Resolution Approving the Description of Fine Calculation

[pic]

BOARD OF THE BANK OF LITHUANIA RESOLUTION ON THE APPROVAL OF THE DESCRIPTION OF FINE CALCULATION

10 July 2018 No 03-126 Vilnius

Acting in accordance with Article 433(10) and Article 477(12) of the Republic of Lithuania Law on the Bank of Lithuania, the Board of the Bank of Lithuania has r e s o l v e d: To approve the Description of Fine Calculation (attached).

Chairman of the Board Vitas Vasiliauskas APPROVED by Resolution No 03-126 of the Board of the Bank of Lithuania of 10 July 2018

DESCRIPTION OF FINE CALCULATION

CHAPTER I GENERAL PROVISIONS

1. The Description of Fine Calculation (hereinafter – the Description) sets out the rules for calculating fines imposed in accordance with Article 433 or Article 477 of the Republic of Lithuania Law on the Bank of Lithuania. 2. The purpose of the Description is to set rules for calculating fines that would provide conditions to impose individual, proportionate, effective and dissuasive fines for infringements of requirements set forth in laws regulating the financial market and infringements laid down in Article 477(5) of the Republic of Lithuania Law on the Bank of Lithuania. 3. The terms used in the Description shall be understood as defined in the Republic of Lithuania Law on the Bank of Lithuania and the legal acts regulating the financial market indicated in Article 42(2) of the Republic of Lithuania Law on the Bank of Lithuania.

CHAPTER II FINE CALCULATION

4. The size of a fine shall be calculated in three steps: 4.1. in accordance with Section 1 of Chapter II of the Description, step one shall involve setting out the base rate of the fine; 4.2. in accordance with Section 2 of Chapter II of the Description, step two shall involve, in justified cases, reducing or increasing the base rate of the fine, taking account of mitigating or aggravating circumstances or other circumstances that positively or negatively affect a person’s situation; 4.3. in accordance with Section 3 of Chapter II of the Description, step three shall involve, in justified cases, reducing or increasing the rate of the fine determined under the previous two steps, taking account of the need to ensure the proportionality and dissuasive effect of the sanction and other significant circumstances not assessed under the first and second steps.

SECTION ONE STEP ONE OF FINE CALCULATION

5. The base rate of a fine is set according to the seriousness and duration of the specific infringement and the maximum rate of a fine applicable for such infringement. 6. Taking into account the seriousness (nature, scale and consequences) and duration of the specific infringement, it shall be considered as: 6.1. minor; 6.2. moderate; 6.3. rather serious; 6.4. serious; 6.5. very serious. 7. The maximum rate of a fine is set pursuant to the law imposing the sanction for the respective infringement. 8. When the law imposing the sanction sets forth that the maximum rate of a fine applicable for a certain infringement is a certain share of the total annual turnover, the total annual turnover shall be calculated according to the following provisions: 8.1. the total annual turnover shall be determined according to the data of the last available approved (signed) annual financial statements. The Bank of Lithuania calculates the total annual turnover based on financial statements that are provided to it together with periodical information that the financial market participant submits in line with the requirements of legal acts, received by it from the Register of Legal Entities administered by the State Enterprise Centre of Registers, or from the person subject to the sanction by a separate request of the Bank of Lithuania. The annual financial statements may not be audited and/or approved by the legal entity’s meeting of members; 8.2. if a legal person, headquartered in a foreign country, including other European Union Member States, and carrying out its activities via a branch established in the Republic of Lithuania, is suspected of having committed an infringement, the rate of the fine to such legal person shall be set according to the total annual turnover of a legal person headquartered in a foreign country; 8.3. if a legal person suspected of an infringement is controlled by a parent undertaking, the rate of a fine to such person shall be set in view of the total annual turnover of the parent undertaking headquartered in the Republic of Lithuania (if such parent undertaking does not exist – the total annual turnover of the legal person suspected of the infringement). If such calculation of the total annual turnover is incompatible with the aims indicated in paragraph 2 of the Description, the rate of a fine to a legal person controlled by a parent undertaking and suspected of having committed an infringement shall be determined in view of the total annual turnover of the parent undertaking headquartered in a foreign country, including other European Union Member States. 9. The base rate of a fine for a: 9.1.1. minor infringement – 1% of the maximum fine; 9.1.2. moderate infringement – 10% of the maximum fine; 9.1.3. rather serious infringement – 20% of the maximum fine; 9.1.4. serious infringement – 30% of the maximum fine; 9.1.5. very serious infringement – 50% of the maximum fine.

