EU Directive will allow confiscation of assets for sanctions violation

Monday, 05 December 2022
The European Commission (EC) has published a draft Directive making sanctions violation a criminal offence across the bloc.

If it is adopted, assets gained by individuals through circumventing sanctions will be deemed 'proceeds of crime', available for permanent confiscation.

EU Member States' different rules for investigating, prosecuting and punishing sanction-violation will be harmonised. Common levels of penalties will be established throughout the EU at a minimum of 5 per cent of the person's worldwide turnover, or five years in jail for an individual.

The list of offences will include making funds or economic resources available to a designated person, failing to freeze these funds, enabling designated people to enter the EU and entering into prohibited transactions with third countries or trading in restricted goods or services.

It will also be an EU offence to offer prohibited or restricted legal advisory services, trust services, tax consulting services and financial activities. Helping someone circumvent sanctions by concealing funds or their ownership or failing to report assets or transactions to the authorities, will similarly be an offence. Confiscation will apply where assets owned, held or controlled by a designated person are concealed or where the fact is concealed that a person subject to sanction is the ultimate owner or beneficiary of funds or economic resources.

However, the EC says the Directive will contain some safeguards for professionals. The rights to silence and not to incriminate oneself will continue to exist and legal professionals will still have limited recourse to privilege where proceedings are under way. 'Legal advice in those circumstances is to be protected by professional secrecy, except where the legal professional is taking part in violation of EU restrictive measures, the legal advice is provided for the purposes of violating EU restrictive measures, or the legal professional knows that the client is seeking legal advice for the purpose of violating Union restrictive measures', says the EC.

Details of the proposal will now be discussed by the European Parliament and the EU Council of Ministers. It has already been approved in principle by the Council at a meeting on 28 November 2022.


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