EU Directive on Criminal Liability for EU Sanctions Violations

EU rolled out Directive 2024/1226, establishing minimum rules for defining criminal offenses and penalties related to the violation of EU sanctions. The new Directive defines criminal offences and penalties for the violation of Union restrictive measures. This Directive amends Directive (EU) 2018/1673 and must be transposed into national legislation by April 30, 2025.

The new Directive establishes minimum rules for prosecuting violations or circumventions of EU sanctions, ensuring that intentional sanctions breaches are criminalised across Member States. It outlines specific conduct considered criminal offences, including:

making funds or economic resources available to or failing to freeze funds or economic resources of a listed person subject to financial sanctions or enabling such a person to enter into the territory of a Member State (Article 3(1), letters (a) to (c));
entering into or continuing prohibited transactions with a third State or a state-owned enterprise, including the award or continued execution of public or concession contracts (Article 3(1), letter (d));
trading, importing, exporting, selling, purchasing, transferring, transiting or transporting sanctioned goods, as well as providing brokering services, technical assistance or other services relating to those goods (Article 3(1), letter (e));
providing financial services or performing financial activities in violation of a prohibition (Article 3(1), letter (f));
providing other prohibited services (Article 3(1), letter (g));
circumventing sanctions in certain scenarios in connection with financial sanctions imposed on listed persons (Article 3(1), letter (h)) and
breaching the conditions of authorisations granted by competent authorities (Article 3(1), letter (i)).

Member States can stipulate that if the conduct involves funds or economic resources of less than EUR 10,000, such conduct does not constitute a criminal offence. Under Article 3(3), sanctions violations committed with serious negligence do however constitute criminal offences if the underlying transaction involves military or dual-use items.

Penalties for natural persons (art. 5 of Directive (UE) 2024/1226 on the Definition of Criminal Offences and Penalties for the Violation of EU Sanctions)

Imprisonment: maximum term going from at least 1 to 5 years if the value is of at least EUR 100 000, and maximum term of imprisonment of at least 5 years irrespective of the value of the items involved if included in the EU Common Military List or in Annexes I and IV to the EU Dual-Use Regulation (EU) 2021/821;
Fines: no minimum or maximum requirement;

Penalties for legal persons (art. 7 of of Directive (UE) 2024/1226 on the Definition of Criminal Offences and Penalties for the Violation of EU Sanctions)

Ensure the liability of legal persons where offences have been committed for their benefit, including where accountable for a lack of supervision or control (art. 6);
Fines for legal persons: maximum limit until at least 5% of the annual worldwide turnover or an amount corresponding to EUR 40 000 000 (art. 7);
Other penalties: exclusion from public benefits, tenders, grants or concessions; judicial supervision, judicial winding-up; and closure of establishment;
The Directive also mandates the freezing and confiscating of assets related to sanctions violations and sets a statute of limitations of at least three years.

This Directive marks a critical effort to enhance the effectiveness of the EU’s sanctions regime and ensure consistent enforcement across Member States.

Recommendations of ECOVIS ProventusLaw:

Conduct comprehensive training sessions for employees on the new Directive. Ensure they understand what constitutes a criminal offence under the new rules, including breaches of asset freezes, trade control measures, and provision of services to sanctioned entities.
Consult with legal and compliance experts to thoroughly understand the new Directive and its implications for your business. They can guide best practices and help implement effective compliance measures.