The head of financial services for the European Union (EU) said Wednesday that banks failing to abide by new and stronger rules regarding liquidity and capital will be subject to fines of as much as 10% of turnover.

Reuters reported that draft laws that would implement the Basel III accords were revealed by Michel Barnier, internal market commissioner for the EU. The laws will compel banks, by 2013, to hold higher levels of capital reserves of better quality than current regulations.

Among the new measures in the draft laws are a requirement for minimum core equity capital equal to 7% of a bank’s riskier assets. There are also tougher sanctions in the event of failure to comply, as well as a dilution of the impact of credit ratings and corporate governance improvements. That last includes whistle-blowing programs as well as requirements for more female members to be considered for board positions.

A briefing note issued by the commission said in part, “If institutions breach EU requirements, the proposal will ensure that all supervisors can apply sanctions that are truly dissuasive, but also effective and proportionate. For example, administrative fines of up to 10% of an institution’s annual turnover, or temporary bans on members of the institution’s management body.”

Fines would be levied in instances of unauthorized banking services; failure to comply with liquidity requirements; failure to notify authorities about acquisition of holdings above a certain threshold; failing to meet governance requirements; exceeding exposure limits to other banks; and not adequately reporting data to supervisors.

Barnier plans to make the proposed laws into a “single rulebook” for supervisory consistency, something banks are in favor of. The commission said of the need for such a move, “Higher levels of capital requirements in one member state would also distort competition and encourage regulatory arbitrage.” There will be some flexibility, however, to allow for measures to cope with local conditions such as an overheating property market.