EU Sanctions: new rules on violations

On 12 March 2024, the European Parliament adopted (543 votes in favour, 45 against, and 27 abstentions) the Directive on the definition of criminal offences and penalties for the violation of European Union (UE) restrictive measures which criminalises the violation and circumvention of EU sanctions by introducing common standards of, and minimum penalties for, violations (the "Directive").

Scope

The newly adopted Directive aims to establish minimum rules at the EU level regarding the definition of criminal offences and penalties in case of violation of UE sanctions, including those targeting Russia.

The Directive cover the violation of UE restrictive measures such as measures related to the freezing of funds and economic resources (including crypto-assets), the prohibitions on making funds and economic resources available and the prohibitions on entry into or transit through the territory of a Member State as well as sectoral economic and financial measures and arms embargoes.

According to the Directive, it is necessary that EU Member States have effective, proportionate and dissuasive criminal and noncriminal penalties in force for the violation of EU sanctions. It is also essential that those penalties address the circumvention of UE restrictive measures.

Criminal offences

Where it is intentional and in violation of a prohibition (under UE restrictive measures or set out in national law implementing EU restrictive measures), the following conducts are inter alia now considered as criminal offences:

• making funds or economic resources available directly or indirectly to, or for the benefit of, a designated person, entity or body;

• failing to freeze funds or economic resources belonging to or owned, held or controlled by a designated person, entity or body;

• enabling designated natural persons to enter into, or transit through, the territory of a Member State;

• entering into or continuing transactions with a third State, bodies of a third State or entities or bodies directly or indirectly owned or controlled by a third State or by bodies of a third State, including the award or continued execution of public or concession contracts;

• trading, importing, exporting, selling, purchasing, transferring, transiting or transporting goods, as well as providing brokering services, technical assistance or other services relating to those goods;

• providing financial services or performing financial activities; and

• circumventing EU restrictive measures.

Inciting, and aiding as well as abetting the commission of an offence referred to above is also punishable as a criminal offence under the Directive.

Penalties for individuals

Offences committed by individuals will be punishable with at least 1 year of imprisonment and with up to 5 years of imprisonment in all EU Member States, depending on the offence.

Penalties for corporates

Businesses can be held liable for criminal offences where such offences have been committed for their benefit. The fines will reach 1% or 5% of their yearly worldwide turnover or alternatively €8 or €40 million, depending on the offence.

Freezing and confiscation

The Member States are required by the Directive to set up specific rules to enable the freezing and confiscation of instrumentalities and proceeds from the criminal offences.

Next steps

Once the Directive has been signed by European Council and Parliament, it will be published in the Official Journal of the EU and will enter into force on the twentieth day following its publication, after which Member states will have one year to transpose it into national legislation.