Credit institutions and undertakings responsible pursuant to Section 30(6) shall have in place administrative, accounting and control procedures for the identification, assessment, management and monitoring of banking and banking-related risks, including those arising from their macroeconomic environment, taking into account the stage of the relevant business cycle, the risk of money laundering and terrorist financing, as well as their remuneration policies and practices, which are appropriate to the nature, scale and complexity of the banking business conducted. The administrative, accounting and control procedures shall, to the greatest extent possible, also cover banking and operational risks, as well as risks arising from remuneration policies and practices that may arise. The organisational structure and the administrative, accounting and control procedures shall be documented in writing and in a comprehensible manner. The organisational structure shall avoid conflicts of interest and competence through organisational and procedural delineations appropriate to the business. The appropriateness of these procedures and their application shall be reviewed by the internal audit department at least once a year.
Opinion of Advocate General Ćapeta delivered on 11 April 2024
Opinion of Advocate General Ćapeta delivered on 11 April 2024
Data
- Case date
- 11 april 2024
Opinion of Advocate General
Ćapeta
delivered on 11 April 2024(1)
Case C‑579/22 P
Anglo Austrian AAB AG, in liquidation,
v
European Central Bank (ECB),
Belegging-Maatschappij ‘Far-East’ BV
"(Appeal - Economic and monetary policy - Directive 2013/36/EU - Prudential supervision of credit institutions - Specific supervisory tasks assigned to the European Central Bank (ECB) - Decision to withdraw the authorisation of a credit institution - Interpretation of national law)"
I. Introduction
1. The Single Supervisory Mechanism (‘SSM’)(2) is the first pillar of the Banking Union, created in 2014(3) in response to the financial crisis. Its purpose is ‘ensuring the safety and soundness of credit institutions and the stability of the financial system of the Union as well as of individual participating Member States and the unity and integrity of the internal market’.(4)
2. In a nutshell, prudential supervision is carried out by the European Central Bank (ECB), assisted by national competent authorities(5) according to the division of labour under Article 6 of the SSM Regulation.(6)
3. The SSM’s organisation is to a certain extent ‘special’, when compared with how most of the EU legal order works.(7) Under Article 4(3) of the SSM Regulation, the ECB ‘shall apply all relevant Union law, and where this Union law is composed of Directives, the national legislation transposing those Directives. Where the relevant Union law is composed of Regulations and where currently those Regulations explicitly grant options for Member States, the ECB shall apply also the national legislation exercising those options’.
4. That provision is at the heart of the present appeal. Anglo Austrian AAB AG, formerly Anglo Austrian AAB Bank AG (‘AAB Bank’), the appellant in the present case, was a less significant credit institution established in Austria. After the ECB withdrew the authorisation of that credit institution, the appellant challenged that decision before the General Court by arguing that the ECB had withdrawn its authorisation without the necessary conditions prescribed by EU law, as transposed into Austrian law, having been met.
5. The General Court dismissed that action in the judgment of 22 June 2022, Anglo Austrian AAB and Belegging-Maatschappij ‘Far-East’ v ECB (T‑797/19, ‘the judgment under appeal’, EU:T:2022:389 ). The appellant in the present case claims, among other things, that the General Court wrongly interpreted and applied national law.
II. Relevant national law
6. Two Austrian laws are of relevance in the present appeal. First, the Bundesgesetz über das Bankwesen (Bankwesengesetz) (Law on Banking; ‘the BWG’); and second, the Bundesgesetz zur Verhinderung der Geldwäsche und Terrorismusfinanzierung im Finanzmarkt (Federal Law on combating money laundering and terrorist financing on financial markets; ‘the FM-GwG’).
7. Paragraph 39 of the BWG is entitled ‘General Due Diligence Obligations’. Its subparagraph (2) and (2b) provide as follows:
‘(2)…
(2b) The procedures pursuant to subparagraph 2 shall take into account in particular:
the credit risk and counterparty default risk;
concentration risk;
the market risk;
the risk of excessive leverage;
operational risk;
securitisation risk;
liquidity risk;
interest rate risk in respect of all transactions not already covered by item 3;
the residual risk arising from credit risk mitigation techniques;
the location of a credit institution’s risk exposures;
the risk of money laundering and terrorist financing;
the risk arising from an institution’s business model, taking into account the impact of diversification strategies;
the results of stress tests for institutions using internal approaches; and
the corporate audit and control arrangements of credit institutions and the entities responsible pursuant to Section 30(6), their corporate culture and the ability of the management body to fulfil their duties.’
8. Paragraph 70(4) of the BWG regulates supervisory powers of the Finanzmarktaufsichtsbehörde (Austrian Financial Markets Supervisory Authority; ‘the FMA’) and specifies that if a credit institution infringes the provisions of the BWG or other laws listed therein,(8) the FMA shall:
‘1.order the credit institution, the financial holding company, the mixed financial holding company or the mixed holding company, under threat of a penalty, to restore the lawful state of affairs within such period as is reasonable in view of the circumstances of the case;
2.in the event of repetition or continuation of the infringement, to prohibit the managers from managing the company in whole or in part, unless this would be unreasonable in view of the nature and gravity of the infringement, and the lawful situation can be expected to be restored by taking further action in accordance with item 1; in this case, the first administrative penalty imposed shall be enforced and the order shall be repeated on pain of a higher administrative penalty;
3.to revoke the license of a credit institution if other measures pursuant to this federal law cannot ensure the functioning of the credit institution. …’
9. Turning to the FM-GwG, Paragraph 31(3)(2) provides that ‘in cases of breaches of obligations pursuant to Paragraph 34(2) and (3) [of the FM-GwG], the FMA may … revoke the licence granted by the FMA …’.
