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The Protection of Fundamental Rights in Composite Banking Supervision Procedures

The Protection of Fundamental Rights in Composite Banking Supervision Procedures

Argyro Karagiani PhD
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Table of Contents
Description

The book provides a thorough analysis of the protection of fundamental rights (right to privacy, legal professional privilege, privilege against self- incrimination, right to an effective remedy and ne bis in idem) in the composite procedures that take place in the context of the Single Supervisory Mechanism (SSM).
Within the SSM, the EU and national levels are in constant interaction. The interlocking of EU and national legal orders for the enforcement of EU law challenge traditional systems of control that were designed for and developed in the context of a single State jurisdiction. This book looks into the system of fundamental rights protection, as a mechanism that guides and controls executive action.
By studying the mutual interactions of three legal orders (EU, the Netherlands, Greece), the book concludes that in certain instances there are gaps in complete fundamental rights protection.
Concrete recommendations are thus brought forward,which are addressed to the ECB, the EU and national courts and the EU legislature and which aim at bolstering the protection of fundamental rights at the intersection between different legal orders and at the interface between administrative and criminal law enforcement.

About the author(s)

Argyro Karagiani works as an assistant professor at Utrecht University. In that capacity, she teaches courses on such topics as the EU Banking Union, the enforcement of anti-money laundering policy and supervision of markets. Prior to starting her
PhD research, Argyro worked as a legal trainee at the European Central Bank and as a judicial trainee at the Athens Court of Appeals. She has also worked in private practice and is a qualified barrister in Greece.

Table of Contents

Acknowledgments    v
Table of Contents    vii
Abbreviations    xviii

chapter i    Introduction
1    Banking supervision through composite procedures    2
2    Complete fundamental rights protection in composite banking supervision procedures?    4
3    Research question    6
4    Methodology    6
5    Delineation    8
6    Academic and societal relevance    14
7    Structure of the book    16

chapter ii    Fundamental Rights Through the Lens of Composite Law Enforcement
1    Introduction    20
2    Composite enforcement procedures    20
2.1    Introduction    20
2.2    From decentralized to direct EU law enforcement    21
2.3    Composite EU law enforcement procedures    25
2.4    The SSM as a composite system of prudential law enforcement    31
3    Protection of fundamental rights through the lens of composite enforcement procedures    33
3.1    The landscape of fundamental rights protection in the EU    34
3.2    Fundamental rights in enforcement procedures    38
3.3    Fundamental rights in composite enforcement procedures: a set of pertinent questions    39
3.3.1    Introduction    39
3.3.2    The right to privacy through the lens of composite enforcement procedures    40
3.3.3    The rights of the defense through the lens of composite enforcement procedures    44
3.3.3.1    Introduction    44
3.3.3.2    Legal professional privilege in composite enforcement procedures    45
3.3.3.3    Privilege against self-incrimination in composite enforcement procedures    48
3.3.4    The right of access to a court through the lens of composite enforcement procedures    49
3.3.5    The ne bis in idem principle through the lens of composite enforcement procedures    51
4    Constitutional framework surrounding composite enforcement procedures and repercussions for the protection of fundamental rights    53
4.1    Introduction    53
4.2    General principles of EU constitutional law applicable to the enforcement of Union law    53
4.3    Preliminary ruling proceedings    54
4.4    The role allocated to fundamental rights in the current EU narrative: a tale of mutual trust and a presumption of equivalence    55
5    Intermediate conclusion    59

