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

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

PA_Legam

SHORT JUSTIFICATION

Since the starts of the Russian unjustified and unprovoked aggressive military aggression against Ukraine on 24 February 2022, EU has adopted an unprecedented package of restrictive measures against individuals and legal entities directly involved or facilitating the war. Such measures have both political and economic objectives aiming at reducing the capacity of Russia to continue military attacks on Ukraine. Considering a broad sector of entities covered by sanctions it is essential to increase the effort for their effective implementation on the EU level.

The addition of the crime of sanction circumvention to the list of the EU crimes requires specific efforts to be made on the national and on the EU level to fight such phenomenon. It is essential to strengthen the effectiveness of the existing sanctions, so as to achieve their economic effect on the targeted persons and entities. This report aims to stress the paramount role the EPPO plays in the investigation of sanction circumvention as the EU body best positioned to fight the crimes involving the EU financial interests. Moreover, since the illicit acquisition of gains through sanction circumvention is connected to the EU financial interests, the EPPO should have the same level of access to information, as national competent authorities do, also in view of a potential extension of the EPPO competence to the fight against sanction evasion.

Moreover, the report follows-up on the call to use the assets confiscated as a result of sanction circumvention of the EU restrictive measures against Russia for the purpose of compensation to the victim population in Ukraine. The monetary value of such assets should serve the goal of building and rebuilding of the infrastructure in Ukraine, as well as the compensation for the victim population.

The report underlines among others, the need to apply proportionate fines in cases of sanction circumvention and strengthen the cooperation among the national authorities, including through the establishment of a joint sanction enforcement structure, with a view to supporting Member States in the implementation of Union restrictive.

AMENDMENTS

The Committee on Budgets calls on the Committee on Civil Liberties, Justice and Home Affairs, as the committee responsible, to take the following into account:

Amendment 1

Proposal for a directive

Recital 6

Text proposed by the Commission

Amendment

(6) Persons, entities and bodies, which are designated individually in Union restrictive measures and subject to those Union restrictive measures, may often be involved as instigators and accomplices. For instance, the practice by designated persons and entities of transferring funds, property or economic resources to a third party with a view to circumvent Union restrictive measures is increasingly widespread. Therefore, this conduct is covered by the circumvention offence approximated by this Directive.

(6) Persons, entities and bodies, which are designated individually in Union restrictive measures and subject to those Union restrictive measures, as well as dependants of those natural persons, may often be involved as instigators and accomplices. For instance, the practice by designated persons and entities of transferring funds, property or economic resources to a third party with a view to circumvent Union restrictive measures is increasingly widespread and risks to undermine the objectives of the Union restrictive measures. Therefore, this conduct is covered by the circumvention offence approximated by this Directive.

Or. en

Amendment 2

Proposal for a directive

Recital 6 a (new)

Text proposed by the Commission

Amendment

(6 a) Violation of the Union restrictive measures is most notably motivated by considerations of financial gain. While generating profits, the circumvention of restrictive measures enables the continued use of frozen assets in ways which undermine the objectives of those restrictive measures. Criminal law measures adopted in the Union, and the freezing and confiscation that result therefrom, represent a way to support victim population. Where the confiscated assets result from the crime of sanction violation and are related to Council Regulation (EU) No 269/20141a and Council Regulation (EU) No 833/20141b, the use of such assets should serve the goal of the reconstruction of Ukraine and help to the local victim population, in line with the Directive (EU) [.../...] of the European Parliament and of the Council [on asset recovery and confiscation]1c.

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1a Council Regulation (EU) No 269/2014 of 17 March 2014 concerning restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine (OJ L 78, 17.3.2014, p. 6).

1b Council Regulation (EU) No 833/2014 of 31 July 2014 concerning restrictive measures in view of Russia's actions destabilising the situation in Ukraine (OJ L 229, 31.7.2014, p. 1).

1c COM(2022) 245.

Or. en

Amendment 3

Proposal for a directive

Recital 19 a (new)

Text proposed by the Commission

Amendment

(19a) For the purpose of this directive, asset recovery offices should closely cooperate with the central and decentralised levels of the European Public Prosecutor's Office (EPPO) with regard to the Member States that participate in the enhanced cooperation on the establishment of the EPPO if applicable under Regulation (EU) 2017/19391a(‘the EPPO Regulation’). Asset recovery offices should therefore incur the reporting obligations under the EPPO Regulation, reporting to the EPPO in the same way as they do to national competent authorities and Financial Intelligence Units.

__________________

1a Council Regulation (EU) 2017/1939 of 12 October 2017 implementing enhanced cooperation on the establishment of the European Public Prosecutor’s Office (‘the EPPO’) (OJ L 283, 31.10.2017, p. 1).

