Even after the EU’s April 2024 directive defining criminal offences and minimum penalties for violations of Union restrictive measures, sanctions enforcement across the bloc remains uneven. In Sascha Lohmann’s view, the real test is still ahead: whether harmonisation will translate into more detected violations, more prosecutions, and more convictions. He also argues that stronger state capacity, closer coordination with business, and more efficient EU-level cross-border enforcement are all part of the answer.
This was stated in a comment to Guildhall by Dr. Sascha Lohmann, Senior Associate in the Americas Research Division at the German Institute for International and Security Affairs (SWP) in Berlin.
— Would you agree that one of the central weaknesses of EU sanctions enforcement has been the uneven application of civil penalties and criminal punishment across member states, with too few violations leading to meaningful accountability?
— Mostly. In the past, the decentralised nature of EU sanctions implementation and enforcement has indeed led to an uneven application of civil fines and criminal punishment, mostly because of different legal frameworks with different thresholds, as well as the large number of competent national authorities responsible for civil enforcement and criminal prosecution.
While this patchwork still remains in place overall, a step forward was taken with the adoption of an EU-wide directive in April 2024, which streamlines the definitions of criminal offences — for example, by covering not only intent but also recklessness — and sets minimum penalties for violations of Union restrictive measures across member states.
It remains to be seen, however, whether this harmonisation will actually lead to increased numbers of detected violations, prosecutions, and convictions. One problem in this respect is the lack of reliable data not only on criminal proceedings, but also on civil enforcement actions by competent national authorities.
So far, there is only an incomplete picture of current EU sanctions enforcement, assembled from press releases and media reports on executive and judicial action in member states, as well as national statistical databases, which are time-delayed and often not granular enough to isolate sanctions-related enforcement action.
— What, in your view, should change to ensure that established cases of sanctions violations lead to real investigations and punishment?
— First and foremost, the implementation of EU sanctions requires close cooperation and consultation between private and state actors in order to alert the business sector to sanctions-related risks, including diversion and circumvention.
If sanctions are implemented comprehensively and uniformly, there will be less diversion and circumvention through third-country operators, and therefore less need for enforcement in the first place.
But if enforcement is necessary — and that is surely the case, given the huge profit margins still to be made and the continued efforts by actors from sanctioned jurisdictions to procure goods and technologies from EU-based economic operators through front entities and supply networks — then further strengthening state capacity is key.
More specifically, properly staffed and specialised bureaucracies in the executive branch, capable of successfully investigating cases and ultimately prosecuting defendants in court, are a basic precondition for scaling up enforcement efforts and reducing the likely significant number of undetected and unprosecuted cases.
— Should enforcement extend across the full chain of actors involved, including banks, traders, insurers, logistics operators, intermediaries, and entities from third countries that knew or should have known the nature of the operation?
— Strict liability, as applied in the criminal enforcement of sanctions, already extends to all potential culprits, but this requires proof of intent or recklessness, meaning gross negligence. That can become harder to establish the further allegedly complicit actors are removed from the actual offence.
At the same time, different actors providing supportive services as enablers of sanctions violations may show very different levels of commitment when it comes to detecting and reporting potential breaches of sanctions law.
Whereas the financial sector largely implements effective controls based on automated compliance mechanisms in line with the FATF risk-based approach, other intermediary actors providing ancillary services — such as logistical support or legal advice — may be more exposed to inadvertently facilitating sanctions violations.
Especially those intermediaries that are understaffed and lack the financial and organisational resources may benefit from stronger outreach and capacity-building in sanctions compliance management. Those acting with criminal intent, meanwhile, could be deterred by targeted enforcement actions that serve as a warning to others not to engage in such conduct.
— Do you see a stronger EU-level enforcement mechanism, including a possible expansion of the role of the European Public Prosecutor’s Office, as part of the solution?
— A stronger EU-level enforcement mechanism would indeed be helpful, and there have been many calls in this direction, backed by concrete proposals, including the idea of creating a “European OFAC.”
Its political feasibility, however, appears limited because member states remain strongly reluctant to transfer further powers to the European Commission and other EU agencies.
In the meantime, an expanded mandate for the EPPO — and for other EU institutions such as Europol, Eurojust, AMLA, or OLAF — to cover sanctions enforcement would certainly be beneficial in increasing the number of prosecutions, especially in cases spanning different EU member states, where the often time-consuming coordination and cooperation between competent national authorities could be made more efficient.
Exclusively for Guildhall.
Только главные новости в нашем Telegram, Facebook и GoogleNews!
Tweet