Explanatory Memorandum to COM(2022)684 - Definition of criminal offences and penalties for the violation of Union restrictive measures - Main contents
Please note
This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2022)684 - Definition of criminal offences and penalties for the violation of Union restrictive measures. |
|---|---|
| source | COM(2022)684  |
| date | 02-12-2022 |
1. CONTEXT OF THE PROPOSAL
·Reasons for and objectives of the proposal
Restrictive measures are an essential tool for promoting the objectives of the Common Foreign and Security Policy (CFSP), as set out in Article 21 of the Treaty on European Union (TEU). These objectives include safeguarding EU values, maintaining international peace and security, and consolidating and supporting democracy, the rule of law and human rights.
To preserve these values, the EU may impose restrictive measures against non-EU countries, entities, legal or natural persons. These measures comprise targeted individual measures, i.e. targeted financial sanctions (asset freezes) and restrictions on admissions (travel bans), and sectoral measures, i.e. arms embargoes or economic and financial measures (e.g. import and export restrictions, and restrictions on the provision of certain services, such as banking services) 1 .
Currently, the EU has over 40 sets of restrictive measures in place. Some of these implement restrictive measures adopted by the United Nations; others are adopted autonomously by the EU. In addition to measures addressing country-specific situations, the EU has also adopted general measures targeting the proliferation and use of chemical weapons, cyberattacks, human rights violations, and terrorism 2 . Restrictive measures are binding on Member States and on any person or entity under the jurisdiction of Member States (EU operators) 3 .
Inconsistent enforcement of Union restrictive measures
As the adoption of Union restrictive measures has intensified over recent decades 4 , so too have the schemes to circumvent them. The Commission has previously pointed to inconsistent enforcement of restrictive measures and the fact that this undermines their efficacy and the EU’s ability to speak with one voice 5 .
Speaking with one voice has become particularly urgent in the current context of Russia’s military aggression against Ukraine. The EU has put in place a series of restrictive measures against Russian and Belarusian individuals and entities, some of which date back to 2014. In this context, in order to enhance EU-level coordination in the enforcement of these restrictive measures, the Commission set up a ‘Freeze and Seize’ Task Force. This Task Force ensures coordination among Member States and EU agencies such as Europol and Eurojust. It has regularly discussed the need for a common criminal law approach in order to hold accountable natural and legal persons involved in the violation of Union restrictive measures.
The implementation and enforcement of Union restrictive measures is primarily the responsibility of Member States. The competent authorities in Member States have to assess whether there has been a breach of the relevant Council Decisions and Council Regulations adopted under Article 29 TEU or Article 215 of the Treaty on the Functioning of the European Union (TFEU), respectively and to take appropriate measures. In this regard, EU Regulations systematically include a provision requiring Member States to adopt national rules providing for effective, proportionate and dissuasive penalties for infringements of those Union legal acts 6 .
Apart from the restrictions, these Decisions and Regulations generally include:
·an anti-circumvention clause, which prohibits knowing and intentional participation in activities that seek to circumvent the restrictive measures in point 7 ; and
·other obligations, in particular to report on steps taken to implement the restrictive measures (e.g. reporting to authorities the amount of assets that have been frozen).
While Article 29 TEU and Article 215 TFEU provide a legal basis for the Council to adopt the necessary measures in the case of adoption of Union restrictive measures, the legal basis for the adoption of restrictive measures does not provide for the approximation of criminal law definitions and the types and levels of criminal penalties 8 .
Differences among Member States’ criminal definitions and penalties
In the absence of EU-level harmonisation, national systems differ significantly as concerns criminalisation of the violation of EU law on Union restrictive measures. In 12 Member States, the violation of Union restrictive measures is solely a criminal offence. In 13 Member States, the violation of these measures can amount to an administrative or a criminal offence 9 . The criteria according to which the conduct falls within one or other category of measures are usually related to its gravity (serious nature), determined in either qualitative (intent, serious negligence) or quantitative (damage) terms 10 , but they are different in each Member State. In two Member States, the specific offence of the violation of Union restrictive measures can, at present, only lead to administrative penalties 11 .