Or. en

Amendment 4

Proposal for a directive

Recital 19 b (new)

Text proposed by the Commission

Amendment

(19b) Offences consisting in violation of the Union restrictive measures which involve designated persons, their dependants, entity or body, listed in the legal acts of the Union on restrictive measures, such as Council Regulation (EU) No 269/2014 and Council Regulation (EU) No 833/2014, need to be considered in the light of the crimes against the financial interests of the Union. As such they should be referred to the EPPO, as the Union body specialised in the investigation of the crimes against the financial interests of the Union, for investigating, prosecuting and bringing to judgment.

Or. en

Amendment 5

Proposal for a directive

Recital 23

Text proposed by the Commission

Amendment

(23) The objectives of this Directive, namely to ensure common definitions of offences related to the violation of Union restrictive measures and the availability of effective, dissuasive and proportionate criminal penalties for serious offences related to the violation of Union restrictive measures cannot be sufficiently achieved by Member States but can rather, by reason of the scale and effects of this Directive, be better achieved at Union level, taking into account the inherent cross-border nature of the violation of Union restrictive measures and their potential to undermine the achievement of the Union objectives to safeguard international peace and security as well as to uphold Union common values. Therefore the Union may adopt measures, in accordance with the principle of subsidiarity as set out in accordance with Article 5 TEU. In accordance with the principle of proportionality, as set out in that Article, this Directive does not go beyond what is necessary to achieve that objective.

(23) The objectives of this Directive, namely to ensure common definitions of offences related to the violation of Union restrictive measures and the availability of effective, dissuasive and proportionate criminal penalties for serious offences related to the violation of Union restrictive measures cannot be sufficiently achieved by Member States but can rather, by reason of the scale and effects of this Directive, be better achieved at Union level, taking into account the inherent cross-border nature of the violation of Union restrictive measures and their potential to undermine the achievement of the Union objectives to safeguard international peace and security as well as to uphold Union common values and defend the Union financial interests. EPPO, as the Union body specialised in the investigation of the crimes against the financial interests of the Union, shall play a crucial role in the investigation of the crime of circumvention of the Union restrictive measures, and should bring such investigations to prosecution and judgement. Therefore the Union may adopt measures, in accordance with the principle of subsidiarity as set out in accordance with Article 5 TEU. Among others, increased efforts for preventing the evasion of Union restrictive measures should be explored, including through the establishment of joint sanctions enforcement structures, with a view to supporting Member States in the implementation of Union restrictive measures. In accordance with the principle of proportionality, as set out in that Article, this Directive does not go beyond what is necessary to achieve that objective.

Or. en

Amendment 6

Proposal for a directive

Article 2 – paragraph 2 – point b

Text proposed by the Commission

Amendment

(b) ‘designated person, entity or body’, means those natural or legal persons, entities or bodies subject to Union restrictive measures consisting in the freezing of funds and economic resources and the prohibition to make funds and economic resources available;

(b) ‘designated person, entity or body’, means those natural persons and their dependants or legal persons, entities or bodies subject to Union restrictive measures consisting in the freezing of funds and economic resources and the prohibition to make funds and economic resources available, as well as Union travel restrictions;

Or. en

Amendment 7

Proposal for a directive

Article 5 – paragraph 3

Text proposed by the Commission

Amendment

(3) Member States shall take the necessary measures to ensure that the criminal offences referred to in Article 3(2), points (h)(iii), (iv) and (v), are punishable by a maximum penalty of at least one year of imprisonment when they involve funds or economic resources of a value of at least EUR 100 000. Member States shall ensure that the threshold of EUR 100 000 or more may also be met through a series of linked offences referred to in Article 3(2), points (h)(iii), (iv) and (v), when committed by the same offender.

(3) Member States shall take the necessary measures to ensure that the criminal offences referred to in Article 3(2), points (h)(iii), (iv) and (v), are punishable by a maximum penalty of at least one year of imprisonment when they involve funds or economic resources of a value of at least EUR 50 000. Member States shall ensure that the threshold of EUR 50 000 or more may also be met through a series of linked offences referred to in Article 3(2), points (h)(iii), (iv) and (v), when committed by the same offender.

Or. en

Amendment 8

Proposal for a directive

Article 5 – paragraph 4

Text proposed by the Commission

Amendment

(4) Member States shall take the necessary measures to ensure that the criminal offences referred to in Article 3(2), points (a) to (g), (h)(i) and (ii), and point (i), are punishable by a maximum penalty of at least five years of imprisonment when they involve funds or economic resources of a value of at least EUR 100 000. Member States shall ensure that the threshold of EUR 100 000 or more may also be met through a series of linked offences referred to in Article 3(2), points (a) to (g), (h)(i) and (ii), and point (i), by the same offender.

