JUDGMENT OF THE GENERAL COURT (Ninth Chamber, Extended Composition)
22 June 2022 (*)(i)
(Economic and monetary policy – Prudential supervision of credit institutions – Specific supervisory tasks assigned to the European Central Bank (ECB) – Decision to withdraw authorisation from a credit institution – Serious breach of the national legislation transposing Directive 2005/60/EC – Proportionality – Infringement of the legislation on the governance of credit institutions – Rights of the defence – Manifest error of assessment – Right to effective judicial protection)
In Case T‑797/19,
Anglo Austrian AAB AG, formerly Anglo Austrian AAB Bank AG, established in Vienna (Austria),
Belegging-Maatschappij ‘Far-East’ BV, established in Velp (Netherlands),
represented by M. Ketzer and O. Behrends, lawyers,
applicants,
v
European Central Bank (ECB), represented by C. Hernández Saseta, E. Yoo and V. Hümpfner, acting as Agents,
defendant,
THE GENERAL COURT (Ninth Chamber, Extended Composition),
composed of S. Papasavvas, President, M.J. Costeira (Rapporteur), M. Kancheva, B. Berke and T. Perišin, Judges,
Registrar: E. Coulon,
having regard to the written part of the procedure,
having regard to the decision of 19 December 2019 of the President of the Ninth Chamber to grant the application to give the case priority,
having regard to the fact that no request for a hearing was submitted by the parties within three weeks after service of notification of the close of the written part of the procedure, and having decided to rule on the action without an oral part of the procedure, pursuant to Article 106(3) of the Rules of Procedure of the General Court,
having regard to the order of 7 February 2020, Anglo Austrian AAB Bank and Belegging-Maatschappij ‘Far-East’ v ECB (T‑797/19 R, not published, EU:T:2020:37), by which the President of the General Court dismissed the applicants’ application to suspend implementation of the contested decision,
having regard to the order of 17 December 2020, Anglo Austrian AAB and Belegging-Maatschappij ‘Far-East’ v ECB (C‑114/20 P(R), not published, EU:C:2020:1059), by which the Vice-President of the Court of Justice dismissed the appeal against that order,
having regard to the order of 15 April 2020, Anglo Austrian AAB Bank and Belegging-Maatschappij ‘Far-East’ v ECB, by which the President of the General Court dismissed a second application to suspend implementation of the contested decision, made by the applicants under Article 160 of the Rules of Procedure of the General Court,
having regard to the order of 17 December 2020, Anglo Austrian AAB and Belegging-Maatschappij ‘Far-East’ v ECB (C‑207/20 P(R), not published, EU:C:2020:1057), by which the Vice-President of the Court of Justice dismissed the appeal against that order,
gives the following
Judgment
1 By their action under Article 263 TFUE, the applicants, Anglo Austrian AAB AG, formerly Anglo Austrian AAB Bank AG (‘AAB Bank’), and Belegging-Maatschappij ‘Far-East’ BV (‘the Shareholder’), seek annulment of Decision ECB-SSM-2019-AT 8 WHD-2019 0009 of 14 November 2019 of the European Central Bank (ECB), by which the ECB withdrew AAB Bank’s authorisation to engage in the business of a credit institution (‘the contested decision’).
I. Background to the dispute
2 The first applicant, AAB Bank, was a less significant credit institution established in Austria for the purposes of Article 6(4) of Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions (OJ 2013 L 287, p. 63). It carried on its business pursuant to an authorisation issued under the Bundesgesetz über das Bankwesen (Bankwesengesetz) (Austrian Banking law, ‘BWG’).
3 The second applicant, the Shareholder, is a holding company that owns 99.99% of the shares in AAB Bank.
4 On 26 April 2019, the Österreichische Finanzmarktbehörde (Austrian financial markets supervisory authority, ‘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 Regulation (EU) No 468/2014 of the [ECB] of 16 April 2014 establishing the framework for cooperation within the Single Supervisory Mechanism between the [ECB] and national competent authorities and with national designated authorities (‘the SSM Framework Regulation’) (OJ 2014 L 141, p. 1).
5 By letter of 14 June 2019, the ECB sent AAB Bank a draft decision to withdraw the authorisation, on which AAB Bank expressed an opinion on 23 July 2019.
6 By the contested decision, the ECB withdrew AAB Bank’s authorisation as a credit institution with effect from the date on which that decision was notified.
7 The ECB determined in essence that, on the basis of the FMA’s findings, made in the context of its task of prudential supervision and concerning continuous and repeated non-compliance with the requirements relating to combating money laundering and terrorist financing and to internal governance by AAB Bank, the bank was not able to ensure sound management of its risks.
8 The ECB therefore found that the grounds justifying withdrawal of AAB Bank’s authorisation to engage in the business of a credit institution, established in Article 18(f) of Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (OJ 2013 L 176, p. 338) and transposed into Austrian law, were fulfilled, since AAB Bank had committed breaches of Article 67(1)(d) and (o) of that directive as transposed into Austrian law, and that the withdrawal was proportionate.
9 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 immediate application of the decision.
II. Procedure and forms of order sought by the parties
10 By decision of the President of the General Court of 18 May 2021, since a member of the Ninth Chamber (Extended Composition) was unable to sit, the President of the General Court designated another judge to complete the Chamber.
11 Following the death of Judge Berke on 1 August 2021, the three judges whose signatures appear in the present judgment continued with the deliberations, in accordance with Article 22 and Article 24(1) of the Rules of Procedure of the General Court.
12 By decision of the President of the General Court of 13 August 2021, the present case was assigned to a new Judge-Rapporteur, sitting in the Ninth Chamber.
13 The applicants claim that the Court should:
– annul the contested decision;
– order the ECB to pay the costs of the proceedings.
14 The ECB claims that the Court should:
– dismiss the action;
– declare the action inadmissible in so far as it has been brought by the Shareholder;
– order the applicants to pay the costs.
III. Law
A. Admissibility of the action in so far as it has been brought by the Shareholder
15 While not formally raising a plea of inadmissibility under Article 130 of the Rules of Procedure, the ECB contends that according to the case-law of the Court of Justice, the Shareholder’s action is inadmissible because the Shareholder is not directly affected by the contested decision.
16 In that regard, it must be borne in mind that the shareholders of a credit institution whose authorisation to engage in the business of a credit institution has been withdrawn are not directly concerned by the decision to withdraw authorisation (see, to that effect, judgment of 5 November 2019, ECB and Others v Trasta Komercbanka and Others, C‑663/17 P, C‑665/17 P and C‑669/17 P, EU:C:2019:923, paragraphs 107 to 115 and 119).
17 The action is therefore inadmissible to the extent that it has been brought by the Shareholder.
B. Substance
18 AAB Bank relies on five pleas in law in support of its action.
19 The first plea alleges that the ECB breached Article 4(1)(a) and Article 14(5) of Regulation No 1024/2013 by incorrectly applying national law. The second plea alleges infringement of the principle of proportionality. The third plea alleges breach of Article 34 of Regulation No 468/2014, read in the light of the right to effective judicial protection, as a result of the ECB’s refusal to suspend application of the contested decision. The fourth plea alleges infringement of AAB Bank’s rights of the defence. The fifth plea alleges violation of the Shareholder’s right to property.
1. First plea in law, alleging that the ECB breached Article 4(1)(a) and Article 14(5) of Regulation No 1024/2013 by incorrectly applying national law
20 In support of that plea AAB Bank contends, in essence, that the conditions for an authorisation to be withdrawn – laid down by EU law in Article 4(1)(a) and Article 14(5) of Regulation No 1024/2013, Article 83 of Regulation No 468/2014 and Article 18(f) and Article 67(1)(d) and (o) of Directive 2013/36 and by the applicable provisions of Austrian law transposing those articles of the directive – were not satisfied in the present case and that although the ECB adopted the contested decision, it did not have power to do so.
21 That plea is divided into two parts.
(a) First part of the first plea, alleging breach of Article 4(1)(a) and Article 14(5) of Regulation No 1024/2013 because the criteria justifying withdrawal of the authorisation, laid down by Article 18(f) and Article 67[(1)](d) and (o) of Directive 2013/36, as transposed into Austrian law, were not satisfied
22 By the first part of the first plea, AAB Bank submits, in essence, that the requirements laid down in Article 4(1)(a) and Article 14(5) of Regulation No 1024/2013, Article 83 of Regulation No 468/2014 and Paragraph 70(4) of the BWG which transposes Article 18 of Directive 2013/36, and the requirements set out in Article 67 of that directive, were not satisfied because AAB Bank had not been found liable for a serious breach within the meaning of Article 67, in accordance with Paragraph 34 et seq. of 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’) which were adopted under Directive 2005/60/EC of the European Parliament and of the Council of 26 October 2005 on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing (OJ 2005 L 309, p. 15) (now Directive 2015/849/EU of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Regulation (EU) No 648/2012 of the European Parliament and of the Council, and repealing Directive [2005/60] and Commission Directive 2006/70/EC (OJ 2015 L 141, p. 73). AAB Bank alleges that the ECB, first, wrongly determined that it had been found liable for serious breaches of the national legislation transposing Directive 2005/60 (now Directive 2015/849) and, secondly, infringed its obligation to state reasons as regards the provisions on which the ECB relied when it found that the purported breaches of the anti-money laundering legislation justified withdrawing the authorisation.
23 The ECB disputes that line of argument.
24 In the contested decision, the ECB determined that AAB Bank had been found liable for serious breaches of the national provisions adopted under Directive 2005/60 (now Directive 2015/849), within the meaning of Article 67(1)(o) of Directive 2013/36, which justified withdrawing its authorisation in accordance with Article 18(f) of that directive, as transposed by Paragraph 70(4) of the BWG.
25 In particular, it found that AAB Bank had breached Paragraph 39(2) and (2b)(5) and (11) of the BWG and Paragraph 6(1), (2) to (4), (6) and (7), Paragraph 7(7), Paragraph 9, Paragraph 23(3) and Paragraph 29 of the FM-GwG.
