Prosecution Of Sanctions Violations Ineffective In EU, Says New Report

December 14, 2021
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There are very few individuals and businesses held effectively accountable for sanctions violations, a recently published report finds, urging EU agencies to take a more coordinated effort when addressing wrongdoers.

There are very few individuals and businesses held effectively accountable for sanctions violations, a recently published report finds, urging EU agencies to take a more coordinated effort when addressing wrongdoers.

In the Expert Report – Prosecution of sanctions (restrictive measures) violations in national jurisdictions: a comparative analysis, the European Union Agency for Criminal Justice Cooperation (Eurojust) finds that “in practice, very few individuals or legal persons responsible for sanctions violations are effectively held accountable”.

It stresses that member states should make sure they penalise sanctions violations adequately and facilitate information exchange between regulators and prosecutors within their country.

“The report emphasises that we need a coordinated approach to facilitate information exchange between national actors dealing with the implementation and monitoring of restrictive measures and authorities investigating and prosecuting core international crimes,” Ruta Bajarunaite, an expert at the Center of Excellence in Anti-Money Laundering, stressed.

EU sanctions adopted by the European Council apply uniformly across the bloc, but member states have the duty to “take all the necessary measures to ensure that they are implemented” and provide penalties that must be “effective, proportionate and dissuasive”.

As part of this duty, member states are required to adopt measures in their national legislation imposing penalties, take concrete steps to enforce such measures and ensure that those measures are effective.

The majority of EU member states treat sanctions violations as a criminal offence, with only Spain and Slovakia categorising it as a purely administrative offence, the report says. However, in 14 states, sanctions violations can be categorised as either criminal or administrative offences, depending on their gravity.

There is, however, much greater variety in terms of the consequences that these violations may mean for wrongdoers.

Those involved in a sanctions violation case often see a large negative impact on their reputation but they may also face hefty penalties or go to prison, depending on where their case is heard.

The large majority of EU states allow for a maximum imprisonment term of between two and five years. However, sanctions violators caught in Greece can be put behind bars for only six months, while criminals prosecuted in Italy and Malta can face the highest period of imprisonment in the EU with a 12-year limit. Nevertheless, EU member states are well behind the United States, where people may face imprisonment for up to 20 years.

EU states also show a significant difference in what they consider as an effective and dissuasive penalty.

Croatian legislation allows for imposing only a €0.133m maximum penalty on legal persons, whereas criminals caught in Latvia could be ordered to pay up to €37.5m for their involvement in a sanctions violation. In Lithuania, which licenses most of the e-money institutions and payment service providers in the EU, businesses may face a penalty as high as €2m.

Fines imposed on individuals are generally significantly lower than those applicable to businesses.

Individuals violating sanctions regulations can face the lowest penalty in Estonia (€1,200), closely followed by Croatia (€6,700) and Sweden (€15,000). Those caught for sanctions violations in Malta may face the highest individual fine in the bloc with €5m, followed by Austria (€1.8m) and Spain (€1.5m).

In the report, Eurojust underscores that even a multinational corporation could be indicted on the ground of complicity in crimes against humanity, such as in the French Lafarge case, which also set the precedent that a parent company can be charged for acts undertaken by its foreign subsidiary.

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