In sanctions law it becomes particularly evident that the direction taken by Brussels is largely determined by the Member States. On the one hand, this can be attributed to the national legal framework, but on the other hand, it is also due to the lack of certain minimum standards at EU level. However, things have now started to move. EU sanctions law is currently on the verge of a decisive qualitative leap forward– and not just another package, but in terms of a specific regime. It is about a horizontal instrument, i.e. one that encompasses all sanctions regimes and is far-reaching. After years of imposing individual sanctions (“targeted” or “smart” sanctions) – these are measures that are not directed against a state but specifically against individuals and companies or institutions (e.g. financial sanctions) – in addition to economic sanctions on certain sectors (therefore also called sectoral sanctions). EU sanctions law is currently undergoing a fundamental shift.
A step to increase the effectiveness and uniformity of the implementation of the Russia sanctions concerning Ukraine was taken at the end of July by the so-called seventh package. Firstly, listed persons are obliged to report funds or economic resources that are owned, held or controlled by them within the territory of a Member State to the competent authority of the Member State where these funds or economic resources are located, in most cases, by the end of August. Failure to comply is considered a breach of anti-circumvention clause, which may have more far-reaching consequences in the future. Within two weeks thereafter, Member States had to inform the Commission of this. Secondly, the third-party reporting obligation was tightened up by requiring the authorities to be informed about “concealed” assets. The exchange of data between the Member States and with the Commission is now also envisaged.
An even deeper change is to connect asset recovery and confiscation of assets to violations of EU restrictive measures – not only as a mere possibility but even as a legal obligation. At any rate, this is the aim of the Commission’s first two proposals. They are one of the results of the “Freeze and Seize” task force that has been working at the Union level for months. Since the enforcement of sanctions lies with Member States and they have different standard definitions and legal consequences for the violation under their administrative and/or criminal law, the first proposal is to create a corresponding offence at Union level. Accordingly, the first proposal is for a Council decision to classify an infringement of restrictive measures of the Union as a criminal offence with a European dimension. Technically, this is the qualification as an “area of crime within the meaning of Article 83(1) TFEU”.
The significant impact of the proposal then becomes clear when one takes into account the comprehensive prohibitions, i.e. in addition to the prohibition to make available funds and the prohibition of circumvention, in particular the newly introduced reporting obligation incumbent upon sanctioned persons (individuals as well as institutions), as well as the intensified reporting obligation incumbent upon third parties, which almost always also include indirectly committed acts. Secondly, the Commission submitted to the Council a proposal for a Directive on asset recovery and confiscation, which aims to enhance the effectiveness further. This is achieved, firstly, by extending the mandate of Asset Recovery Offices by allowing them to rapidly trace and identify assets of persons and entities subject to restrictive measures, including the power to seize assets immediately in the case of imminent risk. Secondly, the proposal aims to expand the possibilities for asset recovery. Thirdly, the proposal provides for the establishment of Asset Management Bodies in all Member States. These bodies are to ensure that seized assets do not lose value and that seized assets that rapidly lose value or are costly to maintain can be disposed of.
There is still a long way to go before this first package is adopted and partly implemented by the Member States. This is already implied by the requirements for decision-making, namely unanimity in the Council and the consent of the European Parliament. The latter, along with some Member States, will, as expected, work towards the strictest possible regulation. Together with these two proposals, the Commission has published a Communication announcing another proposal that is central to the enforcement of sanctions law: a Directive on criminal penalties for the violation of Union restrictive measures. This proposal builds on the Council Decision and will therefore only follow once Member States have agreed on the Council Decision. This third proposal would regulate a number of criminal law aspects and mainly covers offences such as participation in acts directly or indirectly attempting to circumvent the restrictive measures.
Apart from these qualitative developments, some of which are still in the early stages, quantitative changes can also be observed. For example, sanctions law is becoming more complex with each new package that is added. The Commission is trying to counter this with a steadily growing number of interpretative aids, especially on the Russia sanctions, on specific sectors (e.g. finance, trade, agriculture and energy) or on horizontal issues (circumvention, implementation of agreements, payment channels, etc.).
