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Administrative sanctions and other supervisory measures

In the supervision of financial markets, the FIN-FSA may exercise supervisory powers as referred to in chapter 3 of the Act on the Financial Supervisory Authority and other provisions of law, such as curtailment of a supervised entity’s operations subject to authorisation, temporary restriction of the operation of the supervised entity’s management, appointment of an agent to supervise the supervised entity’s operations and imposition of a conditional fine.

The FIN-FSA may also impose administrative sanctions as referred to in chapter 4 of the Act on the Financial Supervisory Authority, i.e. administrative fines, public warnings, and penalty payments.

The FIN-FSA may request a police investigation if it suspects that a crime has been committed.

Administrative fines

The FIN-FSA imposes an administrative fine for a failure to comply with or violation of the provisions and decisions referred to in section 38 of the Act on the Financial Supervisory Authority. However, the FIN-FSA may decide not to impose an administrative fine, subject to fulfilment of the conditions of section 42 of the Act.

The administrative fine payable by a legal person is EUR 5,000–100,000, and that payable by a natural person EUR 500–10,000. The size of an administrative fine is based on a comprehensive assessment, which takes into account the nature, scope and duration of the failure or violation.
The FIN-FSA has, on its website, disclosed the principles to be taken into account in the comprehensive assessment of an administrative fine. The administrative fine is payable to the State.

If the act or omission is particularly reprehensible, the FIN-FSA may impose a penalty payment instead of an administrative fine.

An administrative fine may be imposed, provided that the matter, after comprehensive assessment, does not warrant more severe action.

Public warnings

According to section 39 of the Act on the Financial Supervisory Authority, the FIN-FSA issues a public warning to a supervised entity or other financial market participant for violations that are not subject to an administrative fine or a penalty payment. In addition, a public warning is issued if the supervised entity's conduct is in violation of the terms of its authorisation or the rules governing its operations. However, the FIN-FSA may decide not to issue a public warning, subject to fulfilment of the conditions of section 42 of the Act.

A public warning may be issued, provided that the matter, after comprehensive assessment, does not warrant more severe action.

Penalty payments

The FIN-FSA imposes a penalty payment for a failure to comply with or violation of the provisions and decisions referred to in section 40 of the Act on the Financial Supervisory Authority.

According to section 42 of the Act on the Financial Supervisory Authority, the FIN-FSA may issue a public warning instead of imposing a penalty payment if the erroneous practice is considered negligible or the issuance of a penalty payment is deemed to be unequivocally unreasonable. The FIN-FSA may also decide not to impose a penalty payment or suspend the decision to impose a penalty payment on a legal person if it requests a police investigation of the matter, or takes another supervisory measure as provided by law.

A penalty payment may not be imposed on a natural person for an act or omission that is punishable by criminal law. The FIN-FSA may, however, impose a penalty payment but decide not to report the matter to the police authorities, if the act or omission, after comprehensive assessment, is deemed negligible in terms of its detrimental effect, the degree of guilt of the offender, the resulting profit and any other aspects of the act or omission. 

A penalty payment may be imposed, in addition to or instead of the penalty payment imposed on a legal person, on such member of the management of the legal person whose obligations have been contravened by the act or omission, if such member has significantly contributed to the act or omission.

According to section 41 of the Act on the Financial Supervision Authority, the size of the penalty payment is based on a comprehensive assessment. In assessing the size of the penalty payment, consideration must be given to

  • the nature, scope and duration of the breach
  • the financial position of the person subject to the penalty payment
  • profits gained or damage caused, in so far as they can be determined
  • the person’s cooperation with FIN-FSA in investigating the matter and measures to prevent reoccurrence of the violation
  • other and previous breaches related to financial market provisions
  • potential impact on financial stability.

FIN-FSA has, on its website, disclosed the principles to be taken into account in the comprehensive assessment of a penalty payment.
The maximum amount of a penalty payment is laid down in sections 41 and 41a of the Act. The maximum amount of the penalty payment depends, among other things, on whether it concerns a legal or natural person, and on the provision breached. 

The penalty payment is payable to the State.

Preventing money laundering and terrorist financing

The FIN-FSA may also impose an administrative sanction for violation of the Act on preventing money laundering and terrorist financing. Chapter 8 of the Act lists the following administrative sanctions: administrative fine, public warning and penalty payment. The regulations are largely consistent with the Act on the Financial Supervisory Authority.

The FIN-FSA imposes a penalty payment for serious, repeated or systematic violation of the provisions of chapter 8, section 3 of the Act on preventing money laundering and terrorist financing. Provisions on the size of a penalty payment imposed on a credit or financial institution are laid down in chapter 8, section 4 of the Act.

The FIN-FSA may also request a police investigation if it suspects that a crime has been committed.

 

 

8 November 2018

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