Following the one-year mark of the war in Ukraine, the European Union (EU) demonstrated its intention to focus on enforcing sanctions imposed so far and ensuring that third countries will not facilitate circumvention efforts.
To enhance enforcement, the recently introduced 10th sanctions package includes reporting requirements on EU operators and nationals with respect to funds and resources held, owned or controlled by listed persons or entities. Crucially, the reporting requirement also extends to information about movements of funds in the two weeks prior to listing.
In a separate development, the EU’s Special Envoy for the implementation of EU sanctions outlined plans for engagement with third countries to tackle “leakage” and confirmed that, following his recent visit to the United Arab Emirates, an expert group has been set up to look in to the matter. Addressing anti-circumvention efforts more generally, the Special Envoy stated that:
“Most of these countries take the view that they don’t want to align with our sanctions – that’s their sovereign decision – but neither do they want to become an instrument of circumvention. So, they are willing to cooperate.”
The Special Envoy admitted that resourcing is an issue that is hampering the effective implementation of sanctions and, in a question on whether the EU should consider an OFAC-like agency, replied that implementation efforts need to take into account differences between the U.S. and the EU, as well as the role of Member States. The Special Envoy concluded that the main challenges in the next few months will revolve around obtaining information from third countries and closing loopholes. In respect of the latter, he stated that this can happen through cooperation or maybe through further refinement of the EU’s own sanctions.
At legislative level, the next months will likely see the progress of the Proposal for a Directive on the definition of criminal offences and penalties for the violation of EU restrictive measures, which seeks to harmonise Member States’ approach to investigating, prosecuting, and punishing violations of sanctions.
Finally, the chief prosecutor of the European Public Prosecutor’s Office reiterated the agency’s willingness to pursue those who circumvent sanctions through its presence across 22 Member States.
It is expected that the EU’s focus on enforcement of sanctions will continue both through its own initiatives and as part of concerted actions with allies, such as the recently announced Enforcement Coordination Mechanism which will be established by the G-7 to bolster compliance and enforcement of sanctions.