10. Lastly, Paragraph 34(2) and (3) of the FM-GwG transposes the anti-money laundering provisions of Directive 2005/60/EC(9) and refers, in particular, to serious, repeated or systematic infringements of Section 6(1), (2) to (4), (6) and (7), Section 7(7), Section 9, Section 23(3) of the FM-GwG.
III. Events leading to the proceedings before the General Court
11. The facts relevant for the present appeal may be summarised as follows.
12. The appellant, AAB Bank, was a less significant credit institution established in Austria. Belegging-Maatschappij ‘Far-East’ BV (‘the Shareholder’) is a holding company that owned 99.99% of the shares in AAB Bank.
13. On 26 April 2019, the FMA submitted to the ECB a draft decision to withdraw AAB Bank’s authorisation as a credit institution, in accordance with Article 80(1) of the SSM Framework Regulation.(10)
14. By its decision of 14 November 2019, the ECB withdrew AAB Bank’s authorisation as a credit institution with effect from the date on which that decision was notified.
15. The ECB found that, based on the FMA’s findings of continuous and repeated non-compliance with the requirements relating to combating money laundering and terrorist financing and those relating to internal governance by AAB Bank, it was not able to ensure the sound management of its risks.
16. The ECB therefore found that the grounds justifying the withdrawal of AAB Bank’s authorisation to engage in the business of a credit institution, established in Article 18(f) of Directive 2013/36(11) and transposed into Austrian law, were fulfilled, since AAB Bank had infringed Article 67(1)(d) and (o) of that directive as transposed into Austrian law, and that the withdrawal was proportionate.
17. The ECB also declined to suspend the effects of the contested decision for 30 days on the grounds that AAB Bank’s observations were not such as to raise doubt about the legality of the decision, that the decision was not capable of causing irreparable harm and that the public interest in protecting AAB Bank’s depositors, investors and other partners and the stability of the financial system justified the immediate application of the decision.
IV. The proceedings before the General Court and the judgment under appeal
18. By application lodged at the Registry of the General Court on 19 November 2019, AAB Bank and the Shareholder brought an action for annulment of the contested decision.
19. The General Court, following the judgment of the Court of Justice in ECB and Others v Trasta Komercbanka,(12) declared the action of the Shareholder inadmissible. It dismissed the action of AAB Bank on the merits in its entirety.
V. Procedure before the Court of Justice
20. By its appeal lodged on 1 September 2022, AAB Bank claims that the Court should:
-
set aside the judgment under appeal;
-
set aside the decision of 14 November 2019 by which the ECB withdrew the appellant’s authorisation as a credit institution;
-
in the alternative, refer the case back to the General Court in so far as the Court of Justice does not consider itself in a position to rule on the merits of the case; and
-
order the ECB to pay the costs as part of the present proceedings and those before the General Court.
21. The ECB contends that the Court should:
-
dismiss the appeal in its entirety; and
-
order the appellant to pay the costs.
22. The Shareholder intervened in support of the appellant.
VI. Analysis
23. The appellant raises seven grounds of appeal.
24. By its first ground of appeal, the appellant argues that the General Court exceeded the limits of its jurisdiction, infringed EU law, and distorted the facts. The second ground of appeal alleges infringement by the General Court in accepting the competence of the ECB in matters concerning money laundering. The third ground of appeal alleges that the General Court wrongly interpreted EU and national law, and in any event, distorted the facts. The fourth ground of appeal imputes to the General Court a mistake in the interpretation of Article 67(1)(d) of Directive 2013/36 and national law. The fifth ground of appeal alleges that the General Court failed to address the arguments concerning the principle of proportionality. The sixth ground of appeal alleges that the General Court breached the appellant’s rights of defence. Finally, the seventh ground of appeal imputes to the General Court procedural mistakes that adversely affected the appellant’s interests.
25. In what follows, given that questions related to the proper role and interpretation of national law run through many of the appellant’s grounds of appeal, I will first address the position that national law holds in the legal framework of the SSM (Section A). Following this, I will examine each ground of appeal in turn, demonstrating why the Court should dismiss the appeal in its entirety (Section B).
A. National law as part of the SSM legal framework
26. The SSM Regulation maintains a division between banking regulation and banking supervision. It mostly, albeit not exclusively, concerns the latter.
27. When regulating banking supervision, the SSM Regulation does not harmonise national substantive rules applicable to credit institutions. Instead, it relies on the various national choices concerning the content of the applicable rules, and focuses on ‘modes of supervision’ and the ‘interplay between supervisors’.(13)
28. Sharing the regulation of an area of law between the European Union and the Member States is the usual regulatory method in the European Union. The interweaving of EU and national law is a common feature of the EU legal order. That is, as a rule, the result when regulation is done through directives. Nevertheless, the same is often achieved by using regulations which allow or require additional regulatory choices by the Member States.
29. In most situations such a mix of EU and national law is applied by Member State authorities. Judicial review of decisions of national bodies takes place before national courts, which interpret and apply national law, and may refer to the Court of Justice questions concerning EU law.
