensible coherence, an analysis of the EBU legal framework brings to light several aspects that prove problematic in terms of efficiency and ambiguous in terms of legal security. From a criminal law perspective, a number of important questions arise. To what extent are the administrative measures and sanctions, applied by the European Central Bank and the Single Resolution Board, punitive or even “criminal in nature” (according to the criteria adopted by the European Court of Human Rights)? Do these measures and sanctions sufficiently respect the fundamental principles of punitive law, either substantive (legality, certainty, predictability, proportionality, etc) or procedural (defence rights, ne bis in idem, judicial review, etc)? What place is left for traditional (national) criminal law in prudential banking regulation?

In order for these questions to be answered, our paper begins with a brief descriptive overview of the enforcement-related aspects of the EBU framework. These elements consist mainly of administrative procedures and sanctions.

The focus then shifts to the normative interactions between the EBU enforcement system and “hard core criminal law”. These particularly intricate interactions are of two kinds: “intersystemic and intrasystemic: By intersystemic interactions we refer to potential overlaps between administrative and criminal sanctions, which can be applied alternatively or cumulatively for the same facts. Intrasystemic interactions appear where applicable administrative sanctions can be assimilated, due to their purpose, their nature and their gravity, to criminal ones.

In the final part of our paper, we intend to assess the pros and cons of using criminal law as an enforcement tool for banking regulation. We also intend to examine the possibility of a more coherent enforcement framework, where criminal law could serve not only as an enforcement tool itself, but also as a normative and epistemological paradigm for non-criminal punitive mechanisms. Indeed, the traditional binary distinction between two separate spheres of administrative-punitive and criminal law seems to have reached its limits. There are clearly situations that cannot clearly fit into the first or the second category. Therefore, we propose instead, in line with the recent ECtHR case law (Jussila v. Finland, 23 November 2006, application n^o 73053/01, §43), an integrated enforcement model based on proportionality, where criminal law principles and safeguards should apply gradually, according to the gravity of the sanctions or to the degree of coerciveness and intrusiveness of the supervisory measures.

This paper is part of the project ‘The Enforcement Dimensions of EU Banking Regulations (EUBAR)’, undertaken in the University of Luxembourg by Prof. Silvia Allegrezza and financed by the Fonds National de la Recherche du Luxembourg (FNR). As the project is still ongoing, the considerations and opinions expressed herein should not be considered as definitive.

Silvia Allegrezza is an Associate Professor of Criminal Law and director of the Master in European Law and Ioannis Rodopoulos is a post-doctoral researcher, both at the University of Luxembourg.