European Council Approves Sanctions Offences Directive to Standardize Enforcement Across EU

The European Council has approved the Sanctions Offences Directive on April 12, 2024, to standardize the enforcement of EU sanctions, define criminal offenses, set minimum penalties, and address the circumvention of sanctions across member states. The directive aims to ensure a consistent and effective implementation of EU sanctions regimes throughout the European Union.

The directive establishes common rules for defining criminal offenses related to sanctions violations, such as the brokering of arms and military equipment transfers between third countries. It requires member states to set minimum penalties, including imprisonment of up to 3 years and/or fines up to €100,000, for natural or legal persons found guilty of sanctions offenses.

One of the primary goals of the directive is to tackle the problem of sanctions circumvention. Despite significant export controls and sanctions, Russia has continued to access foreign components, including from the United States, China, and other countries, through third-party countries like Kazakhstan, Turkey, and the United Arab Emirates. The directive seeks to close these loopholes and strengthen the EU's response to sanctions evasion, particularly in the area of dual-use goods that can be used for both civilian and military purposes.

The directive also targets individuals and entities involved in Russia-sponsored destabilizing activities globally, including the successors of the Russian Wagner Group implicated in disinformation operations. The new sanctions framework will focus on individuals responsible for threatening the stability, security, or sovereignty of EU member states or third countries by undermining elections, the rule of law, promoting acts of violence, or engaging in information manipulation and interference. Similar to other EU sanctions regimes, the penalties will include travel bans and asset freezes.

Why this matters: The Sanctions Offences Directive is part of the EU's broader efforts to combat the rising tide of Russian disinformation and interference, particularly ahead of the upcoming European Parliament elections in June 2024. It aims to strengthen the EU's ability to respond to sanctions evasion and destabilizing activities sponsored by Russia and other actors.

The directive will come into effect 20 days after its publication in the EU's Official Journal, and member states will have one year to incorporate it into their national legislation. It introduces a prohibition on the sale or transfer of oil tankers to Russian entities or for use in Russia, with a two-tier scrutiny process involving heightened due diligence by EU sellers and authorization from the Malta Sanctions Monitoring Board (SMB). The SMB has issued guidance on interpreting the term 'for use in Russia,' linking it to the likelihood of the tanker subsequently violating the oil price cap mechanism.

Key Takeaways

• EU approves Sanctions Offences Directive to standardize sanctions enforcement.
• Directive sets minimum penalties for sanctions violations, including imprisonment and fines.
• Aims to tackle sanctions circumvention, particularly on dual-use goods and Russia.
• Targets individuals and entities involved in Russia's destabilizing activities globally.
• Prohibits sale/transfer of oil tankers to Russian entities or for use in Russia.