chapter iii    Enforcement of Prudential Banking Legislation: The EU-Level Legal Framework   
1    Introduction    62
2    The origins of the Single Supervisory Mechanism (SSM)    62
2.1    The road toward the creation of the SSM    62
3    On the objectives of banking regulation and supervision    64
4    Applicable substantive and procedural law    66
4.1    Introduction    66
4.2    Supervision of cross-border banks: The European passport   
    regime    67
4.3    Substantive law applied by the ECB: elements of the Single   
    Rulebook    70
4.4    Procedural law applied by the ECB: a patchwork of written   
    and unwritten rules    71
5    SSM: Institutional design    73
5.1    Introduction    73
5.2    ECB    73
5.2.1    Legal basis for the conferral of supervisory powers    73
5.2.2    ECB’s mandate and tasks    75
5.2.3    The ECB’s decision-making process    75
5.3    National competent authorities (NCAs)    77
5.4    Credit institutions (supervised entities)    77
5.5    Division of labor between the ECB and NCAs    78
5.6    The role of criminal law enforcement    80
6    The obtainment of information by the ECB    81
6.1    Joint Supervisory Teams (JSTs)    82
6.1.1    Composition and tasks    82
6.1.2    Enforcement powers and applicable legal safeguards    84
6.1.3    Any room for national powers?    89
6.2    On-site inspection teams (OSITs)    90
6.2.1    Composition and tasks    90
6.2.2    Enforcement powers and applicable legal safeguards    91
6.3    Independent investigating unit (IIU)    97
6.3.1    Composition and tasks    97
6.3.2    Enforcement powers and applicable legal safeguards    97
6.4    NCA assistance in the supervision of significant institutions 102
6.5    Judicial control of ECB acts in the obtainment phase    104
6.5.1    Action for annulment and interim relief    104
6.5.2    A taxonomy of ECB decisions and acts in the information- gathering stage and possibilities for judicial control    105
6.6    Interim conclusion    106
7    The transfer of information by the ECB for enforcement purposes    107
7.1    The transfer of information within the ECB for enforcement purposes    108
7.1.1    From joint supervisory teams and on-site inspection teams to the independent investigating unit    108
7.1.2    From the Independent Investigating Unit to the Supervisory Board    108
7.2    The exchange of information between SSM authorities for enforcement purposes    109
7.2.1    Information transfers from the Independent Investigating Unit to the National Competent Authorities    109
7.2.2    Information transfers from the National Competent Authorities to the ECB    111
7.3    Information transfers outside the SSM    112
7.3.1    The transfer of information from the ECB to national judicial authorities via the NCAs    112
8    The use of information by the ECB, NCAs, and national judicial authorities for punitive purposes    115
8.1    The use of information by the ECB for punitive purposes    116
8.1.1    ECB’s sanctioning powers    117
8.1.2    The imposition of sanctions by the ECB and applicable legal safeguards    119
8.2    The use of information by the NCAs for punitive purposes    121
8.2.1    Lawful obtainment, but unfair use: the example of the privilege against self-incrimination    123
8.2.2    The use for punitive purposes of information obtained on the basis of divergent standards: the example of the legal
professional privilege    124
8.2.3    The use as evidence for punitive purposes of unlawfully obtained information: the example of the legal professional privilege    125
8.2.4    The use for punitive purposes by NCAs of lawfully obtained information and the ne bis in idem principle    125
8.3    The use of SSM information by national judicial authorities for punitive purposes    127
8.3.1    Punitive follow-up by national judicial authorities and applicable legal safeguards    127
8.3.2    Parallel proceedings by national judicial authorities and applicable legal safeguards    131
9    Conclusions and outlook    132

chapter iv    Enforcement of Prudential Banking Legislation in the Netherlands
1    Introduction    136
2    Enforcement of prudential legislation in the Netherlands    136
2.1    Key concepts and legal sources    136
2.2    The Dutch Central Bank (DNB)    140
2.2.1    Introduction    140
2.2.2    DNB mandate, tasks and governance arrangements    141
2.3    Judicial authorities responsible for the investigation and prosecution of prudential offenses    143
3    The obtainment of information by DNB    144
3.1    Introduction    144
3.2    Requests for information and applicable defense rights    145
3.3    On-site inspections and the right to privacy    150
3.4    Interim remarks    153
4    The transfer of information by DNB to the ECB and to national judicial authorities    155
4.1    Introduction    155
4.2    The transfer of information by DNB to the ECB: possibilities and limits    155
4.3    The transfer of information by DNB to national judicial authorities    157
5    The use of SSM materials in Dutch punitive proceedings    160
5.1    Introduction    160
5.2    The use of SSM materials by DNB and applicable legal safeguards    161
5.2.1    DNB sanctioning powers    161
5.2.2    The use of SSM materials by DNB and applicable defense rights    163
5.2.3    Judicial review of DNB punitive decisions and preceding investigative acts    164
5.2.3.1    DNB sanctioning decisions and the right of access to a court 164
5.2.3.2    DNB sanctioning decisions adopted pursuant to composite procedures and the right of access to a court    165
5.2.4    The use by DNB of ECB materials and the ne bis in idem principle    168
5.3    The use of DNB-gathered materials by the ECB and/or other NCAs and applicable legal safeguards    169
5.4    The use of SSM materials by Dutch judicial authorities and applicable legal safeguards    170
5.4.1    Criminal sanctions for violations of prudential norms    170
5.4.2    The use of SSM materials by judicial authorities in the Netherlands and applicable defense rights    171
5.4.3    The use of SSM materials by judicial authorities in the Netherlands and the right of access to a Court    172
5.4.4    The SSM, Dutch judicial authorities and the una via/ne bis in idem principle    175
6    Conclusions and outlook    178

