Effective, proportionate and dissuasive penalties within the European Union financial services sphere : a legal analysis

Abstract

Along the years, the European Union has sought to establish a robust regulatory framework through which the objectives of the Union could be both safeguarded and achieved. Regulatory compliance within the European Union is often pursued through the imposition of effective, proportionate, and dissuasive administrative pecuniary penalties. Albeit the determination of such penalties remains within the competence of Member States and their National Competent Authorities, the European Union has never issued specific guidance on how these penalties should be computed. This created difficulties in determining the nature of penalties, often leading to the mislabelling of sanctions. In view of this, the European Court of Human Rights and, more recently, the European Court of Justice have applied the ‘Engel Criteria’ test to determine the nature of a sanction through its substance rather than by its domestic categorisation. This dissertation aims to analyse the criteria of effective, proportionate, and dissuasive administrative penalties within the European Union whilst exploring the feasibility of applying such criteria while retaining the administrative nature of penalties. Additionally, the study will examine whether European Union legislative acts possess the necessary legal basis to mandate Member States and their National Competent Authorities to enforce administrative penalties that are inherently criminal.