The European Commission has put forward a proposal for the harmonisation of criminal offenses and penalties for violations of EU restrictive measures.

"While the Russian aggression on Ukraine is ongoing, it is paramount that EU restrictive measures are fully implemented and the violation of those measures does not pay off. 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 EC statement reads.

As noted, the implementation of EU restrictive measures following the Russian attack on Ukraine shows the complexity of identifying assets owned by oligarchs, who hide them across different jurisdictions through elaborate legal and financial structures.

The directive will establish the same level of penalties in all Member States.

The main elements of the proposal include a list of criminal offenses that violate EU sanctions, such as:

• making funds or economic resources available to, or for the benefit of, a designated person, entity or body;
• failing to freeze these funds;
• enabling the entry of designated people into the territory of a Member State or their transit through the territory of a Member State;
• entering into transactions with third countries, which are prohibited or restricted by EU restrictive measures;
• trading in goods or services whose import, export, sale, purchase, transfer, transit or transport is prohibited or restricted;
• providing financial activities which are prohibited or restricted; or
• providing other services which are prohibited or restricted, such as legal advisory services, trust services and tax consulting services.

Offenses will also cover the circumvention of EU restrictive measures.

In addition, the European Commission's proposal contains common basic standards of punishment: depending on the offence, the individual person could be liable to a maximum penalty of at least five years in prison; 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 of the EU as part of the ordinary co-legislative procedure.

In May 2022, the Commission proposed to add the violation of EU restrictive measures to the list of EU crimes. At the same time, the Commission proposed new reinforced rules on asset recovery and confiscation, which will also contribute to the implementation of EU restrictive measures. The proposals come in the context of the ‘Freeze and Seize' Task Force, set up by the Commission in March.

Following the adoption on 28 November of the Council Decision identifying the violation of Union restrictive measures as an area of serious crime that meets the criteria set out in Article 83(1) of the TFEU, the Commission is now putting forward this proposal for a Directive on the violation of Union restrictive measures, as a second step.