SECTION TWO STEP TWO OF FINE CALCULATION

10. Step two of calculating a fine shall involve determining whether there are any mitigating or aggravating circumstances or other circumstances that positively or negatively affect the person’s situation and, if any, reducing or increasing the base rate of a fine calculated in accordance with Section 1 of the Description. 11. Step two shall involve the assessment of the mitigating circumstances set out in Article 433(8) of the Republic of Lithuania Law on the Bank of Lithuania and the aggravating circumstances set out in Article 433(9) therein, and other circumstances set according to the provisions of Article 433(7) of the Republic of Lithuania Law on the Bank of Lithuania that positively or negatively affect the person’s situation. 12. Where only mitigating circumstances or other circumstances that positively affect a person’s situation are identified, the base rate of the fine shall be reduced; where only aggravating circumstances or other circumstances that negatively affect a person’s situation are identified, the base rate of the fine shall be increased. Where both mitigating circumstances or other circumstances that positively affect a person’s situation and aggravating circumstances or other circumstances that negatively affect a person’s situation are identified, the base rate of the fine shall be reduced or increased taking into account the number and relevance of the circumstances. 13. Taking into account the number and relevance of mitigating or aggravating circumstances or other circumstances that positively or negatively affect a person’s situation, a sum accounting for up to 50% of the base rate of a fine shall be subtracted from or added to the base rate of a fine. 14. Mitigating circumstances or circumstances that positively affect a person’s situation shall constitute the following: 14.1. the person suspected of committing an infringement of a legal act voluntarily precludes harmful consequences of an infringement, compensates for losses or rectifies inflicted damage; 14.2. the person suspected of committing an infringement of a legal act cooperates with the Bank of Lithuania and assists actively in clarifying the circumstances of the infringement; 14.3. the person voluntarily informs the Bank of Lithuania of the committed infringement and puts an end to it; 14.4. the person suspected of committing an infringement of a legal act admits to it and puts an end to it. This circumstance is relevant to reducing the rate of the fine when the person admits to all material circumstances of the alleged infringement and the person’s actions point to a sincere acknowledgement of the infringement; 14.5. the person suspected of committing an infringement of a legal act voluntarily takes effective measures to prevent the same or similar infringement in the future. This circumstance is relevant to reducing the rate of the fine only when respective measures are taken not at the instruction of the Bank of Lithuania, but by the person themselves; 14.6. other important circumstances, which, acting in observance of the principle of justice and reasonableness, may be deemed mitigating or positively affecting the person’s situation. 15. Aggravating circumstances or circumstances that negatively affect a person’s situation shall constitute the following: 15.1. the person suspected of committing an infringement of a legal act has infringed the legal act deliberately; 15.2. the person suspected of committing an infringement of a legal act conceals the infringement or otherwise hinders the investigation into the infringement (identification of circumstances of the infringement); 15.3. the person suspected of committing an infringement of a legal act does not put an end to the infringement, ignoring the fact that the Bank of Lithuania has drawn attention to infringements or shortcomings; 15.4. over the last 5 years, the person suspected of committing an infringement of a legal act infringed legal acts regulating the financial market and was subject to at least one sanction. When determining the impact of this circumstance with regard to increasing the fine, the number and relevance of infringements for which sanctions were imposed and the time period elapsed since their commitment are taken into account. Cases of repeated infringements, i.e. when the person who is suspected of committing an infringement of a legal act commits the same infringement of the legal act within the 12 months of the day of the enforcement of the decision on the application of a sanction, are more significant in terms of increasing the rate of a fine; 15.5. other circumstances indicated in Article 433(7) of the Republic of Lithuania Law on the Bank of Lithuania or other legal acts regulating the financial market, which, acting in observance of the principle of reasonableness and justice, may be deemed to negatively affect the person’s situation. 16. Circumstances indicated in paragraph 15 of the Description shall not be taken into account if they constitute circumstances qualifying the infringement or they were considered when determining the base rate of a fine.

SECTION THREE STEP THREE OF FINE CALCULATION

17. Step three of calculating a fine involves determining whether the rate of a fine set under the previous two steps ensures the proportionality and dissuasive effect of the sanction and whether there are other significant circumstances not assessed under the first and second steps due to which the rate of a fine set under these steps could be reduced or increased. 18. The rate of a fine determined under the first and second steps shall be reduced or increased with regard to the following circumstances: 18.1. the fine shall be reduced if the Bank of Lithuania receives data substantiating the financial situation of the person suspected of an infringement before the date of deliberation on the decision to impose a sanction, or the Bank of Lithuania has already received such data in the course of supervising the financial market or cash handling activities, and the calculated rate of the fine, even when accounting for the arrangement of the payment of the fine or its part, as set forth in Article 436 of the Republic of Lithuania Law on the Bank of Lithuania, would make the person unable to pay it in time. This circumstance is not taken into consideration where there is evidence that the person’s financial situation is weaker on account of the person’s actions taken as an attempt to reduce the rate of the fine, or other circumstances due to which the reduction of the fine on the basis of the aforementioned circumstance would be incompatible with the aims indicated in paragraph 2 of the Description; 18.2. the fine shall be reduced if the total annual turnover of a legal person is very high, especially due to the fact that the total annual turnover is calculated based on the annual consolidated financial statement data of the parent undertaking or the annual financial statement data of a foreign legal person operating via a branch established in the Republic of Lithuania, and therefore the size of the fine is disproportionate to the infringement committed; 18.3. if it becomes evident that the infringement results in illegal income, other pecuniary advantage, losses avoided or damage incurred, and its amount exceeds the rate of the fine set under the first and second steps, the fine shall be increased with regard to the illegal income received, other pecuniary advantage, losses avoided or damage incurred as a result of the infringement committed; 18.4. the fine shall be increased if the rate of a fine calculated, especially taking into account the financial capacity of the person suspected of committing an infringement, is so small that it would have no dissuasive effect; 18.5. other relevant circumstances due to which, acting in observance of the principle of reasonableness and justice, the base rate of the fine determined under the first and second steps would be reduced or increased.

CHAPTER ΙΙΙ FINAL PROVISIONS

19. The provisions of the Description shall not mean that the Bank of Lithuania imposes a fine for an infringement in all cases, especially if such an infringement is minor. When considering whether to apply sanctions and when imposing the specific sanction(s), the Bank of Lithuania follows Article 433 and Article 434 of the Republic of Lithuania Law on the Bank of Lithuania and other legislative provisions that provide the opportunity to apply other enforcement or supervisory measures instead of sanctions or fines.

---