26 After noting that the type, number and frequency of the binding supervisory measures, such as formal orders, that had to be issued by the FMA emphasised the severity and long-lasting nature of the breaches found, the ECB cited the following in particular in support of its conclusions:
– the report of the Oesterreichische Nationalbank (Austrian national bank) on the occasion of an on-site inspection on 22 January 2010 during which the bank had found substantial deficiencies in AAB Bank’s anti-money laundering framework;
– the report of the FMA following its on-site inspection on 11 July 2013 finding 38 deficiencies or breaches of the legislation on combating money laundering and terrorist financing;
– the report of 24 March 2015 finding irregularities in 18 out of 20 test cases whose findings were subsequently confirmed by a definitive court decision;
– the FMA’s formal order of 18 August 2015 by which it instructed AAB Bank to apply the 2008 anti-money laundering provisions to all its customers;
– the sanction imposed by the FMA on 14 September 2016 for individual and systemic breaches of the legal requirements relating to the combating of money laundering and terrorist financing;
– the judgment of 7 February 2019 of the Bundesverwaltungsgericht (Federal Administrative Court, Austria) under reference W230 2138107-1/37E, confirming the FMA’s sanction of 14 September 2016 although reducing its amount;
– the order of 15 May 2019 of the Verwaltungsgerichtshof (Supreme Administrative Court, Austria) under reference Ro 2019/02/0006-3, dismissing AAB Bank’s appeal against the judgment of 7 February 2019 of the Bundesverwaltungsgericht (Federal Administrative Court);
– the judgment of 23 February 2017 of the Landesgericht für Zivilrechtssachen Wien (Regional Civil Court, Vienna, Austria) under reference 33 Cg 716s 18, in which the court stated that ‘in the case of nine back-to-back credit transactions with other banks examined in detail by the FMA or the external auditors, it was found that those nine transactions involved serious breaches of the applicable provisions’;
– the FMA’s formal order of 24 October 2018 finding that AAB Bank had committed numerous breaches of the legislation in its relationship with Meinl Bank Antigua Ltd, in particular the fact that, after announcing that the accounts of Meinl Bank Antigua had been frozen, AAB Bank allowed transfers of EUR 19.5 million to be made from its main account and had no appropriate documentation about its business relationship;
– the FMA’s report of 17 January 2019 drawn up after the 2018 on-site inspection (‘the FMA report on the fourth inspection’) finding 22 deficiencies or breaches of legal provisions including a number concerning Meinl Bank Antigua;
– the procedure initiated by the FMA on 7 June 2019 to restore legal compliance in relation to the remaining 15 findings in its report on the fourth inspection, on which AAB Bank had submitted comments that were taken into account in the contested decision in the finding that, in essence, the majority of the breaches were still ongoing;
– AAB Bank’s audit reports and a number of facts gathered during the administrative procedure.
(1) First complaint, alleging breach of Article 18(f) of Directive 2013/36 and Article 67(1)(o) of Directive 2013/36, as transposed into Austrian law, on the grounds that AAB Bank has not been found liable for serious breaches of the national legislation transposing Directive 2005/60 (now Directive 2015/849)
27 AAB Bank argues, in essence, that it could not be inferred from the decisions referred to in the contested decision that it had been found liable for serious breaches of the BWG or the FM-GwG, because the breaches found against it in those decisions were old, time-barred or not serious or had been corrected, and because those findings were not made in decisions having the authority of res judicata.
28 The ECB disputes that complaint.
29 It should be borne in mind that, under Article 4(1)(a) of Regulation No 1024/2013 and subject to Article 14 of that regulation, by virtue of the tasks conferred on it by that regulation, the ECB is exclusively competent to authorise credit institutions established in the Member States participating in the Single Supervisory Mechanism and to withdraw authorisations from those institutions.
30 Under Article 14(5) of Regulation No 1024/2013, the ECB may withdraw the authorisation in the cases set out in relevant EU law on its own initiative, following consultations with the national competent authority [(‘NCA’)] of the participating Member State where the credit institution is established, or on a proposal from such national competent authority.
31 Furthermore, Article 4(3) of Regulation No 1024/2013 provides that, for the purpose of carrying out the tasks conferred on it by that regulation, and with the objective of ensuring high standards of supervision, the ECB is to apply all relevant Union law, and where that EU law is composed of directives, the national legislation transposing those directives.
32 In order to perform the tasks conferred on it by Article 4(1)(a) of Regulation No 1024/2013, the ECB is therefore obliged to apply the provisions of national law transposing Directive 2013/36, construed in the light of that directive, in addition to the provisions of Regulation No 1024/2013.
33 It should also be borne in mind that Article 18(f) of Directive 2013/36 provides that the competent authorities may withdraw the authorisation granted where a credit institution commits one of the breaches referred to in Article 67(1) of that directive.
34 Article 67(1)(o) of Directive 2013/36 provides for the situation in which a credit institution is found liable for a serious breach of the national provisions adopted under Directive 2005/60.
35 As regards the national measures transposing Directive 2013/36 to which AAB Bank refers, it can be seen from Paragraph 70(4) of the BWG that, where a credit institution breaches, inter alia, the provisions of the BWG or measures adopted in order to implement it the FMA must:
‘ … 3. revoke the licence of the credit institution in cases where other measures set out in the BWG cannot ensure the functioning of the credit institution.’
36 Furthermore, under Paragraph 31(3)(2) of the FM-GwG:
‘In the event of non-compliance with the obligations under Paragraph 34(2) and (3) [of the FM-GwG], the FMA may … revoke the licence granted by the FMA …’.
37 The obligations under Paragraph 34(2) and (3) of the FM-GwG are intended to transpose the anti-money laundering provisions of Directive 2005/60 (now Directive 2015/849) and refer, in particular, to serious, repeated or systematic breaches of Paragraphs 6(1), (2) to (4), (6) and (7), Paragraph 7(7), Paragraph 9, Paragraph 23(3) and Paragraph 29 of the FM-GwG.
38 In the present case, the ECB determined, in the contested decision, that it was apparent in particular from the decisions of the FMA and the judgments of the Austrian courts that since 2010 and until at least 2019 AAB Bank did not have an appropriate anti-money laundering risk management procedure, in breach of Article 39(2), in conjunction with Paragraph 39(2b)(11), of the BWG, and that it was also apparent from those national decisions and judgments that AAB Bank had been found liable for serious, repeated or systematic breaches of Paragraph 6(1), (2) to (4), (6) and (7), Paragraph 7(7), Paragraph 9, Paragraph 23(3) and Paragraph 29 of the FM-GwG.
(i) The argument that a credit institution must have been found liable for a serious breach in a recent judicial decision having the authority of res judicata
39 It is important to bear in mind, first, that under Austrian law the FMA has power to adopt decisions determining and penalising breaches of the provisions of the BWG and of the FM-GwG adopted in order to implement Directive 2005/60 (now Directive 2015/849).
40 It follows that the FMA may adopt administrative decisions finding a credit institution liable for a serious, repeated or systematic breach within the meaning of Paragraph 34(2) of the FM-GwG, which transposes Article 67(1)(o) of Directive 2013/36.
41 According to AAB Bank, penalties for serious breaches within the meaning of Paragraph 34(2) of the FM-GwG may only be imposed under administrative criminal law or criminal law and [the breach] must be determined in judicial proceedings by a decision having the authority of res judicata.
42 However, it emerges from Article 39(2) of Directive 2005/60 (now Article 58(2) of Directive 2015/849) that, when transposing that directive, without prejudice to their right to impose criminal sanctions, Member States must establish appropriate administrative penalties in their legislation capable of being imposed on credit institutions that breach national provisions adopted in accordance with that directive.
43 The serious breaches referred to in Paragraph 34(2) of the FM-GwG, read in the light of Article 39(2) of Directive 2005/60, may therefore trigger the application of both criminal and administrative penalties, and the nature of the penalty (criminal or administrative) is not decisive for the purpose of categorising the breach as ‘serious’.
44 Moreover, as regards the nature of the decision determining the breach, in a situation where an administrative authority has jurisdiction to determine and penalise breach of the provisions in question, to take the view, as AAB Bank does, that only a judicial decision having the authority of res judicata can determine that a serious breach of those provisions has occurred would amount to making application of Paragraph 31(3)(2) and of Paragraph 34(2) and (3) of the FM-GwG dependent on whether or not the institution concerned chooses to bring an action against the decision of that authority.
45 Secondly, it is apparent from the case-law on acts of EU institutions that a decision which has not been challenged by its addressee within the time limit laid down becomes definitive as against that person (see, to that effect, judgments of 12 October 2007, Pergan Hilfsstoffe für industrielle Prozesse v Commission, T‑474/04, EU:T:2007:306, paragraph 37, and of 8 May 2019, Lucchini v Commission, T‑185/18, not published, EU:T:2019:298, paragraph 38).
46 It also follows from the case-law on acts of EU institutions 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 (see, to that effect, judgment of 12 October 2007, Pergan Hilfsstoffe für industrielle Prozesse v Commission, T‑474/04, EU:T:2007:306, paragraph 76).
47 That case-law must be applied, by analogy, to the decisions of national administrative authorities, such as the FMA, finding a breach of the national provisions relating to the combating of money laundering and terrorist financing.
48 A credit institution may therefore be found liable for serious breaches within the meaning of Paragraph 34(2) and (3) of the FM-GwG, read in the light of Article 67(1)(o) of Directive 2013/36, on the basis of administrative decisions.
49 Admittedly, as AAB Bank notes, the Court of Justice has held that to exclude from the market through withdrawal of a licence a gaming operator suspected, on the basis of reliable evidence, of being implicated in criminal activities should in principle be considered proportionate to the objective of combating criminality only if that exclusion was based on a judgment which had the force of res judicata and concerned a sufficiently serious offence (judgment of 16 February 2012, Costa and Cifone, C‑72/10 and C‑77/10, EU:C:2012:80, paragraph 81).
50 Nevertheless, given not only the importance of the prudential rules aimed at combating money laundering and terrorist financing but the special responsibility of credit institutions in that respect and the need to act as quickly as possible in response to breaches of those rules, an administrative decision finding a credit institution liable for serious breaches of the national provisions adopted under Directive 2005/60 (now Directive 2015/849) within the meaning of Paragraph 34(2) and (3) of the FM-GwG should be considered to be sufficient grounds for withdrawing authorisation.
51 In the light of the foregoing, contrary to the assertions of AAB Bank, the ECB cannot be criticised for concluding that AAB Bank had been found liable for serious breaches in non-judicial decisions that did not have the authority of res judicata.
52 Furthermore, it should be emphasised that AAB Bank’s internal audit reports cannot be considered sufficient, in themselves, to show that the credit institution was or was not found liable for serious breaches, since those reports cannot be described as administrative or judicial measures finding the institution liable for serious breaches.
53 Nevertheless, in contrast to AAB Bank’s assertions, while those reports may, where applicable, be used to dispute findings by the ECB that are not founded on a definitive decision determining that a breach has been committed, they cannot be regarded as sufficient to call into question findings made in administrative or judicial decisions that have become definitive.
54 Furthermore, AAB Bank’s arguments on the assessment of the viability and sustainability of its business model, its customer risk structure, the discontinuance of back-to-back trust transactions, the characteristics of its audit and the number of suspicions about it reported by the ECB are not such as to refute the fact that the contested decision is founded on definitive decisions finding it liable for serious breaches.