(4) Member States shall take the necessary measures to ensure that the criminal offences referred to in Article 3(2), points (a) to (g), (h)(i) and (ii), and point (i), are punishable by a maximum penalty of at least five years of imprisonment when they involve funds or economic resources of a value of at least EUR 50 000. Member States shall ensure that the threshold of EUR 50 000 or more may also be met through a series of linked offences referred to in Article 3(2), points (a) to (g), (h)(i) and (ii), and point (i), by the same offender.

Or. en

Amendment 9

Proposal for a directive

Article 5 – paragraph 5

Text proposed by the Commission

Amendment

(5) Member States shall take the necessary measures to ensure that natural persons who have committed the offences referred to in Articles 3 and 4 may be subject to additional penalties. Those additional penalties shall include fines.

(5) Member States shall take the necessary measures to ensure that natural persons who have committed the offences referred to in Articles 3 and 4 may be subject to additional penalties. Those additional penalties shall include fines. Such fines shall be proportionate to the amount of funds or economic resources involved in the offence.

Or. en

Amendment 10

Proposal for a directive

Article 7 – paragraph 2

Text proposed by the Commission

Amendment

(2) Member States shall take the necessary measures to ensure that for legal persons held liable pursuant to Article 7 the criminal offences referred to in Article 3(2), points (h) (iii) to (v), are punishable by fines, the maximum limit of which should be not less than 1 percent of the total worldwide turnover of the legal person in the business year preceding the fining decision.

(2) Member States shall take the necessary measures to ensure that for legal persons held liable pursuant to Article 7 the criminal offences referred to in Article 3(2), points (h) (iii) to (v), are punishable by fines, the maximum limit of which should be not less than 5 percent of the total worldwide turnover of the legal person in the business year preceding the fining decision.

Or. en

Amendment 11

Proposal for a directive

Article 7 – paragraph 3

Text proposed by the Commission

Amendment

(3) Member States shall take the necessary measures to ensure that for legal persons held liable pursuant to Article 7 the criminal offences referred to in Article 3(2), points (a) to (f), (h)(i) and (ii), and point (i), are punishable by fines, the maximum limit of which should be not less than 5 percent of the total worldwide turnover of the legal person in the business year preceding the fining decision.

(3) Member States shall take the necessary measures to ensure that for legal persons held liable pursuant to Article 7 the criminal offences referred to in Article 3(2), points (a) to (f), (h)(i) and (ii), and point (i), are punishable by fines, the maximum limit of which should be not less than 10 percent of the total worldwide turnover of the legal person in the business year preceding the fining decision.

Or. en

Amendment 12

Proposal for a directive

Article 10 – paragraph 1 a (new)

Text proposed by the Commission

Amendment

Member States shall ensure that funds or economic resources subject to Union restrictive measures in respect of which the designated person, entity or body, listed in Council Regulation (EU) No 269/2014 and Council Regulation (EU) No 833/2014, commits or participates in an offence referred to in Article 3(2) shall be frozen and confiscated.

Or. en

Amendment 13

Proposal for a directive

Article 10 – paragraph 1 b (new)

Text proposed by the Commission

Amendment

Member States shall take measures allowing confiscated funds or economic resources referred to in Article 10, paragraph 1a to be used for public interest or social purposes, with a particular focus on the victims wherever possible. Where the fines referred to in Article 5(5) and Article 7(2) and (3) are related to the offences referred to in Articles 3 and 4 and are linked to the military aggression of Russian Federation against Ukraine, they should serve the goal of rebuilding of the infrastructure and compensation to the victims in Ukraine.

Or. en

Amendment 14

Proposal for a directive

Article 10 – paragraph 1 c (new)

Text proposed by the Commission

Amendment

Member States shall decide for which areas of public interest and social purposes the net revenue resulting from the liquidation of these confiscated funds or economic resources may be used except for those established as an own resource in accordance with Article 311(3) TFEU and those related to the Russian aggression against Ukraine, which shall constitute external assigned revenue in accordance with Article 21(5) of the Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council1a (‘the Financial Regulation’) until the establishment of the relevant own resource in accordance with Article 311(3) TFEU and without prejudice to restitution, compensation, to the victims and public concerned and Member States’ capacity to implement the Directive.

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1a Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union, amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing Regulation (EU, Euratom) No 966/2012 (OJ L 193, 30.7.2018, p. 1).

Or. en

Amendment 15

Proposal for a directive

Article 10 – paragraph 1 d (new)

Text proposed by the Commission

Amendment

The net revenues resulting from the liquidation of confiscated funds or economic resources related to the Russian aggression against Ukraine shall be mainly assigned to the Neighbourhood, Development and International Cooperation Instrument – Global Europe on the Eastern Neighbourhood line (14 02 01 11) and, where appropriate, to the NDICI - Global Europe - provisioning of the common provisioning fund line (14 02 01 70) under Heading 6 and the successor budget lines in the next multiannual financial framework.

