Key Takeaways

  • In a move that could lead to the quasi-harmonization between Member States of certain aspects of criminal law, the EU institutions are currently considering a new law that would criminalize sanctions evasion.
  • Following the creation of the European Public Prosecutor’s Office (EPPO) in 2021, members of the European Parliament are now seeking the extension of the EPPO’s role, in line with the current trend to expand the EU’s competence in criminal matters.
  • Members of the European Parliament are also pushing for more severe punishments, and have voted in favour of raising the lowest thresholds for the maximum fines and prison sentences. Clearly, the EU wants to step up on its (so far, poor) anti-circumvention front against violators of trade sanctions.

On July 6, 2023, members of the European Parliament’s Civil Liberties Committee (CLC) adopted a draft negotiating mandate that would target those violating or circumventing EU Sanctions.

The legislation under consideration is a proposed directive, published by the European Commission in December 2022, on the definition of criminal offences and penalties for the violation of Union restrictive measures. It would introduce a common definition of violations and set minimum penalties to ensure that the perpetrators can be punished everywhere within the EU. Although the scope of the proposed directive is not limited to restrictive measures taken against Russia, its primary aim is to address problems of legal circumvention that have been identified since the invasion of Ukraine.

There is no doubt that this text is of great importance not only as regards sanctions, but also as regards EU law in general. This proposed directive marks a new stage in the recent expansion of the EU’s competence in criminal matters, following the creation of the EPPO which launched its operations in 2021. This proposal also suggests a quasi-harmonization between Member States for certain aspects of criminal practice.

Building on the Commission’s original proposal, MEPs in the CLC have now voted in favor of amendments that would (i) establish the European Public Prosecutor Office (EPPO) as a key player in the prosecution of violations of EU restrictive measures, (ii) detail what constitutes circumvention under the directive, and (iii) punish more severely those who violate EU restrictive measures:

  1. MEPs favor an extension of the EPPO’s competence
    The CLC draft amendments make provision for EPPO competency in respect of criminal offences for the violation of Union restrictive measures in so far as they concern participation in a criminal organization or criminal offences inextricably linked to offences for which EPPO has material competence.

    In addition, the amendments leave the door open for a “possible extension of competence of the EPPO” beyond such situations. This is in line with the French and German Justice Ministers plea (in November 2022) for violations of EU sanctions to be prosecuted by the EPPO.

    To ensure the effectiveness of the EPPO investigations, the CLC has added a requirement that Member States participate in enhanced cooperation regarding the establishment of the EPPO, and closely cooperate with the central and decentralized levels of the EPPO.
  2. A more detailed definition of “circumvention of EU restrictive measures”
    The CLC MEPs extensively amended the definition of circumvention as contained in Article 3 of the proposed directive. Their amended draft provides a more detailed list of prohibited behaviors and broadens the scope of application.

    Circumvention would no longer cover just the concealing of relevant funds or economic resources by their transfer to a third party, but would also cover:
    – the moving, transferring, altering, using, accessing, dealing with, selling, hiring or mortgaging of relevant funds or economic resources
    – owned, held, or controlled by a designated person, entity or body,
    – in a way that results in a change in the volume, amount, location, ownership, possession, character or destination of those funds or economic resources or any other change that would enable those funds and resources to be used, including by a third party or through portfolio management.
  3. MEPs voted for more severe punishments for violations of EU 8
    The CLC voted to increase the lowest threshold for the maximum fine that companies would have to pay to EUR 10,000,000, or 15% of overall annual turnover (instead of just 1% as suggested in the proposal). 

    In addition, the lowest maximum penalty for a natural person has been increased to five years imprisonment (rather than one or four years in the proposal directive).

    Finally, the CLC draft adds four new “aggravating circumstances”, one of which covers when the offence is committed by senior management, or when senior management level should reasonably have been aware of the offence committed.

In the next step of the procedure, the CLC draft will now be voted on by the European Parliament in plenary session. If it is approved, it will become the European Parliament’s position in the inter-institutional negotiations on this piece of legislation.

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Photo of Vassilis Akritidis Vassilis Akritidis

To maximize trade-related benefits, get customs advice, or ensure robust representation before the European Commission and EU courts in trade and EU matters, clients turn to Vassilis Akritidis and his team for clear advice and dedication to a positive result. Beyond disputes, proactive

To maximize trade-related benefits, get customs advice, or ensure robust representation before the European Commission and EU courts in trade and EU matters, clients turn to Vassilis Akritidis and his team for clear advice and dedication to a positive result. Beyond disputes, proactive compliance and proper corporate governance are essential for success. Vassilis organizes compliance training programs for executives to ensure smooth and cost-effective navigation through the complex web of EU and World Trade Organization regulations.

Vassilis has been practicing EU and international trade law in Brussels since 1991. He qualified in Athens as a maritime lawyer and then pursued graduate studies in European law at the Institute of European Studies in Brussels. An internship at the State Aid Directorate-General for Competition convinced Vassilis that EU and supranational law are hugely interesting. He started as an EU competition and public procurement lawyer and over the years focused increasingly on international trade and WTO law. Vassilis is regularly quoted by renowned legal directories as an expert in these fields.

Vassilis helps his clients win trade investigations, achieve and improve market access, maximize trade benefits, and be trade-compliant wherever they operate. He advises and represents private clients, professional associations, and governments in trade defense investigations (anti-dumping, anti-subsidy, safeguards), customs investigations and litigation, trade sanctions/export controls, and EU anti-fraud investigations led by the European Anti-Fraud Office and the European Public Prosecutor’s Office. Vassilis also advises on EU State aid and EU internal market and public procurement.

Vassilis has worked for clients active in the steel, chemicals, high-tech, transport, defense and aerospace, automotive, and agriculture/food sectors. He represents clients before the EC and other non-EU trade defense authorities.

Should things get contentious, Vassilis is an experienced litigator, representing parties before EU courts in Luxembourg as well as national customs and administrative tribunals.

Vassilis works with his colleagues at Crowell Global Advisors, our global government relations, public policy, and public affairs affiliate, in matters involving EU public policy and lobbying.

Photo of Jean-Baptiste Blancardi Jean-Baptiste Blancardi

Jean-Baptiste Blancardi is an associate at Crowell & Moring, where he focuses on international trade law and on Environmental, Social, and Governance (ESG). His practice covers the broad spectrum of international trade law, including trade remedies investigations (antidumping, countervailing, and safeguard investigations) in…

Jean-Baptiste Blancardi is an associate at Crowell & Moring, where he focuses on international trade law and on Environmental, Social, and Governance (ESG). His practice covers the broad spectrum of international trade law, including trade remedies investigations (antidumping, countervailing, and safeguard investigations) in the EU and the U.S., as well as customs (origin, classification, duty refunds). In parallel, Jean-Baptiste advises clients on how to navigate the new EU regulations affecting trade in the Union and articulated around sustainability (Corporate Sustainability Due Diligence Directive, Carbon Border Adjustment Mechanism, Forced Labour Regulation) and open strategic autonomy (Foreign Subsidies Regulation, Anti-Coercion Instrument, Critical Raw Materials Act).

Prior to joining Crowell, Jean-Baptiste was a trainee at one of the most advanced ESG law firms in Paris, where he gained valuable experience relating to corporate sustainability reporting for groups with complex supply chains.