Tag Archives: CR

Cross-border cooperation programme

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Cross-border cooperation programme

Outline of the Community (European Union) legislation about Cross-border cooperation programme

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These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Enlargement > Enlargement 2004 and 2007

Cross-border cooperation programme

This Regulation implements a cross-border cooperation programme under the Phare programme and is designed to promote cooperation between the border regions of central and eastern Europe and adjacent regions of the Community and other applicant countries of central and eastern Europe.

Document or Iniciative

Commission Regulation (EC) No 2760/98 of 18 December 1998 concerning the implementation of a programme for cross-border cooperation in the framework of the Phare programme [See amending acts].

Summary

This Regulation replaces Commission Regulation (EC) No 1628/94 of 4 July 1994 establishing the first cross-border cooperation programme and pursues similar aims, in particular economic development in the border regions of central and eastern European countries and greater convergence of their level of development with that of the European Union. It extends the programme’s geographical scope and improves the way it works by increasing the number of projects of a typically cross-border nature and stepping up the pace of implementation. The programme must be conducted in coordination with the Community’s structural policies and the Interreg programme. From 1 January 2007 it will be replaced by the Instrument for Pre-Accession Assistance (IPA), which is a single financial framework for candidate countries (and for the potential candidate countries of the Western Balkans) for the period 2007-2013.

The borders eligible for this programme are those:

  • between Romania, on the one hand, and Hungary, Bulgaria, Ukraine, Moldova and Serbia and Montenegro, on the other;
  • between Bulgaria, on the one hand, and Greece, Romania, Turkey, the former Yugoslav Republic of Macedonia and Serbia and Montenegro, on the other.

The Regulation lays down the criteria for the distribution of funds between the recipient countries (population, GDP per capita and surface area of the regions concerned).

Projects funded by grants under this programme must have the following aims:

  • to promote cooperation between border regions in countries in central and eastern Europe and adjacent regions and thus to help them overcome their specific development problems;
  • to promote the creation and development of cooperation networks between border regions and the establishment of links between these networks and wider Community networks.

Actions eligible for funding under the cross-border cooperation programme include:

  • alleviation of the administrative and institutional obstacles to the free flow of persons, products or services across borders;
  • improvement of infrastructures and the provision of local water, gas and electricity supplies;
  • environmental protection;
  • agricultural and rural development;
  • measures in the fields of energy and transport aimed at the development of trans-European networks;
  • justice and home affairs;
  • promotion of business cooperation, enterprise development, financial cooperation and cooperation between institutions representing the business and industrial sector;
  • aid to investment and provision of supporting services and facilities;
  • training and employment measures;
  • local economic development;
  • measures to promote cooperation in health;
  • the development and establishment of facilities and resources to improve the flow of information and communications between border regions;
  • cultural exchanges;
  • local employment, education and training initiatives.

The last five categories may be financed only under a fund which may be established in each of the regions concerned. This fund will receive a limited percentage of the appropriations for the programme with a view to encouraging joint small-scale actions involving local actors from the border regions.

The Community contribution is provided in principle as a grant. Where the Community grant contributes to the financing of revenue-generating activities, the Commission may, in consultation with the authorities involved, provide for co-financing from project revenues or reimbursement of the initial grants.

As regards management, a Joint Cooperation Committee will be set up in each of the border regions consisting of representatives of the countries concerned and the Commission. It will prepare a joint cross-border programming document in a multiannual perspective, which will identify priorities and development strategies for the region and lay down provisions for their implementation. On the basis of this document, the Committee will draw up a common set of projects once a year. Recommendations for projects will be transmitted to the Commission by the government of the country in central and eastern Europe concerned.

On the basis of the joint cross-border programming document and project recommendations, the Commission will formulate a programme proposal for each border region. The amount of the grant for a given project will be established in accordance with the procedure laid down by Council Regulation (EEC) No 3906/89 of 18 December 1989 (Phare). That Regulation lays down the aid management procedures followed by the Commission. Wherever possible, joint monitoring structures will be set up to facilitate the implementation of the programmes.

References

Act Entry into force Deadline for transposition in the Member States Official Journal
Regulation (EC) No 2760/98 22.12.1998 – OJ L 345 of 19.12.1998
Amending act(s) Entry into force Deadline for transposition in the Member States Official Journal
Regulation (EC) No 1596/2002 10.09.2002 – OJ L 240 of 07.09.2002
Regulation (EC) No 1822/2003 01.01.2004 – OJ L 267 of 17.10.2003

Related Acts

Council Regulation (EC) No 1085/2006 of 17 July 2006 establishing an Instrument for Pre-Accession Assistance (IPA).

This Regulation is intended to enhance coordination between the different aid components through the creation of a single framework for assistance: the Instrument for Pre-Accession Assistance (IPA). This framework integrates the structure of all the pre-accession programmes (and the stabilisation and association process), including the cross-border cooperation programme.

This summary is for information only and is not designed to interpret or replace the reference document.

Creation of a Peace Facility for Africa

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Creation of a Peace Facility for Africa

Outline of the Community (European Union) legislation about Creation of a Peace Facility for Africa

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These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Development > African Caribbean and Pacific states (ACP)

Creation of a Peace Facility for Africa

Document or Iniciative

Decision 2003/3 of the ACP-EC Council of Ministers of 11 December 2003 on the use of resources from the long-term development envelope of the ninth EDF for the creation of a Peace Facility for Africa [pdf ].

Summary

The decision to create a Peace Facility for Africa follows a brief conferred by the Council at the session of 21 July 2003, in response to a request made by the African Union Summit (AU), which convened at Maputo on 4 – 12 July 2003.

The Decision allocated an initial amount of EUR 250 million to the Peace Facility for Africa for a period of three years from its date of entry into force.

The EUR 250 million came from the European Development Fund (EDF) under the Cotonou Agreement. Of this, EUR 126.4 million came from each African country’s contribution of 1.5 % from its allocated envelope. The remaining EUR 123.6 million were transferred from unallocated resources (reserves) of the 9th EDF.

The Council of 11 April 2006 decided to extend this initiative for the period 2008 – 10 by allocating EUR 300 million under the Intra-ACP Indicative Programme of the 10th European Development Fund.

This amount can be used to finance costs incurred by African countries deploying their peace-keeping forces in one or more other African countries (cost of carrying troops, soldiers’ living expenses, development of capabilities, etc.) but under no circumstances to cover military and arms expenditure.

The Peace Facility is based on the principle of African ownership. It supports African-led peacekeeping operations in Africa as well as capacity building for the emerging security structure of the African Union (AU). These operations are launched and implemented by the African Union’s organisations and/or by sub-regional organisations. The African Union is required to play a key role in the decision-making process relating to these operations.