Penalty systems also differ substantially across Member States. In 14 Member States, the maximum length of imprisonment is between 2 and 5 years. In 8 Member States, maximum sentences between 8 and 12 years are possible 12 . The maximum fine that can be imposed for the violation of Union restrictive measures – either as a criminal or as an administrative offence – varies greatly across Member States, ranging from EUR 1 200 to EUR 5 000 000 13 .
Fourteen Member States provide for criminal liability of legal persons for the violation of Union restrictive measures 14 . In addition, 12 Member States provide for administrative penalties, notably fines, which may be imposed on legal persons when their employees or their management violate restrictive measures. Maximum fines for legal persons range from EUR 133 000 to EUR 37.5 million 15 .
Lack of criminal investigations and prosecutions
In practice, very few individuals or legal persons responsible for the violation of Union restrictive measures are effectively held accountable 16 . However, the Genocide Network report notes that ‘a positive trend can be observed recently in the number of enforcement actions launched and the rise in penalties imposed by certain national authorities’ 17 .
Despite the positive trends in some Member States, there seem to be only a few in which there are ongoing judicial proceedings related to the violation of Union restrictive measures 18 . This can serve as an indication that in many Member States insufficient priority is given to investigating and prosecuting the violation of Union restrictive measures. In this regard, it should be noted that Europol and Eurojust have developed a number of activities to further support police and judicial authorities investigating and prosecuting the violation of Union restrictive measures. They have been cross-checking the list of EU-designated individuals and companies against their databases. Europol has also launched ‘Operation Oscar’ 19 to support financial investigations by Member States targeting criminal assets owned by individuals and legal entities subject to Union restrictive measures. At the same time, criminal investigations and prosecutions often build on the detection and referral, from administrative authorities to law enforcement, of violations of Union restrictive measures. The absence of such referrals points to a lack of such operational cooperation within national enforcement chains.
Negative consequences of the status quo
In the absence of law enforcement, and of judicial authorities having appropriate and effective tools and resources available to prevent, detect, investigate and prosecute the violation of Union restrictive measures, designated individuals and legal persons whose assets are frozen may continue to be able to access their assets in practice and to support regimes that are targeted by Union restrictive measures, thus frustrating the objectives of those restrictive measures.
Moreover, Member States have very different definitions of, and disparate penalties for, the violation of Union restrictive measures under their administrative and/or criminal law. This indicates that the same infringement might be punished with different penalties and at different enforcement levels. This weakens the enforcement of Union restrictive measures and undermines the credibility of the EU’s objectives.
Finally, in some cases the proceeds generated by the activities carried out in violation of Union restrictive measures may also allow the entities and individuals targeted by those restrictive measures to continue to engage in the behaviour for which they have been subject to restrictive measures.
Objectives of the proposal
Against this background, following a European Commission proposal presented on 25 May 2022 20 , the Council has decided to identify the violation of Union restrictive measures as an area of crime that meets the criteria specified in Article 83 i TFEU. This has enabled the Commission to adopt this proposal for a Directive under the ordinary legislative procedure, which aims to approximate the definition of criminal offences and penalties for the violation of Union restrictive measures.
The objectives of this proposal are to:
(a)approximate definitions of criminal offences related to the violation of Union restrictive measures;
(b)ensure effective, dissuasive and proportionate penalty types and levels for criminal offences related to the violation of Union restrictive measures;
(c)foster cross-border investigation and prosecution; and
(d)improve the operational effectiveness of national enforcement chains to foster investigations, prosecutions and sanctioning.
·Consistency with existing policy provisions in the policy area
Article 2 TEU lays down the EU’s common values of human dignity, freedom, democracy, equality, the rule of law and respect for human rights. The effective enforcement of restrictive measures, including through criminal law measures aimed at addressing the violation of restrictive measures, supports the upholding of such common values within and outside the EU.
