EU cracks down on sanctions evasion, making violations criminal offenses with steep penalties, including for crypto services.
The European Parliament has approved a set of rules aimed at cracking down on violations of EU sanctions, introducing stringent criminal penalties and harmonizing enforcement across the 27 member states.
The new legislation, passed with 543 votes in favor, 45 against, and 27 abstentions, comes amid growing concerns over divergent national approaches that have allowed loopholes to persist in the implementation of EU sanctions regimes.
At the heart of the directive lies a unified definition of what constitutes a sanctions violation, encompassing acts such as failing to freeze funds, disregarding travel bans or arms embargoes, transferring funds to sanctioned individuals or entities, and conducting business with state-owned enterprises of countries under sanctions.
Notably, the rules specifically apply to crypto service providers, making it a violation to provide prohibited crypto-related services like crypto wallets or asset freezing to sanctioned entities.
Perhaps most notably, the rules criminalize the circumvention of sanctions, making it a punishable offense to conceal or transfer funds that should be frozen, obscure true ownership of property, or fail to report necessary information related to sanctions compliance.
Under the new directive, member states will be required to introduce minimum penalties for sanctions violations, including prison sentences of up to five years. Companies found guilty of such transgressions could face substantial fines, with judges empowered to levy penalties based on either the worldwide annual turnover of the offending entity or predetermined maximum amounts.