The AU’s mission in Darfur/Sudan (AMIS) is the first to be supported by the Peace Facility for Africa following a decision in June 2004 for financing amounting to EUR 12 million.

References

Act Entry into force Deadline for transposition in the Member States Official Journal
Decision 2003/3 11.12.2003 – OJ L 345, 31.12.2003.

Related Acts

Decision No 2/2007 of the ACP-EC Council of Ministers of 25 May 2007 allowing additional bilateral contributions, to be managed by the Commission, in support of the objectives of the African Peace Facility

Council Regulation (EC) No 617/2007 of 14 May 2007 on the implementation of the 10th European Development Fund under the ACP-EC Partnership Agreement [Official Journal L 152 of 13.6.2007].

Criminal-law protection of the Community's financial interests

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Criminal-law protection of the Community’s financial interests

Outline of the Community (European Union) legislation about Criminal-law protection of the Community’s financial interests

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Fight against fraud > Protecting the European Union’s financial interests

Criminal-law protection of the Community’s financial interests

Proposal

Proposal for a Directive of the European Parliament and of the Council on the criminal-law protection of the Community’s financial interests [Official Journal C 240 E of 28.08.2001].

Amended proposal for a Directive of the European Parliament and of the Council on the criminal-law protection of the Community’s financial interests [COM(2002) 577 final – Official Journal C 71 E of 25.03.03].

Summary

The Community institutions and the Member States acknowledge the importance of effective protection for the Community’s financial interests. In order to combat fraud and other illegal activities affecting those interests, the Member States signed the Convention of 26 July 1995 on the protection of the European Communities’ financial interests and several additional protocols which provide for measures aimed in particular at aligning national criminal laws. As these instruments have still not been ratified by all the Member States, the Commission has presented a proposal for a Directive on the basis of new Article 280 of the EC Treaty introduced by the Amsterdam Treaty, which incorporates a large proportion of their provisions.

After first defining certain key terms such as Community official, national official and legal person, the proposal requires Member States to make fraud, corruption and money laundering affecting the financial interests of the Community a criminal offence in their national law.

Fraud involving expenditure as well as revenue

Fraud affecting the Community’s financial interests can involve expenditure as well as revenue. Fraud can consist of any intentional act or omission relating to:

  • the use or presentation of false, incorrect or incomplete statements or documents;
  • non-disclosure of information in violation of a specific obligation;
  • the misuse of such funds for purposes other than those for which they were originally granted.

The acts in question must have the effect of reducing the resources of the Community budget or retaining Community funds. Member States may fix the minimum amount in order to define serious fraud. The minimum amount may not, in any event, be more than EUR 50 000.

Active and passive corruption

Passive corruption consists of the deliberate act on the part of an official of requesting or receiving advantages or accepting a promise of such an advantage as inducement to breach their official obligations and carry out or refrain from carrying out an official duty or an act in the course of their official duties in a way that damages or is likely to damage the Community’s financial interests. Active corruption is the deliberate act of promising or giving an advantage of any kind to officials as inducement for them to breach their official obligations and carry out or refrain from carrying out an official duty or an act in the course of their official duties in a way that damages or is likely to damage the Community’s financial interests.

In accordance with the principle of equal treatment, Member States must guarantee that acts of fraud and corruption committed by Community officials are treated in the same way as those committed by their national officials.

Money laundering

Money laundering includes acts committed deliberately in order to:

  • convert or transfer property derived from criminal activity;
  • conceal the source, true nature or location of goods derived from criminal activity as well as the acquisition, possession or use of the above-mentioned property.The deliberate nature of the unlawful conduct must be established on the basis of objective factual circumstances.

Criminal liability and penalties within the Union

Member States are to take the necessary measures to allow persons having power to take decisions or exercise control within a business to be declared criminally liable. They will also have to define the liability of bodies corporate as well as the criminal liability of natural persons committing, instigating or being an accessory to the unlawful act. Member States will have to provide for penalties on bodies corporate such as disqualification from engaging in business activities or placing under judicial supervision.

Member States are to take the necessary measures to impose criminal penalties for the conduct referred to above (fraud, corruption, money laundering) as well as for conduct as an accessory or instigator and, with the exception of corruption, the attempted commission of such acts. In cases of serious fraud, they must provide for custodial sentences. In the case of minor fraud (involving a total of less than 4 000), they may provide for penalties other than criminal penalties.

Member States must take the necessary measures to enable the instruments and proceeds of the unlawful conduct covered by the proposal to be seized in accordance with national law.

Final provisions

The Member States must ensure that the Commission is able to provide all the technical and operational assistance required to facilitate the coordination of investigations undertaken by the relevant national authorities.

Member States will be free to adopt or maintain more stringent provisions in order to provide effective protection for the financial interests of the Community.

References And Procedure

Proposal Official Journal Procedure
COM (2002) 577 Official Journal C 71 E of 25.03.2003 COD/2001/0115
COM (2001) 272 Official Journal C 240 E of 28.08.2001 COD/2001/0115

Criteria for rejecting unfounded applications for asylum

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Criteria for rejecting unfounded applications for asylum

Outline of the Community (European Union) legislation about Criteria for rejecting unfounded applications for asylum

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Other

Criteria for rejecting unfounded applications for asylum

1) Objective

To discourage abuse of asylum procedures by third-country nationals.

2) Union Measure

Resolution of 30 November 1992 on manifestly unfounded applications for asylum.

Resolution of 30 November 1992 on a harmonised approach to questions concerning host third countries.

Conclusions of 30 November 1992 on countries in which there is generally no serious risk of persecution.

3) Contents

Faced with a rising number of applicants for asylum at the beginning of the 1990s, the Member States of the EU felt it necessary to lay down common principles to facilitate determination procedures and to reduce the burden for national authorities represented by the substantial number of manifestly unfounded applications, which delayed the recognition of refugees in genuine need of protection. To that end, they adopted various resolutions (also known as the “London resolutions”) and the conclusions of 30 November 1992.

Manifestly unfounded applications for asylum

Applications for asylum which do not meet the criteria laid down by the 1951 Geneva Convention are regarded as unfounded:

  • either because there is no substance to the applicant’s claim to fear persecution in his own country or because he could obtain effective protection in another part of his own country;
  • or because the claim is based on deliberate deception or is an abuse of asylum procedures (false identity, forged documents, false representations, application in another country using another identity, claim made to forestall an impending expulsion measure, etc.).

These applications may be considered under accelerated procedures, without a full examination, or be rejected very rapidly on objective grounds. Nevertheless, provision is made for procedural guarantees, in particular a face-to-face interview with a qualified official and appeal or review procedures.

According to the Member States, accelerated procedures can be applied in other urgent cases where the applicant has committed a serious offence in the territory of the Member State or for reasons of public security.