Or. en

Amendment 16

Proposal for a directive

Article 10 – paragraph 1 e (new)

Text proposed by the Commission

Amendment

Tracing, freezing and communicating about the amount of frozen assets in the Union as a result of its restrictive measures shall apply to all sanctions regimes the Union currently has.

Or. en

Amendment 17

Proposal for a directive

Article 13 – paragraph 2 a (new)

Text proposed by the Commission

Amendment

For the purposes of this Directive, when the notion of competent authorities refers to investigating and prosecuting authorities, it shall be interpreted as including the central and decentralised levels of the EPPO with regard to the Member States that participate in the enhanced cooperation on the establishment of the EPPO. Asset recovery offices shall therefore incur the obligations under the EPPO Regulation, including the obligation to report to the EPPO under Article 24 of the EPPO Regulation, undertaking of measures if instructed as a competent authority under Article 28(1) of the EPPO Regulation and access to information under Article 43(1) of the EPPO Regulation.

Or. en

Amendment 18

Proposal for a directive

Article 15 – paragraph 1 a (new)

Text proposed by the Commission

Amendment

Offences referred to in Articles 3 and 4 which involve designated persons, their dependants, entity or body, listed in the legal acts of the Union on restrictive measures, such as Council Regulation (EU) No 269/2014 and Council Regulation (EU) No 833/2014, shall be referred to the EPPO for investigating, prosecuting and bringing to judgment.

Or. en

Justification

Since the confiscated resources resulting from the violation of sanctions against individuals and entities involved in Russian aggression against Ukraine shall become part of the EU budget, such resources belong to the financial interests of the EU. Therefore the prosecution of such offences should be carried out by the EPPO, which is the best equipped EU body to deal with the cross-border character of sanction circumvention.

Amendment 19

Proposal for a directive

Article 16 – paragraph 1

Text proposed by the Commission

Amendment

(1) Without prejudice to the rules on cross-border cooperation and mutual legal assistance in criminal matters, Member States’ authorities, Europol, Eurojust, the European Public Prosecutor's Office, and the Commission shall, within their respective competences, cooperate with each other in the fight against the criminal offences referred to in Articles 3 and 4. To that end, the Commission, and where appropriate, Europol and Eurojust, shall provide technical and operational assistance in order to facilitate the coordination of investigations and prosecutions by the competent authorities.

(1) Without prejudice to the rules on cross-border cooperation and mutual legal assistance in criminal matters, Member States’ authorities, Europol, Eurojust, the European Public Prosecutor's Office, Special Envoy for the Implementation of EU Sanctions and the Commission shall, within their respective competences, cooperate with each other in the fight against the criminal offences referred to in Articles 3 and 4. To that end, the Commission, and where appropriate, EPPO, Europol and Eurojust, shall provide technical and operational assistance in order to facilitate the coordination of investigations and prosecutions by the competent authorities.

Or. en

Amendment 20

Proposal for a directive

Article 16 – paragraph 1 a (new)

Text proposed by the Commission

Amendment

(1a) Commission, Europol, Eurojust, Special Envoy for the Implementation of EU Sanctions, as well as authorities of the Member States, in particular Asset Recovery Offices and Asset Management Offices, in accordance with Directive (EU) […/…] [Directive on asset recovery and confiscation], shall cooperate with the EPPO on offences referred to in Articles 3 and 4 which involve designated person, entity or body, listed in Council Regulation (EU) No 269/2014 and which are referred to the EPPO for investigating, prosecuting and bringing to judgment.

Or. en

Amendment 21

Proposal for a directive

Article 16 – paragraph 2

Text proposed by the Commission

Amendment

(2) Member States’ competent authorities shall also regularly share information on practical issues, in particular, patterns of circumvention, e.g. structures to conceal the beneficial ownership and control of assets, with the Commission and other competent authorities.

(2) Member States’ competent authorities shall also regularly share information on practical issues, in particular, patterns of circumvention, e.g. structures to conceal the beneficial ownership and control of assets, with the Commission, EPPO and other competent authorities.

Or. en

Amendment 22

Proposal for a directive

Article 19 – paragraph 2 – point a a (new)

Text proposed by the Commission

Amendment

(aa) the number of criminal proceedings referred to the EPPO in line with Article 15, paragraph 1a.

Or. en

Amendment 23

Proposal for a directive

Article 19 – paragraph 2 – point b a (new)

Text proposed by the Commission

Amendment

(ba) the monetary value of funds and economic resources frozen and confiscated in each case of violation of Union restrictive measures;

Or. en

Amendment 24

Proposal for a directive

Article 19 – paragraph 2 – point b b (new)

Text proposed by the Commission

Amendment

(bb) the types of national authorities involved in investigations and criminal proceedings.

Or. en

Justification

The scope is to identify which of the national authorities are most solicited and as a consequence might require additional financial and technical resources.