European Council gives final approval on a new directive to criminalise the violation and circumvention of EU sanctions
On 12 April 2024, the European Council gave the final approval of a new directive (the Sanctions Offences Directive) aimed at standardising the enforcement of EU sanctions across EU member states.
EU sanctions cover a range of measures including asset freezes, travel restrictions, arms embargoes, and sectoral sanctions such as trade or services restrictions. Although these are formulated at the EU level, the criminality of contravening such measures and the relevant penalties for each are determined at the member state level. In this respect, approaches on what constitutes a criminal offence, the relevant penalty and enforcement more generally may differ in each member state.
The Sanctions Offences Directive in turn seeks to establish uniform definitions for criminal offences and minimum penalties for violations of EU sanctions.
Importantly, the Sanctions Offences Directive includes provisions on what constitutes a circumvention of EU sanctions, which is generally perceived to be an area of legal uncertainty and discrepancy between member states. The Sanctions Offences Directive aims to ensure that circumvention of EU sanctions is subject to penalties. Examples include concealing or transferring frozen funds and economic resources, concealing true property ownership, and failing to comply with reporting obligations to the competent authorities.
The Sanctions Offences Directive also provides limited discretion to Member States to introduce an exemption for certain transactions of a value of less than €10,000. Other limited exemptions apply in connection to humanitarian aid or support for basic human needs and legal professionals.
To bolster the deterrent effect, the Sanctions Offences Directive provides for minimum penalties for sanctions violations, with maximum prison sentences of at least five years across all EU member states and maximum fines of at least €100,000 for certain offences. In cases involving companies, judges are empowered to impose substantial fines to dissuade non-compliance. Member states have the discretion to base these fines on either the company's global turnover or set absolute maximum amounts.
The Sanctions Offences Directive will come into effect twenty days following its publication in the Official Journal of the EU. Member states will then have one year to incorporate it into their national legislation.
The press releases can be found here and here and the approved Directive here.