Host third countries

The principle of the host third country allows the Member States, where appropriate, to send applicants for asylum to that destination after an accelerated examination of their application. The identification of the host third country precedes the substantive examination of the application and applies to all applicants for asylum.

A host third country must offer all the following guarantees to asylum applicants:

  • their life or freedom must not be threatened;
  • they must not be exposed to torture or inhuman or degrading treatment;
  • they must already have been granted protection in the country in question or there must be clear evidence of admissibility;
  • they must be afforded effective protection against refoulement.

Guiding principles were laid down concerning the application of the host third country concept and the procedures under the Dublin Convention.

Concept of “safe” countries

As indicated in point 2, an application for asylum is unfounded if there is no serious risk of persecution in the country of origin. Although the Member States examine all applications for asylum individually, provision is made for accelerated procedures where the applicant comes from a country regarded as “safe”.

Each Member State determines the countries it regards as safe and informs the other Member States. The indicative factors that it may take into account for the purpose of this assessment are as follows:

  • numbers of refugees and recognition rates over the last few years;
  • observance of human rights (adherence to appropriate international instruments and, above all, how the country meets those obligations in practice);
  • democratic institutions (elections, political pluralism, freedom of expression, legal avenues of protection and redress);
  • stability (assessment of the prospect for dramatic change).

4) Deadline For Implementation Of The Legislation In The Member States

Not applicable.

5) Date Of Entry Into Force (If Different From The Above)

Not applicable.

6) References

Not published in the Official Journal.

7) Follow-Up Work

8) Implementing Measures

 

Criminal proceedings: conflicts of jurisdiction and the ne bis in idem principle

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Criminal proceedings: conflicts of jurisdiction and the ne bis in idem principle

Outline of the Community (European Union) legislation about Criminal proceedings: conflicts of jurisdiction and the ne bis in idem principle

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Justice freedom and security > Judicial cooperation in criminal matters

Criminal proceedings: conflicts of jurisdiction and the ne bis in idem principle (Green Paper)

Through this Green Paper the European Commission is launching a wide-ranging consultation of interested parties on issues of conflicts of jurisdiction between the courts of the Member States in criminal matters. The Green Paper also looks at the ne bis in idem principle.

Document or Iniciative

Green Paper on conflicts of jurisdiction and the principle of ne bis in idem in criminal proceedings [COM(2005) 696 – Not published in the Official Journal].

Summary

The Green Paper launches a process of reflection on conflicts of jurisdiction between the courts of the Member States in criminal matters in the light of the ne bis in idem principle. To solve conflicts of jurisdiction between national courts, the Commission outlines the possibilities for the creation of a mechanism for allocating cases to an appropriate jurisdiction. If prosecutions were concentrated in a single jurisdiction, those concerned would not run the risk of being tried several times for the same offence in different States. The Commission considers that such a mechanism would complement the principle of mutual recognition.

ALLOCATING CASES TO A SPECIFIC MEMBER STATE

To allocate cases to the right Member States, the new mechanism would consist of the following stages:

  • Identifying and informing “interested parties”. A Member State which has initiated or is about to initiate a criminal prosecution (“initiating State”) in a case which demonstrates significant links to another Member State must inform the competent authorities of that other Member State. It could be envisaged that this information should be provided within a fixed period of time. If no Member State expresses an interest in prosecuting the case in question, the initiating State could continue with the prosecution of the case without further consultation, unless new facts change the picture.
  • Consultation/discussion. If two or more Member States are interested in prosecuting the same case, their respective competent authorities should be able to examine together the question of the “best place” to prosecute the case. An option would be to create a duty to enter into discussions. Direct contacts between them would seem to be the most efficient means of discussion. If need be, the Member States could ask for the assistance of Eurojust and/or other Union assistance mechanisms.
  • Dispute settlement. Where an agreement cannot be easily found, Eurojust or a newly-established mechanism for dispute resolution could help the Member States concerned to reach a voluntary agreement in consideration of the interests involved using the criteria outlined in the Green Paper. The Commission also looks at the possibility of a body at EU level being empowered to take a binding decision as to the most appropriate jurisdiction.

Establishing a mechanism for allocating cases will raise the need for effective information exchanges between the relevant authorities in the Member States. Once they become aware that proceedings are ongoing in another Member State, the prosecuting authorities of a Member State should have the ability to halt an existing prosecution. The Commission acknowledges that that could raise problems for the legal order of Member States which adhere to the mandatory prosecution principle, in other words where the authorities have a constitutional duty to prosecute every crime which falls within their competence *. It proposes that an exception to the application of this principle could be provided for, since it can validly be argued that in a common area of freedom, security and justice this principle is satisfied when another Member State prosecutes such a case.

Selecting the Member State best placed to prosecute

During the pre-trial stage, the suggested mechanism focuses on consultation among the competent prosecuting authorities. Discussing jurisdiction issues with the individuals concerned might often reveal facts which could jeopardise a prosecution or affect the rights and interests of victims and witnesses. Whether such a risk is present in a specific case could be left to the national courts to be decided.

Unlike in the pre-trial phase, at the trial phase a national court which receives an accusation of an indictment usually examines whether it has jurisdiction to try the case. The Commission is proposing that the Member State should be required to examine whether it is best placed to prosecute. Judicial review would then amount solely to adjudication on whether the principles of reasonableness and due process have been respected.

A choice of jurisdiction could thus be set aside by the competent tribunal if it found that the choice made was arbitrary on the basis of doctrines known to the national legal order of the Member States, such as abuse of process. Questions of interpretation of Union-wide rules, including legislation on the proposed procedural mechanism and the criteria for the choice of jurisdiction, could be presented to the European Court of Justice (ECJ) for preliminary rulings CJEC).

Alongside the allocation mechanism, the Commission is proposing an EU provision that would oblige Member States to concentrate proceedings on the same case in one “leading” jurisdiction. The criteria for determining the leading State would include territoriality, victims’ interests, criteria related to efficiency of the proceedings, etc. The prioritisation rule could be that, when a prosecution is brought in a national court, the other Member States must halt or suspend ongoing proceedings.

Judicial review

The individuals concerned must be able to apply for a judicial review of decisions allocating cases to Member States, particularly those allocated to a specific jurisdiction through a binding agreement, because such agreements would fetter the ability of the relevant Member States to denounce the jurisdiction allocation at a later stage. The question of judicial review in situations where there are no binding agreements could be left to the discretion of the Member States and their national laws. Judicial review would be indispensable if the power to take decisions were conferred on an EU body

RELAUNCHING THE DEBATE ON THE NE BIS IN IDEM PRINCIPLE

Articles 54 to 58 of the Convention implementing the Schengen Agreement (CISA) [Official Journal L 239 of 22. 9.2000] are devoted to the ne bis in idem principle. The principle is thus currently binding throughout the Schengen area, in the ten EU Member States which acceded in 2004, in Iceland and Norway, in the United Kingdom, and shortly also in Ireland.

