DORA Penalties and Fines 2025: What Happens If You're Not Compliant?

The Digital Operational Resilience Act (DORA) has been fully applicable since January 17, 2025. As enforcement ramps up, financial institutions and ICT service providers must understand the significant penalties they face for non-compliance.

DORA Penalty Framework Overview

DORA establishes a comprehensive penalty framework that includes both financial sanctions and non-financial measures. The regulation allows Member States to impose criminal penalties for severe violations.

Financial Penalties

For Financial Entities

Financial institutions found in breach of DORA may face:

• Up to 2% of total annual worldwide turnover for the most serious violations
• Up to 1% of average daily turnover worldwide for certain breaches
• Fixed fines up to EUR 5 million depending on the violation

For Critical ICT Third-Party Providers

CTPPs designated under DORA face:

• Fines up to EUR 5 million for non-compliance with oversight requirements
• Periodic penalty payments to compel compliance
• Business restrictions limiting services to financial entities

For Individuals

Senior management and key function holders may face:

• Personal fines up to EUR 1 million
• Temporary bans from holding management positions
• Criminal sanctions in severe cases (Member State dependent)

Types of DORA Violations

Tier 1: Most Serious Violations

These violations carry the highest penalties:

• Failure to implement an ICT risk management framework
• Not reporting major ICT incidents to authorities
• Failure to conduct required resilience testing
• No exit strategies for critical ICT providers
• Obstruction of supervisory activities

Tier 2: Significant Violations

• Incomplete Register of Information
• Inadequate third-party risk management
• Insufficient incident classification procedures
• Non-compliant contractual arrangements with ICT providers

Tier 3: Administrative Violations

• Late submission of required reports
• Minor documentation gaps
• Procedural non-compliance

Enforcement Mechanisms

Who Enforces DORA?

DORA enforcement involves multiple authorities:

Enforcement Powers

Supervisory authorities have extensive powers including:

• On-site inspections: Unannounced examinations of operations
• Information requests: Mandatory data and document production
• Interviews: Questioning of staff and management
• Remediation orders: Mandatory corrective actions
• Public warnings: Naming and shaming for violations
• License suspension: In extreme cases, withdrawal of authorization

Aggravating and Mitigating Factors

Factors That Increase Penalties

• Repeated violations
• Deliberate non-compliance
• Obstruction of investigations
• Failure to remediate after warnings
• Significant customer or market impact
• Senior management involvement in violations

Factors That May Reduce Penalties

• Self-reporting of violations
• Full cooperation with authorities
• Prompt remediation
• First-time offense
• Good faith compliance efforts
• Minor actual impact

Criminal Penalties Under DORA

Article 52 of DORA allows Member States to impose criminal penalties for severe violations. This may include:

• Criminal fines for individuals
• Imprisonment in extreme cases
• Director disqualification orders
• Corporate criminal liability

Coordination with judicial and criminal justice authorities ensures effective enforcement at the national level.

Real-World Enforcement Scenarios

Scenario 1: Major Incident Not Reported

A bank suffers a significant cyber attack affecting 50,000 customers but fails to report within 72 hours.

Potential consequence: Fine of 1-2% of annual turnover, plus mandatory remediation program.

Scenario 2: No TLPT Testing

A large investment firm has not conducted threat-led penetration testing as required.

Potential consequence: Significant fine plus mandatory testing within 90 days.

Scenario 3: Inadequate Third-Party Oversight

An insurance company cannot demonstrate adequate oversight of its cloud provider relationships.

Potential consequence: Remediation order, ongoing monitoring, potential fine.

How to Avoid DORA Penalties

Compliance Priorities

1. Implement ICT risk management framework: The foundation of DORA compliance
2. Establish incident reporting: Ensure 72-hour notification capability
3. Conduct resilience testing: Schedule and document all required tests
4. Manage third-party risk: Maintain Register of Information and contracts
5. Document everything: Maintain comprehensive audit trails

Board and Management Responsibilities

To avoid personal liability, senior management must:

• Approve and oversee the ICT risk management framework
• Receive regular compliance reports
• Allocate adequate resources for DORA compliance
• Ensure proper governance structures
• Demonstrate active engagement with ICT risk

What To Do If You Receive a Penalty Notice

1. Respond promptly: Meet all deadlines for responses
2. Engage legal counsel: Specialized regulatory expertise is essential
3. Cooperate fully: Cooperation is a mitigating factor
4. Document remediation: Show good faith efforts to address issues
5. Consider appeals: Understand your appeal rights and deadlines

DORA Compliance Investment vs. Penalty Risk

Consider the cost-benefit analysis:

The cost of compliance is almost always less than the cost of non-compliance.