Furthermore, the EU constitutes an area of freedom, security and justice that respects fundamental rights, and different legal systems and traditions of Member States. It aims at ensuring a high level of security through measures that include preventing and combating crime, racism and xenophobia. Under Article 83 i TFEU, the European Parliament and the Council may ‘establish minimum rules concerning the definition of criminal offences and penalties in the areas of particularly serious crime with a cross-border dimension, resulting from the nature or impact of such offences or from a special need to combat them on a common basis.’
The approximation of definitions and penalties for the criminal offence of the violation of Union restrictive measures complements the Commission proposal for a Directive on asset recovery and confiscation, implementing the Security Union Strategy 21 and the EU strategy to tackle organised crime 22 . The proposal for a Directive on asset recovery and confiscation aims at strengthening the capabilities of national authorities to trace and identify, freeze and manage property that constitutes the proceeds or instrumentalities of crime. Furthermore, it provides for a reinforced legal framework on confiscation, including specific cases where a conviction for a specific crime is not possible.
In addition, the proposal for a Directive on asset recovery and confiscation contributes to the effective implementation of restrictive measures since it requires Member States to enable the tracing and identification of property linked to violations of Union restrictive measures as defined under national law. Moreover, the proposal makes the revised rules on asset recovery and confiscation applicable to the criminal offence of the violation of Union restrictive measures.
Following the adoption of this proposal for a Directive approximating the definitions and penalties related to the violation of Union restrictive measures, the rules on tracing and identification, freezing, management, and confiscation measures will become applicable to property related to the violation of Union restrictive measures. In the end, proceeds of the violation of Union restrictive measures, for example in instances where individuals and companies would make funds available to those subject to targeted financial sanctions (i.e. asset freezes), could become the object of confiscation measures. At the same time, instrumentalities used to pursue the violation of restrictive measures could also become the object of confiscation.
·Consistency with other Union policies
Contents
The establishment of minimum rules concerning the criminal law definition of, and penalties for, the violation of restrictive measures based on Article 83 i TFEU would strengthen the enforcement of restrictive measures in Member States, thereby complementing the measures taken in accordance with Article 29 TEU and Article 215 TFEU. The provision on penalties in Regulations No 833/2014 and No 269/2014 23 have been strengthened as part of the sixth package of restrictive measures in response to the Russian war of aggression against Ukraine. The amended provisions oblige Member States to lay down rules on penalties, including criminal penalties, applicable to infringements of these Regulations and to take all measures necessary to ensure that they are implemented. The penalties must be effective, proportionate and dissuasive. Member States must also provide for appropriate measures for the confiscation of the proceeds of such infringements.
On 21 July 2022, the Council adopted Council Regulation (EU) 2022/1273 24 , which amends Article 8 and Article 9 of Council Regulation (EU) No 269/2014. In particular, in order to ensure the effective and uniform implementation of this Regulation, and in view of the increasing complexity of evasion schemes of restrictive measures, which hamper such implementation, it obliges designated persons and entities with assets within the jurisdiction of a Member State to report these assets and to cooperate with the competent authority in the verification of this reporting (Article 9) 25 . Failure to respect this obligation will constitute a circumvention 26 . Regulation 2022/1273 also strengthens the provision on reporting obligations for EU operators, with a view to preventing the breach and circumvention of the freezing of assets (Article 8) 27 .
However, Article 29 TEU and Article 215 TFEU are not the suitable legal basis for the approximation of criminal definitions and the types and levels of criminal penalties.
Furthermore, in its 2021 Communication The European economic and financial system: fostering openness, strength and resilience 28 , the Commission notes that the implementation of Union restrictive measures is not as uniform across the EU as it ought to be. This creates distortions in the single market, as EU companies, including EU subsidiaries of foreign companies, can find means to circumvent the restrictive measures. This also creates uncertainty among operators. Inconsistent enforcement undermines the efficacy of Union restrictive measures and the EU’s ability to speak with one voice. Among other initiatives, the strategy calls for further coordination work between the Commission and Member States to ensure that national penalties for breaching Union restrictive measures are effective, proportionate and dissuasive.
