Opinion of the European Economic and Social Committee on the ‘Communication from the Commission to the European Parliament and the Council, towards a Directive on criminal penalties for the violation of the Union restrictive measures’

(COM(2022) 249 final)

on the ‘Proposal for a Council decision on adding the violation of Union restrictive measures to the areas of crime laid down in Article 83(1) of the treaty on the Functioning of the European Union’

(COM(2022) 247 final)

and on the ‘Proposal for a Directive of the European Parliament and of the Council on the definition of criminal offences and penalties for the violation of Union restrictive measures’

(COM(2022) 684 final)

(2023/C 184/11)

Rapporteur:

José Antonio MORENO DÍAZ

Referral	European Commission, 26.7.2022
Legal basis	Article 304 of the Treaty on the Functioning of the European Union
Section responsible	Employment, Social Affairs and Citizenship
Adopted in section	8.3.2023
Adopted at plenary	22.3.2023
Plenary session No	577
Outcome of vote (for/against/abstentions)	141/1/2

1.   Conclusions and recommendations

1.1.

The EESC welcomes the decision to include sanctions violation among the list of crimes under Article 83(1) TFEU, and the proposal of the Directive to approximate definitions and minimal penalties in national legislation for sanctions breaches.

1.2.

However, the EESC regrets that the abovementioned decision was not subject to full democratic deliberation in the European Parliament's Committee on Civil Liberties, Justice and Home Affairs due to the activation of the urgency procedure. Similarly, the EESC remains concerned that the proposal for a Directive tabled by the Commission has not been preceded by an impact assessment. Moreover, the EESC regrets that the Commission's proposal for a Directive on the definition of criminal offences and penalties for the violation of sanctions does not mention the European Economic and Social Committee among the stakeholders consulted.

1.3.

In the development of the Directive, the EESC encourages the European Commission, the European Parliament and the Council of the European Union to expand the humanitarian carve out, exempting humanitarian agencies and personnel from criminal liability, bringing this provision in tune with current international practice, while ensuring that appropriate mechanisms are provided for to prevent abuse for criminal or political purposes.

1.4.

The EESC supports the inclusion of appropriate guarantees and protection for whistleblowers and journalists who publicise attempts to evade sanctions, to which the abovementioned carve-out should extend.

1.5.

The EESC urges the European Commission, the European Parliament and the Council of the European Union to ensure that the private sector and civil society organisations are provided adequate information and proactive support in adjusting to the new legislation and in complying with new requirements.

1.6.

The EESC encourages the European Commission, the European Parliament and the Council of the European Union to ensure that, beyond promoting the harmonisation of legislation, Member States are equipped with adequate administrative capacities, sufficient funds, and trained personnel for detecting, prosecuting and punishing sanctions violations, which could be supported by cooperation between Member States via the sharing of best practices in detection and prosecution.

1.7.

The EESC welcomes the fact that the proposal for a Directive insists on the respect for the principle of non-retroactivity and the EESC underlines the need to guarantee the due process rights and other human rights safeguards of accused persons.

1.8.

The EESC remains concerned that common crimes as serious as gender-based violence and hate crimes remain outside the scope of Article 83(1) TFEU as ‘Eurocrimes’, stressing that geopolitical imperatives should not take precedence over the protection and wellbeing of our citizens.

2.   Background

2.1.

Foreign policy sanctions (or restrictive measures in EU jargon) are agreed by the Council of the European Union under the Common Foreign and Security Policy (CFSP) and take the form of binding legislation with direct effect in all EU member states.

2.2.

In contrast to sanctions legislation, which is adopted centrally and is applicable throughout the EU, the implementation and enforcement of sanctions is decentralised: member state authorities are in charge of monitoring that firms and citizens abide by the prohibitions, granting derogations, establishing penalties for violations and investigating and prosecuting them. This applies to all sanctions except for prohibitions on entry, which are managed directly by state authorities.

2.3.

The de-centralised nature of the system for implementing EU sanctions results in fragmentation (1): national legislation varies in terms of the definitions and scope of sanctions violations, and the penalties they may result in. There is also variation in administrative capacities for investigation. In addition, individual national authorities enjoy broad discretion in determining whether or not to grant a derogation on humanitarian grounds.

2.4.

