EU sanctions: new rules to crack down on violations

• Violating EU sanc­tions, includ­ing those tar­get­ing Russia, should be punished
• Member states’ enforce­ment of sanc­tions remains uneven
• Common stan­dards to ensure sanc­tions vio­la­tions are crimes pun­ish­able by dis­sua­sive penalties

MEPs have approved new rules to harmonise the enforcement of EU sanctions across member states.

With 543 votes in favour, 45 against, and 27 absten­tions, the European Parliament has adopt­ed a direc­tive, agreed with mem­ber states, on crim­i­nal­is­ing the vio­la­tion and cir­cum­ven­tion of EU sanc­tions. It will intro­duce a com­mon def­i­n­i­tion of, and min­i­mum penal­ties for, violations.

EU sanc­tions can con­sist of freez­ing funds and assets (includ­ing cryp­to-assets), trav­el bans, arms embar­goes, and restric­tions on busi­ness sec­tors. While sanc­tions are adopt­ed at the EU lev­el, enforce­ment relies on mem­ber states, amongst which def­i­n­i­tions of sanc­tion vio­la­tion and asso­ci­at­ed penal­ties vary.

The new law sets con­sis­tent def­i­n­i­tions for vio­la­tions, includ­ing not freez­ing funds, not respect­ing trav­el bans or arms embar­goes, trans­fer­ring funds to per­sons sub­ject to sanc­tions, or doing busi­ness with state-owned enti­ties of coun­tries under sanc­tion. Providing finan­cial ser­vices or legal advi­so­ry ser­vices in vio­la­tion of sanc­tions will also become a pun­ish­able offence.

The law also defines the cir­cum­ven­tion of sanc­tions and ensures this is a pun­ish­able offence. Examples include con­ceal­ing or trans­fer­ring funds that should be frozen, hid­ing the true own­er­ship of prop­er­ty, and not report­ing nec­es­sary infor­ma­tion. The law spec­i­fies that human­i­tar­i­an assis­tance or sup­port­ing basic human needs should not count as sanc­tions violations.

Stronger punishments for violations

The direc­tive ensures pun­ish­ment for vio­lat­ing and cir­cum­vent­ing sanc­tions is dis­sua­sive by mak­ing them crim­i­nal offences car­ry­ing prison sen­tences of a max­i­mum of five years in all mem­ber states. When com­pa­nies vio­late or cir­cum­vent sanc­tions, judges must be able to issue dis­sua­sive fines, although mem­ber states can choose whether a judge can impose a max­i­mum penal­ty based on the world­wide annu­al turnover of the com­pa­ny, or based on absolute max­i­mum amounts.

Currently, vary­ing penal­ties can lead to forum shop­ping ‑the prac­tise of seek­ing out the mem­ber states with the weak­est enforce­ment. The new law would give judges a wide vari­ety of means to pun­ish vio­la­tors. In addi­tion to inten­tion­al vio­la­tions, the trade in arms or dual-use items would be also be crim­i­nalised in cas­es of seri­ous negligence.

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After the vote, rap­por­teur Sophie in ’t Veld (Renew, the Netherlands) said: “The Russian inva­sion ben­e­fits from crooks break­ing the law in Europe. They must be caught, and forum-shop­ping must stop. We need this leg­is­la­tion because diverg­ing nation­al approach­es have cre­at­ed weak­ness­es and loop­holes, and it will allow for frozen assets to be con­fis­cat­ed. Parliament took an ambi­tious, har­mon­is­ing approach to the law, and even though we could not close all the loop­holes we want­ed to, it is an improve­ment on the cur­rent sit­u­a­tion and shows our strong sup­port to Ukraine.”

Next steps

The law still needs to be for­mal­ly approved by the Council, too, before it can become law. It will enter into force twen­ty days after its pub­li­ca­tion in the Official Journal of the EU, after which mem­ber states will have one year to trans­pose it into nation­al legislation.

Press con­fer­ence

After the vote, at 16.00 CET on Tuesday, rap­por­teur Sophie In ’t Veld (Renew, NL) will hold a press con­fer­ence in Strasbourg to dis­cuss the new pro­vi­sions and answer questions.

Background

The EU has adopt­ed more than 40 sanc­tions regimes against third par­ties as part of its Common Foreign and Security Policy, most recent­ly against Russia fol­low­ing its inva­sion of Ukraine. However, the Commission finds that incon­sis­tent enforce­ment of EU sanc­tions has under­mined their efficacy.

Source: EU PARLIAMENT