Article 44 Digital Operational Resilience Act (DORA), Administrative Penalties And Remedial Measures

The Digital Operational Resilience Act (DORA) outlines the framework for ensuring that financial entities within the European Union maintain a high level of operational resilience, particularly in the face of digital threats. Article 44 of DORA focuses on the administrative penalties and remedial measures that competent authorities must enforce to ensure compliance with the regulation.

Supervisory, Investigatory, and Sanctioning Powers

To effectively carry out their responsibilities under DORA, competent authorities are granted comprehensive supervisory, investigatory, and sanctioning powers. These powers are essential to ensure that financial entities adhere to the standards set forth by DORA and that any breaches are appropriately addressed. The powers include the ability to access any relevant document or data, regardless of its form, that the authority deems necessary for performing its duties. This provision ensures that authorities have unfettered access to information crucial for their oversight functions. Additionally, competent authorities are empowered to conduct on-site inspections or investigations, providing them with the means to directly assess the compliance of financial entities.

Corrective and Remedial Measures

A key aspect of the powers granted to competent authorities is the ability to require corrective and remedial measures in cases where breaches of the regulation occur. These measures are intended to rectify non-compliance and prevent future violations. By enforcing such measures, authorities can ensure that financial entities take the necessary steps to align their practices with DORA’s requirements, thereby enhancing their overall operational resilience.

Member States' Role in Penalties and Measures

While DORA establishes the framework for administrative penalties and remedial measures, it is the responsibility of Member States to implement rules that define these penalties and measures. Member States must ensure that the penalties and measures are not only effective but also proportionate and dissuasive. This requirement underscores the importance of maintaining a balanced approach to enforcement, where penalties are sufficient to deter non-compliance but are not excessively punitive.

Powers Conferred on Competent Authorities

Member States are required to empower competent authorities to impose at least the following administrative penalties or remedial measures for breaches of DORA:

• Cease and Desist Orders: Competent authorities can issue orders requiring individuals or entities to cease any conduct that violates DORA and refrain from repeating such conduct in the future. This measure aims to immediately halt non-compliant behavior and prevent its recurrence.

• Cessation of Practices: Authorities can demand the temporary or permanent cessation of any practice or conduct that contravenes DORA’s provisions. This power ensures that harmful practices are promptly stopped, protecting the integrity of the financial system.

• Compliance Measures: Authorities can adopt various measures, including financial penalties, to ensure that financial entities continue to meet legal requirements. This provision allows authorities to impose sanctions that encourage ongoing compliance and deter future breaches.

• Data Traffic Records: Where permitted by national law, authorities can require access to existing data traffic records held by telecommunications operators if there is reasonable suspicion of a breach of DORA. These records may be crucial in investigating potential violations, providing authorities with the evidence needed to enforce compliance.

• Public Notices: Competent authorities can issue public notices that identify the individuals or entities responsible for a breach and describe the nature of the violation. Publicizing breaches serves as a deterrent to others and promotes transparency in the enforcement process.

Penalties For Legal Persons

When the penalties and measures outlined in DORA apply to legal persons, Member States must grant competent authorities the power to impose these penalties on members of the management body or other individuals responsible for the breach under national law. This provision ensures accountability at the highest levels of management within financial entities.

Right of Appeal

Finally, DORA mandates that any decision imposing administrative penalties or remedial measures must be well-reasoned and subject to a right of appeal. This requirement ensures that the enforcement process is fair and transparent, providing affected parties with the opportunity to challenge decisions they believe are unjust.

Conclusion

Article 44 of DORA establishes a robust framework for the enforcement of administrative penalties and remedial measures, empowering competent authorities to effectively oversee compliance and maintain the operational resilience of financial entities within the EU.