The implementation and enforcement of EU sanctions are currently the responsibility of the EU member states. The member states have different criminal law systems and, thus, separate definitions of offences and crimes concerning the violation of sanctions. The Commission seeks to harmonize definitions and penalties of criminal offences related to the violation of EU sanctions through the proposed Directive COM(2022) 684 final (the “Directive”).
The Directive is expected to be enacted in the course of 2023. It marks a significant milestone in harmonizing EU sanctions enforcement and advancing a harmonized EU criminal law in general. Besides harmonizing definitions and penalties, the Commission envisages closing existing legal loopholes, including circumvention of sanctions and increasing the deterrent effect of violating EU sanctions. The list of covered criminal offences which violate EU sanctions includes:
- 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.
The proposed Directive provides for the following five examples in which natural or legal persons may be engaged in an act of circumvention that leads to a violation of EU sanctions:
- the concealment of funds or economic resources owned, held, or controlled by a designated person, entity or body, which should be frozen in accordance with EU sanctions, by the transfer of those funds, or economic resources to a third party;
- the concealment of the fact that a person, entity or body subject to restrictive measures is the ultimate owner or beneficiary of funds or economic resources, through the provision of false or incomplete information;
- the failure by a designated person, entity or body to comply with an obligation under EU sanctions to report funds or economic resources within the jurisdiction of a Member State, belonging to, or owned, held, or controlled by them;
- the failure to comply with an obligation under EU sanctions to provide without undue delay information on funds or economic resources frozen or information held about funds and economic resources within the territory of the Member States, belonging to, or owned, held or controlled by designated persons, entities or bodies and which have not been frozen, to the competent administrative authorities;
- the failure to cooperate with the competent administrative authorities in any verification of information upon their reasoned request.
In addition, there is a proposal to qualify proceeds of sanctions violations as proceeds of crime for anti-money laundering purposesregardless of whether the sanctions violation is a crime at the place where it was committed.