National laws on EU sanctions will be better aligned

Under Decision (EU) 2022/2332, the Council is requiring Member States to apply minimum rules on the definition of criminal offences and penalties in the area of sanctions and other restrictive measures.¹

What is the aim of the Decision?

The EU has adopted a variety of sanctions and other restrictive measures following the invasion of Ukraine.  The aim of the Decision is to ensure the effective implementation of the EU’s policy in this regard.

Currently, Member States have different definitions of, and penalties for, the violation of EU restrictive measures under their national laws.  This contributes to differing degrees of enforcement and prosecution, depending on the Member State in which a suspected infringement is pursued.

This inconsistency may lead to ‘forum shopping’ by offenders and even to a form of impunity by permitting offenders to choose to conduct their activities in those Member States with lower penalties. This undermines the EU’s objectives underpinning the restrictive measures and demonstrates a need for common action at Union level. This will now be addressed by harmonisation of penalties, which should increase the effectiveness, proportionality and dissuasiveness of those penalties.

Common action at EU level will not only contribute to a level playing field among Member States, enhancing law enforcement and judicial cooperation in the area, but will also do so on a global level in relation to the interaction with third countries on the violation of EU restrictive measures.

What is the next step?

To give legislative effect at EU level to this Council Decision, the European Commission has now prepared a proposal for a Directive. This sets out a list of criminal offences, which will violate EU sanctions. Offences will also include actions aimed at circumventing these measures.

Under the proposal, a corporate entity may be liable for an offence carried out for its benefit or where a failure to supervise made the commission of an offence possible.

The proposal also sets out common basic standards for penalties. Depending on the offence, an individual could be subject to a maximum penalty of five years in prison. Amongst other penalties, corporates could be subject to fines of 5% of total worldwide turnover in the business year preceding the fining decision.

The proposal will now make its way “as a matter of urgency” through the EU legislative process and, when adopted and in effect, Member States will have six months to align their national laws to give effect to the harmonised provisions of the new Directive.

Please contact any of the following if you require further information or have any queries regarding EU sanctions against Russia.