Brussels presents plan to facilitate seizure of frozen assets of Russian oligarchs
Brussels is seeking to remove legal blockages preventing the confiscation of assets of Russian oligarchs as part of efforts to strengthen enforcement of its sanctions regime.
The European Commission has tabled proposals making breaches of EU sanctions a criminal offense in all 27 member states – a move that would make it easier to confiscate assets belonging to people who evade sanctions.
Brussels has also presented measures to strengthen the search and seizure of assets between member states, which would allow them in particular to quickly freeze assets at risk of disappearance.
The commission wants to make enforcement of its state-specific sanctions regime more effective, while allowing assets to be confiscated that could ultimately be liquidated and used for Ukraine’s reconstruction.
The proposals “aim to ensure that the assets of individuals and entities who violate the restrictive measures can be effectively confiscated in the future,” the commission said.
But some member states are skeptical of attempts to fund reconstruction efforts with seized assets, given the need to protect due process and safeguard property rights.
German officials have pointed out that the sanctions-related expropriation would require changing the country’s constitution, which guarantees private property. Finance Minister Christian Lindner on Tuesday marked his preference for the confiscation of assets belonging to the Russian central bank, rather than to individuals.
“Germany is politically open to discussing the use of seized Russian sovereign assets for the reconstruction of Ukraine. We have to distinguish between sovereign assets, of the Russian central bank, for example, and private assets,” he said.
The national systems of European countries differ in the severity with which they deal with non-compliance with sanctions. In 13 member states breaching sanctions can be an administrative or criminal matter, while it is only the latter in 12, according to the committee.
In two Member States circumvention of sanctions is purely an administrative offence. EU countries also apply different penalties.
The committee hopes that making dodging penalties a criminal offense across the EU will discourage forum shopping by offenders seeking less harsh regimes.
Authorities might also find it easier to seize assets as this can usually only be done through criminal proceedings. The confiscated assets could be liquidated and used to fund a reconstruction fund for Ukraine.
Member states must now unanimously back a Council resolution calling on the commission to introduce legislation to add circumvention of sanctions to the list of EU crimes. This means that there are great obstacles to the proposals becoming law.
EU member states have frozen more than €22 billion in Russian central bank assets and €9.9 billion in private assets as a result of five sanctions packages, according to the commission. Brussels has sought to expand its range of punitive measures in a sixth package that would include an oil embargo, but has stalled mainly due to Hungarian opposition.
The commission is trying to “strengthen the existing instruments we have”, said Didier Reynders, the justice commissioner, on Wednesday.
He added: “At present, diverging definitions and criminal penalties for breaching restrictive measures can still lead to impunity. We need to close the loopholes and provide judicial authorities with the right tools to prosecute breaches of EU restrictive measures.”
Some member states argue that the commission should not raise expectations for asset seizures given the legal hurdles.
“It will take months of negotiations and years of litigation before a single euro is seized,” warned a European diplomat. “If not at all. This would have a much greater immediate impact if the Commission had devoted so much time and energy to the application of sanctions.