30. The SSM is unique in that it is the first situation in EU law in which an EU institution, as opposed to a national one, is directly obliged to apply national law.(14)
31. In most cases, prudential supervision is a task shared by the ECB and national competent authorities.(15) For the majority of supervisory tasks, the two divide their work between significant and less significant institutions.(16)
32. However, regardless of the significant/less significant distinction, the ECB has two exclusive competences in respect of all credit institutions: first, to issue or withdraw a banking authorisation, and second, to assess notifications of the acquisition and disposal of qualifying holdings in credit institutions (except in the case of a bank resolution).(17) It is this first power that is of interest in this case.
33. In coming to a decision whether to issue or withdraw their authorisation, the ECB is asked to apply the rules of both EU law and the law of the Member State of the credit institution concerned. Under Article 4(3) of the SSM Regulation, national law is explicitly relevant for the ECB when adopting certain decisions.(18)
34. The question therefore arises as to who, and on the basis of what law, reviews the exercise of that power by the ECB.
35. The question of ‘who’ has already been answered by the Court in Berlusconi: Article 263 TFEU confers upon EU Courts exclusive jurisdiction to review the legality of acts of EU institutions. Therefore, they also have exclusive jurisdiction in relation to the decisions of the ECB.(19)
36. The question ‘on the basis of what law’ is slightly more complicated.
37. As the ECB applies not only EU law, but also rules of national law when deciding whether to grant or withdraw an authorisation, it is inevitable that EU Courts apply national law as a basis for judicial review of such ECB decisions.
38. Before EU Courts, national law can be treated in two ways: as fact or as law.(20)
39. The logic of infringement actions, preliminary references,(21) and, at times, annulment actions,(22) results in national law commonly being treated as a question of fact.(23) In such a situation, reviewing the findings of the General Court concerning national law would entail a review of its fact-finding process, something that the Court of Justice may do on appeal only where the parties claim that the General Court distorted facts.(24)
40. However, there are situations in EU law where questions concerning national law are treated as questions of law. In that respect, the SSM is not the only situation where EU law makes an explicit reference to national law as the relevant law.
41. The best known example of this is the Trade Mark Regulation,(25) which makes extensive explicit references to national law.(26) Advocate General Mengozzi(27) further mentioned the areas of public procurement, where it sometimes falls to the EU institutions to comply with the relevant provision of national law where the public contract is to be carried out, as well as the Court’s jurisdiction under Article 272 TFEU, in which case national law might become applicable on the basis of the contractual arbitration clause.
42. Advocate General Mengozzi argued that in situations in which national law forms part of the relevant legal context, ‘albeit acting with all due caution, the Courts of the European Union cannot avoid the obligation to examine in their entirety the administrative measures to be reviewed, including that part of those measures in which an assessment of national law has been carried out’.(28)
43. Advocate General Bot considered, in the area of trade mark law, that the General Court ‘may examine, if necessary of its own motion, the content, the conditions of application and the scope of the rules of national law relied upon by the parties in support of their claims’.(29)
44. I am of the opinion that national law should be treated as law also in the area of banking supervision when EU legislation requires the ECB to apply the rules of national law. In determining and applying national law within the SSM, EU Courts must therefore use their standard methodology of legal interpretation, while placing national law within its proper national context, which may differ from one Member State to another. It is only in that way that EU Courts can give effect to the regulatory diversity across the Member States endorsed by the SSM system,(30) a consideration that guides the ECB in exercising its supervisory powers.(31)
45. To understand the meaning of national law in the SSM context, I agree with Advocates General Mengozzi and Bot that the General Court should take into consideration, if necessary of its own motion, both the national legislative context and the national case-law relevant for the correct interpretation of the respective national rules.(32)
46. As national law is treated as a question of law, the Court of Justice is empowered to review on appeal how the General Court applied that law.
47. It remains to be decided which standard of review the Court of Justice should use when assessing arguments on appeal that the General Court wrongly interpreted the applicable national law.
48. In the context of trade mark law,(33) the Court of Justice established a standard of review that seems to focus on the search for a distortion of meaning in the General Court’s presentation of national law, taking into account how that law was presented by the parties to the case. The reason for this may be that the Court of Justice never explicitly confirmed that national law in that area plays the role of law, and not of fact.(34)
49. I agree that the Court of Justice should not on appeal engage in the novel interpretation of national law, but should rather assess which elements the General Court took into consideration in the interpretation of that law in making its conclusion.
50. However, it seems to me that a focus on the textual meaning of the relevant national provisions, even if treated as a question of law, may be too narrow in the context of the SSM, which, as demonstrated above, is one where national regulatory diversity is the norm.
51. The review of the Court of Justice should therefore focus on determining the duty of care that the General Court applied in determining the proper meaning of national law. The Court of Justice should focus on the factors the General Court took into consideration in assessing the meaning of national law and the clarity of its reasoning justifying one competing interpretation over another.
B. Analysis of the grounds of appeal
52. Taking the foregoing into account, I now turn to examine the appellant’s seven grounds of appeal. In my analysis, I will switch the order of the first and the second grounds of appeal, after which I will turn to the remaining grounds of appeal in the order in which they were raised.
1. Second ground of appeal: the competence of the ECB
53. By its second ground of appeal, AAB Bank argues, first, that the General Court was wrong not to examine of its own motion whether the ECB had competence in matters of money laundering or of its potential application of national law in that area; second, the ECB merely has the power to issue sanctions for breaches of directly applicable EU law; and third, the ECB is competent solely for exercising prudential supervision in respect of deposit and credit activities.
54. I understand this ground of appeal as a claim that the ECB acted not in matters of withdrawing a banking authorisation (for which it is exclusively competent), but in matters of anti-money laundering (a power that pertains to national competent authorities).