If a mechanism for allocating jurisdiction can be established, discussions on ne bis in idem could be re-launched. In this Green Paper the Commission addresses the following questions:

  • Need to clarify certain elements and definitions. Consideration should be given, for instance, to the types of decision which can have a ne bis in idem effect, and/or what is to be understood under idem or “same facts”.
  • Application of the principle. The principle currently applies only where the imposed penalty “has been enforced, is actually in the process of being enforced or can no longer be enforced”. This condition was justified in a traditional system of mutual assistance, but it is questionable whether it is still needed in an area of freedom, security and justice, where cross-border enforcement now takes place through EU mutual recognition instruments.
  • Current possibilities for derogations from the principle. The Commission sees no further need for exception. Currently, Article 55 CISA enables Member States to provide for exceptions from the ne bis in idem principle where for example the acts to which the foreign judgment relates constitute an offence against national security.

The measures proposed in the Green Paper would also enable the Union to reduce the number of grounds for non-enforcement of judicial decisions by other Member States which are currently provided for by EU instruments. Some of these grounds for non-enforcement could be maintained, such as the fact that an act took place on the territory of the Member State of enforcement.

Background

The Hellenic Republic presented an initiative with a view to adopting a Council Framework Decision concerning the application of the ne bis in idem principle [Official Journal C100 of 26.4.2003]. It provided for definitions of the “same facts” (idem), the principle that penalties are not cumulative, exchanges between competent authorities, etc. The Council has failed to reach agreement on the Greek initiative.

Application of the principle raises a number of questions of interpretation on account of the divergent rules applying nationally and internationally. In the legal systems of some Member States the principle is recognised only in the national context, i.e. vertically in the country’s own criminal procedure. Articles 54 to 57 of the CISA provide for the ne bis in idem principle to apply in the international context, i.e. horizontally.

The ne bis in idem principle is enshrined in Article 50 of the Charter of Fundamental Rights of the EU, which extends the principle throughout Union territory. This represents considerable progress over Protocol 7 to the European Human Rights Convention (ECHR). The Court of Justice of the European Communities considered the scope of the principle in two important judgments based on Schengen (C-385/01 Gözütok and Brügge; C-469/03 Miraglia). The principle is recognised by all legal systems that are concerned to secure protection for fundamental rights.

Key terms used in the act
  • The ne bis in idem (or non bis in idem) principle is also known as the double jeopardy rule. The principle is that no-one may be prosecuted or convicted twice for the same facts or the same punishable conduct.
  • The mandatory prosecution principle is the rule that the prosecution service must always prosecute every offence that comes to its knowledge.

 

Criminal convictions: disqualifications

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Criminal convictions: disqualifications

Outline of the Community (European Union) legislation about Criminal convictions: disqualifications

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Justice freedom and security > Judicial cooperation in criminal matters

Criminal convictions: disqualifications

Document or Iniciative

Communication from the Commission of 21 February 2006 to the Council and the European Parliament: Disqualifications arising from criminal convictions in the European Union [COM(2006) 73 final – Not published in the Official Journal].

Summary

The Communication clarifies the concept of disqualification, presents a round-up of the relevant legislation at European level and outlines the measures that could be taken to make disqualifications more effective. It concerns only disqualifications resulting from a criminal conviction and not, for example, measures imposed during a trial or measures imposed for preventive purposes on persons who cannot be held criminally liable.

Definition of disqualifications arising from a criminal conviction

A person may be deprived of certain rights following a criminal conviction. This may include, for example, a driving ban, prohibition from residing in a particular area or deprivation of civil rights. The disqualification is a penalty ordered by the court, either as an addition to the principal penalty or as an alternative penalty if ordered in place of one or more principal penalties. Where appropriate, it can be automatically imposed as a consequence of the principal penalty and thus need not be ordered by the court (additional penalty). A disqualification may be ordered in administrative or disciplinary proceedings arising as a result of a criminal conviction.

Disqualifications can apply to natural persons or legal persons such as firms or associations. However, not all Member States recognise the criminal liability of legal persons. The Commission addresses this question in its Green Paper on sanctions [PDF ], which illustrates the differences in Member States’ legislation on sanctions and disqualifications.

Approximating legislation in the Member States

Community instruments adopted in this connection aim to approximate national legislation. One of these is Framework Decision 2004/68/JHA on combating sexual exploitation of children and child pornography. Under this Decision, Member States are required to take the necessary measures to ensure that a person convicted of such an offence is prevented from exercising professional activities related to the supervision of children. The Communication also refers to Framework Decision 2003/568/JHA on combating corruption in the private sector, the legislation concerning the procedures for the award of public contracts and aimed at combating corruption and organised crime, and other EC directives applying to the financial sector.

The instruments concerning the effect that a disqualification measure or a conviction ordered in one Member State is likely to have in the other Member States can be divided into three categories: instruments allowing partial mutual recognition, instruments which are not in force or which have been ratified by only a limited number of Member States, and non-mandatory resolutions.

The instruments allowing partial mutual recognition include a number of directives that deal directly with the recognition of a disqualification ordered in another Member State, such as the Directives on the exercise of the right to vote and stand for election at municipal and European elections or the Directive on the mutual recognition of expulsion decisions.

Instruments which are not in force or which have been ratified by only a limited number of Member States include:

  • the Danish initiative with a view to adopting a Council Decision on increasing cooperation between European Union Member States with regard to disqualifications [Procedure CNS/2002/0820];
  • the EU Convention of 1998 concerning driving disqualifications, ratified by very few Member States.

An example of a non-mandatory resolution is the 1997 resolution aimed at combating football-related violence.

The Commission notes that there are few instruments that require the Member States to include professional disqualifications among the penalties available on conviction or to attach disqualification effects to certain convictions. It regrets the lack of any genuine information-exchange systems among the Member States.

Making disqualifications more effective in the European Union

In order to make disqualifications more effective, the Commission envisages that conviction for specific offences should lead to automatic disqualification from exercising certain activities. The adoption of legislation is likely to require that the activities and professions concerned be defined, minimum harmonisation of the offences themselves and harmonisation of the duration of the disqualification itself, in order to avoid potential discrimination. The Commission feels that this regulatory approach might prove inappropriate for activities that are not necessarily EU-wide.

In certain cases, the effect of a national disqualification should be extended to the whole EU territory. Mutual recognition is the cornerstone of an area of freedom, security and justice; however, extending the territorial effect of disqualifications could be seen as aggravating the sanction and raises the issue of the rights of the individual concerned. Furthermore, national criminal law and its penalties vary within the European Union. Extending the effect of a disqualification measure ordered in one Member State throughout the Union could be opposed by a Member State which does not impose this type of sanction for the offence in question.