Finally, under the Technical Support Instrument 29 , the Commission supports Member States to provide capacity building and technical advice on the implementation of restrictive measures.
2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY
·Legal basis
Under Article 83 i TFEU, the European Parliament and the Council may, by means of directives adopted in accordance with the ordinary legislative procedure, establish minimum rules concerning the definition of criminal offences and sanctions in areas of particularly serious crime with a cross-border dimension resulting from the nature or impact of such offences or from a special need to combat them on a common basis.
These areas of crime are the following: terrorism; trafficking in human beings and sexual exploitation of women and children; illicit drug trafficking; illicit arms trafficking; money laundering; corruption; counterfeiting of means of payment; computer crime; and organised crime. On the basis of developments in crime, the Council may adopt a decision identifying other areas of crime that meet the criteria specified in this paragraph. In doing so, it acts unanimously after obtaining the consent of the European Parliament.
Following the adoption of Council Decision 2022/2332 30 , the areas of crime listed in Article 83 i TFEU now also include the violation of Union restrictive measures. This has enabled the Commission to put forward the current proposal for a Directive.
·Subsidiarity (for non-exclusive competence)
The objectives of this Directive are to ensure common definitions of offences related to the violation of Union restrictive measures and the availability of effective, dissuasive and proportionate criminal penalties for serious offences related to the violation of Union restrictive measures. As discussed in more detail in the following paragraphs, these objectives cannot be sufficiently achieved by Member States. They can instead be better achieved at EU level, by reason of the scale and effects of the conduct at stake, which is of an inherent cross-border nature and which potentially undermines the achievement of EU objectives to safeguard international peace and security, and to uphold EU common values. Therefore, the EU may adopt the necessary measures in accordance with the principle of subsidiarity as set out in Article 5 TEU.
The violation of Union restrictive measures is a particularly serious area of crime, since it may perpetuate threats to international peace and security, undermine the consolidation of, and support for, democracy, the rule of law and human rights, and result in significant economic, social and environmental damage. Because of such violations, individuals and entities whose assets are frozen or whose activities are restricted continue to be able to access their assets thus frustrating the objectives of those restrictive measures. Similarly, the money generated by the exploitation of goods and natural resources traded in violation of Union restrictive measures may also allow the regimes targeted by those restrictive measures to have continued access to the necessary means (i.e. purchase the arms and weapons) with which they maintain repressive practices and continue committing grave crimes. The violation of Union restrictive measures relating to trade could furthermore contribute to the illegal exploitation of natural resources in the jurisdiction targeted by those restrictive measures.
In addition, the fact that Member States, under their administrative and/or criminal law, have very different definitions and penalties for the violation of Union restrictive measures suggests that the same infringement might be punished with different penalties and face different enforcement levels. These differences represent an obstacle to the consistent application of the Union policy on restrictive measures. They may even lead to forum shopping by offenders and could ultimately lead to their (quasi) impunity in case they choose to conduct their activities in the Member State(s) that provide for less severe penalties or have a record of being lenient in the prosecution for the violation of Union restrictive measures. This undermines the efficiency of restrictive measures and their enforcement at Union level. Such a situation has the risk of frustrating the EU objectives to safeguard international peace and security and uphold EU common values. Therefore, there is a special need for common action at EU level, by means of criminal law, to address the violation of Union restrictive measures.
Furthermore, violations of Union restrictive measures have a clear and at times even inherent cross-border dimension. Not only are they usually committed by natural persons and legal entities operating on a global scale, but, in some cases, Union restrictive measures, such as restrictions on banking services, even forbid cross-border operations. Hence, by definition, their violation is conduct with a cross-border dimension requiring a common cross-border response at EU level.
Finally, harmonisation would also increase the deterrent effect of penalties for the violation of Union restrictive measures.
·Proportionality
In accordance with the principle of proportionality, as set out in Article 5 TEU, this Directive does not go beyond what is necessary to achieve its objective. The approximation of definitions of criminal offences and the types and levels of criminal penalties is limited to what is needed to effectively address the violation of Union restrictive measures in Member States. Measures on the use of investigative tools and information exchange are included only to the extent needed for the proposed criminal law framework to function effectively.
