European authorities have reached political agreement on two new initiatives which come in the context of the ‘Freeze and Seize’ Task Force, set up by the Commission in March 2022, and which will contribute to the enforcement of EU sanctions. The measure include the harmonisation of criminal offences and penalties for the violation of EU sanctions, and a new Directive to bolster the EU’s powers of asset recovery and confiscation.
Harmonisation of criminal offences for sanctions violations
Enforcement of EU sanctions is devolved to national Member States, leading to variable levels of enforcement in different EU countries. The European Parliament and Council reached provisional agreement on Tuesday 12 December 2023 on a proposal to harmonise criminal offences and penalties for the violation of EU sanctions and make it easier to investigate and prosecute sanctions violations. The proposal will create consistency in penalties across Member States by establishing a common basic standard for penalties including imprisonment of at least five years for certain offences and enhanced rules on freezing and confiscation (see further below).
The new rules will introduce a list of criminal offences related to violation or circumvention of EU sanctions:
- Failing to freeze assets.
- Breaching travel bans and arms embargoes.
- Providing prohibited or restricted economic and financial services.
- Transferring funds to a third party or providing false information to conceal funds that should be frozen.
The European Council and Parliament now need to formally adopt the Directive which will enter into force on the 20th day following its publication in the Official Journal and Member States will have six months to transpose the provisions of the Directive into national law.
The full press release can be found here: New rules criminalising the violation of EU sanctions (europa.eu)
Asset recovery and confiscation
The European Parliament and Council similarly reached agreement on updated rules relating to asset recovery and confiscation. The Directive will seek to limit the ability of criminals to maintain and invest illegal gains, and will also cover the violation of restrictive measures, ensuring the effective tracing, freezing, management and confiscation of benefits coming from violating sanctions.
Once adopted the Directive will:
- Expand the possibilities to confiscate assets from a wider set of crimes such as arms trafficking, fraud, trafficking of cultural goods including for bypassing of sanctions (once the Commission proposal on extending the list of EU crimes is adopted);
- Allow for the confiscation of unexplained wealth linked to criminal activities, ensuring illegal gains do not remain in the hands of criminals that managed to hide the illegal origin of their properties or assets;
- Provide Asset Recovery Offices with the mandate to swiftly trace and identify criminal assets, including to urgently freeze property when there is a risk that assets could disappear.
- Ensure financial investigations for high profit generating crimes.
- Establish Asset Management Offices in all EU Member States to ensure that frozen property does not lose its value and enable the sale of frozen assets that are at such risk or are costly to maintain.
- Facilitate victims’ right to compensation, by allowing for compensation through the confiscated property if necessary.
- Strengthen safeguards to ensure that affected persons have the necessary and effective remedies to protect their rights, such as the right to defence, to be informed and to challenge judicial decisions.
Once published in the Official Journal, the Directive will enter into force 20 days after publication and Member States will have 30 months to transpose the provisions of the Directive into national law.
The full press release can be found here.