Research has confirmed significant variation in the implementation and enforcement of sanctions by different EU member states (2). A recent study by the European Network for investigation and prosecution of genocide, crimes against humanity and war crimes (‘Genocide Network’) highlighted considerable discrepancies in penalties for sanctions violations among EU member states (3).

2.5.

The Commission enjoys some oversight powers in this regard: it ensures that all Member States fulfils their obligations under EU sanctions regulation, such as having appropriate penalties in place. As in other areas of EU governance, the Commission is entitled to launch an infringement procedure against any member state which fails to honour these obligations, although no such action has ever been taken to date. The Commission also supports the implementation of sanctions by issuing guidance, e.g. on granting derogations.

2.6.

While the system's inherent potential for fragmentation is evident, it is only recently that the Commission has started to take some steps (4) towards improving the implementation and enforcement of EU sanctions. While the Commission's renewed activity in this regard pre-dates the Russian invasion of Ukraine launched in February 2022, the wave of sanctions it unleashed added new impetus to the strengthening of sanction implementation and enforcement.

2.7.

Council Decision 2022/2332 (5) identifies the violation of EU sanctions as an area of crime that meets the criteria specified in Article 83(1) of the Treaty on the Functioning of the European Union, popularly known as ‘Eurocrimes’, and thereby enabling the Commission to propose legislation to approximate the definition of criminal offences as well as penalties in the Member States (6).

2.8.

This proposal is justified on the grounds that violations may help to perpetuate threats to peace and security, as well as to the rule of law, democracy and human rights in third countries, and they often have a cross-border dimension. Specifically, it is posited that the violation of sanctions is a ‘particularly serious area of crime, since it may perpetuate threats to international peace and security, undermine the consolidation and support for democracy, the rule of law and human rights and result in significant economic, societal and environmental damage’ (7). The current situation allows individuals and companies contemplating circumvention to ‘shop around’ while preventing the establishment of a level the playing field for EU operators.

2.9.

On 30 June 2022, the Council of the European Union reached an agreement on the text and requested that the European Parliament give consent on the draft Council decision to add violations of Union restrictive measures to the areas of crime laid down in Article 83(1) TFEU (8). The European Parliament assented through the emergency procedure on 7 July 2022 (9). The Decision was adopted on 28 November 2022 (10).

2.10.

The Commission tabled a draft Directive on 2 December 2022 proposing the establishment of minimum rules concerning the definition of criminal offences and penalties for sanctions violation (11).

3.   General comments

3.1.

The identification of sanctions violations as an area of crime under Article 83(1) TFEU is a positive development that will help to harmonise the typification of sanctions violation and associated penalties throughout the EU and improve sanctions implementation and enforcement.

3.2.

The EESC encourages the European Commission, the European Parliament and the Council of the European Union to take into account the concerns set out in the following section when proposing and adopting the Directive currently under consideration and other substantive secondary legislation on the establishment of minimum rules concerning the definition of criminal offences and penalties for sanctions violations.

4.   Specific comments

4.1.

The European Parliament gave its consent to the draft Council decision via an urgent procedure. This means that the European Parliament gave its consent without prior deliberation by its Committee on Civil Liberties, Justice and Home Affairs (LIBE). The strong geopolitical imperative underlying the adoption of the proposal should not detract from the need to submit legislative proposals to appropriate democratic scrutiny. Democratic accountability standards should be preserved. The EESC reiterates the importance of ensuring adequate scrutiny by the European Parliament on the proposal for a Directive on the establishment of minimum rules concerning the definition of criminal offences and penalties for sanctions violations that is currently under consideration.

4.2.

In the same vein, the proposal for a Directive mentions that the Commission refrained from conducting an impact assessment, pointing to the ‘urgent need to hold accountable individuals and legal persons involved in the violation of Union restrictive measures’ (12). Although the EESC acknowledges the pertinence of expediting the adoption of the Directive on criminal penalties for the violation of Union sanctions, it is the Committee's view that the relative urgency of harmonising definitions and penalties does not justify skipping the impact assessment that ought to accompany the preparation of the Directive. This is particularly the case since the individuals and legal persons involved in the violation of sanctions can already be held accountable under existing national legislation, which means that delaying the adoption of the Directive will not leave violations unpunished. Thus, the EESC supports the conduct of a regular impact assessment and once the Directive has been adopted, the EESC advocates it in place quickly.

4.3.