chapter v    Enforcement of Prudential Banking Legislation in Greece
1    Introduction    182
2    Institutional design of banking supervision in Greece    182
2.1    Enforcement of prudential legislation: concepts, legal sources, and ongoing challenges    182
2.1.1    Enforcement of prudential legislation through administrative law    182
2.1.2    Enforcement of prudential legislation through criminal law    186
2.2    The Bank of Greece    187
2.2.1    Introduction    187
2.2.2    BoG mandate, tasks and governance arrangements    187
2.3    Judicial authorities responsible for the investigation and prosecution of economic crime 190
3    The obtainment of information by the BoG    191
3.1    Introduction    191
3.2    Information requests, oral statements and applicable defense rights    192
3.3    On-site inspections and the right to privacy    197
4    The transfer of information by BoG to the ECB and to national judicial authorities    198
4.1    Introduction    198
4.2    The transfer of information by BoG to the ECB and to other NCAs    198
4.3    The transfer of SSM information by BoG to national judicial authorities    201
5    The use of SSM materials in Greek punitive proceedings    202
5.1    Introduction    202
5.2    The use of SSM materials by BoG and applicable legal safeguards    203
5.2.1    BoG’s sanctioning powers    204
5.2.2    BoG’s sanctioning powers and applicable defense rights    206
5.2.3    Judicial review of BoG final decisions and preceding investigative acts    207
5.2.3.1    BoG sanctioning decisions and the right of access to a court 207
5.2.3.2    Judicial review of BoG sanctioning decisions adopted pursuant to composite enforcement procedures    209
5.2.4    Ne bis in idem between the ECB and BoG    213
5.3    The use of SSM materials by Greek judicial authorities and applicable legal safeguards    213
5.3.1    Introduction    213
5.3.2    Criminal law sanctions for violations of prudential norms    213
5.3.3    The use of SSM materials by Greek judicial authorities an appicable defense rights    214
5.3.4    The use of SSM materials by Greek judicial authorities
and the right of access to a court    215
5.3.5    Ne bis in idem between an SSM authority and Greek judicial authorities    217
6    Concluding remarks    218

