1.INTRODUCTION

1.1.Union law on restrictive measures

Restrictive measures are an essential tool for the promotion of 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 the Union’s values, maintaining international peace and security as well as consolidating and supporting democracy, the rule of law and human rights.

For the sake of preserving these values, the Union may impose restrictive measures against third countries, entities or individuals. These measures include targeted individual measures, i.e., asset freezes and restrictions on admissions (travel bans), as well as sectoral measures, i.e. arms embargoes or economic and financial measures (e.g. import and export restrictions, restrictions on the provision of certain services, such as banking services) . Currently, the Union has over forty different regimes of restrictive measures in place and their use has intensified in recent times. Some of these regimes implement restrictive measures by the United Nations Security Council and in some cases impose additional restrictions; others are adopted autonomously by the Union. In addition to regimes addressing country-specific situations, the Union has also adopted horizontal regimes targeting the proliferation and use of chemical weapons, cyberattacks, human rights violations and terrorism .

Preserving international peace and security is critical in the current context of Russia’s invasion of Ukraine. The Union has put in place a series of restrictive measures against Russian and Belarusian individuals and companies, as well as sectoral measures some of which date back to 2014. In this context, in order to enhance Union-level coordination in the enforcement of these restrictive measures, the Commission set up the ‘Freeze and Seize’ Task Force, in which Commission services, Member States’ representatives and Union agencies, such as Eurojust and Europol, participate . Besides ensuring coordination among Member States, the Task Force seeks to explore the interplay between restrictive measures and criminal law measures.

1.2.Need to enhance the enforcement of restrictive measures through criminal law

The implementation and enforcement of restrictive measures are primarily the responsibility of Member States. Competent authorities in Member States must assess whether there has been a infringement of the relevant Council Regulation and take adequate steps. In this regard, Council Regulations adopted pursuant to Article 215 of the Treaty on the Functioning of the European Union (‘TFEU’) systematically include a provision requiring Member States to adopt national rules providing for effective, proportionate and dissuasive penalties, to be applied in the event of infringements of the provisions of the relevant Regulation . These Regulations generally include:

·the restrictive measures;

·the anti-circumvention clause, which prohibits knowing and intentional participation in activities that seek to circumvent the restrictive measures in question; 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).

In the absence of Union-level harmonisation, national systems differ significantly as far as criminalisation of the violation of Union law on restrictive measures (‘Union restrictive measures’) is concerned. In 12 Member States, the violation of Union restrictive measures is solely a criminal offence. In 13 Member States, the violation of Union restrictive measures can amount to an administrative or a criminal offence . The criteria according to which the conduct falls within one or the other regime category are usually related to its gravity (serious nature), either determined in qualitative (intent, serious negligence) or quantitative (damage) terms , but they are different in each Member State. In two Member States, the specific offence of violation of Union restrictive measures can currently only lead to administrative penalties . Penalty systems also differ substantially across the Member States. As regards prison sentences, in 14 Member States, the maximum length of imprisonment is between 2 and 5 years. In eight Member States, maximum sentences between eight and 12 years are possible. 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 500 000. 14 Member States provide for criminal liability of legal persons for the violation of Union restrictive measures. In addition, twelve 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 37.5 million.

The Commission and the High Representative for Foreign Affairs and Security Policy have proposed to strengthen the provision on penalties in Council Regulations 833/2014 and 269/2014 in the framework of the sixth package of restrictive measures in response to the Russian aggression against Ukraine. The amended provisions would oblige Member States to lay down the rules on penalties, including as appropriate criminal penalties, applicable to infringements of the provisions of these regulations. Member States need to take all measures necessary to ensure that they these penalties are properly implemented and applied. 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. Restrictive measures are adopted on the basis of Article 29 TEU and Article 215 TFEU. While these provisions serve as a legal basis for obliging Member States to lay down penalties, including criminal penalties, neither can be used for definingthe exact types and levels of criminal penalties. The limited impact of obliging Member States to have criminal penalties in place, without approximating criminal definitions and penalties by a Directive based on Article 83 TFEU, means that Member States would still not have a harmonised approach towards confiscation measures, relative to the violation of Union restrictive measures, as well as freezing, management, and confiscation measures as provided for in the current and future Union acquis on asset recovery and confiscation would not apply to the violation of Union restrictive measures. Even if in several Member States the violation of Union restrictive measures has already been criminalised, differences among Member States can lead to a fragmented approach in cross-border cases.

Against this background, the Commission is issuing a proposal for a Council decision on adding the violation of Union restrictive measures to the areas of crime laid down in Article 83(1) TFEU . Adding the violation of Union restrictive measures to the areas of crime laid down in Article 83(1) TFEU would enable the Commission, as a second step, to immediately propose a Directive under the ordinary legislative procedure to approximate the definition of criminal offences and penalties. Such approximation of criminal definitions and penalties for the violation of Union restrictive measures would complement the Commission proposal for a Directive of the European Parliament and the Council, also adopted today, on asset recovery and confiscation . This proposal significantly reinforces the current EU asset recovery framework, composed of the Confiscation Directive and the Council Decision on asset recovery offices .

The proposed Directive on on asset recovery and confiscation contributes to the effective application of Union restrictive measures in two ways. Firstly, it requires Member States to launch asset tracing and identification investigations where necessary to prevent, detect or investigate criminal offences related to the violation of Union restrictive measures, and to extend the mandate of asset recovery offices to swiftly trace and identify property of individuals and entities subject to EU targeted financial sanctions, and urgently freeze it whenever necessary to prevent its removal from the jurisdiction. Secondly, by making the enhanced rules on asset recovery and confiscation applicable to the criminal offence of violation of Union restrictive measures, the proposal would ensure the effective tracing, freezing, management and confiscation of proceeds derived from the violation of Union restrictive measures, pending the approximation of criminal definitions and penalties for the violation of Union restrictive measures.

As explained in more detail in the proposal for a Council decision on adding the violation of Union restrictive measures to the areas of crime laid down in Article 83(1) TFEU , the criteria referred to in Article 83(1) TFEU for adding therein a new area of crime, relating to the cross-border dimension of that area of crime (nature, impact, special need to combat on a common basis), are met.