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EU member states agree on draft law to criminalize evasion of sanctions


EU countries have agreed on a draft law to facilitate the seizure of the assets of Russian oligarchs and other individuals or institutions accused of circumventing the bloc’s sanctions against Moscow over the war in Ukraine.

In a move that could hit European financial institutions, justice ministers on Friday approved measures that would make it a criminal offense to help sanctioned individuals circumvent travel bans, trade banned goods or engage in transactions with sanctioned states or entities.

This “will give Member States new tools to monitor sanctions,” Swedish Justice Minister Gunnar Strömmer told the Financial Times.

The measures would affect banks dealing with sanctioned individuals, entities or states. Strömmer said “financial institutions in member states” were targeted, adding that sanctioned individuals would also be affected.

The EU has been looking for ways to use frozen Russian assets to aid Ukraine in its war effort and finance its reconstruction. “Discussions are also underway about using Russian sovereign assets to raise funds for Ukraine,” EU Justice Commissioner Didier Reynders said on Friday.

“To date, member states have reported more than EUR 200 billion in immobilized assets of the Russian central bank under the 10th sanctions package,” said Reynders. This was in addition to “€24.3 billion in assets of listed individuals and entities that have been frozen to date”.

One option the EU is exploring is using the proceeds from the assets held at clearinghouses, which function as the pipeline of the financial system. Institutions like Euroclear reinvest cash generated by those assets and make profits that officials are considering forfeiting. Member state representatives will discuss this next week ahead of a summit of EU leaders at the end of this month, EU officials said.

Meanwhile, the EU is still bickering over an eleventh package of sanctions against Moscow, but its 27 members have so far failed to reach a unanimous agreement despite weeks of debate.

Hungary and Greece are withholding their support for the package in response to Kiev’s move to include some of their companies on a list of entities considered “sponsors” of Russia’s war effort.

Several countries are also concerned about a proposed mechanism that could allow the EU to target companies in third countries that are supposed to act as intermediaries to ship sanctioned goods to Russia. To address concerns that this could damage diplomatic relations with those countries, a proposed compromise would create a step-by-step procedure, fairly warning targeted companies to change their practices before being penalized.

Ministers on Friday also backed rules to facilitate the freezing of assets related to criminal offenses in general, including sanctions evasion, as well as organized crime, money laundering, fraud and other crimes.

“That will be a very important tool for fighting organized crime in general,” Strömmer said.

Europol estimates that only about 2 percent of criminal proceeds in the EU are frozen and about 1 percent are completely confiscated.

The rules still need to be negotiated with the EU parliament before they can come into force. A parliament spokesman said talks should begin before August.

Member State representatives are eager to agree on the package ahead of the EU leaders’ summit on 29 June.

Additional coverage by Henry Foy in Brussels

Merry C. Vega is a highly respected and accomplished news author. She began her career as a journalist, covering local news for a small-town newspaper. She quickly gained a reputation for her thorough reporting and ability to uncover the truth.

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