EU Directive criminalizing circumvention of European Union restrictive measures
On 19 May 2024, EU Directive 2024/1226 on the definition of criminal offences and penalties for the violation of Union restrictive measures (sanctions) came into force. The purpose of the Directive is to unify national regimes regarding criminal liability for violation of sanctions. The Directive has an indirect effect; it obliges
Member States to bring into force the laws, regulations and administrative provisions necessary to comply with this Directive within 12 months from the date of entry into force of the Directive
Thus, the Directive instructs EU Member States to criminalize the following actions:
• assisting EU sanctioned individuals to circumvent EU restrictions on admission (travel bans);
• trade in sanctioned goods;
• carrying out transactions with states or organizations subject to EU restrictive measures,
• provision of services that are prohibited or limited by EU sanctions: including but not limited to the provision of legal advisory services, trust services, public relations services, accounting, auditing, bookkeeping and tax consulting services, business and management consulting, IT consulting, broadcasting, architectural and engineering services.
The criminalization requirement applies to consultants if they deliberately breach the obligation to report breaches of EU restrictive measures when providing services in the context of professional activities, such as legal, financial and trading services.
The Directive obliges EU Member States to criminalize so-called “circumvention” of EU sanctions, and the Directive provides a detailed explanation of the concept of “circumvention” of restrictive measures, which includes, inter alia, providing false or misleading information, including incomplete relevant information, in order to conceal that a designated person, entity or body is the ultimate owner or beneficiary of funds or economic resources subject to Union restrictive measures also amounts to a circumvention of Union restrictive measures. Therefore, that conduct circumventing Union restrictive measures should constitute a criminal offence under this Directive
.
Punishment for violation and “circumvention” of sanctions (restrictive measures) will include:
• imprisonment (for individuals) for up to 5 years;
• additional fines, including a turnover fine;
• freezing of funds and economic resources.
EU member countries are given 12 months to integrate the requirements of the Directive into national legislation – that is, to introduce uniform offenses and penalties into their legislationю
The Moscow law firm Avista cooperates with Danish and international law firms and has extensive experience in resolving various issues when doing business in Russia, taking into account both Russian legislation and the legislation of the countries of the European Union. As a Russian legal entity, Moscow Law Firm Avista is not bound by the increased restrictions on the activities of consultants who are citizens of EU Member States, who are under pressure and the threat of accusations of violating restrictive measures (especially in conditions of very vague criteria for charges), and thus Avista in its work it relies exclusively on the Law and business practice.
Moscow Law Firm Avista provides advice on various aspects of sanctions law relating to both Russian and foreign persons, aimed at reducing the risks of unobvious liability when doing business in Russia, which have increased in connection with the adoption of the Directive, both in relation to businessmen and in relation to consultants – citizens of EU member countries.