Institute of financial intermediaries’ responsibility for non-compliance with regulatory standards: comparative legal analysis of legislation and law enforcement practices in the EU and Ukraine

Abstract

This study analyzes the institutional structure of financial intermediaries’ liability for regulatory violations in a comparative context between the EU and Ukrainian legal systems. Therefore, it shall determine and analyze the mechanisms, forms (types), and practices of enforcement of regulatory responsibility applied to financial service providers.

The research addresses the conceptual foundations of regulatory liability, analyzing both administrative and civil sanctions applied to financial intermediaries for breaches of supervisory requirements. Particular attention is given to the evolution of enforcement mechanisms within the EU regulatory architecture, including the role of European Supervisory Authorities and national competent authorities in sanctioning non-compliant entities.

A comparative legal analysis highlighted differences in the approaches to regulatory enforcement between the EU and its Member States, on one side, and Ukraine, on the other. While a harmonized framework of enforcement has been broadly set out within the provisions relating to administrative sanctions in MiFID II and several other sectoral financial services regulations, an interim model reflecting adaptations of European standard practices to domestic traditions at law exists in Ukraine. The paper focuses mainly on actual practical implementation—including administrative pecuniary penalties (fines), suspension or restriction of activity licenses.

Key findings demonstrate that the EU system emphasizes preventive supervision and proportionate sanctioning, supported by advanced risk-based monitoring and cross-border cooperation mechanisms. Ukrainian practice, in spite of incorporating European principles and elements, is still facing challenges with consistency in enforcement, adequacy of sanctions to support deterrence with violations against regulations.

The study considers particular cases of enforcement action taken against banks, insurance companies, investment firms and payment service providers in both jurisdictions. This empirical study brings out differences in the severity of sanctions, due process safeguards and effectiveness of remedial measures.

The recommendations proposed in this study for aligning Ukrainian regulatory enforcement with the best practices of the EU include building institutional capacity within supervisory authorities, increasing transparency related to sanctions imposed, developing an efficient appeals mechanism and adopting a risk-based approach towards enforcement. This paper adds to existing literature on topics discussed therein by exploring them from a perspective of ongoing debate about regulatory convergence and approximation of financial law in Ukraine towards that of Europe.