EU sanctions may take the form of freezes of funds and assets, travel bans to the EU, arms embargoes, and restrictions on economic sectors. Although sanctions are adopted at the EU level, their implementation depends on Member States, among which definitions of sanctions violations vary.
On Tuesday, with
543 votes in favor and 45 against, with 27 abstentions, the European Parliament adopted a directive, already agreed with member states, on
the criminalization of violations and circumvention of EU sanctions. It will introduce a common definition and minimum penalties for breaches of sanctions.
The new law establishes consistent definitions for violations, including failure to freeze funds, failure to comply with travel bans or arms embargoes, transferring funds to sanctioned persons, and doing business with state entities from sanctioned countries. Providing financial services or legal advice in violation of sanctions will also be punishable.
The regulations also define what constitutes sanctions circumvention and impose penalties for it. Examples include concealing or diverting funds that should be frozen, concealing true ownership of real estate, and failing to report necessary information. However,
humanitarian aid or support for basic human needs should not be considered a violation of sanctions.
Directive ensures that penalties are dissuasive
The directive ensures that penalties for breaching or circumventing sanctions are dissuasive by making them
offenses punishable by imprisonment of up to five years in all Member States. Where companies breach or avoid sanctions, judges must be able to impose dissuasive fines, although member states can choose whether a judge can impose the maximum penalty based on the company’s annual total turnover or based on absolute maximum amounts.
Currently, the variety of penalties causes companies wanting to circumvent sanctions to look for places for their operations where they are more leniently enforced.
The new law would provide judges with a wide range of means to punish those who violate sanctions. In addition to willful violations, trade in weapons or dual-use goods would also be punishable in the event of gross neglect of duty.
Forum-shopping must stop: EP member
“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, harmonizing 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,” said rapporteur Sophie in 't Veld (Renew Europe).
Before the text becomes law, it must be formally approved by the Council. The rules will enter into force 20 days after their publication in the Official Journal of the EU, after which Member States will have one year to implement them into national law.
The EU has adopted over 40 sanctions packages against third parties under the common foreign and security policy, most recently against Russia following its invasion of Ukraine.
