CJEU ¦ EU Law allows linking Sanctions on Legal Persons to Responsible Individuals
EU Law permits linking Legal Person Sanctions to Culpable Individuals, Advocate General Rules
The recent opinion delivered by Advocate General Ćapeta on 3 July 2025 in Case C-291/24 addresses a significant legal question concerning the imposition of sanctions on legal persons under EU anti-money laundering law. The case arose from a dispute involving Steiermärkische Bank und Sparkassen AG, an Austrian bank, which was sanctioned by the Austrian Financial Market Authority (FMA) for breaches of due diligence obligations related to money laundering prevention. The core issue under review is whether national legislation that requires establishing the liability of a specifically identified natural person before sanctioning a legal person aligns with Directive (EU) 2015/849, the key EU framework regulating anti-money laundering.
Directive 2015/849, known as the fourth anti-money laundering directive, imposes obligations on various obliged entities, including financial institutions, to prevent the misuse of the financial system for money laundering or terrorist financing. The Directive mandates that Member States must ensure that administrative sanctions can be imposed for breaches of these obligations on both natural and legal persons. Importantly, Article 60(5) and (6) of the Directive stipulate that a legal person may be held liable if a breach is committed by a natural person who holds a leading position within that legal person—someone with the power to represent, make decisions, or exercise control. It also holds legal persons liable if such leading individuals fail to supervise others adequately, allowing breaches to occur.
The Austrian legislation in question transposed the Directive into national law through the Finanzmarkt-Geldwäschegesetz (FM-GwG). However, it introduced a distinctive procedural requirement: before a legal person can be sanctioned, the culpability of an identified natural person acting on its behalf must be established first. This natural person must be formally recognized as a defendant in the proceedings, not merely as a witness, and the administrative penalty must explicitly state that this individual committed an unlawful and culpable act that is attributed to the legal person.
The referring Austrian court expressed concern that this linkage might impose additional substantive conditions on legal person liability beyond what the Directive requires, potentially undermining the effectiveness and uniformity of EU anti-money laundering rules. The court also questioned whether the limitation periods set by Austrian law—three years to initiate proceedings and five years to conclude them—are consistent with EU law principles.
Advocate General Ćapeta’s analysis concludes that the Austrian approach does not conflict with Directive 2015/849. The Directive itself allows Member States considerable latitude in how they implement liability for legal persons and explicitly bases such liability on the acts or omissions of natural persons in leading positions. The requirement to identify a culpable natural person and grant that individual full procedural rights during sanction proceedings does not contravene the Directive. Instead, it ensures that both natural and legal persons’ rights are respected and does not prevent effective sanctioning.
Furthermore, although the Advocate General acknowledges that Directive 2015/849 does not explicitly require establishing fault for leading persons, it does not forbid national laws from imposing such a requirement. Austrian law’s presumption of negligence in cases of inaction by leading persons fits within this framework. The procedural safeguards surrounding the status of the natural person in the proceedings are viewed as reasonable and supportive of fair trials rather than as obstacles to enforcement.
On the question of limitation periods, Advocate General Ćapeta notes there is no direct EU rule governing them in this context. National limitation periods are acceptable provided they do not make it impossible or unreasonably difficult to exercise rights under EU law. The periods of three years for bringing proceedings and five years for concluding them fall within ranges previously accepted by the Court of Justice of the European Union in analogous cases. Consequently, these time limits do not conflict with EU principles of equivalence or effectiveness.
The Advocate General also differentiates this case from a recent ruling in Deutsche Wohnen (C-807/21), which interpreted the General Data Protection Regulation (GDPR). In Deutsche Wohnen, the Court held that fines under the GDPR must be imposed directly on legal persons without requiring prior identification of a culpable natural person. However, Directive 2015/849 explicitly links the liability of legal persons to acts committed by natural persons in leading roles, making that ruling inapplicable here.
Overall, Advocate General Ćapeta recommends that the Court of Justice find that national legislation such as Austria’s FM-GwG is compatible with Directive 2015/849. The Directive does not preclude requirements that a natural person be formally identified and found culpable before sanctions can be imposed on a legal person, nor does it restrict reasonable national limitation periods for initiating and concluding sanction proceedings.
While this opinion directly addresses Austrian law, its interpretation of Directive 2015/849 has wider significance for how all Member States design their AML enforcement systems. It affirms that linking legal person liability to specific individuals within organizations is permissible under EU law and that safeguards for those individuals do not inherently undermine enforcement efforts. Additionally, it supports Member States’ discretion regarding limitation periods as long as these do not obstruct effective remedies. The final ruling by the Court of Justice will provide further clarity but, for now, this opinion helps ensure greater consistency and effectiveness in combating money laundering across the European Union.
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