chapter vi    The Protection of Fundamental Rights in Composite SSM Enforcement Procedures   
1    Introduction    220
2    SSM composite enforcement procedures    220
2.1    The institutional design of the Single Supervisory Mechanism    221
2.2    The obtainment of information by the SSM    223
2.2.1    Direct obtainment of information by the ECB    223
2.2.1.1    Joint Supervisory Teams    223
2.2.1.2    On-site inspection teams    225
2.2.1.3    The independent investigating unit    227
2.2.2    Indirect obtainment of information by the ECB    228
2.3    Top-down and bottom-up information transfers inside the SSM for enforcement purposes    230
2.3.1    Information transfers from the ECB to the NCAs for enforcement purposes    230
2.3.2    Information transfers from the NCAs to the ECB for enforcement purposes    230
2.4    The use of SSM obtained information by the ECB and by NCAs for punitive purposes    231
2.4.1    The use of information obtained by the NCAs in ECB punitive proceedings    231
2.4.2    The use of information obtained by the ECB or another NCA in DNB and BoG punitive proceedings    232
2.5    Intermediate remarks    233
3    Interactions between the SSM and national criminal law enforcement    235
3.1    Enforcement of prudential legislation through criminal law in the Netherlands and in Greece    235
3.2    National judicial authorities requesting information obtained by an SSM authortiy    237
3.3    Spontaneous transfers of criminally relevant information from the ECB to national judicial authorities    237
3.4    National judicial authorities transferring criminal information to an NCA    238
3.5    Intermediate conclusion    239
4    The protection of fundamental rights in composite SSM enforcement procedures    240
4.1    The right to privacy in composite SSM enforcementprocedures    240
4.1.1    The right to privacy and issues of legal certainty    241
4.1.1.1    Issues of legal certainty with respect to the applicable law    241
4.1.2    The right to privacy and issues of legal protection    243
4.1.2.1    The organization of judicial control of SSM on-site inspections    243
4.1.2.2    Vertical (bottom-up) issues of privacy – related legal protection    245
4.1.2.3    Vertical (top-down) issues of privacy – related legal protection    247
4.1.2.4    Diagonal issues of privacy-related legal protection    248
4.1.3    Intermediate conclusions    250
4.2    Defense rights in composite SSM enforcement procedures    251
4.2.1    Defense rights and legal certainty: the example of the legal professional privilege    251
4.2.1.1    Divergent standards between legal orders    252
4.2.1.2    Is Akzo Akcros the answer to legal certainty concerns in composite enforcement procedures? 255
4.2.2    Defense rights and procedural fairness: the example of the privilege against self incrimination    257
4.2.2.1    The privilege against self-incrimination in composite SSM enforcement proceedings    258
4.2.3    Defense rights and issues of legal protection    264
4.2.3.1    Legal protection and divergent standards of defense rights    264
4.2.3.2    Legal protection and evidence obtained in violation of defense rights    266
4.2.4    Intermediate conclusions    271
5    The protection of fundamental rights at the intersection between administrative SSM enforcement and national criminal law enforcement    275
5.1    Issues of legal certainty: Top-down transfers of criminally relevant information and the determination of the receiving legal order    276
5.2    Issues of procedural fairness    277
5.3    Issues of legal protection    279
5.4    The ne bis in idem principle    283
5.4.1    Unclear content in sufficiently interlinked proceedings taking place in different legal orders    283
5.4.2    ECB and national judicial authorities: Systemic risks for ne bis in idem violations    287
5.4.3    NCAs and national judicial authorities: Violations possible, depending on the national legal order    289

chapter vii    Synopsis, Conclusions, and Recommendations   
1    A synopsis of the research problem and key concepts    292
2    Research question and guiding sub-questions    296
3    The protection of fundamental rights in composite SSM   
 procedures: Conclusions    297
3.1    Right to privacy    297
3.1.1    Privacy-related legal certainty    297
3.1.2    Privacy-related legal protection    298
3.2    Rights of the defense    300
3.2.1    Defense rights-related legal (un)certainty    300
3.2.2    Procedural fairness may often be compromised    301
3.2.3    Defense rights-related legal protection    303
3.2.3.1    Evidence gathered on the basis of divergent procedural standards and legal protection    303
3.2.3.2    Unlawfully obtained evidence and legal protection    304
3.3    Ne bis in idem: Ambiguous content, but systemic risks for violations are unlikely    306
4    The protection of fundamental rights at the intersection between SSM administrative law enforcement and national criminal law enforcement: conclusions    307
4.1    Issues of legal certainty at the intersection between SSM administrative law enforcement and national criminal law enforcement    307
4.2    Issues of procedural fairness at the intersection between SSM administrative law enforcement and national criminal law enforcement    308
4.3    Issues of legal protection at the intersection between SSM administrative law enforcement and national criminal law enforcement    310
4.3.1    Legal protection and unlawfully obtained evidence    310
4.3.2    Lawful obtainment but unfair use: issues of legal protection    311
4.4    The ne bis in idem principle at the intersection between SSM administrative law enforcement and national criminal law enforcement    312
5    Recommendations    313
5.1    Introduction    313
5.2    A roadmap toward protecting fundamental rights in the composite SSM landscape    314
5.3    A roadmap toward protecting fundamental rights at the interface between SSM administrative and national criminal law enforcement    324
5.4    Suggestions for a future research agenda    327

References
Bibliograpy    330
Legislation    346
Table of Case Law    348
Nederlandse samenvatting    356

ISBN:
9789462512955
Practice area:
Administrative Law, Human Rights Law
Author:
Argyro Karagiani PhD
Edition:
1
Number of pages:
356
Release date:
22 juni 2022
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