Vulcan Insight | EU proposes to outlaw sanctions evasion

On Wednesday, the European Commission the European Commission proposed adding the evasion of EU sanctions measures to the list of crimes recognised in the European Union. The Commission also proposed new reinforced rules on the recovery and confiscation of frozen assets, which will also contribute to the overall implementation of EU’s restrictive measures framework.

The Commission’s proposals come in the context of the ‘Freeze and Seize’ Task Force, set up by the European Commission in March to accelerate and enforce its measures against sanctioned Russian individuals and their assets in the European Union.

The proposals aim to ensure that the assets of individuals and entities that violate sanctions can be confiscated effectively by EU and national authorities in the future, an action currently operating in a legal grey zone. According to EU Home Affairs Commissioner, Ylva Johansson, the newly proposed measures would also allow tough action for fighting organised crime.

“This proposal allows Asset Recovery officers to trace and freeze: trace where the assets are and issue an urgent freezing order. The tracing allows assets to be found and the urgent freezing gives time for courts to act,” Ms. Johansson said at a press conference, adding that “this proposal will cover new types of crime including firearms trafficking, extortion, to the tune of 50 billion.”

On making the violation of EU restrictive measures an EU crime, the Commission’s proposed Directive would set a common basic standard on criminal offences and penalties across the EU in line with Article 83 (1) TEU. According to the Commission, such common rules would make it easier for public authorities across the European Union to investigate, prosecute and punish violations of sanctions in all Member States.

According to an accompanied Communication for a future Directive, the potential criminal offences under the new legal framework could include “engaging in actions or activities that seek to directly or indirectly circumvent the restrictive measures, including by concealing assets; failing to freeze funds belonging to, held or controlled by a designated person/entity; or engaging in trade, such as importing or exporting goods covered by trade bans.”

Meanwhile, on the Commission’s proposal on asset recovery and confiscation aims to expand the possibilities to confiscate assets from a wider set of crimes, including the violation of EU restrictive measures, and will mandate the establishing of Asset Management Offices in all EU Member States to ensure that frozen property does not lose value, enabling the sale of frozen assets that could easily depreciate or are costly to maintain.

The new actions come as the Commission announced that so far, EU Member States had frozen assets worth €9.89 billion and blocked €196 billion worth of transactions by sanctioned Russian individuals and entities.

Compliments of Vulcan Consulting – a member of the EACCNY.