55. In respect of the first argument, the appellant invokes recital 28 of the SSM Regulation, interpreting it as according an exclusive competence to the FMA in matters concerning the fight against money laundering. According to the appellant, the General Court was wrong to separate decision-making in this area into two parts: first, the finding of breaches that pertains to the FMA and, second, a sanctioning power in the form of a withdrawal of a banking licence that pertains to the ECB.
56. In support of that argument, the appellant also argues that if a different reading would result from Article 4(3) of the SSM Regulation, this would lead to the illegality of that provision, as it would go against the separation of powers.
57. In respect of recital 28 of the SSM Regulation, the Court has already rejected the interpretation that the appellant proposes in the present case.
58. In Versobank v ECB, the Court underlined that the power to withdraw an authorisation is reserved exclusively to the ECB.(35) Furthermore, the Court found that under Article 14(5) of the SSM Regulation, the ECB may withdraw an authorisation, among other things, on a proposal from a national competent authority.(36) Lastly, the Court confirmed that that competence of the ECB remains exclusive even when the grounds for withdrawing a licence concern, for example, governance obligations and anti-money laundering obligations.(37)
59. The General Court was therefore right to make those same conclusions in respect of the ECB’s power to withdraw the licence of AAB Bank based on the breaches determined by the FMA, under Article 18(f) and Article 67(1)(d) and (o) of Directive 2013/36.(38)
60. That leads me to conclude that the first argument of the second ground of appeal should be rejected as unfounded.
61. By its second argument, the appellant claims that, pursuant to recital 36 and Article 18 of the SSM Regulation, the ECB may only impose sanctions based on directly applicable EU law, and not in case of breaches of national law.
62. However, for the same reasons as those under the first argument of this ground of appeal, the Court of Justice has unequivocally confirmed that the ECB also applies the relevant national law. The General Court was thus, in my view, right in finding that the obligations under Paragraph 34(2) and (3) of the FM-GwG transpose the relevant provisions of Directive 2005/60, and a breach of those obligations thus fall within the scope of Paragraph 31(3)(2) of the FM-GwG, which prescribed as a consequence the withdrawal of a licence to a credit institution.(39) The General Court was therefore right in finding that the ECB, having the exclusive power to withdraw an authorisation under the SSM Regulation, was entitled to base that decision on breaches of national law.(40)
63. The argument claiming the illegality of Article 4(3) of the SSM Regulation was not discussed before the General Court, and should therefore be considered new at the point of appeal, thus rendering it inadmissible.(41)
64. Lastly, the appellant argues that the ECB is competent solely for exercising prudential supervision in respect of deposit and credit activities.
65. That argument was introduced only at the point of appeal, and is thus inadmissible.
66. In any event, given that, as I explained in respect of the first argument of the present ground of appeal, the ECB has the exclusive competence to withdraw a banking authorisation, without any delimitation as to the activities included in such an authorisation, that argument must be rejected.
67. In conclusion, to the extent that it is admissible, the second ground of appeal should be rejected as unfounded.
2. First ground of appeal: the jurisdiction of the General Court
68. The appellant argues in its first ground of appeal that the General Court exceeded its competence and breached Article 263 TFEU, in that it dealt with questions concerning the interpretation and application of Austrian law concerning the fight against money laundering. As a subsidiary point, the appellant argues that that interpretation and application of national law was wrong. Finally, in the event that the Court of Justice finds that national law should be treated as a question of fact, the appellant claims that the General Court distorted its meaning.
69. I propose that the Court find these arguments unfounded. Specifically, as elaborated on in the previous section, Article 4(3) of the SSM Regulation brought national law into its relevant legal framework.
70. The ECB is therefore under an obligation to make decisions based also on national law.
71. As confirmed in Berlusconi, it falls to EU Courts to review the legality of EU acts on the basis of Article 263 TFEU.(42) In doing so, as suggested in point 44 of this Opinion, they must apply national law as law. Given that the BWG, which relates to the withdrawal of authorisation, refers to the FM-GwG, which relates to money laundering, the latter became part of the national law which the General Court applies when reviewing the ECB decision to withdraw the authorisation.
72. The appellant furthermore argues that the General Court was wrong to apply the principles of EU administrative law, by analogy, to the definitive character of the decisions of national administrative authorities (in this case, the FMA) concerning the breach of Paragraph 31(3)(2) and Paragraph 34(2) and (3) of the FM-GwG.(43)
73. The appellant is right that in assessing the definitive character of national administrative act, the General Court should take into consideration Austrian principles of administrative law. However, the appellant does not clarify how the principles applied by the General Court differ from Austrian administrative rules. I therefore propose the rejection of the argument that the General Court came to a substantively erroneous decision.(44)
74. Finally, the appellant argues that the General Court’s reasoning is contradictory, because, on the one hand, it considers that determining the conditions for a withdrawal of a licence is a matter for the national administrative bodies, while on the other hand, it exercises judicial review of such decisions itself.
75. To my mind there is nothing contradictory in that finding of the General Court. EU law (the SSM Regulation) requires that Member States determine the conditions for granting the authorisation to credit institutions. However, once those conditions are determined, they are to be taken into consideration by the institution that grants (or withdraws) such an authorisation, and that is the ECB. As EU Courts exercise jurisdiction over the ECB’s decision, the only possible outcome is that they must take into consideration the conditions imposed by national law.