55 The same is true of AAB Bank’s arguments concerning the ECB’s findings in respect of its owners, its involvement in the Odebrecht scandal and Meinl Bank Antigua.
56 Indeed, those arguments relate to factual considerations included by the ECB for the sake of completeness which have no bearing on application of the criterion under Paragraph 34(2) and (3) of the FM-GwG, read in the light of Article 67(1)(o) of Directive 2013/36, according to which the institutions concerned must have been found liable for serious breaches.
57 They therefore cannot cast doubt on the fact that AAB Bank was found liable for breaches by means of administrative and judicial decisions that have become definitive.
58 Similarly, AAB Bank’s arguments to the effect that the breaches found are old or have been corrected do not cast doubt on that conclusion.
59 Neither the BWG, the FM-GwG or Article 18(f) or Article 67(1)(o) of Directive 2013/36 establish, first, any time limit within which earlier decisions establishing the liability of the persons who committed those breaches must be taken into account or, secondly, that such breaches must not have been interrupted or must still exist at the time a withdrawal of authorisation decision is adopted, in particular where, as in the present case, the matter concerns a number of decisions adopted over a period of several years.
60 The foregoing applies with all the more reason to breaches found only three years or five years before the contested decision was adopted, since those decisions cannot be regarded as old.
61 Moreover, the position asserted by AAB Bank to the effect that certain infringements found were corrected and can no longer justify a withdrawal of authorisation would undermine the objective of safeguarding the European banking system since it would permit credit institutions that have committed serious breaches to continue their activities so long as the competent authorities do not demonstrate again that they have committed new breaches.
62 The argument to the effect that AAB Bank put in place other improvement measures, in particular subcontracting the internal audit, improving various anti-money laundering processes since 22 July 2019 and putting anti-money laundering blocks on accounts, should be rejected for the same reason.
63 The same applies to the purported elimination of deficiencies concerning the designation of beneficial owners which AAB Bank reported to the FMA in a letter of 19 March 2019.
64 Furthermore, it can be seen from the contested decision that AAB Bank has also been found to be liable for serious breaches more recently, in the FMA decision of 24 October 2018 – against which it has not lodged an appeal – finding that there was no verifiable anti-money laundering documentation relating to its business relationships, in particular that with Meinl Bank Antigua.
65 Similarly, as the ECB highlighted in the contested decision, in its report on the fourth inspection the FMA found 22 deficiencies or breaches of legal provisions including a number concerning Meinl Bank Antigua.
66 In the light of the foregoing, since the ECB determined that definitive administrative and judicial decisions issued between 2010 and 2018 had, repeatedly, found AAB Bank liable for serious breaches of the provisions of the FM-GwG transposing Directive 2005/60 (now Directive 2015/849), AAB Bank’s arguments to the effect that the breaches found have been corrected and that the internal audit reports have confirmed that the improvements carried out are satisfactory do not demonstrate that the contested decision is vitiated by a manifest error of assessment in so far as the ECB found AAB Bank to have been found responsible for serious breaches justifying withdrawal of its authorisation within the meaning of Paragraph 31(3)(2) and of Paragraph 34(2) and (3) of the FM-GwG, both read in the light of Article 67(1)(o) of Directive 2013/36.
(ii) Effect of any time-barring of the serious breaches found in decisions of administrative authorities or courts
67 AAB Bank submits that the breaches found in the FMA report on the fourth inspection are no longer relevant because they should be regarded as minor or time-barred under Paragraph 36 of the FM-GwG which establishes a three-year limitation period, since the inspection related to facts dating back to 2014 and before.
68 However, first of all, it should be noted that the infringements found in the FMA report on the fourth inspection are not the only serious breaches on which the ECB based the withdrawal of authorisation in the contested decision, with the effect that AAB Bank’s line of argument, even assuming it to be well founded, must be rejected as ineffective.
69 Next, a credit institution cannot rely on any time-barring of serious breaches for which it has been found liable in an administrative decision in order to establish that it has not been found liable for those breaches for the purposes of the withdrawal of its authorisation.
70 As soon as a decision finding that a breach occurred becomes definitive, there can no longer be any question of the facts that gave rise to that decision becoming time-barred. There was therefore nothing to prevent the ECB from taking that definitive decision into account for the purposes of a withdrawal of authorisation.
71 Furthermore, the interpretation advanced by AAB Bank, to the effect that a definitive decision finding that a breach occurred cannot be taken into account where the facts constituting that breach are time-barred, would render the ability to withdraw an authorisation in the event of serious breaches contingent on the length of the administrative procedure that gave rise to the finding that those breaches occurred or on the length of the administrative procedure giving rise to the decision to withdraw the authorisation and would, therefore, jeopardise the useful effect of Article 14(5) of Regulation No 1024/2013.
72 That argument accordingly does not establish that the contested decision is vitiated by an error of law in so far as the ECB considered AAB Bank to have been found liable for serious breaches within the meaning of Paragraph 34(2) and (3) of the FM-GwG.
(iii) Refutation of the facts alleged against AAB Bank in its relationship with Meinl Bank Antigua
73 AAB Bank disputes the ECB’s finding that it authorised or performed illegal transactions on Meinl Bank Antigua’s accounts with it and concealed information about that bank by lifting the anti-money laundering blocks on those accounts.
74 In that respect, the ECB had regard to those breaches on the basis, in particular, of the findings made in the FMA decision of 24 October 2018 from which it concluded that AAB Bank had breached Paragraph 39(2) and (2b)(5) and (11) of the BWG and Paragraph 23(3) of the FM-GwG.
75 That decision is definitive and has not been appealed by AAB Bank even though it was appealable to the Bundesverwaltungsgericht (Federal Administrative Court).
76 AAB Bank’s argument to the effect that there is no definitive finding that it breached its inspection and documentation obligations or committed any other criminal infringement determined by a court decision therefore cannot succeed.
77 Furthermore, the claims – intended to minimise the breaches AAB Bank is alleged to have committed – that, as the correspondent bank of Meinl Bank Antigua, AAB Bank confined itself to passively transferring payment streams not instigated by it, since it cooperated with the Bundeskriminalamt (Office of the Federal Judicial Police, Austria), spontaneously blocked the accounts and provided the FMA with the information requested about the transactions on blocked accounts and information about the lawful unblocking for certain transactions, cannot cast doubt on the findings in the FMA’s definitive decision, which the ECB took into consideration, that serious breaches were committed.
78 Those arguments are therefore not such as to establish that the contested decision is vitiated by a manifest error of assessment in so far as the ECB considered AAB Bank to have been found liable for serious breaches within the meaning of Paragraph 34(2) and (3) of the FM-GwG.
(iv) Claim that the breaches for which AAB Bank was found liable are not serious
79 AAB Bank submits, in essence, that in order to qualify as serious breaches within the meaning of Paragraph 34(2) and (3) of the FM-GwG breaches must go beyond failure to comply with individual provisions of the transposing legislation on the combating of money laundering and terrorist financing. In its view, the breaches for which it was found liable according to the contested decision cannot be regarded as serious.
80 Next, the breaches confirmed by the order of 7 February 2019 of the Bundesverwaltungsgericht (Federal Administrative Court), under reference W230 2138107-1, were in its view all minor breaches which that court did not classify as serious or systematic.
81 Lastly, according to AAB Bank, the shortcomings referred to in the FMA report on the fourth inspection all related to minor infringements that cannot be grounds for withdrawing authorisation.
82 In the contested decision, the ECB stated, inter alia, that it can be seen from the decisions of the national competent authorities that AAB Bank had breached the legislation to combat money laundering and terrorist financing in a serious, repeated and systematic manner since 2010, even while conducting high-risk transactions.
83 It also emphasised that, in the light of the FMA’s most recent assessments, AAB Bank was continuing seriously to breach those provisions and, therefore, to cause a significant risk to itself, the Austrian financial sector and the Single Supervisory Mechanism.
84 The ECB also indicated that, according to the FMA’s assessment, AAB Bank had breached the legislation to combat money laundering and terrorist financing in a serious, repeated and systematic manner since 2010 by failing to take measures to rectify the breaches detected, and also could be seen to have an attitude of non-cooperation towards the FMA.
85 The ECB concluded from the foregoing that AAB Bank had been found liable for serious breaches of the provisions of the FM-GwG adopted under Directive 2005/60 (now Directive 2015/849) which justified withdrawing its authorisation.
86 In the light of the many findings of breaches committed by AAB Bank contained in the administrative and court decisions set out in the contested decision and in paragraph 26 above, showing that the breaches of the legislation to combat money laundering and terrorist financing were systematic, serious and continuous, the ECB did not commit a manifest error of assessment by taking the view that the national competent authorities and the Austrian courts had found AAB Bank liable for serious breaches within the meaning of Paragraph 34(2) and (3) of the FM-GwG.
87 Indeed, as the ECB found in the contested decision, the administrative and court decisions show that AAB Bank seriously and continuously infringed its obligation to have an organisational structure and an appropriate procedure to combat money laundering and terrorism, and that it was found liable for serious breaches of the legislation to combat money laundering and terrorist financing.
88 In particular, since, in the decisions preceding the FMA’s withdrawal proposal which had become definitive by the date of the contested decision, the competent authorities found AAB Bank liable for serious breaches of the national anti-money laundering provisions, the seriousness of the breaches cannot be challenged at the stage of the administrative procedure before the ECB.
89 Moreover, in the light of the objective of those provisions of safeguarding the European banking market, the ECB cannot be criticised for finding that the systematic, serious and continuous breaches of the national legislation to combat money laundering and terrorist financing had to be classified as serious breaches justifying a withdrawal of authorisation within the meaning of Paragraph 34(2) and (3) of the FM-GwG and Article 67(1)(o) of Directive 2013/36.
90 Furthermore, in contrast to the assertions of AAB Bank, it is clear from the contested decision, the measures adopted by the FMA and the decisions of the Austrian courts set out in that decision that the breaches taken into account went beyond failure to comply with individual provisions of the transposing legislation on the combating of money laundering and terrorist financing and cannot be described as minor infringements.
91 AAB Bank has therefore not demonstrated that the ECB committed a manifest error of assessment when it found that AAB Bank had been found liable for serious breaches justifying withdrawal of its authorisation within the meaning of Paragraph 34(2) and (3) of the FM-GwG.
