In a significant development, a Europe-wide law introducing the criminal offense of sanction evasion has been agreed upon. The law mandates member states to define specific actions as criminal offenses, including aiding individuals under EU restrictive measures to bypass travel bans, trading sanctioned goods, engaging in transactions with entities hit by EU measures, providing prohibited or restricted financial services, and concealing ownership of funds belonging to EU-sanctioned entities.
The directive further specifies that not only intentional violations but also those committed with serious negligence, especially in trade involving war material, will constitute criminal offenses. The European Council emphasized the importance of this directive in the context of the Russian war of aggression against Ukraine.
The new EU directive aims to ensure that violators or those attempting to circumvent EU sanctions will face prosecution. Member states are required to impose effective, proportionate, and dissuasive criminal penalties for violating EU sanctions. Intentional violations must carry a maximum penalty, including imprisonment, with member states having the flexibility to implement laws with even higher sentences.
Legal persons, such as companies, can also be held liable for offenses under this directive, particularly when committed for their benefit by individuals in leadership positions within the organization. Sanctions against legal persons may include disqualification of business activities and the withdrawal of permits and authorizations for economic pursuits.
To strengthen enforcement, member states are obligated to enhance efforts to ensure compliance with EU sanctions. This includes setting a limitation period for legal action initiation and taking measures to freeze and confiscate proceeds resulting from sanctions violations.
The provisional agreement will undergo endorsement by member states' representatives (Coreper) and, if approved, will be formally adopted by both the Council and the European Parliament.
The background to this development lies in the varying types and levels of penalties across member states, as national systems dealing with EU sanctions violations differ significantly. The new directive, proposed by the Commission on December 5, 2022, aims to standardize the criminalization of violations and tighten enforcement measures to combat sanctions circumvention effectively."
By fLEXI tEAM