76. In conclusion, to the extent that it is admissible, the first ground of appeal should be rejected as unfounded.
3. Third ground of appeal: the interpretation and application of national law
77. By its third ground of appeal, divided into nine parts, the appellant claims that the General Court wrongly interpreted Paragraph 31(3)(2) of the FM-GwG, Article 67(1) of Directive 2013/36, as well as national administrative and judicial decisions.
(a) Part one: Paragraph 31(3)(2) of the FM-GwG
78. In the first part, the appellant argues that the General Court wrongly interpreted and applied Paragraph 31(3)(2), of the FM-GwG, in that it found, in paragraph 44 of the judgment under appeal, that it was not necessary to wait for the relevant national decisions to become final, before finding that the conditions for the withdrawal of an authorisation were met. Furthermore, the appellant argues that the General Court provided a ‘radical’ interpretation of Austrian law in that it did not find a problem with two separate decisions dealing with the same breach: one (national) establishing it, and the other (the ECB’s) sanctioning it, by withdrawing the authorisation.
79. In addition, the appellant argues that the General Court, in paragraph 61 of the judgment under appeal, erred in that it wrongly interpreted Paragraph 70(4) of the BWG, expressly made applicable by Paragraph 31(3)(2) of the FM-GwG.
80. In respect of the first argument, it is not entirely clear that the General Court in fact makes the finding imputed to it by the appellant. The General Court was replying to an argument according to which the determination of a serious breach may only be established under administrative criminal law or criminal law and it must be determined in judicial proceedings by a decision having the authority of a res judicata.(45)
81. In that respect, the General Court responded that in a situation where national law grants jurisdiction to an administrative authority to determine and penalise a breach of the relevant provisions (Paragraph 34(2) of the FM-GwG), requiring a res judicata would make the application of such a penalty dependent on the credit institution concerned appealing the decision of that authority.
82. It therefore seems to me that the General Court did not find, contrary to what the appellant argues, that a decision of an administrative authority finding a breach of the relevant provisions need not become final. That court merely stated that, in the absence of an appeal, such a decision becomes final.
83. In respect of the appellant’s argument concerning the ‘radical’ interpretation of national law, according to which the finding of a breach and the imposition of a penalty cannot be done in two different decisions, it seems to me that this argument cannot succeed, because the exclusive power of withdrawing an authorisation pertains, under Article 4(1)(a) of the SSM Regulation, to the ECB.
84. It may well be true that such a division of powers changes how administrative law worked in the Member States prior to the creation of the Banking Union. However, it cannot be seen as an erroneous interpretation of national law.
85. Finally, the appellant argues that the General Court erred, in paragraph 61 of the judgment under appeal, in that it wrongly interpreted Paragraph 70(4) of the BWG. According to the appellant, that provision of national law, which applies expressly by virtue of Paragraph 31(3)(2) of the FM-GwG, requires a step-by-step imposition of sanctions according to three successive levels of sanctions.
86. However, it does not seem to me that the General Court is making such an interpretation in paragraph 61 of the judgment under appeal. There, it found that infringements, even if corrected in the meantime, justify the withdrawal of the authorisation due to the objective of safeguarding the European banking system.
87. Paragraphs 79 to 92 of the judgment under appeal are also of relevance here: in those paragraphs, the General Court, in my view, correctly, found that the ECB was right in applying the withdrawal of authorisation as the penalty based on systematic, serious, and continuous breaches.
88. As argued in point 45 of this Opinion, the General Court should also take into account relevant national case-law that interprets national law.(46) In that respect, the appellant put forward before the General Court a decision of the Bundesverwaltungsgericht (Federal Administrative Court, Austria)(47) whereby that court decided that the breaches were not serious or systematic.
89. The General Court did not address that argument in the judgment under appeal, focusing instead on the reasons provided by the ECB, based on the FMA findings submitted to it. The General Court also cross-referred to the list of decisions that formed the basis for the FMA’s recommendation and the ECB’s decision to withdraw an authorisation, among which was the judgment referred to by the appellant.(48)
90. Even if I can agree that the General Court could have explained more clearly the influence of that judgment on its finding, it is nevertheless clear that the General Court included the judgment of the Bundesverwaltungsgericht (Federal Administrative Court) in its assessment and found that it does not diminish the finding of the FMA and the ECB that the breaches of AAB Bank were systemic, serious, and continuous.
91. In addition, the General Court also found that the importance of prudential rules aimed at combating money laundering and terrorist financing, the special responsibility of credit institutions in that respect, as well as the need to act as quickly as possible in response to breaches of those rules, justifies the withdrawal of the authorisation.(49)
92. I therefore conclude that the first part of the third ground of appeal should be rejected.
(b) Part two: national decisions
93. The appellant argues that the General Court erred in finding that it is necessary that a national decision establish a breach and that it be subject to judicial control. The appellant does not refer to any paragraph of the judgment under appeal where the General Court made such a finding.
94. In addition, it is not clear which mistake is imputed to the General Court, which is why I consider that the Court of Justice should find this argument inadmissible.
95. The appellant then analyses the documents listed in paragraph 26 of the judgment under appeal, one by one, arguing that the General Court ascribed to them, in that paragraph, the wrong legal force.
96. However, paragraph 26 of the judgment under appeal merely refers to the various documents that the FMA and the ECB referred to in making the decision to withdraw an authorisation. The appellant does not specify the mistake of the General Court in setting out that list.
