MEP Accuses Austria Of Non-Compliance With EU Sanctions Regime

August 31, 2023
In a written letter to the European Commission, a member of the European Parliament (MEP) has claimed that Austria is “flouting” the EU’s sanctions regime.

In a written letter to the European Commission, a member of the European Parliament (MEP) has claimed that Austria is “flouting” the EU’s sanctions regime.

“How is the Commission planning to hold Austria accountable for its choice to fraternise with Russia, contrary to the EU sanctions?” asked Romanian MEP Eugen Tomac earlier this month.

Referencing the latest Eurostat data, Tomac complained that although the general trend at EU level has been a significant reduction in trade with Russia, the case of Austria is a “completely different story”.

Tomac, who sits with the centre-right European People’s Party, said the value of products imported by Austria from Russia in 2022 increased 252 percent compared with 2019.

“Austria has doubled its imports of goods from Russia since the beginning of the latter’s war against Ukraine,” said Tomac.

“Vienna continues to supply the criminal regime in Moscow with more than €20m per day, ignoring the EU’s sanctions policy.”

In his correspondence with the European Commission, the MEP has asked whether the regulator intends to take “concrete measures” to address Austria’s infringement.

Tomac noted that the EU’s sanctions against Russia are legally binding for all member states and “must be reinforced”.

Close acquaintances

Austria’s relationship with Russia has come under increased scrutiny since the beginning of the invasion in 2022.

Earlier this year, Austrian foreign minister Alexander Schallenberg said in an interview with Reuters that the country will “remain important for Europe”.

“To think that there won't be Russia anymore and we can decouple in all areas is delusional," Schallenberg told the news service.

He also defended the Austrian bank, Raiffeisen Bank International, after it encountered criticism for continuing business with Russia.

The bank is reportedly under investigation by authorities in the Czech Republic, which shares a border with Austria.

The Czech Association for the Rights of Citizens and Entrepreneurs, according to local media, filed a complaint against Raiffeisen, accusing it of continuing activities in Russia and sponsoring Moscow’s invasion of Ukraine.

Austria’s softer stance does contrast significantly with that of other countries in the EU. For example, Baltic states such as Lithuania and Estonia have taken measures to strengthen their sanctions regimes.

Latvia’s Financial Intelligence Unit (FIU), meanwhile, reportedly froze bank accounts under local proceeds of crime legislation to tackle suspected sanctions circumvention.

Tweaking Europe’s sanctions regime

Meanwhile, in Brussels, sanctions evasion has become an increasingly pertinent topic.

An 11th round of sanctions from the trading bloc, unveiled in May, targeted third countries as a means to prevent circumvention.

This is where firms and individuals evade sanctions by routing transactions via an intermediary.

The European Commission also named David O’Sullivan, the EU’s former ambassador to the US, as its sanctions envoy.

In 2022, Russia’s invasion of Ukraine led to the highest number of regulatory events ever recorded by VIXIO, at 243 in March 2022 alone.

Firms, including those in the EU, were forced to act at short notice to remain compliant with rules.

This continued to change and become more restrictive throughout 2022, resulting in heavier workloads for compliance teams.

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