On June 9, 2023, the European Council issued an official press release announcing that the European regulator has reached an agreement on the key provisions of the Directive on criminalization of sanctions circumvention (the "Directive").
On December 2, 2022, the European Commission first announced the need for the adoption of a directive at the EU level providing minimum rules concerning the definition of criminal offences and penalties with regard to the violation of those Union restrictive measures.
In the European Union, the European Council is responsible for administering the introduction of sanctions, and EU member states are responsible for prosecuting violators.
According to the Directive, the following actions will be considered criminal offenses:
· helping persons subject to Union restrictive measures to bypass an EU travel ban;
· trading sanctioned goods;
· running transactions with states or entities which are hit by EU restrictive measures.
Currently, EU member states are not required to criminalize sanctions circumvention. Instead, administrative liability may be provided for. Terms of imprisonment for such crimes vary from 2 to 12 years in different EU member states.
Punishment for sanctions circumvention will include:
· imprisonment (for natural persons);
· additional fines, including turnover fines;
· freezing of assets and funds.
From the European Council press release, it follows that:
· EU member states will be required to provide a statute of limitations for this offense that would ensure proper law enforcement;
· Aggravating circumstances will include committing a crime by a government official and as part of an organized group of individuals.
In the Interagency File 2022/0398, it is noted that the Directive does not apply to violations related to monetary funds, economic resources, goods, services, transactions, or activities where the damage amount is less than 10,000 euros. Punishment for such violations is within the jurisdiction of EU member states.
The Directive is of great importance to businesmen. Now they will need to exercise greater caution in choosing counterparties, investment objects, and monitoring sanctions.
Nadmitov, Ivanov & Partners Law Firm advises on sanctions and countersanctions.
Tel.: +7 (495) 649-87-12