EU set to impose bloc-wide criminal penalties for breaching Russia sanctions

All EU countries will impose the same criminal penalties for breaches of sanctions against Russia under a new proposal by the EC that aims to close legal loopholes. The move follows news last week that the EU will make sanctions violations a criminal offence. EU companies in breach of the bloc’s sanctions could be liable for 5% of worldwide turnover, while individuals could face up to five years in prison. The EC has also proposed that circumventing EU sanctions against Russian companies and individuals, such as concealing funds or concealing the owner of funds to bypass restrictions, will be a criminal offence. Criminal law for breaches of EU sanctions currently varies between member states. Harmonising criminal offences and penalties for breaches of EU sanctions against Russia and designated persons will make it easier to investigate and prosecute for violations in all member states on the same footing, the EC said. The EC has proposed a list of criminal offences, which include: Making funds available to, or for the benefit of, a designated person, entity or body. Failing to freeze funds. Enabling designated persons to enter a member state or their transit through a member state. Entering transactions with third countries prohibited or restricted by EU sanctions. Trading goods and services that are prohibited or restricted from import, export, sale, purchase, transfer, transit or transport. Providing financial activities that are prohibited or restricted. Providing other services, such as legal and tax advice, which are prohibited or restricted. The EC said member states have found it difficult to implement sanctions, given elaborate and complex legal and financial structures used by Russian oligarchs to hide their assets across different jurisdictions. It added that legal loopholes, such as transferring ownership of a sanctioned property to a non-sanctioned third party, have helped oligarchs hide assets. “The proposed directive will establish the same level of penalties in all member states,” the EC said. “It will close existing legal loopholes and increase the deterrent effect of violating EU sanctions in the first place.” “An inconsistent enforcement of restrictive measures undermines the Union's ability to speak with one voice,” it added. The proposals will now be put before the European Parliament and European Council. Věra Jourová, vice-president for values and transparency at the EC, said: “EU sanctions must be respected and those trying to get around them must be punished. The EU will carry on cracking down on those helping Russia to finance its war against Ukraine. The EU is showing once again that it is united in this effort – harmonising penalties for violating EU sanctions means no more loopholes, no more safe havens and no more playing the system.” Mairead McGuinness, commissioner for financial services, financial stability and capital markets union, added: “These activities are criminal acts under EU law. This further reinforces our toolbox to ensure that our sanctions are properly implemented across the EU. Harmonised penalties will put an end to forum shopping. We must crack down on all types of sanctions evasion. That is why in the eighth package of sanctions, we also proposed a new listing criterion, which will allow us to sanction persons who facilitate the circumvention of sanctions.”

EU set to impose bloc-wide criminal penalties for breaching Russia sanctions

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