The Commission favours the mutual recognition of disqualifications in areas where a common basis already exists among the Member States and where there is therefore a sufficient degree of homogeneity as regards sanctions. This is the case where the disqualification already exists in all the Member States for a specific category of offence and where a legal instrument specifically requires this type of penalty to be provided for in all Member States for certain types of offence. However, if disqualification is only one out of a possible range of penalties for the conduct that the legal instrument requires to be treated as a criminal offence, there is no guarantee that a common basis will exist.

Improving the flow of information

The Commission believes that improving the flow of information among the Member States is a prerequisite for making disqualifications more effective at European level. Several measures have already been adopted, such as the White Paper analysing the main difficulties in exchanging information on convictions [PDF ]. Nevertheless, the disparities in the Member States as regards disqualifications and the widely differing rules on the keeping of national registers make the exchange of information difficult.

The Commission envisages a comprehensive exchange of information on the disqualifications ordered in a Member State:

  • by a court following criminal conviction;
  • flowing automatically from a conviction in that same Member State;
  • following a criminal conviction, regardless of the authority ordering them, where the procedure gives the same guarantees as a criminal procedure;
  • on legal persons for offences or infringements which would have been criminal offences if they had been committed by a natural person and for which a legal person can be held liable (criminally or administratively) in all the Member States.

The Commission concludes that the existence of a criminal conviction triggering a disqualification is the common denominator among the Member States. It wishes to improve the flow of information on convictions and will pursue the work already begun. Concerning the mutual recognition of disqualifications, the Commission favours a “sectoral” approach, in sectors where a common basis exists between the Member States, e.g. driving disqualifications and disqualification from working with children.

 

Criminal Justice specific programme

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Criminal Justice specific programme

Outline of the Community (European Union) legislation about Criminal Justice specific programme

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Justice freedom and security > Judicial cooperation in criminal matters

Criminal Justice specific programme (2007-13)

Document or Iniciative

Council Decision 2007/126/JHA of 12 February 2007 establishing for the period 2007 to 2013, as part of the General Programme on Fundamental Rights and Justice, the Specific Programme Criminal Justice.

Summary

This decision establishes the specific programme Criminal Justice. This programme is one of the five specific programmes that make up the Fundamental Rights and Justice general programme, developed with the aim of creating an area of freedom, security and justice within the European Union (EU).

This Criminal Justice programme covers the period from 1 January 2007 to 31 December 2013.

General objectives

The Criminal Justice programme is aimed at creating a European area of justice. It has four main objectives, including:

  • promoting judicial cooperation in criminal matters;
  • bringing the judicial systems of EU countries closer together and to that of the EU;
  • enhancing contacts and the exchange of information and best practices between legal, judicial and administrative authorities and the legal professions and promoting the training of the members of the judiciary;
  • further improving mutual trust between the judicial authorities.

Specific objectives

More precisely, the Criminal Justice programme seeks to foster judicial cooperation in criminal matters, with the aim of:

  • promoting mutual recognition of judicial decisions;
  • approximating the judicial systems of EU countries in criminal matters, in particular with regard to serious cross-border crime;
  • establishing minimum standards concerning aspects of procedural criminal law;
  • avoiding conflicts of jurisdiction;
  • improving the exchange of information, for example, through a computerised system for exchanging information on national criminal records;
  • promoting the protection of individuals involved in criminal proceedings and assistance to victims;
  • strengthening EU countries cooperation with Eurojust;
  • promoting measures aimed at re-socialising offenders.

The programme also aims to achieve the following specific objectives:

  • to improve mutual knowledge of EU countries’ legal and judicial systems and to strengthen networking, cooperation and the exchange of information and best practices;
  • to ensure the sound implementation and evaluation of EU action in the area of judicial cooperation in criminal matters;
  • to better inform the public about legal systems in EU countries and about access to justice;
  • to promote training in European law for those involved in the work of the judiciary;
  • to improve mutual understanding between EU countries to pave the way for mutual trust;
  • to implement a computerised system for the exchange of information on criminal records and to examine the possibility of establishing other types of exchanges of information.

Eligible actions

The Criminal Justice programme supports various initiatives, including:

  • actions taken by the Commission, such as research, the implementation of specific projects, the formulation of indicators and methodologies, the development of networks of national experts and the dissemination of information;
  • transnational projects presented by several EU countries working together (at least two EU countries or at least one EU country and one other country that may either be an acceding or a candidate country);
  • the activities of non-governmental organisations (NGOs) or other entities pursuing aims of general European interest;
  • expenditure of the European Judicial Training Network, which may obtain an operating grant as part of this programme;
  • EU countries’ national projects, individually, may be supported under this programme, subject to certain conditions.

Target groups

The programme is targeted in particular at those involved in the work of the judiciary, national authorities and the citizens of the Union in general.

The programme is open to both public and private organisations, including professional organisations, universities, research and training institutes, legal practitioners and NGOs. It is also open to organisations that are profit oriented, but subject to certain conditions.

Non-EU countries and international organisations may participate in transnational projects only as partners.

Types of EU funding

There are two types of EU funding provided under the programme, including:

  • grants, which are normally awarded following calls for proposals, through operating grants and grants to actions. The annual work programme must specify the minimum rate of annual expenditure to be awarded to grants, which shall be at least 65 %. It must also specify the maximum rate of co-financing of projects;
  • public procurement contracts are foreseen for accompanying measures, such as the purchase of goods and services, particularly expenditure on information and communications, the implementation and monitoring of projects, policies, programmes and legislation.

Implementing measures

The Commission implements the financial support in accordance with the Financial Regulation applicable to the general budget of the EU. It also adopts an annual work programme specifying the specific objectives, thematic priorities and the accompanying measures that are funded through public procurement contracts.

The evaluation and award procedures take several criteria into account, including:

  • conformity with the annual work programme, the four general objectives, the specific objectives and the eligible actions;
  • quality of the action;
  • amount of EU financing requested;
  • relationship between the expected results and the general objectives, specific objectives and eligible actions.

The award of operating grants to actions taken by NGOs or by the European Judicial Training Network is also subject to certain criteria.

Coordination with other programmes

Synergies should be created with other programmes, including the:

  • Civil Justice specific programme, which, like the Criminal Justice programme, is also part of the general programme on Fundamental Rights and Justice;
  • general programme on Security and Safeguarding Liberties;
  • general programme on Solidarity and the Management of Migration Flows;
  • EU statistical programme.

Monitoring and evaluation

To allow the Commission to monitor any action financed by the programme, the beneficiary of the funding must:

  • submit technical and financial reports on the progress of the work and a final report within three months of completion of the action funded;
  • keep available for the Commission all the supporting documents regarding expenditure for a period of five years following the last payment in respect of the action taken.