92 The first complaint of the first part of the first plea in law must therefore be rejected.
(2) Second complaint, alleging infringement of the obligation to state reasons and that the ECB had no power to find that the purported breaches of the anti-money laundering legislation justify withdrawing the authorisation
93 AAB Bank submits, in essence, that the only provisions of Austrian law according to which authorisation can be withdrawn on the grounds of serious breaches of the legislation to combat money laundering and terrorist financing are the combined provisions of Paragraph 31(3)(2) and Paragraph 34(2) and (3) of the FM-GwG, and that breach of the legislation to combat money laundering and terrorist financing does not permit authorisation to be withdrawn under Paragraph 70 of the BWG. It asserts that the ECB did not rely on those provisions and, in any event, did not have power to do so.
94 In essence, therefore, it is disputing the legal basis relied on in the contested decision as grounds for holding that breaches of the legislation to combat money laundering and terrorist financing justified withdrawing authorisation under Austrian law.
95 It infers from the foregoing that the infringement concerned was of the Austrian legislation and further states that the ECB cannot rely directly on the provisions of Directive 2013/36 and has power to act only under the substantive provisions of Austrian banking supervision law.
96 AAB Bank also argues, in essence, that the ECB failed to discharge its obligation to state reasons because it did not specify in the contested decision which national provisions relating to the combating of money laundering and terrorist financing had allegedly been breached.
97 It should be recalled in that respect that under Article 84(1) of the Rules of Procedure, no new plea in law may be introduced in the course of proceedings unless it is based on matters of law or of fact which come to light in the course of the procedure.
98 However, a plea that expands on a plea raised previously, whether directly or by implication, in the application and which is closely connected to that plea must be found to be admissible.
99 In order for a new argument to be regarded as expanding on a plea or argument raised previously, it must have a sufficiently close connection with the pleas or arguments initially contained in the application (see, to that effect, judgments of 12 November 2009, SGL Carbon v Commission, C‑564/08 P, not published, EU:C:2009:703, paragraphs 20 to 34, and of 16 December 2010, AceaElectrabel Produzione v Commission, C‑480/09 P, EU:C:2010:787, paragraph 111).
100 In the application, AAB Bank claimed that the contested decision had been adopted in breach of Article 4(3) of Regulation No 1024/2013 and of the applicable Austrian law because the requirements laid down by that law were not satisfied, and inferred from the foregoing that the ECB did not have power to withdraw its authorisation.
101 However, the arguments raised in the reply and comprising the second complaint of the first part of the first plea seek to challenge the provisions on the basis of which the ECB determined in the contested decision that withdrawal of AAB Bank’s authorisation was justified under Austrian law and to demonstrate that the ECB did not rely on a national provision that empowered it to withdraw authorisation in the event of breaches of the anti-money laundering provisions.
102 Since those arguments have a close connection with the arguments raised in support of the first plea in law in the application they must be regarded as expanding on those arguments and, therefore, as being admissible.
103 It should be noted in that respect that the ECB found in the contested decision that AAB Bank had breached, inter alia, the anti-money laundering provisions of the BWG and inferred from that circumstance that the requirements under Paragraph 70(4) of the BWG providing for withdrawal of authorisation were fulfilled.
104 It also stated that AAB Bank had breached various provisions of the FM-GwG on the combating of money laundering and terrorist financing, referred to in paragraph 25 above.
105 Accordingly, in contrast to the assertions of AAB Bank, it is incorrect to find that the only provisions in Austrian law according to which authorisation can be withdrawn on the grounds of breaches of the legislation to combat money laundering and terrorist financing are the combined provisions of Paragraph 31(3)(2) and Paragraph 34(2) and (3) of the FM-GwG and that breach of the anti-money laundering obligations under the BWG cannot be taken into account for the purposes of Paragraph 70(4) of the BWG.
106 Paragraph 39(2) and (2b) of the BWG, which the ECB found to have been breached by AAB Bank, in fact explicitly refers to the risk of money laundering and terrorist financing and it is apparent from Paragraph 70(4) of the BWG that breaches of the BWG such as those can be grounds for withdrawing authorisation.
107 Since, under Austrian law, a withdrawal of authorisation is justified where the anti-money laundering obligations under the BWG and the FM-GwG have been breached and since the ECB relied on those provisions, AAB Bank’s arguments must be rejected in so far as they assert that that there was no legal basis or that the ECB breached Article 4(3) of Regulation No 1024/2013.
108 In any event, even assuming that the ECB did rely on the wrong legal basis, it should be borne in mind that the annulment of an administrative decision because the wrong legal basis was used is not justified where that error had no decisive effect on the assessment made by the administration, so that a plea in law alleging selection of the wrong legal basis must be rejected in so far as it is purely formal in scope (judgment of 9 June 2015, Navarro v Commission, T‑556/14 P, EU:T:2015:368, paragraph 26).
109 AAB Bank is not claiming that the choice of a different legal basis could have affected the ECB’s assessment in the present case. Nor does it appear that choosing a different legal basis could have affected the ECB’s assessment.
110 In addition, it can be seen from the case-law, first, that the statement of reasons required under Article 296 TFEU must be appropriate to the measure in question and must disclose in a clear and unequivocal fashion the reasoning followed by the institution which adopted that measure, in such a way as to enable the persons concerned to ascertain the reasons for the measure and to enable the competent court to carry out its review and, secondly, that the requirements to be satisfied by the statement of reasons depend on the circumstances of each case, in particular the content of the measure in question, the nature of the reasons given and the interest which the addressees of the measure, or other parties to whom it is of direct and individual concern, may have in obtaining explanations. In particular, it is not necessary for the statement of reasons to specify all the relevant matters of fact and law, since the question whether the statement of reasons meets the requirements of Article 296 TFEU must be assessed with regard not only to its wording but also to its context and to all the legal rules governing the matter in question (see judgment of 16 May 2017, Landeskreditbank Baden-Württemberg v ECB, T‑122/15, EU:T:2017:337, paragraphs 123 and 124 and the case-law cited).
111 In contrast to AAB Bank’s assertions, the ECB has not infringed the obligation to state reasons, because the provisions of the BWG and the FM-GwG breached by AAB Bank and the provisions of the BWG establishing that authorisation can be withdrawn are referred to in the contested decision, as can be seen from paragraph 25 above.
112 The second complaint of the first part of the first plea in law is therefore unfounded.
113 Having regard to the foregoing, the first part of the first plea in law must be rejected.
(b) Second part of the first plea in law, alleging, in essence, that the provisions transposing Article 18(f) of Directive 2013/36 were breached because AAB Bank had put in place the governance arrangements required by the competent authorities in accordance with the national provisions transposing Article 74, within the meaning of Article 67(1)(d), of that directive
114 According to AAB Bank, the requirements under Article 18(f) and Article 67(1)(d) of Directive 2013/36, as transposed by Paragraph 39(2) and (2b), read in conjunction with Paragraph 70(4), of the BWG, were not satisfied, because AAB Bank did have the governance arrangements required by the competent authorities.
115 It can be seen from Article 18 of Directive 2013/36, transposed by Paragraph 70(4) of the BWG, that the competent authorities may withdraw the authorisation granted where a credit institution has not put in place the governance arrangements required by the competent authorities in accordance with the national provisions transposing Article 74 of that directive.
116 Article 74 of Directive 2013/36, entitled ‘Internal governance and recovery and resolution plans’, reads as follows:
‘1. Institutions shall have robust governance arrangements, which include a clear organisational structure with well-defined, transparent and consistent lines of responsibility, effective processes to identify, manage, monitor and report the risks they are or might be exposed to, adequate internal control mechanisms, including sound administration and accounting procedures, and remuneration policies and practices that are consistent with and promote sound and effective risk management.’
117 As regards the provisions transposing Article 74 of Directive 2013/36, Paragraph 39(2) of the BWG provides:
‘Credit institutions shall have administrative, accounting and control mechanisms to capture, assess, manage and monitor operational risk and the risks arising from banking transactions and from their remuneration policy and practices. Those mechanisms shall be appropriate to the type, scope and complexity of the banking operations carried out. The organisational structure and the administrative, accounting and control mechanisms shall be documented comprehensibly in writing. In so far as possible, the administration, accounting and control mechanisms shall also capture operational risk and the risks arising from banking transactions and from any remuneration policy and practices that might come into being. The organisational structure shall seek to prevent conflicts of interest and of competence by establishing demarcations within the structural organisation and processes appropriate to the business of the credit institution. The internal audit unit shall examine at least once a year whether those procedures are appropriate and are implemented.’
118 According to Paragraph 39(2b) of the BWG:
‘In particular, the procedures referred to in paragraph 2 must include the following: 1. credit risk and counterparty risk; 2. concentration risk; 3. market risk; 4. risk of excessive leverage; 5. operational risk; 6. securitisation risk; 7. liquidity risk; 8. interest rate risk arising from transactions not covered by paragraph 3; 9. the residual risk associated with credit risk mitigation techniques; 10. macroeconomic environment risks; 11. the risk of money laundering and terrorist financing; 12. the risk associated with the institution’s business model having regard to the effects of diversification strategies; 13. the results of stress tests in the case of institutions using internal approaches; and 14. the systemic risk … arising from an institution.’
119 Paragraph 42 of the BWG also establishes, in essence, an obligation to set up an internal audit body, while Paragraph 44 of the BWG, in essence, requires credit institutions to file their audited annual financial statements six months after the end of the financial year.
120 In the present case, the ECB found that AAB Bank had breached the national provisions transposing Article 74 of Directive 2013/36, specifically Paragraph 39(2), (2b) and (5), Paragraph 42 and Paragraph 44(1) of the BWG, and, in consequence, that it had committed and was still committing breaches justifying withdrawal of its authorisation under Paragraph 70(4) of the BWG.
121 In particular, it stated that the decision to withdraw AAB Bank’s authorisation to engage in the business of a credit institution was founded, inter alia, on infringement of the obligation to have an internal governance framework enabling sound risk management and infringement of the obligation to provide the FMA with correct information and the obligation to have an internal audit mechanism, adequate internal accounting procedures, an adequate internal documentation system and adequate concentration risk management procedures.