While the EESC welcomes the extensive consultations that the Commission conducted with a broad spectrum of stakeholders, the EESC regrets that the Commission's proposal for a Directive on the definition of criminal offences and penalties for the violation of sanctions does not mention the European Economic and Social Committee among them.

4.4.

The attention devoted to detecting, prosecuting and punishing sanctions violations ought to be matched by a comparable effort to guide economic operators and civil society actors in the implementation of sanctions. Deficiencies in sanctions implementation are often due to a lack of awareness among stakeholders in the private sector, despite efforts by national agencies to inform them (13). It should be kept in mind that the bulk of EU economic operators are small and medium sized enterprises (SMEs) which are often unfamiliar with the duties emanating from sanctions legislation given that economic measures were rare in past sanction practice (14). The EESC welcomes the Commission's current efforts to improve the support given to economic operators and encourage their continuation (15).

4.5.

Adequate provisions should be made to safeguard humanitarian action in jurisdictions under sanctions. Liability for possible sanctions violations remains a concern for humanitarian actors providing relief to heavily-sanctioned jurisdictions (16). Such actors consistently draw attention to the difficulty of guaranteeing that no transgression of sanctions legislation occurs in the course of their operations, as well as to the negative implications of their association with Western sanctions in the eyes of belligerents (17). The recent adoption by the United Nations Security Council of Resolution 2664 on December 2022 (18), which contains a general carve out allowing for the provision of funds and services to humanitarian organisations (19) and was quickly implemented by US authorities (20), turns the persistence of narrow humanitarian clauses in EU legislation into an exception, putting it in the spotlight. In order to ensure that the penalty framework does not hinder humanitarian action, the language of the proposed Directive ought to be strengthened. At the moment, it only exempts ‘the delivery of humanitarian aid to persons in need’ (21) from criminalisation. The EESC supports the adoption of a broader humanitarian exemption excluding criminal liability under EU sanctions regimes for all staff of impartial humanitarian organisations. Such a clause would ensure the conformity of EU sanctions legal frameworks with International Humanitarian Law (IHL). At the same time, provisions should exist to prevent possible abuse for criminal or political purposes. The protection of humanitarian actors should extend to investigative journalists.

4.6.

The EESC encourages the Commission to monitor the implementation of the directive not merely with reference to the adoption of legislation, but paying attention to the endowment of sufficient administrative, financial, technological and human resources capacities and appropriate training to allow national bureaucracies, judicial and law enforcement authorities to give effect to the contents of the new legislation. In the absence of adequate equipment, staffing and financial endowment, the harmonisation of legislation alone is likely to fail in its mission of detecting, prosecuting and punishing sanctions violations. In addition, the EESC encourages the Commission to make criteria it will apply for monitoring, in order to provide some orientation to stakeholders.

4.7.

When criminal convictions allow for the confiscation of assets, a sizable portion of the proceeds ought to be allocated for compensating victims and, in the case of those sanctions currently in force against Russian targets over its war on Ukraine, to post-war reconstruction efforts in Ukraine. The EESC supports this demand, in line with the EESC opinion (22) on the Commission proposal for a Directive on asset recovery and confiscation. The EESC further encourages the Commission to work with dedicated civil society organisations on the definition of victims and on the design of mechanisms to channel the proceeds of sanctions evasion to victims, or to social investment endeavours that directly benefit them. In the interest of accountability, the EESC advocates enhanced transparency in the form of release of figures of confiscated assets and their subsequent destination.

4.8.

The proposed Directive should also contain adequate provisions for the protection of whistleblowers and investigative journalists who uncover sanctions evasion practices. Their key role as ‘early warning’ mechanisms merits protection. In that regard, the EESC supports the Commission's proposal to extend the protection afforded under Directive (EU) 2019/1937 (23) to the reporting of violations of EU restrictive measures and to persons reporting such violations.

4.9.

As indicated in the Directive's current wording, provisions should be made to uphold the principle of non-retroactivity of criminal penalties, in line with the principle ‘nulla poena sine lege’. The EESC underlines the need to guarantee the due process rights and other human rights safeguards of accused persons.

4.10.

Lastly, the EESC regrets that, while the identification of sanctions violations as a ‘Eurocrime’ has proved a swift process, crimes as serious and common crimes such as hate crimes and gender-based violence cannot be covered under the scope of Article 83(1) TFEU. Geopolitical imperatives should not be prioritised at the cost of neglecting other crimes of immediate relevance to our citizens.

