The implementation of EU sanctions following the Russian invasion of Ukraine highlights the complexity of identifying assets owned by oligarchs, and which are hidden across different jurisdictions through complex legal and financial structures. So far, Member States have reported frozen assets worth EUR 9,9 billion and blocked EUR 196 billion worth of transactions.
In recent weeks, there have been many discussions within the EU about the stricter enforcement of sanctions. As a reminder, in most EU Member States, assets can only be frozen but not confiscated without a criminal conviction. Currently, there are over 40 regimes regulating restrictive measures in the EU (such as asset freezes, travel bans, import and export restrictions and restrictions on banking and other services) and the rules criminalizing the violation of such measures vary from state to state.
The European Commission is now taking a twofold action. With two new proposals, briefly outlined below, the EU aims to ensure that sanctions are fully implemented and that a breach of these does not pay off. The proposed rules shall boost the capacity of Member States to trace and identify assets when implementing EU sanctions, such as the ones set out against Russia and Belarus.
Criminalization of sanctions violations
On May 25, the European Commission proposed adding the violation of EU sanctions to the list of EU criminal offenses. This will make it possible to establish “a common basic standard on criminal offences and penalties” across the EU. Such common EU rules would, in turn, make it easier to “investigate, prosecute and punish violations of sanctions” equally in all Member States.
Modernizing EU rules on asset recovery and confiscation
The Commission is also proposing new, stricter rules on asset recovery and confiscation. The proposed rules will also apply to the violation of EU sanctions.
Summarized, this proposal is intended to achieve four specific goals:
- Strengthening asset tracing capabilities by ensuring that competent authorities have the competences and resources as well as sufficient access to information to trace and identify assets of individuals and entities subject to EU sanctions.
- Expanding the possibilities to confiscate assets from a wider set of crimes, including the violation of EU sanctions once the Commission proposal on extending the list of EU crimes is adopted. Moreover, the proposal also enables the confiscation of unexplained wealth linked to criminal activities.
- Improving asset management tools to minimize costs and safeguard the value of the assets by establishing Asset Management Offices in all EU Member States.
- Improving the efficiency of the asset recovery system through a more strategic approach and increased cross-border cooperation.
It is expected that tightening sanctions enforcement will affect a greater number of individuals and assets.