Glossary term
Civil Penalty
Subject: Compliance and Regulation, Regulatory Supervision and Enforcement
Also known as: Civil monetary penalty, Civil fine
A civil penalty is a financial punishment ordered for a breach of law or regulation in a civil, non-criminal process, usually requiring proof on the balance of probabilities and carrying no prison term.
Explanation
Civil penalties are used across many regimes: securities law, competition, consumer protection, environmental rules, sanctions and anti-money laundering. In some places a court orders them on application from a regulator; in others an agency imposes them itself, in which case they overlap with administrative penalties. The key feature is the lower standard of proof compared with a criminal trial, and the absence of imprisonment. The amount may be a fixed sum, a multiple of the gain or loss, or a percentage of turnover. The same conduct can sometimes lead to civil and criminal consequences at once. Because criminal intent need not be proved, a regulator can pursue failures that a prosecutor would find too hard to take to a criminal trial.
Example
A court finds that a company made misleading statements about its financial position to investors. On the regulator's application, it orders the company to pay a civil penalty of 5 million and to give up the profits it gained. No criminal charges are brought, and the case is decided on the balance of probabilities.
Not to be confused with
- Criminal Penalty
- Criminal penalties need proof beyond reasonable doubt and can include prison. Civil penalties are financial and decided on a lower standard.