For its part, the Commission will:

  • carry out supervision and financial control of actions resulting from this programme, in particular by on-the-spot checks. The Court of Auditors may also carry out audits in order to ensure the proper implementation of expenditure;
  • ensure that, if necessary, the scale or conditions of allocation of the financial assistance and timetable for payments are adjusted;
  • ensure that every other necessary step be taken to verify that the actions are properly carried out.

The Commission must apply measures to prevent fraud, corruption and any other illegal activities. It will carry out checks, recover amounts unduly paid and apply penalties in the event of irregularities.

The Commission will ensure the regular, independent and external monitoring and evaluation of the programme. It will annually publish a list of actions financed under the programme.

References

Act Entry into force Deadline for transposition in the Member States Official Journal

Decision 2007/126/JHA

24.2.2007

–

OJ L 58, 24.2.2007

Cross-border payments in euros

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Cross-border payments in euros

Outline of the Community (European Union) legislation about Cross-border payments in euros

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Internal market > Single market for capital

Cross-border payments in euros

Document or Iniciative

Regulation (EC) No 924/2009 of the European Parliament and of the Council of 16 September 2009 on cross-border payments in the Community and repealing Regulation (EC) No 2560/2001 (Text with EEA relevance).

Summary

This Regulation guarantees that national and cross-border payments made in the Community are subject to the same rules with regard to bank charges.

Scope

The payments concerned must not exceed EUR 50,000. They are to be made in euros or in the national currency of Member States wishing to apply the Regulation. Thus, following a request from Sweden, the principle of equality of charges also applies to payments made in Swedish kronor.

The Regulation shall not apply to payments made by payment service providers * for their own account or on behalf of other payment service providers. Furthermore, the Regulation shall not apply to currency conversion charges.

Equality of charges applicable to payments

Service providers shall levy identical charges for:

  • cross-border payments and electronically processed payment transactions where the payer’s payment service provider and the payee’s payment service provider are located in different States;
  • national payments and electronically processed payment transactions where the two service providers are located in the same State.

Facilitating the automation of payments

Payment service providers shall give each client an International Bank Account Number (IBAN). They shall also communicate their Bank Identifier Code (BIC). These codes shall be indicated by clients when making cross-border transactions. Failing this, the client may be subject to additional charges. Service providers must inform their clients of the amount of additional charges before a transaction takes place.

Compliance with regulatory obligations

Member States shall designate the competent authorities responsible for ensuring compliance with this Regulation.

If there is an infringement of the provisions by service providers, service users or any interested party may submit claims to national authorities. Member States shall establish out-of-court complaint and redress procedures. They shall designate or create competent bodies.

Member States shall lay down penalties to be applied in the event of infringement.

Cross-border cooperation

The competent authorities and the bodies responsible for out-of-court complaint and redress procedures shall expeditiously cooperate in solving cross-border disputes.

Context

Regulation (EC) No 2560/2001 is repealed, as from 1 November 2009.

Key terms
  • Payment service providers: means in particular credit institutions, electronic money institutions, payment institutions, post office giro institutions, the European Central bank and national central banks, Member States or their regional and local authorities (when not acting in their capacity as public authorities).

References

Act Entry into force Deadline for transposition in the Member States Official Journal
Regulation (EC) No 924/2009

1.11.2009

–

OJ L 266 of 9.10.2009

Related Acts

Communication from the Commission of 10 September 2009 – Completing SEPA: A Roadmap for 2009-2012 [COM(2009) 471 final – Not published in the Official Journal].

The Roadmap presented by the Commission lays down the priorities for the Single Euro Payments Area (SEPA) for the period 2009-2010. These priorities concern Member States which have adopted the euro or are preparing to do so, as well as Sweden. These priorities should:

  • accelerate the migration of financial products and payment standards towards SEPA products;
  • increase the visibility of SEPA and its products;
  • complete the legal environment for SEPA and strengthen compliance of its standards with those of the European Payments Council;
  • ensure standardisation, interoperability and security of the processing of payments;
  • improve governance of SEPA, through the establishment of a new competent body at European level.

Communication 2002/C 165/08 from the Commission of 11 July 2002 pursuant to Article 9 of Regulation (EC) No 2560/2001 of the European Parliament and of the Council [Official Journal C 165 of 11.7.2002].
The Commission received notification on 28 June 2002 of the decision of the Swedish authorities to extend the application of the Regulation to the Swedish kronor.

Another Normative about Cross-border payments in euros

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic

Other

Cross-border payments in euros

This Regulation provides that the charges levied on payments in euros between bank accounts in different Member States must not be higher than those levied on payments in euros within a Member State. Transactions by debit card and withdrawals from ATMs are also covered by the Regulation.

Document or Iniciative

Regulation (EC) No 2560/2001 of the European Parliament and of the Council of 19 December 2001 on cross-border payments in euro.

Summary

This Regulation is designed to put charges for cross-border payments in euros on the same footing as those for payments in that currency within a Member State. It sets a maximum amount of €50 000 and does not apply to cross-border payments between institutions for their own account.

Reducing costs and making cross-border payments easier for citizens

Cross-border payments comprise:

  • cross-border credit transfers: Transactions carried out by the originator via an institution in one Member State, in order to place a sum of money at the disposal of a beneficiary in the latter’s institution in another Member State (the originator and the beneficiary may be the same person);
  • cross-border electronic payment transactions: Cross-border funds transfers effected by an electronic payment method or cash withdrawals;
  • cross-border cheques: paper cheques.

An institution must make available to its customers in a readily comprehensible form, in writing and, where appropriate, by electronic means, prior information on the charges levied in respect of: cross-border payments, payments transacted within the Member State in which it is located and the exchange of currencies into and from euros.

Any change in the charges must be notified in advance of the date of application.

Facilitating cross-border transfers: IBAN number and BIC code

Institutions must notify customers on request of their International Bank Account Number (IBAN) and the institution’s Bank Identifier Code (BIC). In order to pay only the charges that apply to domestic transfers, customers are required to indicate the IBAN of the beneficiary and the BIC of the beneficiary’s institution.

Applying the Regulation to Member States outside the euro zone

This Regulation also applies to cross-border payments made in the currency of another Member State, once the latter has notified the Commission that it has decided to extend the Regulation’s application to its currency. To date, only the Swedish authorities have asked for the Regulation’s application to be extended to their currency, the Swedish krona. This means that cross-border payments within the European Union (EU) in Swedish kroner are covered by the Regulation in the same way as payments in euros. (For more information, please consult the document explaining the practical implications of Article 9 of the Regulation (pdf )).

This Regulation also applies to cross-border transfers to accounts in euros even if they have been opened in an EU country outside the euro zone, such as the United Kingdom.

