(1) Where the Bank concludes that a reinsurance undertaking conducting business in the State through a branch or on the basis of the freedom to provide services is not complying with the law applicable to it in the State, it shall require the undertaking to remedy the failure.

(2) At the same time, the Bank shall refer those findings to the supervisory authority of the home Member State.

(3) If the undertaking persists in its failure to comply with the laws applicable to it in the State, despite any measures taken by the home Member State or because those measures prove to be inadequate or are lacking in that State, the Bank may, after informing the supervisory authority of the home Member State, exercise its powers under financial services legislation to take appropriate measures to prevent or penalise further failure, including, in so far as is strictly necessary, preventing the undertaking from concluding new reinsurance contracts within the State.

(4) Any measure under paragraph (1) or (3) involving sanctions or restrictions on the conduct of reinsurance business shall state the reasons and shall be communicated to the undertaking.