The European parliament is pushing ahead with plans to develop a clearly defined regime across its 27 member states to punish market abuse, in a bid to prevent future banking scandals such as Barclays’ manipulation of the Libor rate.

The European Union’s legislature yesterday, via its Civil Liberties, Justice and Home Affairs Committee (Libe), voted in support of plans to harmonize sanctions across the region, as well as impose tougher criminal sanctions and increase cross-border supervision of suspected market abuse cases.

Earlier this week, Michel Barnier, the EU’s financial services commissioner, had said that the EU’s proposals on insider dealing and market manipulation in the updated Market Abuse Directive and regulation needed to be beefed up in light of the recent Libor scandal that has engulfed the U.K..

“We need to draw lessons from the Libor case,” said Barnier. “We intend to close the regulatory gap in our proposed market abuse legislation by including the direct manipulation of market indexes such as Libor.”

Late last month, Barclays, Britain’s second biggest bank, was fined $451 million in the U.K. and U.S. after it admitted to manipulating Libor, or the London interbank lending rate, from 2005-2009, as well another global benchmark interest rate, the Euribor, or European interbank offered rate, to the benefit of its derivative positions as well as by a desire to make the bank look stronger during the financial crisis.

Barclays is among more than a dozen global banks under investigation by authorities in North America, Europe and Japan, but the only one so far to admit wrongdoing.

“There is no doubt that the Libor scandal is market manipulation of the worst kind,” said Arlene McCarthy, a left-of-center U.K. MEP who is vice-chair of the European parliament’s Economics and Monetary Affairs Committee (Econ) and is also tasked with guiding the Market Abuse Directive and regulation through parliament.

“Fines have proved ineffective and have not changed the greedy culture in the banking industry. The penalties for this rogue behavior must be a custodial sentence. The EU cannot be seen to be the soft option or a safe haven for perpetrators of market abuse.

“If the U.S. can conduct criminal investigations with large fines and custodial sentences of up to 14 years then we need to toughen the rules and make it a crime to transmit false information to the market. The new European rules should extend the scope to cover manipulation of Libor and Euribor rates.”

U.K. regulator the Financial Services Authority does not possess the power to prosecute over any manipulation of Libor, although the U.K.’s Serious Fraud Office, an independent U.K. government department, has now stepped in and has launched an investigation into the rigging of inter-bank lending rates, with the potential for criminal charges to be brought against individuals. British Prime Minister David Cameron has also initiated a review led by Martin Wheatley, a top regulator, on how best to ensure effective regulation of Libor and other self-regulated indices.

One of the European parliament’s main aims of the proposed beefed up EU market abuse legislation, apart from establishing criminal sanctions which will have a greater deterrent effect, is to harmonize the maximum penalties across the EU for at least two or five years. Today, the minimum length of a sentence for insider dealing varies from 15 days in Slovenia to three years in Slovakia while the maximum length of detention ranges from 30 days in Estonia to 12 years in Italy and Slovakia. Minimum penalties for market manipulation vary from 15 days in Slovenia to two years in Italy, while the maximum length of a prison sentence varies between 30 days in Estonia to 15 years in Slovakia, giving perpetrators scope for forum shopping —operating where the penalties are the least severe.

“It is absolutely right that those involved in market manipulation should feel the full force of the law,” said Kay Swinburne, a UK center-right MEP, who is also a member of Econ. “I am confident that will happen in the case of the interbank rate rigging but to ensure there is no doubt in future cases, we will amend the [Market Abuse] Directive to clarify its wide scope so that all market participants understand that all types of abuse will be subject to criminal sanctions.”

The Market Abuse Directive was held up earlier this week after political wrangling in Econ postponed a vote on the updated Market in Financial Instruments Directive (MiFID II)—a key piece of securities reform looking to tighten up financial regulation in the wake of the 2007 original. The Market Abuse Directive is inter-linked in part to MiFID II and policymakers want to pass both directives on the same day in a bid to simplify matters.

The new law on criminal sanctions for market abuse is expected to be voted on in Econ in late September and in plenary in October or November. Econ and Libe share responsibility for legislation on market abuse.

For the plans to be adopted by the European Union as a whole, the Council of the European Union and the European Commission still need to endorse the proposals, although in the current climate of anti-banker sentiment it appears that this will be a formality.