·Choice of the instrument
Under Article 83 i TFEU, the European Parliament and the Council may, by means of directives adopted in accordance with the ordinary legislative procedure, establish minimum rules concerning the definition of criminal offences and sanctions in the areas of particularly serious crime with a cross-border dimension resulting from the nature or impact of such offences or from a special need to combat them on a common basis.
3. RESULTS OF EX POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS
·Stakeholder consultations
Targeted consultations were conducted with Member States in the Working Party on Judicial Cooperation in Criminal Matters (COPEN) (8 September 2022), Europol (5 September) and Eurojust (13 September). DG JUST also organised an in-depth discussion with members of its Expert Group on EU Criminal Policy (16 September). These consultations were based on a dedicated Commission questionnaire that raised questions on the offences, penalties, jurisdiction rules, and provisions on cross-border cooperation to be included in the future Directive.
·Collection and use of expertise
Following Russia’s military aggression against Ukraine, the Commission set up the ‘Freeze and Seize’ Task Force at the beginning of March 2022. Its aim is to ensure coordination among Member States in the enforcement of Union restrictive measures on Russian and Belarusian listed individuals and companies, and to explore the interplay between Union restrictive measures and criminal law measures. These exchanges of views included meetings with national competent authorities for the implementation of restrictive measures, Europol, Eurojust, and the Genocide Network 31 , the Secretariat of which is hosted by Eurojust.
A specific subgroup of the ‘Freeze and Seize’ Task Force is dedicated to strengthening the implementation of Union restrictive measures. In particular, it tackles questions raised by national authorities and explores possible ways to identify assets proactively. Member State national competent authorities participate in this subgroup. During the exchanges of views in the context of this subgroup, references were made on several occasions to difficulties in holding accountable individuals and legal persons involved in the violation of Union restrictive measures. Participants in such exchanges also argued in favour of a common criminal law approach to the violation of Union restrictive measures.
Evidence of the need for such a common approach is specifically provided for in the Genocide Network report of December 2021 32 . This report highlights the need for the criminalisation of the violation of Union restrictive measures to ensure that individuals or legal persons responsible for such violations are held accountable 33 . It furthermore concludes that ‘prosecuting sanctions violations can offer a safety net to avoid impunity’, especially in the context of core international crimes 34 .
Furthermore, discussions within the ‘Freeze and Seize’ Task Force on the exchange of best practices on both criminal investigations and confiscation demonstrated the importance of a proactive approach and coordination among authorities responsible for the implementation of Union restrictive measures. Financial intelligence units, law enforcement authorities and customs authorities, along with international partners, civil society and investigative journalists, should cooperate and exchange information in order to obtain the leads that will enable law enforcement authorities to start an investigation.
The Commission also consulted its Expert Group on EU Criminal Policy 35 on 13 May and 16 September 2022. The group generally welcomed the idea of harmonising definitions and penalties at EU level and provided specific input as regards offences, penalties, jurisdiction rules and cross-border cooperation.
·Impact assessment
This proposal for a Directive aims at approximating the definition of criminal offences and penalties in the area of the violation of Union restrictive measures. It follows the adoption of Council Decision (EU) 2022/2332 on identifying the violation of Union restrictive measures as an area of crime that meets the specified criteria laid down in Article 83 i of the Treaty on the Functioning of the European Union 36 .
The European Commission proposal for a Council Decision, presented on 25 May 37 , was accompanied by a Communication Towards a Directive on criminal penalties for the violation of Union restrictive measures 38 . Because of the urgent need to hold accountable individuals and legal persons involved in the violation of Union restrictive measures, the annex to this Communication already outlined the main elements that a future Directive on criminal penalties for the violation of Union restrictive measures could contain.
Council Decision (EU) 2022/2332 on identifying the violation of Union restrictive measures as an area of crime that meets the specified criteria laid down in Article 83 i of the Treaty on the Functioning of the European Union also underlines the urgency of the adoption of secondary legislation 39 .
