Sanctions violations in the US and UK can be enforced by imposing both criminal and civil penalties. In France, sanctions violations are criminal offenses.
In the US, a person who willfully commits, willfully attempts to commit, or willfully conspires to commit, or aids or abets in the commission of, an unlawful act pursuant to the International Emergency Economic Powers Act may be fined not more than $1,000,000, or if a natural person, may be imprisoned for not more than 20 years, or both.1
In the UK, penalties for breaches of sanctions are set out in the relevant UK statutory instruments. Criminal fines are unlimited and the Policing and Crime Act 2017 increased maximum prison sentences for sanctions violations to seven years.
In France, a violation or attempted violation of applicable sanctions is punishable by, inter alia:
(i) imprisonment of up to 5 years;
(ii) a fine of up to 2 times (for individuals) or 10 times (for entities) the economic value of the violation at stake; and
(iii) confiscation of the goods and/or means of transport (e.g., a cargo ship) used for committing the offense, and of the goods and assets resulting, directly or indirectly, from the commission of the offense.
- Article L.574-3 of French Monetary and Financial Code provides that the same penalties apply, in particular, to a financial institution and their management and employees where they circumvent their corresponding legal obligations or obstruct the implementation of relevant measures.
- In addition, Article 459(3) of the French Customs Code provides that it is a criminal offense to encourage in writing, promote (propagandize) or advertise the violation of applicable economic sanctions, which is punishable by (i) imprisonment up to 5 years and (ii) a fine of up to EUR 225,000 (for individuals) or EUR 1,250,000 (for companies).
- To the best of our knowledge, there is no precedent for any company being convicted by the French criminal courts for a breach of international sanctions. There is, however, at the time of writing, at least one ongoing high-profile case where the defendant company has been indicted (mise en examen) on such charges.
The violation of financial sanctions adopted either by the EU or Italy implies the application of administrative fines and may also imply criminal liability (for individuals only), to the extent that the Public Prosecutor finds that the violation is also of a criminal nature. As to the relevant administrative fines, the following penalties apply:
- violating the prohibition of using/disposing of frozen assets or of making, directly or indirectly, funds/resources available to designated persons is punishable by a fine of Euro 5,000 up to Euro 500,000; the same fine applies in case of a deliberate participationin activities whose objective is to circumvent, directly or indirectly, an assets freeze;
- breach by institutions and entities subject to anti-money laundering obligations of their duty to communicate details of the assets freeze measures adopted and of the amount and nature of frozen assets is punishable by a fine of Euro 500 up to Euro 25,000;
- any other violations of EU Regulations imposing restrictive measures or economic sanctions or the violation of the reporting duty/request of authorizations by member States is punishable by a fine of Euro 5,000 up to Euro 500,000.
The above-listed administrative fines can be increased up to three times for serious, repeated and/or systematic violations. Moreover, as said above, the relevant conduct may be prosecuted as a criminal offence to the extent that it falls within the scope of one of the offenses set out in the Italian Criminal Code. In particular, providing financial resources to persons/entities designated under the sanctions regime targeting terrorism may ultimately lead to a sentence of up to 15 years imprisonment, regardless of whether those resources were used for terroristic acts.
In addition, the Ministry of Economy and Finance can order the seizure of the items used or intended to commit the violation.
Legislative Decree No. 109/2007—in connection with Law No. 689/1981—also provides that in the event that the above mentioned violations are committed by a director/employee of a legal entity, both the individual and the entity are severally liable, even where those who materially committed the violation are not univocally identifiable.
Administrative fines applied according to Legislative Decree No. 109/2007 can be challenged according to Law No. 689/1981.
In the US, statutory guidelines and OFAC’s enforcement guidelines provide the base penalty amount for each apparent civil violation. OFAC will adjust the base penalty amount after considering aggravating and mitigating factors. OFAC considers voluntary self-disclosure and subsequent cooperation as mitigating factors that may lower the penalty amount in the event of enforcement. See the OFAC Principles of Enforcement topic in the Sanctions Enforcement section.
For a non-egregious violation, ignoring any adjustment of the penalty based on aggravating or mitigating factors, the base penalty amount would be approximately the value of the transaction, determined specifically by a schedule provided in OFAC’s enforcement guidelines, capped at $295,141 per transaction. In the event a company voluntarily discloses an apparent violation to OFAC, the base amount of the proposed civil penalty is one-half of the transaction value capped at a maximum base amount of $147,571 per violation.
For egregious violations, the base penalty amount is the statutory maximum penalty. If the company submits a voluntary self-disclosure, the base penalty amount is reduced to one-half the statutory maximum.
OFAC enforcement guidelines are described at 31 CFR Part 501 Appendix A.
In the UK, OFSI has the power to impose monetary penalties of up to £1 million or 50% of the value of the breach (whichever is higher) on the basis of a civil standard of proof. Guidance on OFSI’s monetary penalties can be found here. As of February 2022, OFSI has imposed monetary penalties in six cases. See Sanctions Enforcement in the Latest Development Section.
The Policing and Crime Act 2017 also added financial sanctions violations to the list of offenses for which Serious Crime Prevention Orders may be imposed on the basis of a civil standard of proof. Such orders are aimed at preventing further serious crime.
In France, civil penalties do not apply to sanctions violations, as they are criminal offenses. However, if a violation of applicable sanctions causes harm to any third-party victim (either an individual or a legal entity), the perpetrator of such offense could be ordered to pay damages to the victim.
1 See 50 USC § 1705(c).