What are EU Crimes?
The EU Council is empowered by Article 83(1) of the Treaty for the Functioning of the European Union (TFEU) to establish de minimis threshold rules with respect to certain serious cross-border offences (commonly known as 'EU crimes') such as terrorism, human trafficking, illicit drug trafficking, money laundering and corruption.
On November 28, 2022, the EU Council unanimously decided to include sanctions violations in the list of EU crimes. On December 2, 2022 the European Commission released its proposed directive setting out minimum rule concerning the definition of criminal offences and penalties in relation to the violation of Union restrictive measures.
How will this impact sanctions enforcement?
Until now, enforcement of breaches of economic sanctions (referred to as 'restrictive measures') have been solely within EU member state discretion. While the majority of states categorised the violation of restrictive measures as a criminal offence, EU Member States had different criteria for conduct which constituted a criminal violation. The EU Council states in its decision that these discrepancies “undermine the Union objectives of safeguarding international peace and security and upholding Union common values” in particular as it may contribute to “forum shopping” and impunity by offenders.
The Council’s decision covers restrictive measures adopted under Article 29 of the Treaty on the European Union or Article 215 TFEU, such as those “concerning the freezing of funds and economic resources, the prohibition on making funds and economic resources available and the prohibition on entry into the territory of a Member State of the Union, as well as sectoral economic measures and arms embargoes.”
European Commission Proposal
According to the proposed directed, restrictive measures in scope will include: asset freezing measures, immigration measures, "sectoral economic and financial measures" and arms embargoes.
Each Member State will be required to take the steps necessary to criminalize the violation of European Union restrictive measures in their jurisdiction. Member States are expected to cooperate to determine which Member State should conduct criminal proceedings in instances where an applicable offence falls in the jurisdiction of more than one Member state.
If committed with "serious negligence," violations of the restrictive measures will constitute criminal offences. To mitigate risk of breach, the proposed directive cautions professionals in the “legal, financial and trade services” industries “to exercise due diligence to prevent any violation of EU sanctions.”
The EU Council and European Parliament will now discuss and adopt the Commissions' proposed directive.
The European Commission has announced plans to use frozen assets (estimated at €300 billion of Russian Central Bank reserves and €19 billion of “oligarchs’” funds) to rebuild Ukraine. The Commission is presenting potential options for EU member state consideration. The Commission has also proposed setting up a specialised UN hybrid tribunal to investigate and prosecute Russia’s crimes of aggression.
It remains to be seen the exact scope and timing for finalisation of these proposals.
The violation of Union restrictive measures is a particularly serious area of crime, which, in terms of gravity, is of a similar degree of seriousness to the areas of crime listed in Article 83(1) TFEU, since it can perpetuate threats to international peace and security, undermine the consolidation of and support for democracy, the rule of law and human rights and result in significant economic, social, societal and environmental damage.