The European Commission is today putting forward a proposal to harmonise criminal offences and penalties for the violation of EU restrictive measures. While the Russian aggression on Ukraine is ongoing, it is paramount that EU restrictive measures are fully implemented and the violation of those measures does not pay off. The Commission proposal sets out common EU rules, which will make it easier to investigate, prosecute and punish violations of restrictive measures in all Member States alike.
Violating EU sanctions is a serious criminal offence
The implementation of EU restrictive measures following the Russian attack on Ukraine shows the complexity of identifying assets owned by oligarchs, who hide them across different jurisdictions through elaborate legal and financial structures. The proposed Directive will establish the same level of penalties in all Member States. Thereby it will close existing legal loopholes and increase the deterrent effect of violating EU sanctions in the first place. The main elements of the proposal include:
- A list of criminal offences, which violate EU sanctions, such as:
- making funds or economic resources available to, or for the benefit of, a designated person, entity or body;
- failing to freeze these funds;
- enabling the entry of designated people into the territory of a Member State or their transit through the territory of a Member State;
- entering into transactions with third countries, which are prohibited or restricted by EU restrictive measures;
- trading in goods or services whose import, export, sale, purchase, transfer, transit or transport is prohibited or restricted;
- providing financial activities which are prohibited or restricted; or
- providing other services which are prohibited or restricted, such as legal advisory services, trust services and tax consulting services.
- Offences will cover circumventing an EU restrictive measure: this means bypassing or attempting to bypass restrictive measures by concealing funds or concealing the fact that a person is the ultimate owner of funds.
- Common basic standards for penalties: depending on the offence, the individual person could be liable to a maximum penalty of at least five years in prison; companies could be liable to penalties of no less than 5% of the total worldwide turnover of the legal person (company) in the business year preceding the fining decision.
The proposal will now be discussed by the European Parliament and the Council as part of the ordinary co-legislative procedure.
Since the start of the war in Ukraine, the EU has adopted a series of sanctions against Russian and Belarussian individuals and companies. The implementation of EU restrictive measures shows the complexity of identifying assets owned by oligarchs, who hide them across different jurisdictions through complex legal and financial structures. For example, by transferring ownership of sanctioned property to a non-sanctioned third party. They are helped by existing legal loopholes, as the criminal law provisions on breaches of EU sanctions vary across Member States. An inconsistent enforcement of restrictive measures undermines the Union’s ability to speak with one voice.
In May 2022, the Commission proposed to add the violation of EU restrictive measures to the list of EU crimes. At the same time, the Commission proposed new reinforced rules on asset recovery and confiscation, which will also contribute to the implementation of EU restrictive measures. The proposals come in the context of the ‘Freeze and Seize’ Task Force, set up by the Commission in March.
Following the adoption on 28 November of the Council Decision identifying the violation of Union restrictive measures as an area of serious crime that meets the criteria set out in Article 83(1) of the TFEU, the Commission is now putting forward this proposal for a Directive on the violation of Union restrictive measures, as a second step.