A roadmap toward protecting fundamental rights in composite banking law enforcement

The Single Supervisory Mechanism (SSM) is the legislative and institutional framework that grants the European Central Bank (ECB) exclusive competence to authorize and supervise banks in the eurozone. Yet, even in the context of such a high degree of Europeanization, the ECB is not completely autonomous but often relies on the powers and expertise of the national supervisors (NCAs). Various final decisions are therefore adopted on the basis of composite administrative procedures. While SSM procedures are indeed highly integrated, the protection of fundamental rights is split between the EU and the national legal orders, which may lead to gaps in complete fundamental rights protection.

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How to ensure defense rights in the composite SSM setting?

Under the aegis of the SSM, which comprises the ECB and 19 national central banks (NCAs), the ECB carries out banking supervision vis-à-vis euro area banks. To this end, the EU watchdog has been entrusted with various direct law enforcement powers. Yet, for executing its tasks, it still depends to a significant extent on the expertise and powers of the NCAs. For instance, a large part of banks’ (punitive) sanctioning is still being dealt with by the NCAs, upon the ECB’s request. In our recent study ‘EU administrative investigations and the use of their results as evidence in national punitive proceedings’, which was part of the report Admissibility of OLAF Final Reports as Evidence in Criminal Proceedings, we have pointed out the challenges that stem from the fact that certain ECB investigations and their concomitant results can be used as evidence for punitive sanctioning at the national level; in the absence of EU rules providing for clear guidance on the admissibility of EU gathered materials in national proceedings, numerous questions can be raised concerning the protection of defense rights in a composite law enforcement setting. We have identified three types of challenges: how to protect defense rights at the interface of i) different legal orders, ii) non-punitive and punitive law enforcement, iii) administrative and criminal law enforcement. We concluded that the introduction of EU rules facilitating the interoperability of SSM materials as evidence in national proceedings should be put high on the agenda.

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