Dec. 6 (Bloomberg) -- The European Union will consider adopting uniform criminal penalties for violations of the region’s financial-services laws in a proposal as soon as this week.
The European Commission will call for the 27-country bloc to increase and better align sanctions at nations’ disposal to target financial crime, because of concerns that uneven enforcement is harming market confidence, according to a document seen by Bloomberg News.
There should be “the possible introduction of criminal sanctions for the most serious violations” of EU financial law, the document says. Financial Services Commissioner Michel Barnier will issue the proposals on Dec 8., the European Commission said last week.
Regulators are seeking to toughen enforcement of financial rules to prevent repeats of trading and ponzi scheme scandals that hurt market confidence. A Paris court on Oct. 5 sentenced former trader Jerome Kerviel to three years in prison after his activities caused Societe Generale SA to suffer a 4.9 billion-euro ($6.5 billion) trading loss.
Barnier will seek views on his plans until Feb. 19, the commission said last week, after which it will decide what follow-up actions are needed. Any new sanctions would have to be approved by national governments and the European Parliament.
“National legislations do not always provide for certain sanctioning powers such as withdrawal of licenses,” the EU document says.
Some EU states already use criminal sanctions to uphold financial services laws. In the U.K., insider trading carries a maximum sentence of seven years in prison.
Violations of authorization rules contained in the EU’s Markets in Financial Instruments Directive, are “punishable by imprisonment in only seven member states,” the document says.
Jacques de Larosiere, the former head of the International Monetary Fund and the Bank of France, called on the EU to bolster its sanctions against financial crime in a report last year on the roots of the economic crisis.
“Member states sanctioning regimes are in general weak and heterogeneous,” said de Larosiere’s report, which paved the way for an overhaul of financial supervision in the EU. “Sanctions for insider trading range from a few thousands of euros in one member state to millions of euros or jail in another.”
EU regulators also may propose expanded criminal penalties to enforce data protection rules that limit what companies and governments can do with personal information, the commission said last month.
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