122 In support of its findings in respect of breaches of the national provisions transposing Article 74 of Directive 2013/36, the ECB relied in particular on:
– the FMA’s formal order of 19 August 2015 instructing AAB Bank to ensure that its internal audit department finished its annual audit plan on time and noting that the internal audit department had failed to fulfil its audit plans, thereby breaching Paragraph 42 of the BWG (transposing Article 74 of Directive 2013/36);
– the FMA’s formal order of 17 May 2016 instructing AAB Bank to implement adequate Business Continuity Management (BCM) plans and finding that its BCM had been inadequate in the period from 2013 to 2016, thereby breaching Paragraph 39(2), (2b) and (5) of the BWG (transposing Article 74 of Directive 2013/36);
– the FMA’s formal order of 1 July 2016 instructing AAB Bank to submit its 2015 audited annual statements and finding that it had failed to submit the audited statements in due time, that is to say, by 30 June 2016, and had, therefore breached Paragraph 44(1) of the BWG;
– the FMA’s formal order of 6 September 2016 instructing AAB Bank to ensure complete and comprehensible documentation of its credit files and finding that, in the period from 2013 to 2016, its credit processes (in particular annual reporting and the treatment of problematic loans) had not been comprehensibly documented, in breach of Paragraph 39(2) and (2b)(1) of the BWG (transposing Article 74 of Directive 2013/36);
– the FMA’s formal order of 17 July 2017 instructing AAB Bank to allocate sufficient resources to its internal audit department and finding that the internal audit department had still not been completed, in breach of Paragraph 42 of the BWG (transposing Article 74 of Directive 2013/36);
– the FMA’s formal order of 31 January 2018 instructing AAB Bank to ensure that, when entering into contracts, the relevant documentation is adequate (that is to say, in written form and complete), and finding that, in the period from 2015 to 2017, AAB Bank had repeatedly concluded business transactions despite the fact that the relevant contracts were either incorrect or incomplete, or, in some cases, no written contract existed, in breach of Paragraph 39(2) of the BWG (transposing Article 74 of Directive 2013/36);
– the FMA’s formal order of 5 September 2018 instructing AAB Bank to put in place adequate and timely accounting procedures and finding that, in the period from 2017 to 2018, its accounting procedures did not ensure that its accounting and therefore also its supervisory reporting were up to date, in breach of Paragraph 39(2) and (3)(6) of the BWG (transposing Article 74 of Directive 2013/36);
– the FMA’s formal order of 24 October 2018 instructing AAB Bank to ensure that all its trading transactions and its business relationship with Meinl Bank Antigua were comprehensibly documented, and finding that its internal documentation, including anti-money laundering documentation, was so inadequate that the internal audit department, the risk manager and the anti-money laundering officer were not able to perform their control functions, in breach of Paragraph 39(2) and (2b)(5) and (11) of the BWG, transposing Article 74 of Directive 2013/36, and of Paragraph 23(3) of the FM-GwG;
– the FMA’s formal order of 3 December 2018 instructing AAB Bank to ensure that a correct risk weight was applied to all balance sheet items and finding that, in the period from 2017 to 2018, its internal procedures had not ensured that all its assets – in particular as regards non-standard transactions – were correctly weighted, in breach of Paragraph 39(2) of the BWG (transposing Article 74 of Directive 2013/36).
123 The second part of the first plea, seeking to challenge those findings and the conclusion drawn from them, is divided into two complaints.
(1) First complaint, alleging breach of Article 74 of Directive 2013/36, as transposed by Paragraph 39(2) and (2b) of the BWG, by applying those articles to risks associated with combating money laundering and terrorist financing
124 AAB Bank claims, in essence, that Article 74 of Directive 2013/36 concerns the obligations relating to governance arrangements intended to prevent financial risk and that Paragraph 39(2) and (2b) of the BWG should therefore be interpreted as meaning that supervisory measures such as withdrawal of authorisation under Article 70(4) of the BWG can only be applied as the result of an inappropriate risk structure for financial risk, rather than an inappropriate structure for combating money laundering and terrorist financing.
125 It infers from the foregoing that the ECB erred in law by basing the contested decision on a breach of Article 74 of Directive 2013/36 transposed by Paragraph 39(2) and (2b) of the BWG arising from inappropriate arrangements for combating money laundering and terrorist financing, instead of from inappropriate governance arrangements to prevent financial risk.
126 It is sufficient to note in that respect that the contested decision makes clear that when it determined that Paragraph 39(2) and (2b) and (5), Paragraph 42 and Paragraph 44(1) of the BWG had been breached, the ECB relied in particular on infringement of the obligation to have an internal governance framework enabling sound risk management, the obligation to provide the FMA with correct information and the obligation to have an internal audit mechanism, adequate internal accounting procedures, an adequate internal documentation system and adequate concentration risk management procedures.
127 In contrast to the assertions of AAB Bank, the ECB cannot therefore be criticised for finding that those provisions of the BWG were breached as a result of inappropriate arrangements for combating money laundering and terrorist financing, because it inferred the existence of that breach from, inter alia, the fact that the governance arrangements were inappropriate.
128 Furthermore, Paragraph 39(2b) of the BWG states that the adequate procedures that credit institutions are required to have under Paragraph 39(2) of the BWG must include appropriate arrangements to combat the risk of money laundering and terrorist financing.
129 AAB Bank’s arguments in this respect therefore do not demonstrate that the ECB erred in law when it found that the bank had not put in place the governance arrangements required by the competent authorities in accordance with the provisions of the BWG transposing Article 74 of that directive.
130 It follows that the line of argument according to which AAB Bank did have a satisfactory framework for preventing money laundering and terrorist financing and that it had been improved must also be rejected as irrelevant.
131 The first complaint of the second part of the first plea in law must therefore be rejected.
(2) Second complaint, alleging breach of Article 67(1)(d) of Directive 2013/36, as transposed into Austrian law, because AAB Bank was not in breach of the legislation on governance arrangements on the date of the contested decision
132 AAB Bank contends, in essence, that, on the date of the contested decision, not only did it have the governance arrangements required by the competent authorities and its internal audit was appropriate but it is untrue that it was infringing its obligations relating to keeping, monitoring and filing accounts, governance, risk management, its internal and contractual documentation system and the management of credit files.
133 First, AAB Bank asserts not only that some of those breaches are too old and were eliminated in 2016 or have been eliminated since 2017 or corrected, and that it has made considerable progress in those areas, as it claims is confirmed, for example, by its 2019 audit reports, but also that the residual weaknesses relating to those breaches could be mitigated.
134 However, AAB Bank’s reasoning cannot succeed. No interpretation to the effect that past breaches or breaches that have been mitigated cannot justify withdrawing authorisation emerges either from the wording of Article 67(1)(d) of Directive 2013/36 or from Paragraph 70(4) of the BWG.
135 Such an interpretation would furthermore jeopardise the objective of safeguarding the European banking system since it would permit credit institutions that have not put in place the governance arrangements required by the competent authorities to continue their activities so long as the competent authorities do not demonstrate again that they have committed new breaches.
136 The foregoing applies with all the more reason to breaches committed only three years or five years before the contested decision was adopted.
137 Secondly, AAB Bank disputes that the infringements of its obligations found in the contested decision in fact occurred, claiming that those infringements are not systemic, flagrant or serious.
138 Nevertheless, it does not emerge from Article 18(f) or Article 67(1)(d) of Directive 2013/36 or from the provisions transposing those articles that the breaches to which those provisions refer must be serious, flagrant or systemic in order to justify withdrawing authorisation.
139 The ECB therefore did not commit a manifest error of assessment by failing to establish that the breaches it found AAB Bank had committed of provisions of the BWG transposing Article 74 of that directive were serious, flagrant or systemic.
140 Thirdly, AAB Bank contends, in essence, that its internal audit department is not understaffed, has sufficient financial resources and performs its tasks properly and that the bank does not exert unlawful pressure on it.
141 However, it is important to bear in mind that under Austrian law the FMA has power to adopt decisions determining and penalising a breach of the provisions of the BWG transposing Article 74 of Directive 2013/36.
142 It follows that the FMA may adopt administrative decisions finding that an institution has not put in place the governance arrangements required by the competent authorities in accordance with the provisions of the BWG transposing Article 74 of that directive.
143 It is furthermore apparent from the case-law concerning acts of EU institutions that a decision which has not been challenged by its addressee within the time limit laid down becomes definitive as against that person (see, to that effect, judgments of 12 October 2007, Pergan Hilfsstoffe für industrielle Prozesse v Commission, T‑474/04, EU:T:2007:306, paragraph 37, and of 8 May 2019, Lucchini v Commission, T‑185/18, not published, EU:T:2019:298, paragraph 38).
144 It also follows from the case-law concerning acts of EU institutions 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 (see, to that effect, judgment of 12 October 2007, Pergan Hilfsstoffe für industrielle Prozesse v Commission, T‑474/04, EU:T:2007:306, paragraph 76).
145 That case-law must be applied, by analogy, to decisions of national administrative authorities determining a breach of the national provisions relating to the governance of credit institutions.
146 A credit institution may therefore be found to have failed to put in place the governance arrangements required by the competent authorities in accordance with the provisions of the BWG transposing Article 74 of that directive in earlier definitive administrative decisions.
147 AAB Bank’s arguments therefore do not refute the fact that its internal audit was inappropriate, found in earlier definitive administrative decisions on which the ECB relied in the contested decision.
148 The line of argument according to which, on the date of the contested decision, AAB Bank had the governance arrangements required by the competent authorities and its internal audit was appropriate and did not infringe its obligations relating to keeping, monitoring and filing accounts, governance, risk management, its internal and contractual documentation system and the management of credit files, must therefore be rejected.
149 Furthermore, it should be emphasised that AAB Bank’s internal audit reports cannot be regarded as sufficient, in themselves, to demonstrate whether or not the credit institution put in place the governance arrangements required by the competent authorities in accordance with the provisions of the BWG transposing Article 74 of Directive 2013/36.
150 Although those reports may, if applicable, be used to dispute findings by the ECB that are not founded on a definitive decision determining that a breach has been committed, they cannot be regarded as sufficient to call into question findings made in administrative decisions that have become definitive.
151 Fourthly, AAB Bank accepts that, on a number of occasions, the provisions relating to large exposures were breached, but states that those breaches are explained by the recalculation of reserves. According to the bank, the reduction in own funds resulting from the recalculation of reserves resulted in a breach of the large exposure provision. In addition, according to AAB Bank, those breaches have already been offset by an increase in the penalty under Paragraph 97 of the BWG.
152 However, AAB Bank does not dispute that it breached the large exposure provisions and is merely attempting to justify those breaches.
153 Furthermore, the fact that those breaches have already given rise to increased penalties does not cast doubt on the fact that they occurred or, therefore, that they can be grounds for a withdrawal of authorisation.
154 Fifthly, AAB Bank submits that the ECB should have applied Paragraph 70(4) of the BWG and Paragraph 31(1) of the FM-GwG, under which that authority must take all the necessary appropriate measures to ensure that the business operation of obliged entities is compatible with the FM-GwG.
155 The FMA should therefore have followed the three stages of the supervisory procedure established in Paragraph 70(4) of the BWG and should have attempted to rectify the assumed non-compliance with the prudential supervisory standards by means of specific instructions, the threat of a periodic penalty and then, if those means failed, by prohibiting activity, and should only have withdrawn the authorisation if other measures established by the BWG could not ensure the proper functioning of the credit institution.
