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Commission bids to close sanctions loopholes

The European Commission has put forward a plan to harmonise criminal offences and penalties linked to EU sanctions against Russia and Belarus.

The EU has adopted a series of sanctions against individuals and companies in the two countries since the start of the war in Ukraine.

The commission says, however, that oligarchs attempting to avoid the measures are being helped by existing legal loopholes, as the criminal-law provisions on breaches of EU sanctions vary across member states.

“An inconsistent enforcement of restrictive measures undermines the union's ability to speak with one voice,” it adds.

Criminal offences

The EU body’s proposal sets out common EU rules, which it believes will make it easier to investigate, prosecute, and punish violations of restrictive measures in all member states.

The proposed directive includes a list of criminal offences that violate EU sanctions, such as:

• 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 that 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 that are prohibited or restricted, or
• Providing other services that are prohibited or restricted, such as legal-advisory services, trust services and tax-consulting services.

Offences will cover circumventing an EU restrictive measure – including bypassing or attempting to bypass restrictive measures by concealing funds, or concealing the fact that a person is the ultimate owner of funds.

Penalties

The directive also includes common basic standards for penalties.

Depending on the offence, an individual person could be liable to a maximum penalty of at least five years in prison, while companies could be liable to penalties of no less than 5% of the total worldwide turnover of the legal person (company) in the business year preceding the fining decision.

The European Parliament and the EU Council will now discuss the proposal.