Given these circumstances, no impact assessment was conducted.
·Fundamental rights
This Directive respects fundamental rights and observes the principles laid down in the Charter of Fundamental Rights of the European Union (the Charter) 40 . Notably, the Directive ensures compliance with the following provisions of the Charter: the right to liberty and security (Article 6); the right to protection of personal data (Article 8); the freedom to conduct a business (Article 16); the right to property (Article 17); the right to an effective remedy and to a fair trial (Article 47); the presumption of innocence and right of defence (Article 48); the principles of legality and proportionality of criminal offences and penalties (Article 49); and the right not to be tried or punished twice in criminal proceedings for the same offence (Article 50).
This Directive will have to be transposed into national law respecting fundamental rights. In particular, Member States should ensure that the imposition of criminal and administrative penalties respects the principles of the Charter, including the privilege against self-incrimination, the right to remain silent and the prohibition of being tried or punished twice in criminal proceedings for the same offence. Member States should also ensure that the procedural rights of suspected or accused persons in criminal proceedings are respected. In this regard, the obligations under this Directive are without prejudice to Member States’ obligations under EU law on procedural rights in criminal proceedings. Finally, this Directive will have to be transposed without prejudice to the applicable rules on reporting, confidentiality and professional secrecy.
4. BUDGETARY IMPLICATIONS
The current proposal has negligible budgetary implications for Member States and for the Commission. Specific information on the financial implications for the Commission can be found in the legislative financial statement attached to this legislative package.
As provided for in Article 19 i and i of the current proposal, the Commission will have to undertake a number of reporting obligations. Two years after the end of the transposition period, the Commission will have to produce a report on how Member States transposed the Directive. Five years after the end of the transposition period, the Commission must produce a study on the Directive’s effectiveness to evaluate its added value. The latter will only happen after the end of the current multiannual financial framework.
The first report relates to transposition of the Directive by Member States. The second report that the Commission has to produce is a study that will assess the effectiveness of the Directive, with respect to a specified series of indicators.
In addition, the legislative financial statement details the costs for the collection and analysis of statistics on the criminal offences referred to in Articles 3, 4 and 5. Member States have to submit these statistics to the Commission on an annual basis, in accordance with Article 19(2) and i of the current proposal.
Besides the costs for the Commission, the proposal will also have limited financial implications for Member States. These financial implications can be divided into three parts.
As provided for in Article 15 of the current proposal, Member States will have to ensure that effective investigative tools are made available for the investigation of offences related to the violation of Union restrictive measures.
In accordance with Article 13 of the current proposal, Member States will have to ensure coordination and cooperation at strategic and operational level among all their competent authorities involved in the prevention, investigation and prosecution of offences related to the violation of Union restrictive measures.
Member States will face some costs related to the above-mentioned obligation to submit, on an annual basis, statistics on the criminal offences referred to in Articles 3, 4 and 5. However, insufficient data are available to enable an exact cost estimate of the related costs.
5. OTHER ELEMENTS
·Implementation plans and monitoring, evaluation and reporting arrangements
Member States will have six months after the entry into force of the Directive to transpose it into national legislation. Two years after the end of this transposition period, the Commission will have to produce a report on how Member States transposed the Directive. Five years after the end of the transposition period, the Commission must produce a study on the Directive’s effectiveness to evaluate its added value.
·Detailed explanation of the specific provisions of the proposal
Article 1: Subject matter
This provision sets out the purpose of the Directive, in particular its aim of ensuring the effective application of Union restrictive measures.
Article 2: Scope and definitions
This provision sets out the scope of the Directive. It applies to violations of Union restrictive measures adopted by the EU on the basis of Article 29 TEU or Article 215 TFEU. Such measures include the freezing of funds and economic resources, prohibitions on making funds and economic resources available and prohibitions on entry into, or transit through the territory of a Member State of the European Union, as well as sectoral economic measures and arms embargoes. Furthermore, this provision provides definitions of terms used in the Directive, including of the ‘designated person, entity or body’, ‘funds’ and ‘economic resources’.