156 However, in its submission, neither the ECB nor the FMA have shown that those prerequisites for withdrawing authorisation were satisfied and the national measures adopted before the withdrawal of authorisation set out in the contested decision do not establish that the stages laid down by Austrian law were followed.
157 In the present case, it should be noted that, in contrast to AAB Bank’s claims, the contested decision was preceded by prudential supervisory measures targeting the same shortcomings as those that gave rise to withdrawal of the authorisation.
158 As the contested decision states, since 2015 the FMA has in fact issued, inter alia, 24 formal supervisory measures, including 17 formal orders to restore legal compliance in relation to deficiencies in AAB Bank’s anti-money laundering framework and the combating of terrorist financing, 4 sanctions in relation to internal governance and violations of the legislation on the prevention of money laundering and terrorist financing, and a large number of supervisory measures.
159 AAB Bank’s line of argument here therefore lacks any basis in fact.
160 The second complaint of the second part of the first plea in law must therefore be rejected.
161 Having regard to the foregoing, the second part of the first plea in law is unfounded.
162 The first plea in law must therefore be rejected.
2. Second plea in law, alleging infringement of the principle of proportionality
163 In support of that plea, AAB Bank asserts that, even if the ECB’s criticisms were well founded and sufficient, the contested decision is disproportionate because it was neither necessary nor appropriate to withdraw the authorisation in order to achieve the objectives pursued.
164 First, AAB Bank takes issue with the FMA and the ECB, in essence, for failing to determine whether, out of all the measures available to them, the objective pursued could have been achieved using a less onerous means than a withdrawal of authorisation.
165 Secondly, according to AAB Bank, the contested decision was neither appropriate nor necessary because it was issued seven months after the FMA’s proposal to withdraw the authorisation, whereas it should have been issued promptly, and because the FMA was unable to determine whether the proposed withdrawal was still appropriate and necessary.
166 Thirdly, AAB Bank asserts that the withdrawal of authorisation was disproportionate to the objectives pursued.
167 Fourthly, according to AAB Bank, the withdrawal of authorisation was also disproportionate because it had the effect of destroying its soundness, to the detriment of depositors, investors and counterparties.
168 Fifthly, AAB Bank argues that the refusal to suspend implementation of the contested decision was disproportionate in the light of its adverse effects on its ability to defend itself.
169 The ECB disputes those arguments.
170 In the present case, the ECB held in the contested decision, in essence, that withdrawal of AAB Bank’s authorisation was proportionate because it pursued the objective of putting an end to AAB Bank’s breaches of the law and the resulting risks to the European banking system and because, given the seriousness of those breaches and the measures already taken by the FMA, no other measure could achieve that objective. It also stated that the public interest in protecting depositors, investors and AAB Bank’s other partners had to prevail over the bank’s interests and those of its owners in continuing to be authorised.
171 In that regard, it should be borne in mind that, according to the case-law, the principle of proportionality requires that acts of the EU institutions be appropriate for attaining the legitimate objectives pursued by the legislation at issue and do not go beyond what is necessary in order to achieve those objectives (judgment of 16 June 2015, Gauweiler and Others, C‑62/14, EU:C:2015:400, paragraph 67 and the case-law cited).
172 First, as the ECB highlighted, the objective pursued by withdrawing authorisation was to put an end to AAB Bank’s breaches of the law and the resulting risks to the European banking system and to protect depositors, investors and AAB Bank’s other partners.
173 AAB Bank has not disputed that those objectives are legitimate.
174 Secondly, as regards whether the contested decision is appropriate to achieving those objectives, it should be noted that withdrawing the credit institution’s authorisation, because it prevents that institution from continuing to perform its activities, is appropriate to furthering the objective of putting an end to the breaches of the law and the resulting risks to the European banking system and to the objective of protecting depositors, investors and AAB Bank’s other partners.
175 On that point, AAB Bank is of the view, first, that the contested decision was neither appropriate nor necessary because it was issued seven months after the FMA’s proposal to withdraw the authorisation and because the FMA was unable to determine whether the proposed withdrawal was still appropriate and necessary.
176 Admittedly, as AAB Bank emphasises, Article 81(1) of Regulation No 468/2014 makes clear that the ECB is to assess a draft withdrawal decision without undue delay.
177 However, the fact that seven months elapsed between the FMA’s proposed withdrawal decision and adoption of the contested decision does not prove that the contested decision was not necessary in order to achieve the objectives pursued.
178 In the present case, moreover, that period is reasonable since the ECB had to study the FMA’s draft withdrawal decision, which was extensive, in order to determine whether it was justified and to analyse the, likewise extensive, 12 letters containing supplementary comments submitted by AAB Bank after it had been heard.
179 The fact that the FMA did not re-examine whether the withdrawal of authorisation was still necessary after seven months is also irrelevant because only the ECB is competent to determine the necessity for withdrawal.
180 Furthermore, according to AAB Bank, the withdrawal of authorisation was inappropriate to the objectives pursued because the residual legal effects of the withdrawal paradoxically involved discontinuing all supervision and ceasing to address money laundering.
181 However, that argument does not establish that the contested decision was not necessary.
182 By preventing it from continuing to operate, withdrawal of AAB Bank’s authorisation in fact put an end to the infringements of its anti-money laundering obligations.
183 It is therefore necessary to determine, thirdly, whether AAB Bank’s arguments establish that the contested decision went beyond what is necessary in order to achieve the objectives pursued.
184 AAB Bank asserts in that respect, first, that less onerous alternative measures, such as injunctions, fines or the publication of notices, could have achieved the objective of restoring legality.
185 However, as can be seen from the contested decision, even though the FMA has issued a large number of injunctions and penalties against AAB Bank since 2010, AAB Bank has not taken satisfactory corrective measures to comply with the legal requirements of the applicable legislation.
186 The ECB therefore did not commit a manifest error of assessment when it found that other measures could not achieve the objectives pursued.
187 For the same reason, the arguments that the infringements of AAB Bank’s obligations were old and in the past by the date of the contested decision, that they were not sufficiently serious and could have been corrected, since it strives constantly to comply with the prudential rules, or that the authorisation could have been withdrawn later, do not prove that the ECB committed a manifest error of assessment when it found that a withdrawal of authorisation was the only measure capable of achieving the objectives pursued.
188 The argument that, according to the specific embodiment of the principle of proportionality in Austrian law in Paragraph 70(4) of the BWG, measures should have been taken as a precondition for the contested decision is likewise untenable because such measures were in fact taken previously by the FMA and were not able to restore legality within the meaning of Article 70(4)(1).
189 The same is true of AAB Bank’s argument that the voluntary, albeit provisional, discontinuance of its banking activities or a decision to immediately liquidate the bank and then restore its authorisation after an 18-month transitional period would have reduced the alleged risks while avoiding the need to withdraw the authorisation.
190 Indeed, provisionally discontinuing AAB Bank’s activities and maintaining the authorisation would not have brought the alleged breaches definitively to an end since those breaches could have recurred once it resumed its activities.
191 Similarly, restoring AAB Bank’s authorisation after an 18-month transitional period could not have prevented breaches from continuing during that period.
192 In addition, as the ECB emphasises, neither the solution of AAB Bank self-liquidating nor the discontinuance of its banking activities could achieve the objective pursued since, if AAB Bank decided to resume its activities, the ECB or the FMA could not have forced it to complete the liquidation or prevented it from resuming its banking activities using any measure other than withdrawal of its authorisation.
193 Secondly, according to AAB Bank, withdrawing the authorisation was also disproportionate because the ECB had not correctly assessed the actual consequences of its decision. Withdrawing its authorisation would have destroyed the soundness of AAB Bank, to the detriment of depositors, investors and counterparties. In its view, liquidating the bank would have destroyed consumer confidence in the Austrian financial system, meaning that the serious effects on AAB Bank’s situation caused by the measure adopted posed an obstacle to the objectives pursued.
194 In particular, the ECB had not foreseen that withdrawal of the authorisation would trigger the maturity of deposits and, therefore, insolvency as the result of payment default. Nor did the ECB envisage that the FMA would infer from the withdrawal of authorisation, without further conditions, that the management board should be removed and replaced by liquidators as the sole representatives of the bank’s governing bodies.
195 It should nevertheless be noted that, given the objective of restoring legality and the risks that the breaches alleged against AAB Bank posed to the banking system, its creditors, customers and partners, the ECB cannot be criticised for not declining to withdraw its authorisation solely in order to prevent that credit institution becoming insolvent and being placed in liquidation.
196 Indeed, in the light of the breaches found and the objectives pursued by the contested decision, the consequences of the contested decision for AAB Bank’s situation did not go beyond what was necessary in order to achieve the objectives pursued.
197 Moreover, as can be seen from the contested decision, the breaches alleged against AAB Bank also had the effect of damaging its soundness, to the detriment of depositors, investors and counterparties, and of destroying consumer confidence in the banking market.
198 Thirdly, AAB Bank claims that the refusal to suspend immediate application of the contested decision was disproportionate because the ECB failed to take into account the adverse effects of withdrawing the authorisation and of its implementation on its rights of the defence.
199 However, since AAB Bank was in a position both to appeal against the contested decision and to apply for interim measures, the ECB’s refusal to suspend immediate application of the contested decision had no adverse effects on its rights of the defence and did not go beyond what was necessary to achieve the objectives pursued.
200 In the light of the foregoing, the ECB did not commit a manifest error of assessment when it found that the contested decision was proportionate.
201 The second plea in law must therefore be rejected.
3. Third plea in law, alleging that the ECB breached Article 34 of Regulation No 468/2014, read in the light of the right to effective judicial protection, by refusing to suspend application of the contested decision
202 In support of that plea, AAB Bank asserts, in essence, that the refusal to grant its application to suspend application of the contested decision not only contravened Article 34 of Regulation No 468/2014 and the right to effective judicial protection but was also unjustified because there was no urgency.
203 According to AAB Bank, the right to effective judicial protection presupposed that the ECB should suspend implementation of the contested decision until judgment had been issued on an action brought against that decision, because it would have no opportunity to obtain a review of the lawfulness of the contested decision before implementation, even by means of an application for interim measures, although a measure of that nature would cause irreparable harm and lead to its executives being replaced by liquidators as the sole representatives of the bank’s governing bodies.
204 AAB Bank adds that the rule that decisions to withdraw authorisation must be applied immediately must be found to infringe fundamental rights because – as a result of the scope of those decisions and because provisional judicial protection at European level is limited – it prevents the effective judicial protection of the addressees of withdrawal of authorisation decisions.
205 It should be borne in mind that Article 47 of the Charter of Fundamental Rights of the European Union states that everyone has the right to an effective remedy and to access to an impartial tribunal.