97. I therefore consider that the Court should reject this part of the third ground of appeal.
(c) Part three: principles of administrative law
98. The appellant argues that the General Court, in paragraphs 46 and 47 of the judgment under appeal, wrongly applied by analogy the EU principles of administrative law to a situation regulated by Austrian law.
99. The General Court stated that ‘the guilt of a person accused of an infringement can be regarded as established definitively where the decision finding that infringement has become definitive’.(50)
100. The appellant does not, however, explain how this principle is in contradiction with the relevant Austrian law. In other words, it did not explain what the Austrian law would prescribe in turn. On the contrary, and in agreement with the argument put forward by the ECB, the principle referred to by the General Court follows a general legal logic according to which a finding becomes definitive when the decision in which that finding has been made itself becomes definitive.
101. I therefore consider that this part of the third ground of appeal should be rejected.
(d) Part four: effects of national administrative decisions
102. The appellant argues that the General Court erred, in paragraph 149 and 150 of the judgment under appeal, in ascribing, contrary to national law, a number of consequences to national administrative decisions.(51)
103. In my opinion, this argument distorts the reasoning on which the invoked paragraphs of the judgment under appeal rely, in which the General Court merely rejected the internal audit report of AAB Bank as sufficient proof that serious breaches, as established in the relevant administrative decisions at the national level, did not occur.
104. I am therefore of the view that this part of the third ground of appeal should be rejected.
(e) Part five: where there is smoke there is fire
105. The appellant argues that the General Court acted on the principle that ‘where there is smoke, there is fire’ by superficially treating a number of documents that broadly deal with legislation concerning the fight against money laundering.
106. It should be said that the appellant does not refer to any part of the judgment under appeal specifically, thus rendering this part of the third ground of appeal inadmissible, as the Court of Justice cannot formulate the appeal arguments for the appellant.
107. However, it should be added that the General Court specifically reviewed the findings of individual breaches that led the FMA, and then the ECB, to find that there were serious, systemic, and continuous breaches of Paragraph 34(2) and (3) of the FM-GwG, which justify the withdrawal of an authorisation.(52)
108. Therefore, I propose that the Court reject this part of the third ground of appeal.
(f) Part six: a global assessment
109. The appellant argues that the General Court failed to make a global assessment of the relevant national decisions, citing three decisions of the Bundesverwaltungsgericht (Federal Administrative Court).
110. It should be said that this argument was not made before the General Court and is therefore new at the point of appeal. Such arguments are, as already mentioned above, inadmissible.(53)
111. In so far as the appellant refers to the assessment of the General Court, which, in its view, dealt with issues that are ‘too specific and outdated’, it is unclear which parts of the judgment under appeal this argument refers to and what exactly the error in law imputed to the General Court is. If anything, it seems to me that the appellant seeks from the Court of Justice an assessment of the facts at the point of appeal.
112. However, the Court of Justice does not have jurisdiction to establish the facts or examine evidence, except where the appellant argues that the General Court distorted the facts and that such distortion is obvious from the documents on the Court’s file.(54)
113. In addition, the party alleging distortion must indicate precisely the evidence alleged to have been distorted by the General Court and show the errors of appraisal that, in that party’s view, led to such distortion.(55)
114. The appellant confines itself to characterising the facts already assessed by the General Court, without demonstrating that that court distorted evidence.
115. I therefore consider that the Court should find that the sixth part of the third ground of appeal is inadmissible in its entirety.
(g) Part seven: Article 67(1)(o) of Directive 2013/36
116. By the seventh part of the third ground of appeal, the appellant argues that the General Court wrongly found that serious breaches were committed, as required under Article 67(1)(o) of Directive 2013/36. In addition, the appellant argues that the General Court misinterpreted the judgment it relied on,(56) concerning the licence withdrawal to gaming operators. Finally, the appellant argues that there is no reason to interpret Austrian law in light of EU law, rather than Austrian law itself.
117. In respect of the argument concerning a serious breach, the appellant is inviting the Court to reassess the facts, something that is not in its jurisdiction. As explained in points 112 to 114 above, unless the appellant invokes distortion of facts, which is not the case here, arguments concerning facts should be considered inadmissible.
118. As regards the interpretation of the judgment invoked by the General Court in paragraph 49 of the judgment under appeal, the appellant does not explain what the mistake is or the correct interpretation that the General Court should have applied. That argument should therefore also be rejected as unsubstantiated and thus inadmissible.
119. Finally, the appellant does not explain in which particular part of the judgment under appeal the General Court interpreted Austrian law by reference to EU law only, where it allegedly should have done that exclusively in relation to Austrian law. Lacking a more precise explanation, the Court can do no more but generally explain that the General Court should apply the national rules applicable as part of the SSM framework in light of both Austrian and EU law, the same as the national court would do when interpreting national law.
120. I therefore propose to the Court to find the seventh part of the third ground of appeal inadmissible.
(h) Part eight: Paragraph 70(4) of the BWG
121. The appellant argues that the General Court insufficiently assessed the requirements of Paragraph 70(4) of the BWG, according to which sanctions should be issued at three subsequent stages, each based on separate individual breaches. The General Court, in paragraph 158 of the judgment under appeal, wrongly accepted that the different measures taken by the FMA in the past are enough; because it is necessary that an infringement persists on the date that the decision is taken, that court thus committed an error of law in paragraphs 61 and 62 of the judgment under appeal. The appellant also argues that the General Court distorted Austrian law with its own judicial politics, thus raising rule of law concerns. Lastly, the appellant also argues that Article 127(6) TFEU, the legal basis of the SSM Regulation, did not grant the Council the power to change national law concerning conditions for the withdrawal of an authorisation.