Article 3: Violation of Union restrictive measures
This provision describes the criminal offences covered by this Directive. The offences cover violations of the prohibitions and restrictions contained in Union restrictive measures, conduct intended to circumvent Union restrictive measures 41 , and breaching conditions under authorisations granted by competent authorities to conduct certain activities otherwise prohibited by the restrictive measures. These offences are not to be understood as imposing obligations on natural persons contrary to the right not to incriminate oneself and to remain silent as set out in the Charter and Directive (EU) 2016/343 42 . In addition, they do not affect the applicable rules on reporting, confidentiality and professional secrecy.
Moreover, activities which concern the provision of goods and services of daily use for the personal use of designated natural persons, such as food and healthcare products and services, or of petty cash, where it is clearly limited to fulfilling the basic human needs of such persons and their dependent family members are excluded from criminalisation. The failure to report such activities are also excluded from criminalisation. In addition, the delivery of humanitarian aid to persons in need is excluded from criminalisation. Such humanitarian aid must be provided strictly in accordance with international humanitarian law and can notably consist of food and nutrition, shelter, health care, water and sanitation. Furthermore, in implementing this Directive, Member States should take into account that International Humanitarian Law, the law of armed conflict, requires that restrictive measures should not prevent the delivery of humanitarian aid in line with principles of impartiality, humanity, neutrality and independence. 43
Certain violations of Union restrictive measures also constitute a criminal offence when committed with serious negligence. In particular, professionals, such as in legal, financial and trade services, should exercise due diligence to prevent any violation of Union restrictive measures.
Article 4: Inciting, aiding and abetting, and attempt
Article 4 criminalises inciting, and aiding and abetting, the commission of criminal offences referred to in Article 3. Also, attempts to commit criminal offences listed in Articles 3 are criminalised.
Article 5: Criminal penalties for natural persons
Article 5 provides minimum standards to ensure that the offences referred to in Articles 3 and 4 are punishable by effective, proportionate and dissuasive criminal penalties. The proposal requires that Member States establish specific sanction levels and types for criminal offences related to the violation of Union restrictive measures. The categorisation proposed reflects the seriousness of the offences. A monetary threshold of EUR 100 000 is set as a way to distinguish more serious offences that should be punishable by a maximum term of imprisonment of at least 5 years. As mentioned, currently, in 14 Member States, the maximum length of imprisonment is between 2 and 5 years. In 8 Member States, maximum sentences between 8 and 12 years are possible 44 . Additional penalties or measures should also be available in criminal proceedings against natural persons. They should include fines.
Article 6: Liability of legal persons
Article 6 contains obligations to ensure the liability of legal persons for offences referred to in Articles 3 and 4 where such offences have been committed for their benefit. This Article also provides that Member States should make sure that legal persons can be held accountable for a lack of supervision and control that has made possible the commission of an offence referred to in Article 3 and 4 for the benefit of the legal person. Furthermore, the liability of the legal person should not exclude criminal proceedings against natural persons.
Article 7: Penalties for legal persons
Article 7 sets out penalties applicable to legal persons involved in the criminal offences covered by this proposal. In particular, Member States are required to take the necessary measures to ensure that a legal person held liable pursuant to Article 6 is subject to effective, proportionate and dissuasive penalties, including: criminal or non-criminal fines; exclusion from access to public funding, including tender procedures, grants and concessions; disqualification from the practice of business activities; withdrawal of permits and authorisations to pursue activities that have resulted in committing the offence; placing under judicial supervision; judicial winding up; and closure of establishments that have been used for committing the criminal offence.
In addition, this Article provides that Member States should take the necessary measures to ensure that legal persons that benefit from the commission by others of offences in violation of Union restrictive measures are punishable by fines, the maximum limit of which should be not less than 5 per cent of the total worldwide turnover of the legal person in the business year preceding the fining decision. The liability of legal persons does not exclude the possibility of criminal proceedings against natural persons who are the perpetrators of criminal offences specified in Articles 3 and 4.
