Fines for inaccurate EMIR reporting
According to art. 12 of EMIR the member states should lay down the rules on penalties applicable to infringements of the EMIR rules and shall take all measures necessary to ensure that they are implemented. Furthermore, at regular intervals they must publish assessment reports on the effectiveness of the penalty rules being applied.
The national competent authorities (NCAs) had the obligation to inform the EC by 17 Feb 2013 regarding the penalties and legal measures established in the local legislations. All NCAs except the one of Luxembourg have officially confirmed to ESMA the successful implementation of penalty regimes into their legislations regarding EMIR.
Please find below a table that outlines the official notifications to ESMA and refers to the texts in the local legislations that set the rules for penalties and fines imposed for inaccurate EMIR reporting and EMIR non-compliance as well as the minimum and maximum fines if indicated.
|Country||Language and Link to Notification||Minimum Fine under EMIR||Maximum Fine under EMIR|
|Austria||Notification in German||3,000 Euro||150,000 Euro|
|Belgium||Notification in French||2,500 Euro||2,500,000 Euro|
|Bulgaria||Notification in Bulgarian||5,000 Euro||40,000 Euro|
|Croatia||26,666 Euro||66,666 Euro|
|Cyprus||Notification in English||700,000 Euro|
|Czech Republic||Notification in English||Not indicated||10,000,000 CZK|
|Denmark||Notification in Danish||Not indicated||Not indicated|
|Estonia||Notification in English||32,000 Euro|
|Finland||Notification in Finish||5,000 Euro||100,000 Euro|
|France||Notification in French||Not indicated||10,000,000 Euro|
|Germany||Notification in German||50,000 Euro||500,000 Euro|
|Greece||Notification in Greek||10,000 Euro||3,000,000 Euro|
|Hungary||Notification in Hungarian||Not indicated||Not indicated|
|Ireland||Notification in English||2,500,000 Euro|
|Italy||Notification in Italian||30,000 Euro||5,000,000 Euro or up to 10% of turnover|
|Latvia||Notification in English||100,000 lats|
|Lithuania||Notification in English||LTL 15,000|
|Luxembourg||No notification received by ESMA. Implemented in Article 3 of Law of 15 March 2016||125 Euro||1,500,000 Euro|
|Malta||Notification in English||150,000 Euro|
|Netherlands||Notification in Dutch||1,000,000 Euro|
|Poland||Notification in English||1,000,000 PLN||10,000,000 PLN or 10% of revenue|
|Portugal||Notification in Portuguese||1,500,000 Euro|
|Romania||Notification in English||Not indicated||Not indicated|
|Slovakia||Notification in English||332 Euro||663,878 Euro|
|Slovenia||Notification in English||12,000 Euro (small legal entities)|
25,000 Euro (medium and large legal entities)
|150,000 Euro (small legal entities)
250,000 (medium and large legal entities)
|Spain||Notification in Spanish||500,000 Euro|
|Sweden||Notification in Swedish||5,000 SEK||50,000,000 SEK|
|UK||Notification in English||Broad definition that gives freedom to FCA.|
Although some of the NCAs failed to meet the deadline of 17 February 2013 for official confirmation about the legal transposition of the penalties and fines into the local legislations, one year after EMIR has been in force all member states except Luxembourg have successfully implemented the necessary rules and regulations. The maximum fine for inaccurate EMIR reporting and failure to comply with EMIR vary:
- from approximately EUR 35,000 in the Eastern European countries, for example: the lowest is 4,800 EUR (LTL 15,000) in Lithuania, EUR 32,000 in Estonia and EUR 40,000 in Bulgaria;
- within the range of EUR 150,000 and EUR 500,000 in Central and Western Europe, for example: EUR 150,000 in Austria, EUR 500,000 in Spain and Ireland. In Cyprus the maximum fine that can be imposed by CySEC is EUR 350,000 for the first time penalty for inaccurate EMIR reporting and up to EUR 700,000 for the second time.
- up to millions Euro. Few NCAs are given the option to impose maximum fines in million Euros, for example: Portugal with 1.5 million; Belgium with max 2.5 million; Greece: 3 million and the Netherlands with the highest figure of maximum 4 million according to the local legislations.
As an exception the British legislation has not defined any range. It gives freedom to FCA by implementing broad definitions about fines regarding EMIR. The fines are similar to those already imposed by FCA to the companies regarding MiFID: GBP 1 per line of inaccurately reported or non-reported transaction with up to GBP 1.5 per line for companies that repeatedly fail to comply with MiFID.
On 23 Oct 2017 FCA fined Merrill Lynch £34.5 million for failing to report 68.5 million exchange traded derivative transactions between 12 February 2014 and 6 February 2016. This is the first enforcement action in the UK against a firm for failing to report details of trading in exchange traded derivatives under the European Markets Infrastructure Regulation (EMIR). MLI agreed to settle at an early stage of the investigation and received a 30% reduction in their overall fine. Without this discount the fine would have been £49,320,000. More information is available here.
On 21 June 2017 and 26 July 2017 Covip in Italy has applied two sanctions to one pension fund for the infringements of Articles 9 and 11 of EMIR. The pension fund did neither comply with the reporting obligation under Article 9 nor with the risk mitigation techniques requirements of Article 11 of EMIR because of an erroneous assumption that certain OTC instruments were outside the scope of EMIR. The first fine amounts to 105,000 euros. The second fine is for the amount of 60,000 euros.
On 13 June 2018 ESMA has issued a Report on Supervisory Measures and Penalties under Articles 4, 9, 10 and 11 of EMIR. More information is available here.
It is important to establish the fully compliant EMIR reporting processes and procedures since day one. Back in Feb 2014 there was still some uncertainty about few rules and few definitions. For that reason we would urge the companies that are already reporting to perform internal audit of the accuracy of the first submitted transactions as well as back-dated reporting in order to avoid future fines and penalties related to EMIR reporting.
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