206 Moreover, it has already been held that the unavailability of interim measures was incompatible with the general principle of EU law which gives individuals a right to complete and effective judicial protection (see, to that effect, order of 3 May 1996, Germany v Commission, C‑399/95 R, EU:C:1996:193, paragraph 46).
207 Nevertheless, it can also be seen from the case-law that the existence of conditions of admissibility or substantive conditions does not, as such, contravene the right to effective judicial protection (see, by analogy, judgments of 13 March 2007, Unibet, C‑432/05, EU:C:2007:163, paragraph 73; and of 3 October 2013, Inuit Tapiriit Kanatami and Others v Parliament and Council, C‑583/11 P, EU:C:2013:625, paragraphs 98 and 106; and order of 19 June 1995, Kik v Council and Commission, T‑107/94, EU:T:1995:107, paragraph 39).
208 The fact remains that such conditions must not in practice render an action impossible or excessively difficult (see, to that effect, by analogy, judgments of 16 December 1976, Rewe-Zentralfinanz and Rewe-Zentral, 33/76, EU:C:1976:188, paragraph 5; of 26 January 2010, Transportes Urbanos y Servicios Generales, C‑118/08, EU:C:2010:39, paragraph 31; and of 12 December 2013, Test Claimants in the Franked Investment Income Group Litigation, C‑362/12, EU:C:2013:834, paragraph 32).
209 Furthermore, under Article 34 of Regulation No 468/2014, without prejudice to Article 278 TFEU and Article 24(8) of Regulation No 1024/2013, the ECB may decide to suspend application of a supervisory decision.
210 In the present case, first, in contrast to AAB Bank’s assertions, neither the application to the EU court to provisionally suspend the contested decision nor the action for annulment of that decision seeking a review of its legality was rendered excessively difficult or impossible by the refusal to suspend immediate application of the contested decision.
211 Indeed, the fact that AAB Bank was placed into liquidation, which occurred as a result of the contested decision, did not prevent it from bringing an action for annulment and an application for interim measures against that decision.
212 Moreover, by the order of 20 November 2019, Anglo Austrian AAB Bank and Belegging-Maatschappij ‘Far-East’ v ECB (T‑797/19 R, not published, EU:T:2019:801), the President of the General Court, at the applicants’ request, ordered the suspension of implementation of the contested decision six days after it was adopted, until a decision was made on their application for interim measures.
213 Secondly, the claim that provisional judicial protection at EU level is limited, alleging as it does that the requirements for obtaining interim relief are incompatible with the right to effective judicial protection, must in any event also be rejected applying the case-law cited in paragraph 207 above.
214 In respect, in particular, of the argument that authorisation withdrawal decisions are irreversible or irreparable, it should be noted that a refusal to suspend the effects of a withdrawal of authorisation decision does not undermine the right to judicial protection of the institutions concerned.
215 The immediate application of authorisation withdrawal decisions can indeed be suspended, where appropriate, in the context of an application for interim measures, and does not prevent the institutions concerned from bringing actions for annulment of those decisions.
216 AAB Bank could therefore have obtained a suspension of implementation of the contested decision had it satisfied the conditions for such a suspension, in particular the condition relating to urgency.
217 Furthermore, in the event that a withdrawal decision is found to be unlawful in an action for annulment, the institution concerned may seek compensation for the loss sustained as a result of the unlawfulness found.
218 Moreover, the fact that a credit institution has been placed in liquidation following withdrawal of its authorisation and that its executives have been replaced by liquidators as its representatives does not prevent that institution from bringing an action against the decision withdrawing its authorisation.
219 Immediate application of withdrawal decisions therefore does not conflict with the right of the institutions concerned to judicial protection.
220 Thirdly, AAB Bank contends that the refusal to suspend application of the contested decision contravenes Article 34 of Regulation No 468/2014 and was not justified by any urgency because the contested decision was based on breaches dating back several years, none of which still existed. It also asserts that neither the ECB nor the FMA advanced any arguments relating to the existence of urgency.
221 It should be borne in mind in that respect that the ECB declined to suspend the effects of the contested decision for 30 days on the grounds that AAB Bank’s comments were not such as to raise doubt about the legality of the decision, that the decision was not such as to cause 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 immediate implementation of the decision.
222 In addition, it cannot be inferred from Article 34 of Regulation No 468/2014, according to which the ECB may decide to suspend application of a supervisory decision, that the ECB must demonstrate that the refusal to suspend a withdrawal of authorisation decision is justified on grounds of urgency.
223 Furthermore, under Article 34 of Regulation No 468/2014, it is at the discretion of the ECB whether or not to suspend application of a withdrawal of authorisation decision.
224 In view of the fact that a large number of injunctions and penalties have been issued since 2010, the allegation that the breaches levelled against AAB Bank were old and no longer existed does not prove any manifest error of assessment vitiating the ECB’s assertion that the public interest in protecting its depositors, investors and other partners and the stability of the financial system justified immediate application of the contested decision.
225 The ECB therefore did not exceed its discretion or breach Article 34 of Regulation No 468/2014 by refusing to suspend the contested decision for 30 days.
226 Having regard to the foregoing, the third plea in law is unfounded.
4. Fourth plea in law, alleging infringement of AAB Bank’s rights of the defence
227 Under this plea, which is divided into four parts, AAB Bank submits that the contested decision was adopted in breach of Article 41 of the Charter of Fundamental Rights and Articles 31 and 32 of Regulation No 468/2014 because the ECB, first, infringed its right to a fair legal process and its right to be heard, secondly, denied it full access to the file, thirdly, failed to determine the relevant circumstances and, fourthly, infringed its ‘right to a hearing’.
228 The ECB disputes that line of argument.
(a) First part of the fourth plea in law, alleging infringement of the right to be heard and the right to a fair legal process
229 Under the first part of the fourth plea, AAB Bank asserts that the FMA did not hear it before notifying the draft decision to the ECB, whereas it had an obligation to do so under Paragraph 70(4) of the BWG and by virtue of the right to be heard, and that the ECB failed to inform it that a draft withdrawal decision had been notified.
230 It should be borne in mind that under Article 81(2) of Regulation No 468/2014 the right to be heard, as provided for in Article 31 of that regulation, is to apply.
231 Article 31 provides that: ‘before the ECB may adopt an ECB supervisory decision addressed to a party which would adversely affect the rights of such party, the party must be given the opportunity of commenting in writing to the ECB on the facts, objections and legal grounds relevant to the ECB supervisory decision. … The notification by which the ECB gives the party the opportunity to provide its comments shall mention the material content of the intended ECB supervisory decision and the material facts, objections and legal grounds on which the ECB intends to base its decision.’
232 In the present case, AAB Bank does not dispute that, before the contested decision was adopted, it was heard on the ECB draft decision, which was sent to it by the ECB on 14 June 2019 and contained the essential facts, objections and legal grounds on which the ECB intended to rely in the contested decision. Following that notification, by letter of 23 July 2019 AAB Bank commented in writing on the ECB draft decision, as provided for in Article 31(1) of Regulation No 468/2014.
233 Furthermore, in contrast to the assertions of AAB Bank, that article, which governs the relevant applicable procedure, imposed no requirement on the ECB to notify the FMA’s draft decision to AAB Bank.
234 That being so, AAB Bank’s argument, founded on Article 4(3) of Regulation No 1024/2013, that the ECB should have found that its procedural rights were infringed as the result of the FMA breaching Paragraph 70(4) of the BWG, has no basis in law.
235 It must therefore be found that AAB Bank was given an opportunity to comment on the ECB draft decision that gave rise to the contested decision, in accordance with Article 31 of Regulation No 468/2014.
236 Under those circumstances, the fact that the applicant was not heard on the FMA draft decision and the fact that the ECB did not notify the FMA’s proposal to withdraw authorisation to it at the time it was sent to the ECB are of no significance.
237 The first part of the fourth plea in law must therefore be rejected.
(b) Second part of the fourth plea in law, alleging infringement of the right of access to the file
238 AAB Bank claims that the right of access to the file arises as soon as the FMA commences the supervisory procedure and that its purpose is to enable the addressee of a draft decision to exercise the right to be heard.
239 It also submits that its right of access to the file was infringed because the ECB granted only restricted access to the file. AAB Bank claims that because internal communications and communications between the ECB and the FMA were not forwarded, having been classified as confidential, it was prevented from determining whether the documents disclosed were materially relevant for the purposes of gaining access to the file for the proceedings before the General Court and of identifying the allegations made by the ECB and the FMA.
240 It should be borne in mind in that respect that the right of access to the file means that the institution concerned must give the undertaking concerned the opportunity to examine all the documents in the investigation file which may be relevant for its defence. Those documents include both incriminating evidence and exculpatory evidence, save where the business secrets of other undertakings, internal documents or other confidential information are involved (see, to that effect, by analogy, judgment of 7 January 2004, Aalborg Portland and Others v Commission, C‑204/00 P, C‑205/00 P, C‑211/00 P, C‑213/00 P, C‑217/00 P and C‑219/00 P, EU:C:2004:6, paragraph 68 and the case-law cited).
241 Furthermore, according to Article 32(1) and (5) of Regulation No 468/2014, the right of access to the file does not cover confidential information, which may include not only internal documents of the ECB and national competent authorities but correspondence between the ECB and a national competent authority or between those authorities.
242 Accordingly, first, AAB Bank did have access to the file before commenting on the ECB draft decision that led to adoption of the contested decision.
243 Because the period that was given in which to comment, five weeks, was sufficient for it properly to defend itself, it must be found that AAB Bank was given an opportunity to comment while having access to the file.
244 Secondly, AAB Bank’s reasoning that, because it did not have access to the internal communications of the ECB and those between the FMA and the ECB concerning determination of the incriminating facts and the FMA’s findings, it was prevented from determining whether the documents disclosed in the file were materially relevant and from identifying the allegations made by the ECB and the FMA does not prove that AAB Bank was prevented from effectively defending itself.
245 Since the withdrawal of authorisation is founded on decisions by the FMA and judgments of the Austrian courts determining that there were infringements or that breaches had been committed, and since AAB Bank was either the addressee of those administrative decisions or a party to the court proceedings concerned, it cannot claim to have been prevented from determining the material relevance of documents or from identifying the allegations made by the ECB and the FMA which have their basis in those decisions and judgments.
246 Furthermore, since the allegations and the documents whose relevance AAB Bank wished to determine concern factual findings included by the ECB for the sake of completeness, intended to set out the context of the alleged breaches, it must also be found that their disclosure would not in any event have enabled AAB Bank to demonstrate that the definitive national decisions referred to in the contested decision, of which it was inevitably aware, did not find that breaches had been committed.