122. In respect of the first argument, it should be stated that the appellant invites the Court of Justice to reassess the factual findings of the General Court, in particular the value it ascribed to the measures undertaken by AAB Bank to correct the infringements and the different supervisory decisions issued by the FMA.
123. As explained in points 112 to 114 above, unless the appellant invokes distortion of facts, something that is not the case here, arguments concerning facts should be considered inadmissible.
124. With regard to the remaining arguments, the appellant does not refer to specific parts of the judgment under appeal nor does it provide details as to the alleged mistake of the General Court, beyond a general reference to judicial politics and the rule of law. Such arguments are, according to the case-law of the Court,(57) inadmissible.
125. I therefore propose to the Court to find the eighth part of the third ground of appeal inadmissible.
(i) Part nine: the relationship between Paragraph 31(3)(2) of the FM-GwG and Paragraph 70(4) of the BWG
126. The appellant argues that the General Court erred, in paragraph 105 and onwards of the judgment under appeal, in its interpretation of the relationship between Paragraph 31(3)(2) of the FM-GwG and Paragraph 70(4) of the BWG. Specifically, the appellant argues that the ECB based its decision on Paragraph 70(4) of the BWG, whereas the power to sanction activities contrary to the rules on combating money laundering and the financing of terrorism is regulated only by the FM-GwG, to which Paragraph 70(4) of the BWG does not refer. AAB Bank therefore claims that the ECB used the wrong legal basis for its decision to withdraw the authorisation.
127. The General Court found, in paragraph 103 of the judgment under appeal, that the ECB referred to Paragraph 70(4) of the BWG, which prescribes the power to withdraw an authorisation when the anti-money laundering provisions of that law are breached. That court also noted, in paragraph 104 of the judgment under appeal, that the ECB had also referred to the fact that AAB Bank breached various provisions of the FM-GwG. Finally, in paragraph 109 of the judgment under appeal, the General Court underlined that AAB Bank did not argue that the ECB’s assessment would have been different had a different legal basis been used.
128. In my view, the General Court was right to find, in paragraphs 105 to 107 of the judgment under appeal, that Paragraph 39(2) and (2b) of the BWG also refers to the risk of money laundering and terrorist financing, and that both the FM-GwG and the BWG may be taken into account to establish such breaches, resulting in the withdrawal of an authorisation.
129. Furthermore, I consider that the General Court was right to find that a wrong legal basis, in so far as it is merely formal in scope, cannot lead to the annulment of the contested decision.(58)
130. The General Court refers to its own previous judgment, to which it later started referring to as settled case-law.(59)
131. The approach of the General Court may also be found, more than three decades ago, in the Opinion of Advocate General Mischo in Gestetner Holdings,(60) who argued that the choice of the wrong legal basis did not (necessarily) lead to a different result from what would have been the case had the correct legal basis been chosen.(61)
132. I propose to the Court to follow the logic of both the General Court and Advocate General Mischo in concluding that the choice of a ‘wrong’ legal basis of an individual decision should only be decisive for its validity in the event that the ‘correct’ legal basis would have led to a different outcome in the decision itself.
133. In that respect, I consider that the General Court did not err in finding that a different legal basis would not have affected the ECB’s assessment and its power to withdraw the authorisation of AAB Bank.
134. In conclusion, I propose that the Court reject the ninth part of the third ground of appeal as unfounded.
4. Fourth ground of appeal: Article 67(1)(d) of Directive 2013/36
135. By the fourth ground of appeal, the appellant argues that the General Court, in paragraphs 132 to 144 of the judgment under appeal, erred in finding, first, that breaches committed three or five years ago and remedied in the meantime were sufficient to withdraw an authorisation; second, in finding that the withdrawal of an authorisation does not require that breaches are of a serious nature in order to withdraw an authorisation; third, in finding, contrary to the judgment of the Court of Justice in Berlusconi, that a national decision which established internal governance breaches is final and should have been challenged at the national level; fourth, in that it wrongly assessed the documents listed in paragraph 122 of the judgment under appeal.
136. As regards the first argument, I consider that, by raising it, the appellant seeks from the Court of Justice to reassess the factual findings made by the General Court in respect of the value it ascribed to the breaches found by the FMA and the ECB.(62)
137. As explained in points 112 to 114 above, unless the appellant invokes distortion of facts, something that is not the case here, arguments concerning facts should be considered inadmissible.
138. Should the Court disagree with such an assessment, I consider that the General Court did not err, in paragraph 134 of the judgment under appeal, in finding that Article 67(1)(d) of Directive 2013/36 does not preclude the withdrawal of an authorisation on the basis of past or mitigated breaches.
139. The General Court also stated, in paragraph 135 of the judgment under appeal, that to find otherwise would mean that competent authorities would need to take new decisions in order to demonstrate that the credit institution indeed breached the governance requirements that are intended to safeguard the European banking system.
140. I do not see a mistake in the General Court’s reasoning. Aside from not requiring that breaches of governance arrangements be systemic or serious, it should be emphasised that the ECB withdrew the authorisation based not only on repeated breaches of Article 67(1)(d) of Directive 2013/36, but also of Article 67(1)(o) of that directive.