References

Act Entry into force Transposition in the Member States Official Journal
Regulation (EC) No 2560/2001

31.12.2001

–

OJ L 344 of 28.12.2001

Related Acts

Proposal for a Regulation of the European Parliament and of the Council of 13 October 2008 on cross-border payments in the Community [COM(2008) 640 final – Not published in the Official Journal].
This proposed Regulation will replace the above Regulation, in order to realise an Internal Market for payment services in euro. Such an Internal Market will provide national and cross-border payments with the same rules and allow for more effective competition within the EU. The new Regulation will also improve consumer protection and establish the necessary legal framework to create an up-to-date and effective European level payment system.
The proposed amendments to the existing Regulation were derived, in particular, from the Commission’s report on its application (below). With the new Regulation, its scope will be extended so that:

  • national and cross-border direct debits will also be covered by the equality of charges principle, meaning that costs for these would be the same in each Member State;
  • the obligation for payment service providers to report on the statistics concerning the balance-of-payments (BoP) will be phased out.

In addition, Member States will be requested to appoint competent authorities and out-of-court redress bodies for ensuring that the new Regulation is applied correctly. These will also provide arbitration and mediation in payment-related disputes.
Co-decision procedure (2008/0194/COD)

Report from the Commission to the European Parliament and the Council of 11 February 2008 on the application of Regulation (EC) No 2560/2001 on cross-border payments in euro [COM(2008) 64 final – Official Journal C 207 of 14.8.2008].

This report examines the practical problems encountered in the application of Regulation (EC) No 2560/2001. It confirms that the Regulation has helped bring about a substantial reduction in the charges linked to cross-border transfers. Also, prompted by the Regulation, the financial services sector has taken the necessary action to realise the notion of an ‘internal payments area’ for non-cash payments, namely the Single Euro Payments Area (SEPA).
Nevertheless, the Commission notes in its report that the Member States should set up competent authorities and proper procedures to permit the amicable settlement of disputes between a bank and its client so as to protect consumers’ rights. In addition, the Regulation should be extended to cover direct debits, a payment method not yet available across borders. The Commission intends to submit a proposal for legislation in autumn 2008.

Communication from the Commission of 2 December 2003 concerning a New Legal Framework for Payments in the Internal Market (Consultative Document) [COM(2003) 718 final – Official Journal C 96 of 21.4.2004].
The purpose of this Communication is to consult interested parties on the general principles underpinning modernisation of the legal framework for retail payment services in the internal market. The consultation, which deals with a number of legal and technical issues, should enable the Commission to put forward appropriate proposals for a new legal framework for payments.

Communication from the Commission of 11 July 2002 pursuant to Article 9 of Regulation (EC) No 2560/2001 of the European Parliament and of the Council [Official Journal C 165 of 11.7.2002].

On 28 June 2002, the Commission received notification of the Swedish authorities’ decision to extend the application of the Regulation to the Swedish krona.

Cross-border exchanges in electricity

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Cross-border exchanges in electricity

Outline of the Community (European Union) legislation about Cross-border exchanges in electricity

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Energy > Internal energy market

Cross-border exchanges in electricity (from 2011)

Document or Iniciative

Regulation (EC) No 714/2009 of the European Parliament and of the Council of 13 July 2009 on conditions for access to the network for cross-border exchanges in electricity and repealing Regulation (EC) No 1228/2003 (Text with EEA relevance).

Summary

This Regulation aims at laying down rules for cross-border exchanges in electricity with a view to improving competition and harmonisation in the internal market for electricity.

Certification of transmission system operators

National regulatory authorities shall send the European Commission notification of decisions concerning the certification of a transmission system operator. The Commission then has a period of two months to deliver its opinion to the national regulatory authority. The authority then adopts the final decision concerning the certification of the transmission system operator. This decision and the Commission’s opinion are published.

European Network of Transmission System Operators (ENTSO) for electricity

Creation of the ENTSO for Electricity

The European Network of Transmission System Operators (ENTSO) for electricity is responsible for managing the electricity transmission system and for allowing the trading and supplying of electricity across borders in the Community. By 3 March 2011, the transmission system operators for electricity shall submit to the Commission and to the Agency for the Cooperation of Energy Regulators the draft statutes for the ENTSO for electricity, a list of members and draft rules of procedure.

Tasks of the ENTSO concerning network codes

The Commission shall consult the Agency for the Cooperation of Energy Regulators and the ENTSO for Electricity in order to establish an annual list of the priorities which are to contribute to developing network codes. These codes shall be developed using a non-binding framework guideline submitted to the Commission by the Agency. The codes include rules and procedures relating in particular to:

  • network security and reliability;
  • data interexchange;
  • technical and operational exchanges;
  • transparency rules;
  • harmonised transmission tariff structures;
  • energy efficiency.

Tasks of the ENTSO for Electricity

The ENTSO for Electricity is responsible for adopting:

  • common network operation tools;
  • a ten-year network development plan;
  • recommendations relating to the coordination of technical cooperation between Community transmission system operators;
  • an annual work programme;
  • an annual report;
  • annual summer and winter generation supply outlooks.

Costs and financing

The costs related to the activities of the ENTSO for electricity shall be borne by the transmission system operators. They shall establish regional cooperation within the ENTSO for electricity and publish a regional investment plan every two years, on which investments may be based.

Transmission system operators shall receive compensation for costs incurred as a result of hosting cross-border flows of electricity on their networks. The compensation shall be paid by the operators of national transmission systems from which cross-border flows originate. The costs shall be established on the basis of forecasted costs.

Charges for access to networks shall also be applied by operators.

Information and congestion management

Transmission system operators shall put in place information exchange mechanisms to ensure the security of networks in the context of congestion management.

Network congestion problems shall be addressed with non-discriminatory solutions based on market mechanisms which give economic signals to the market participants and transmission system operators.

New interconnectors may, upon request, be exempted, for a limited period of time, from the general provisions governing congestion management on condition that:

  • their installation increases competition in electricity supply;
  • the level of risk necessitates the exemption;
  • the interconnection must be owned by a natural or legal person;
  • charges are levied on users of the interconnection;
  • the exemption must not be to the detriment of competition or the effective functioning of the internal market, or the efficient functioning of the of the regulated system to which the interconnector is linked.

This Regulation repeals Regulation (EC) No 1228/2003 as from 3 March 2011.

Context

The 1997 Commission Communication “An Energy Policy for Europe” highlighted the importance of creating an internal market for electricity and the implementation of fair competition between the various operators. As the rules and measures in force were not sufficient for achieving these objectives, it was necessary to adopt new provisions.

References

Act Entry into force Deadline for transposition in the Member States Official Journal

Regulation (EC) No 714/2009

3.9.2009

–

OJ L211 of 14.8.2009

Related Act

Commission Regulation (EU) No 838/2010 of 23 September 2010 on laying down guidelines relating to the inter-transmission system operator compensation mechanism and a common regulatory approach to transmission charging (Text with EEA relevance).