247 Disclosure of those allegations and documents was therefore not relevant to AAB Bank’s defence.
248 Under those circumstances, in contrast to AAB Bank’s assertions, the fact that the ECB did not explicitly set out the reasons why those internal documents and the communications between the FMA and the ECB were confidential does not render the contested decision unlawful.
249 For the same reason, AAB Bank’s request that the ECB be ordered to produce the documents hitherto classified as confidential should not be granted.
250 The second part of the fourth plea in law is therefore unfounded.
(c) Third part of the fourth plea in law, alleging infringement of the obligation to determine the relevant circumstances
251 Under the third part of the fourth plea, AAB Bank contends that the ECB infringed the principle of sound administration by failing to determine, examine and assess carefully and impartially all the material elements relevant for the withdrawal of the authorisation. It states that the ECB should not have relied on the facts found by the FMA but should have conducted its own investigations, first, into whether the provisions concerning the combating of money laundering and terrorist financing had been breached and, secondly, into whether there was an appropriate organisation.
252 First of all, it is clear from reading Article 18(f) in conjunction with Article 67(1)(o) of Directive 2013/36 that the competent authorities may withdraw the authorisation granted where a credit institution is found liable for a serious breach of the national provisions adopted under Directive 2005/60 (now Directive 2015/849).
253 It is also clear from Paragraph 70(4) of the BWG that, where a credit institution breaches the provisions of the BWG or measures adopted in order to implement it, among others, the FMA must revoke the credit institution’s licence in cases where other measures set out in the BWG cannot ensure the functioning of the credit institution.
254 In addition, according to Paragraph 31(3)(2) of the FM-GwG, in the event of non-compliance with the obligations under Paragraph 34(2) and (3) of the FM-GwG, the FMA may revoke the authorisation.
255 Under the second subparagraph of Article 14(5) of Regulation No 1024/2013, where the national competent authority that proposed the authorisation in accordance with paragraph 1 considers that the authorisation must be withdrawn in accordance with national law, it is to submit a proposal to the ECB to that effect. In that case, the ECB is to take a decision on the proposed withdrawal taking full account of the justification for withdrawal put forward by the national competent authority.
256 Lastly, according to Article 83 of Regulation No 468/2014, when the ECB makes its decision, it must take into account all of the following: ‘(a) its assessment of the circumstances justifying withdrawal; (b) where applicable, the NCA’s draft withdrawal decision; (c) consultation with the relevant NCA and, where the NCA is not the national resolution authority, the national resolution authority …; (d) any comments provided by the credit institution pursuant to Articles 81(2) and 82(3).’
257 It is apparent from those provisions and from Article 4(1) and (3) and Article 14(5) of Regulation No 1024/2013 that, in exercise of its power to withdraw authorisation from credit institutions the ECB was obliged, in the present case, to determine whether the conditions laid down by Austrian law, read in the light of Article 18(f) and Article 67(1)(o) of Directive 2013/36, were satisfied, taking full account of the justification for withdrawal put forward by the national competent authority and on completion of its assessment of the circumstances justifying withdrawal, that is to say, it had to establish the relevant facts and determine whether they should be found to establish that the credit institution concerned had been found liable for a serious breach within the meaning of Paragraph 34(2) and (3) of the FM-GwG.
258 The expression ‘is found liable’ in Article 67(1)(o) of Directive 2013/36 implies in that respect that Paragraph 31(3)(2) of the FM-GwG, which transposes that article, must be interpreted as meaning that, in order to determine whether the institution concerned has committed serious breaches of the provisions to which Paragraph 34(2) and (3) of the FM-GwG refers, the ECB must base its determination on decisions of the national competent authorities establishing that serious breaches have been committed, but not as meaning that the ECB must itself find that the credit institution committed a serious breach.
259 In the present case, the ECB established the facts relevant to withdrawing authorisation on the basis of administrative decisions of the FMA, judicial decisions of the Austrian courts, internal audit reports and, as it stated in the contested decision, its own assessment of the relevant documentation.
260 It also stated that, following its own assessment, it agreed with the FMA’s determination that breaches had been committed and also found that the facts at issue, in essence, established that AAB Bank had been found liable for a serious breach of the national provisions adopted under Directive 2005/60 (now Directive 2015/849), within the meaning of Article 67(1)(o) of Directive 2013/36 and of Paragraph 34(2) and (3) of the FM-GwG.
261 Accordingly, in contrast to AAB Bank’s assertions, the ECB did not merely refer to the breaches found by the FMA in its proposed decision, but, on conclusion of its own assessment of the facts and evidence available to it, determined that the bank had been found liable for serious breaches within the meaning of Paragraph 34(2) and (3) of the FM-GwG.
262 Furthermore, in contrast to AAB Bank’s claim, the fact that, in order to establish that a credit institution has been found liable for serious breaches, the ECB is obliged to rely on national decisions that precede the decision to propose withdrawing the authorisation does not preclude judicial review of those breaches.
263 Those decisions can be the subject matter of an action before a national court, as did in fact occur in relation to a number of the decisions addressed to AAB Bank that were taken into account by the ECB.
264 Consequently, the ECB cannot be criticised because it did not itself determine that there had been breaches of the legislation on combating money laundering and terrorist financing.
265 Secondly, in exercise of its power to withdraw the authorisation of credit institutions, the ECB must assess whether the conditions laid down in Paragraph 70(4) of the BWG are satisfied, that is to say, it must establish the relevant facts and decide whether they must be found to establish that the credit institution failed to put in place the governance arrangements required by the competent authorities in accordance with Paragraph 39(2), (2b) and (5), Article 42 and Paragraph 44(1) of the BWG.
266 In the present case, the ECB did not merely reproduce in the contested decision the findings that the FMA set out in its proposed decision or the administrative measures taken by the FMA, but based its decision on its own assessment of compliance with the national provisions transposing Article 74 of Directive 2013/36, that is to say, the provisions of the BWG.
267 Accordingly, in contrast to AAB Bank’s assertions, the ECB did not rely only on the breaches found by the FMA in its proposed decision, but itself verified the breaches of the provisions of banking supervision law found by the FMA.
268 Nor can the ECB be criticised for taking administrative decisions by the FMA into account for that purpose.
269 Indeed, Paragraph 70(4) of the BWG, which transposes Articles 18 and 67 of Directive 2013/36, provides that, where a credit institution breaches the provisions of the BWG or measures adopted in order to implement it, among others, the FMA must, in essence, instruct it to restore legality, issue penalties or revoke its authorisation.
270 This means that breaches of the BWG, which contains the national provisions transposing Article 74 of Directive 2013/36, may be identified by administrative measures or penalties issued by the FMA.
271 The ECB therefore did not act in contravention of Paragraph 70(4) of the BWG by relying on decisions of the national competent authorities and on its own assessment when it found that national provisions transposing Article 74 of Directive 2013/36 had been breached, for the purpose of determining that AAB Bank had not put in place the governance arrangements required by the competent authorities in accordance with the provisions of the BWG transposing Article 74 of that directive.
272 It therefore cannot be claimed that it failed to determine, examine and assess carefully and impartially all the material elements relevant for the withdrawal of the authorisation.
273 The third part of the fourth plea in law is therefore unfounded.
(d) Fourth part of the fourth plea in law, alleging infringement of the ‘right to a hearing’
274 According to AAB Bank, the ECB infringed its right to sound administration by rejecting its request to comment orally at a meeting on the facts, objections and legal grounds relevant to the decision.
275 It should be borne in mind in that respect that, under Article 31(1) of Regulation No 468/2014 the ECB may, if it deems it appropriate, give the parties the opportunity to comment on the facts, objections and legal grounds relevant to the ECB supervisory decision in a meeting.
276 Arranging such a meeting, during which comments may be made orally, is therefore an option available to the ECB rather than an obligation.
277 It therefore cannot be criticised for infringing a ‘right to a hearing’ because the credit institutions concerned have no such right.
278 AAB Bank also states that the FMA infringed its right to the protection of business secrets by disclosing confidential documents relating to the withdrawal procedure to the Bundesverwaltungsgericht (Federal Administrative Court) before the procedure had been closed.
279 Irrespective of whether that allegation is well founded, it is sufficient to note that it cannot render the contested decision unlawful because it does not concern elements that influenced the content of that decision.
280 The fourth part of the fourth plea in law is therefore unfounded.
281 Having regard to the foregoing, the fourth plea in law must be rejected.
5. Fifth plea in law, alleging violation of the Shareholder’s right to property because the economic value of the shares it held in the capital of AAB Bank was destroyed
282 First, AAB Bank claims that the contested decision destroyed the economic value of the shares that AAB Bank’s Shareholder holds in its capital and undermined the essence of that Shareholder’s right to property.
283 Secondly, according to AAB Bank, because in accordance with Paragraph 6(4) of the BWG the contested decision had the same effects as a winding up decision and served directly as the basis for its liquidation, that decision constitutes an infringement of the Shareholder’s right to property and of its shareholder rights.
284 It should be borne in mind in that respect, first, that the Shareholder’s action against the contested decision was dismissed as inadmissible.
285 Secondly, AAB Bank cannot adduce in support of its action for annulment a right to property that it does not hold.
286 Since AAB Bank cannot rely on the right to property of its Shareholder, the fifth plea in law must be rejected.
6. AAB Bank’s application for measures of organisation of procedure
287 By document lodged at the Registry of the General Court on 8 April 2021, AAB Bank lodged an application for measures of organisation of procedure in which it sought leave from the Court for the parties to supplement their arguments by commenting, in essence, on Austrian administrative and court decisions relating to the situation on the date of the contested decision which would in its view challenge the grounds of those decisions.
288 The ECB submitted comments on that application.
289 Since AAB Bank has not identified the decisions it considers relevant to the present action, and since it has not provided them to the Court, it must be found not to have proven that the decisions it invokes are relevant to this action.
290 Under those circumstances, AAB Bank’s application for measures of organisation of procedure must be rejected.
291 It is apparent from the foregoing that the action must be dismissed in its entirety.
IV. Costs
292 Under Article 134(1) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the applicants have been unsuccessful, they must be ordered to bear their own costs and to pay those of the ECB, including the costs relating to the proceedings for interim relief, in accordance with the form of order sought by the latter.
On those grounds,
THE GENERAL COURT (Ninth Chamber, Extended Composition)
hereby:
1. Dismisses the action;
2. Orders Anglo Austrian AAB AG and Belegging-Maatschappij ‘Far-East’ BV to bear their own costs and to pay those incurred by the European Central Bank (ECB), including those relating to the proceedings for interim relief.
Papasavvas | Costeira | Kancheva |
Delivered in open court in Luxembourg on 22 June 2022.
[Signatures]
i The wording of paragraphs 26, 75, 80 and 278 of this judgment has been amended since it was first put online.