Since the start of the war in Ukraine, the EU has adopted a series of sanctions against Russian and Belarussian individuals and companies. The implementation of EU restrictive measures shows the complexity of identifying assets owned by oligarchs, who hide them across different jurisdictions through complex legal and financial structures. For example, by transferring ownership of the sanctioned property to a non-sanctioned third party. They are helped by existing legal loopholes, as the criminal law provisions on breaches of EU sanctions vary across Member States.
The European Commission on 2 December 2022 put forward a proposal to harmonise criminal offences and penalties for the violation of EU restrictive measures. The Commission proposal sets out common EU rules, which will make it easier to investigate, prosecute and punish violations of restrictive measures in all Member States alike. The proposed Directive will establish the same level of penalties in all Member States. Thereby it will close existing legal loopholes and increase the deterrent effect of violating EU sanctions in the first place.
The main elements of the proposal include (i) a list of criminal offences, which violate EU sanctions, such as making funds or economic resources available to, or for the benefit of, a designated person, entity or body; providing financial services or other services which are prohibited or restricted, such as legal advisory services, trust services and tax consulting services etc., (ii) offences that will cover circumventing an EU restrictive measure, this means bypassing or attempting to bypass restrictive measures by concealing funds or concealing the fact that a person is the ultimate owner of funds, (iii) common basic standards for penalties. Depending on the offence, an individual could be liable to a maximum penalty of at least five years in prison, while companies could be liable to penalties of no less than 5% of the total worldwide turnover of the legal person (company) in the business year preceding the fining decision.
The proposal will now be discussed by the European Parliament and the Council as part of the ordinary co-legislative procedure.