The Council of the European Union Greenlights the Directive Introducing Criminal Offences and Penalties for EU Sanctions Violation

Key Aspects:

• On 12 April 2024, a significant milestone was reached as the Council of the European Union (the Council) formally endorsed the adoption of a Directive aimed at defining criminal offences and penalties related to the violation of European Union restrictive measures, commonly referred to as sanctions.
• This pivotal decision came after months of negotiation. The political agreement on the text of the Directive was initially reached by the European Parliament (the EP) and the Council on 12 December 2023. Following this agreement, the EP officially adopted the Directive on 12 March 2024.
• The Directive does not replace the EU's decentralized enforcement approach. Instead, it provides a framework for harmonizing enforcement practices, while respecting the sovereignty of individual Member States.

What Constitutes a Criminal Offense? 

Member States are mandated to ensure that intentional actions breaching EU sanctions or implementing national measures are classified as criminal offenses. The Directive casts a wide net, encompassing all potential violations of EU sanctions, along with acts of incitement, aiding, and abetting such violations. Notably, attempts to breach EU sanctions would also be subject to criminalization in most cases.

Moreover, the scope extends to violations of trade control measures, particularly for military and dual-use items, if committed with "serious negligence".

However, there are provisions within the Directive allowing Member States to exclude criminal liability for offenses involving a value of less than EUR 10,000. Additionally, exemptions are provided for legal professionals' reporting obligations conflicting with legal privilege requirements and for humanitarian assistance efforts.

Criminal Liability And Penalties

The Directive mandates Member States to hold legal persons accountable for sanctions violations, whether committed by a leading figure, or due to a lack of supervision. This accountability does not exempt natural persons who engage in, incite, or aid in such violations.

Regarding penalties, the Directive aims to standardize them across Member States. For individuals, sanctions violations could result in prison sentences ranging from one to five years, along with accessory penalties. Legal persons may face fines of at least 5% of their total worldwide turnover or EUR 40 million, with the possibility of additional penalties as determined by Member States.

Member States must consider specific aggravating and mitigating factors when imposing penalties, although judges retain discretion based on the circumstances of each case.

It's crucial that the implementation of the Directive fully respects the rights of individuals involved in criminal proceedings and upholds fundamental rights. This ensures fairness and adherence to legal principles throughout the enforcement process.

Enhancing Existing Criminal Law Tools

The Directive mandates Member States to implement measures, as outlined in Directive 2014/42/EU on the freezing and confiscation of instrumentalities and proceeds of crime in the European Union, to freeze and confiscate:

(i) assets and gains obtained from sanctions violations, and

(ii) funds or economic resources subject to EU sanctions, in cases involving their concealment or the concealment of their ultimate owner or beneficiary.

Moreover, the Directive includes EU sanctions violations in the list of predicate offences for money laundering under EU laws governing the combatting of money laundering through criminal prosecution. 

The Directive 2014/42/EU was adopted by the Council on the same day, establishing EU-wide minimum rules on the tracing, identification, freezing, confiscation, and management of criminal property associated with various crimes, including sanctions violations. 

The Directive will enter into force 20 days after its publication in the Official Journal of the European Union. Member States will then have 12 months to implement the Directive’s provisions into their national law. 

Official Links:

https://www.consilium.europa.eu/en/press/press-releases/2024/04/12/council-gives-final-approval-to-introduce-criminal-offences-and-penalties-for-eu-sanctions-violation/?utm_source=brevo&utm_campaign=AUTOMATED%20-%20Alert%20-%20Newsletter&utm_medium=email&utm_id=320

https://data.consilium.europa.eu/doc/document/PE-95-2023-INIT/en/pdf/

https://www.consilium.europa.eu/en/press/press-releases/2024/04/12/organised-crime-council-gives-green-light-for-eu-law-on-asset-recovery-and-confiscation/

https://data.consilium.europa.eu/doc/document/PE-3-2024-INIT/fr/pdf