141. I therefore propose to the Court to reject that argument as unfounded.
142. With regard to the second argument, I consider that the General Court, in paragraph 138 of the judgment under appeal, rightly found that Article 67(1)(d) of Directive 2013/36 does not require that a breach of governance arrangements be serious, flagrant or systemic in order to justify withdrawing an authorisation. That provision, unlike Article 67(1)(o) of Directive 2013/36, does not require that the breach be serious. That argument should therefore be rejected.
143. The third argument of the appellant imputes to the General Court a mistake, in paragraphs 142 to 145 of the judgment under appeal, in finding that the decisions of the FMA concerning governance arrangement breaches should have been appealed at national level, whereas the Court of Justice found in the judgment in Berlusconi that national courts are prevented from reviewing preparatory acts for which the ECB has the final decision-making power.
144. In Berlusconi, the Court indeed found that national courts are precluded, under Article 263 TFEU, from reviewing preparatory acts of national competent authorities, when they act under Articles 22 and 23 of Directive 2013/36, Article 4(1)(c) and Article 15 of the SSM Regulation, and Articles 85 to 87 of the SSM Framework Regulation.(63)
145. However, the decision of the FMA, as the General Court rightly held in paragraphs 145 and 146 of the judgment under appeal, concerning the failure of AAB Bank to put in place the required governance arrangement, is a definitive decision. The findings from Berlusconi therefore do not apply.
146. Finally, the appellant claims that the General Court wrongly assessed the documents listed in paragraph 122 of the judgment under appeal, without analysing the three stages of consequences prescribed under Paragraph 70(4) of the BWG.
147. However, as also argued by the ECB, the amount of repeated breaches in this respect required precisely the withdrawal of an authorisation as the consequence, as there was no less restrictive measure that would equally address the heightened number of repeated breaches of the rules concerning governance arrangements.
148. In conclusion, I propose to the Court to reject the fourth ground of appeal in its entirety.
5. Fifth ground of appeal: the principle of proportionality and national law
149. By its fifth ground of appeal, the appellant argues that the General Court breached the principle of proportionality and did not examine Article 70(4) of the BWG.
150. It should be noted that these arguments were already raised within the scope of the eighth part of the third ground of appeal and I therefore refer to the analysis made there.(64)
151. In addition, the appellant argues that by withdrawing an authorisation, the ECB ultimately made the FM-GwG inapplicable, whereas this would remain binding for the appellant if it had gone through voluntary liquidation. It is unclear what mistake is imputed to the General Court in this argument, and it should, according to the case-law referred to above, be found inadmissible.(65)
152. In conclusion, to the extent that it is admissible, I propose that the Court reject the fifth ground of appeal.
6. Sixth ground of appeal: rights of defence
153. By its sixth ground of appeal, the appellant argues that the General Court, in paragraphs 227 onwards of the judgment under appeal, breached its rights of defence, in respect of access to file, and reviewing the obligation of the ECB to determine the relevant circumstances.
154. First, the General Court found, in paragraphs 245 to 248 of the judgment under appeal, that the ECB was not under an obligation to disclose the confidential part of the file to AAB Bank.
155. The General Court justified this by reference to Article 32(1) and (5) of the SSM Framework Regulation, according to which confidential information, such as the correspondence between the ECB and national competent authorities, is not covered by the right of access to file.(66) In addition, the General Court found that since AAB Bank had been the addressee of the FMA’s decisions or a party in national judicial proceedings, it was sufficiently informed of the content of those decisions, which form the basis for the withdrawal of authorisation.(67)
156. Second, in respect of the determination of relevant circumstances by the ECB, it should be said that the General Court analysed this obligation extensively in paragraphs 251 to 273 of the judgment under appeal, which are not challenged by the appellant.
157. I therefore conclude that the sixth ground of appeal should be rejected in its entirety.
7. Seventh ground of appeal: procedural irregularities
158. By its seventh ground of appeal, the appellant argues that the General Court committed procedural mistakes which adversely affected its interests.
159. First, the appellant argues that it should have had the opportunity to express its position concerning the approach taken by the General Court that the reasons given in the national administrative and judicial decisions have binding effect also in respect of the withdrawal of authorisation.
160. However, the appellant does not identify the relevant paragraphs of the judgment under appeal nor the mistakes allegedly committed by the General Court.
161. It is unclear what mistake is imputed to the General Court in this argument, and it should, according to the case-law referred to above, be found inadmissible.(68)
162. Second, the appellant argues that the General Court should have made public its change of view in the context of a measure of organisation of procedure on 27 April 2021, in that it allegedly found that serious offences had been committed in respect of the obligations concerning the fight against money laundering.
163. However, by its measure of organisation of 27 April 2021, the General Court did not take any legal position, but submitted two written questions to the ECB. That argument should therefore be rejected.
164. Third, the appellant argues that the General Court took the view, by rejecting its request for a measure of organisation of 8 April 2021, that the conditions for withdrawing an authorisation are not met, due to the lack of the required serious offences.
165. That argument appears to me inadmissible, as it does not specify the mistake allegedly committed by the General Court.(69)
166. Finally, the appellant argues that the General Court breached its duty to state reasons, and in particular in comparison to the judgments of the Bundesverwaltungsgericht (Federal Administrative Court).
167. As with the previous argument, the appellant does not refer to precise paragraphs of the judgment under appeal or the more specific mistakes imputed to the General Court. That argument should therefore be declared inadmissible.
168. In conclusion, to the extent that it is admissible, I propose to the Court to reject the seventh ground of appeal.
VII. Conclusion
169. In light of the foregoing, I propose that the Court should:
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dismiss the appeal;
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order the appellant to pay the costs.