This Regulation establishes an inter-transmission system operator compensation mechanism (ITC mechanism) for the costs caused by hosting cross-border flows of electricity. The transmission system operators contribute to the ITC fund in proportion to the absolute value of net flows onto and from their national transmission system. Furthermore, this Regulation lays down the annual average transmission charges paid by electricity producers.

Credit rating agencies

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Credit rating agencies

Outline of the Community (European Union) legislation about Credit rating agencies

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Internal market > Financial services: transactions in securities

Credit rating agencies

Document or Iniciative

Regulation (EC) No 1060/2009 of the European Parliament and of the Council of 16 September 2009 on credit rating agencies (Text with EEA relevance).

Summary

This Regulation aims at regulating the business of credit rating agencies with a view to protecting investors and European financial markets against the risk of malpractice. It lays down the conditions for issuing credit ratings, as well as rules related to registering and monitoring credit rating agencies.

Which credit ratings does the Regulation apply to?

This Regulation applies to credit ratings which are issued by credit rating agencies registered in the European Union (EC) and which are communicated to the public or distributed by subscription.

How are credit ratings used?

Credit ratings issued by credit rating agencies based in the EU are used by investors, borrowers, issuers and public administrations to help them make investment and financial decisions. These ratings may be used by the banks as a reference for calculating their capital requirements for solvency purposes or to help investors to assess the risks in their investment activity.

Two procedures allow the use, in the EU, of ratings issued by credit agencies established in third countries. Firstly, credit rating agencies have the option to give their endorsement to credit ratings issued outside of the EU, on the condition that:

  • the credit rating agency has carried out preliminary checks and can continue to demonstrate to the European Securities and Markets Authority (ESMA) that the credit ratings meet legislative requirements which are at least as strict as those applicable in the EU;
  • the ability of ESMA to assess and monitor compliance with the requirements is not limited;
  • the credit rating agency shall provide ESMA with all the information it requires;
  • the credit rating agency established in the third country is authorised or registered, and is subject to supervision, in that third country;
  • a cooperation arrangement has been concluded between ESMA and the relevant competent authority of the credit rating agency established in a third country.

Secondly, ratings issued by a small credit rating agency established in a third country, but not established in the EU, can be used in the European Union on the condition that:

  • the credit rating agency is authorised or registered in and is subject to supervision in that third country;
  • the Commission has adopted an equivalence decision recognising the legal and supervisory framework for ratings agencies in the third country;
  • the cooperation arrangements with the third country exist and are operational;
  • the credit ratings issued by the credit rating agency and its credit rating activities are not of systemic importance to the financial stability or integrity of the financial markets of one or more Member States;
  • the credit rating agency is certified in the Union.

Credit rating agencies may request certification from ESMA.

Under which conditions are credit ratings issued?

The issuing of credit ratings should not be affected by any conflict of interest or business relationship. In order to ensure this, credit rating agencies are subject to specific organisational and operational requirements. The administrative or supervisory board of the agency shall ensure independence of the rating process. It shall ensure that conflicts of interest are properly identified, managed and disclosed, and finally that the credit rating agency complies with the requirements of the Regulation. ESMA may however exempt a credit agency from certain requirements in view of the nature, scale and complexity of its business.

The methodologies of credit rating agencies and the descriptions of models and key rating assumptions, such as mathematical or correlation assumptions, are published in a manner permitting comprehensive review. In this way, agencies shall guarantee the quality of the credit ratings that they produce, and the transparency of methods used.

The credit rating agencies shall ensure regular monitoring of credit ratings and shall review this at least once a year. They shall produce general and periodic disclosures, as well as a transparency report. Agencies shall send data to ESMA on their past performance so that it can be made available to the public.

How is monitoring of credit rating activities carried out?

Credit rating agencies established in the EU must register with ESMA. They will send their application for registration to ESMA, providing, amongst other things, information on their headquarters, their legal status, their methods of issuing ratings and their policies and procedures on managing conflicts of interest. ESMA has 45 working days to examine their application.

In the case of an application for registration made by a group of agencies, ESMA decides whether to grant or refuse registration. In this case, it has 55 working days to reach a decision.

ESMA is responsible for drawing up guidelines in consultation with the European Banking Authority (EBA) and the European Insurance and Occupational Pensions Authority (EIOPA). It is required to publish an annual report on the application of this Regulation.

ESMA carries out ongoing surveillance of credit rating agencies, particularly of their rating methodologies. It must not interfere with the content of the credit ratings or with the methodologies used by the credit rating agencies. If it identifies an infringement (listed in Annex III), ESMA appoints an independent investigator to open an inquiry, at the end of which a dossier is produced presenting his/her conclusions. ESMA then decides whether to fine the credit rating agency or to impose one of the following penalties:

  • withdraw the registration of the credit rating agency;
  • temporarily prohibit the agency from issuing credit ratings;
  • suspend the use of the credit ratings;
  • require the agency to stop the infringement;
  • issue public notices.

ESMA is required to cooperate with EBA, EIOPA and the competent authorities and sectoral competent authorities with regard to exchanging information. It has the right to send confidential information to the following bodies:

  • the central banks;
  • the European Central Bank;
  • the European Systemic Risk Board;
  • public authorities.

Context

The 2008 financial crisis and the absence of national regulations led the European Commission to establish common rules in order to better regulate the activities of credit rating agencies. In February 2009, the “Larosière” Expert Group highlighted the need to strengthen the framework for monitoring the financial sector, which enabled the creation of a European System of Financial Supervision (ESFS) comprising three European supervisory authorities and a Systemic Risk Board. The role of ESMA also enables the monitoring of credit rating agencies to be strengthened.

Key terms of the Act
  • Credit rating: an opinion regarding the creditworthiness of an entity, a debt or financial obligation, debt security, preferred share or other financial instrument, or of an issuer of such debt or financial obligation, debt security, preferred share or other financial instrument, issued using an established and defined ranking system of rating categories;
  • Credit rating agency: a legal person whose occupation includes the issuing of credit ratings on a professional basis;
  • Rating category: a rating symbol, such as a letter or numerical symbol which might be accompanied by appending identifying characters, used in a credit rating to provide a relative measure of risk to distinguish the different risk characteristics of the types of rated entities, issuers and financial instruments or other assets.

References

Act Entry into force Deadline for transposition in the Member States Official Journal
Regulation No 1060/2009

7.12.2009

–

OJ L 302 of 17.11.2009
Amending act(s) Entry into force Deadline for transposition in the Member States Official Journal
Regulation No 513/2011

1.6.2011

–

OJ L 145 of 31.5.2011
Directive 2011/61/EU

21.7.2011

–

OJ L 17 of 1.7.2011