Article 8: Aggravating circumstances
Article 8 sets out the aggravating circumstances to be taken into account when penalties are applied to an offence referred to in Articles 3 and 4. Any of the following circumstances should be considered an aggravating circumstance: the offence was committed in the framework of a criminal organisation within the meaning of Council Framework Decision 2008/841/JHA 45 ; the offence was committed by a professional service provider in violation of their professional obligations; the offence was committed by a public official when performing their duties; and the offence was committed by another person when performing a public function.
Article 9: Mitigating circumstance
Article 9 sets out a mitigating circumstance to be considered when penalties are applied to an offence referred to in Articles 3 and 4. This would be where the offender provides the administrative or judicial authorities with information they would not otherwise have been able to obtain, helping them to: (i) identify or bring to justice the other offenders; and/ or (ii) find evidence.
Article 10: Freezing and confiscation
Article 10 clarifies the concept of ‘proceeds’ 46 specifically in situations in which the designated person, entity or body commits or participates in the specific circumvention offences under Article 3(2)(h)(i) and (ii). The proportionality of confiscation will have to be observed in each individual case.
Article 11 lays down provisions on jurisdiction to make sure that Member States establish jurisdiction for offences covered by the proposal. Member States should exercise jurisdiction over offences committed by legal persons established in their territory and where the offences are committed for the benefit of a legal person in respect of any business done in whole or in part within the EU. In particular, the 2021 report of the Genocide Network mentions several relevant cases 47 of companies established in a Member State violating restrictive measures in non-EU countries. Furthermore, the establishment of jurisdiction over legal persons in respect of any business done in whole or in part within the EU is of particular importance to tackle the violation of Union restrictive measures. This will enable Member States to prosecute violation with an EU connection that is conducted via non-EU countries and/or by non-EU persons, e.g. exports from the EU to a targeted destination or end-user, or transfers of assets from the EU to a listed person.
Article 12: Limitation periods
Article 12 lays down provisions on limitation periods in order to allow the competent authorities to investigate, prosecute and adjudicate criminal offences covered by this proposal during a certain time period.
Article 13: Coordination and cooperation between competent authorities within a Member State
This provision requires Member States to ensure coordination and cooperation at strategic and operational level among all their competent authorities involved in the prevention, investigation and prosecution of offences related to the violation of Union restrictive measures.
Article 14: Reporting of offences and protection of persons who report offences related to the violation of Union restrictive measures or who assist the investigation
This provision concerns the protection of whistle-blowers reporting information or providing evidence to a criminal investigation relating to the violation of Union restrictive measures.
Article 15: Investigative tools
This provision lays down that effective investigative tools, such as those that are used in organised crime or other serious crime cases, shall also be available for investigating or prosecuting offences referred to in Articles 3 and 4.
Article 16: Cooperation between Member States, the Commission, Europol, Eurojust and the European Public Prosecutor’s Office
This provision requires Member States authorities, Europol, Eurojust, the European Public Prosecutor’s Office, and the Commission, within their respective competence, to cooperate with each other in the fight against criminal offences referred to in Articles 3 and 4. The competent authorities of the Member States should also share information on practical issues.
Article 17: Amendments to Directive (EU) 2018/1673
The provision amends Article 2 of Directive (EU) 2018/1673 on combatting money laundering by criminal law 48 by defining the violation of Union restrictive measures as “criminal activities”. As a consequence, money laundering as described in Article 3 of Directive (EU) 2018/1673 involving property derived from the criminal offences covered by this Directive constitutes a criminal offence.
Articles 18-21
These Articles contain further provisions on transposition by Member States, reporting by Member States, evaluation and reporting by the Commission, entry into force, and addressees of this Directive. Given the urgent need to hold accountable individuals and legal persons involved in the violation of Union restrictive measures, Member States should bring into force the laws, regulations and administrative provisions necessary to comply with this Directive within 6 months after the entry into force of this Directive.