4.11.

To conclude, it should not be forgotten that harmonising penalties aim is to improve the credibility of sanctions adopted under the CFSP. From that vantage point, Member States should strive to respect visa bans with the same diligence that is expected of EU citizens and operators (24).

---

(1)  Portela, C., ‘Implementation and Enforcement’, in N. Helwig et al., Sharpening EU sanctions policy, FIIA Report 63, Finnish Institute of International Affairs: Helsinki. Study commissioned by the Office of the Prime Minister of Finland, 2020, p. 107.

(2)  Druláková, R. and Přikryl, P., ‘The implementation of sanctions imposed by the European Union’, Central European Journal of International and Security Studies, vol. 10, no. 1, 2016, p. 134.

(3)  Genocide Network, Prosecution of sanctions (restrictive measures) violations in national jurisdictions: a comparative analysis, 2021.

(4)  European Commission Communication: ‘The European economic and financial system: fostering openness, strength and resilience’, (COM(2021) 32 final).

(5)  Council Decision (EU) 2022/2332 of 28 November 2022 on identifying the violation of Union restrictive measures as an area of crime that meets the criteria specified in Article 83(1) of the Treaty on the Functioning of the European Union (OJ L 308, 29.11.2022, p. 18).

(6)  European Commission Communication: ‘Towards a Directive on criminal penalties for the violation of Union restrictive measures’, (COM(2022) 249 final.

(7)  This wording from Commission Communication COM(2022) 249 final, p. 4, is reflected in preambular paragraph 10 of Council Decision (EU) 2022/2332 (OJ L 308, 29.11.2022, p. 18).

(8)  Council of the European Union, press release, 30 June 2022.

(9)  European Parliament legislative resolution. TA/2022/0295.

(10)  OJ L 308, 29.11.2022, p. 18.

(11)  European Commission Proposal for a Directive of the European Parliament and of the Council on the definition of criminal offences and penalties for the violation of Union restrictive measures (COM(2022) 684 final).

(12)  COM(2022) 684 final.

(13)  Druláková, R. and Zemanová, S., ‘Why the implementation of multilateral sanctions does (not) work: lessons learnt from the Czech Republic’, European Security, vol. 29, no. 4, 2020, p. 524.

(14)  Portela, C., ‘Sanctions in EU foreign policy’, in N. Helwig et al., Sharpening EU sanctions policy, FIIA Report 63, Finnish Institute of International Affairs: Helsinki. Study commissioned by the Office of the Prime Minister of Finland, 2020, p. 23.

(15)  Council Decision (CFSP) 2022/1506 of 9 September 2022 on a European Union action to support the development of information technology tools to improve the dissemination of information on Union restrictive measures (OJ L 235, 12.9.2022, p. 30).

(16)  Portela, C., ‘What if the EU made sanctions compatible with humanitarian aid?’, in F. Gaub (ed.) What if…? Fourteen Scenarios for 2021, EUISS: Paris, 2020.

(17)  Debarre, A., ‘Safeguarding humanitarian action in sanctions regimes’, New York: International Peace Institute, 2019.

(18)  United Nations Resolution 2664, S/RES/2664(2022).

(19)  Operative paragraph 1 of S/RES/2664(2022) stipulates that the provision of funds or the provision of goods and services necessary to ensure the timely delivery of humanitarian assistance by the United Nations (…) or non-governmental organizations or by others as added by individual Committees established by this Council ‘are permitted and are not a violation of the asset freezes imposed by this Council or its Sanctions Committees.’

(20)  U.S. Treasury Department, press release, Treasury Implements Historic Humanitarian Sanctions Exceptions, 20 December 2022.

(21)  COM(2022) 684 final.

(22)  OJ C 100, 16.3.2023, p. 105.

(23)  Directive (EU) 2019/1937 of the European Parliament and of the Council of 23 October 2019 on the protection of persons who report breaches of Union law (OJ L 305, 26.11.2019, p. 17).

(24)  Mangas Martin, A., ‘Sobre la vinculatoriedad de la PESC y el espacio aéreo como territorio de un estado (Comentario al auto del TS español de 26 de noviembre de 2020, sala de lo penal’ (On the binding nature of the CFSP and airspace as the territory of a state (Commentary to the judicial decree of the Spanish Supreme Court of 26 November 2020, criminal division)). Revista General de Derecho Europeo, 53, 2021.