What changed between the draft committee report and the plenary report

DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION

10 unchanged paragraphs

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

(COM(0022)0684 – C90401/2022 – 2022/0398(COD))

(Ordinary legislative procedure: first reading)

The European Parliament,

– having regard to the Commission proposal to Parliament and the Council (COM(0022)0684),

– having regard to Article 294(2) and Article 83(1) of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C90401/2022),

– having regard to Article 294(3) of the Treaty on the Functioning of the European Union,

– having regard to the opinion of the European Economic and Social Committee of 23 March 2023,

– having regard to Rule 59 of its Rules of Procedure,

– having regard to the opinion of the Committee Budgets,

Changed:– having regard to the report of the Committee on Civil Liberties, Justice and Home Affairs (A90000/2023),(A9-0235/2023),

1. Adopts its position at first reading hereinafter set out;

2. Calls on the Commission to refer the matter to Parliament again if it replaces, substantially amends or intends to substantially amend its proposal;

3. Instructs its President to forward its position to the Council, the Commission and the national parliaments.

Change 1

Changed:Recital 4:1: (4)(1) TheIn order to ensure the effective application of Union restrictive measuresmeasures, callsthe forintegrity commonof criminalthe definitionsinternal ofmarket conductwithin infringingthe UnionUnion, restrictiveand measures.to Memberachieve Statesa shouldhigh ensurelevel thatof thissecurity conductwithin constitutesthe aArea criminalof offenceFreedom, whenSecurity committedand withJustice, intentit asis wellnecessary asto withestablish negligence,common inminimum caserules theconcerning naturalthe ordefinition legalof personcriminal knewoffences orand shouldpenalties havewith known,regard thatto theirthe conductviolation wouldof infringethose Union restrictive measures.

Change 2

Removed:Recital 7: (7) Legal professionals, as defined by the Member States, should be subject to this Directive, including the obligation to report the violation of Union restrictive measures, when providing services in the context of professional activities, such as legal, financial and trade services. Experience shows that there is a clear risk of the services of those legal professionals being misused for the purpose of violating Union restrictive measures. There should, however, be exemptions from any obligation to report information which is obtained in strict connection with judicial, administrative or arbitral proceedings, whether before, during or after judicial proceedings, or in the course of ascertaining the legal position of a client. Therefore, legal advice in those circumstances should remain subject to the obligation of professional secrecy, except where the legal professional is taking part in the violation of Union restrictive measures, the legal advice is provided for the purposes of violating Union restrictive measures, or the legal professional knows or has reasons to believe that the client is seeking legal advice for the purposes of violating Union restrictive measures. Knowledge can be inferred from objective factual circumstances.

Added:Recital 3: (3) To ensure the effective application of Union restrictive measures, it is necessary that Member States have effective, proportionate and dissuasive penalties in place for natural or legal persons who violate or breach those Union restrictive measures, including obligations, such as transparency and information reporting, established therein. It is also necessary that those penalties address the circumvention of Union restrictive measures.

Added:Recital 4: (4) The effective application of Union restrictive measures calls for common criminal definitions of conduct violating Union restrictive measures. Member States should ensure that that conduct constitutes a criminal offence when committed with intent or with negligence, where the natural or legal person knew or should have known, that their conduct would violate Union restrictive measures.

Added:Recital 6: (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, or accomplices of violations or circumventions of such measures. 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 needs to be addressed since it undermines the effectiveness of Union restrictive measures. Therefore, this conduct is covered by the circumvention offence approximated by this Directive.

Added:Recital 6 a (new): (6a) The circumvention of sectoral economic and financial measures should also be addressed. Therefore, conduct under the cover of a formal appearance which enables the avoidance of the constituent elements of a violation, but has the same effects, should be covered by the circumvention offence approximated by this Directive, when committed intentionally. Such conduct may in particular occur by the concealment of goods, transactions, services or activities subject to a Union restrictive measure, or information about them, for instance in situations where a natural or legal person exports goods to a third country with the knowledge that such goods will be transferred to a final destination to which their export is prohibited by a Union restrictive measure.

Added:Recital 6 b (new): (6b) The violation of Union restrictive measures is often linked to other criminal activities and most notably motivated by considerations of financial gain. While generating profits, the circumvention of restrictive measures enables the continued use of assets. It undermines the objectives and effectiveness of those restrictive measures and hence needs to be addressed. Proceeds resulting from the violation of Union restrictive measures or instruments used to pursue the violation of restrictive measures should become the object of confiscation. Where the assets are confiscated in connection with the Russian war of aggression on Ukraine or associated crimes, without prejudice to restitution to and compensation of the victims or the public concerned by the criminal offence, the confiscated assets or the net proceeds resulting from the liquidation of such assets should be assigned to contributions towards the reconstruction efforts of Ukraine.

Added:Recital 7: (7) Legal professionals, as defined by the Member States, as well as providers of other professional services, such as accountants, tax advisors, financial and trade advisers, real estate agents and migration consultancies advising on residence by investment and citizenship by investment, amongst others, should be subject to this Directive, including the obligation to report the violation of Union restrictive measures, when providing services in the context of professional activities. Experience shows that there is a clear risk of the services of those legal professionals being misused for the purpose of violating Union restrictive measures. For legal professionals, there should, however, be exemptions from any obligation to report information which is obtained in strict connection with judicial, administrative or arbitral proceedings, whether before, during or after judicial proceedings. Information which is obtained by legal professionals or in the course of ascertaining the legal position of a client should be covered by legal privilege. Therefore, legal advice in those circumstances should remain subject to the obligation of professional secrecy, except where the legal professional is taking part in the violation of Union restrictive measures, the legal advice is provided for the purposes of violating Union restrictive measures, or the legal professional knows or has a well-grounded suspicion on the basis of factual circumstances that the client is seeking legal advice fo…

Added:Recital 8: (8) The effective application of Union restrictive measures furthermore calls for a common criminal law definition of intentionally breaching conditions under authorisations granted by competent authorities to conduct certain activities, which in the absence of such an authorization are prohibited or restricted under a Union restrictive measure.

Added:Recital 8 a (new): (8a) Member States should make easily accessible and detailed guidelines on compliance with Union restrictive measures, including detailed information on, inter alia, matters of compliance and enforcement standards.

Added:Recital 8 b (new): (8b) When applying measures aimed at preventing the violation or circumvention of Union restrictive measures, credit and financial institutions should ensure that clients are not discriminated against or unduly excluded from access to financial services.

Added:Recital 9: (9) It is appropriate to exclude from the criminalisation activities which concern the provision of goods and services of daily use for the personal use of designated natural persons, such as food and healthcare products and services, or of petty cash, where it is clearly limited to fulfilling the basic human needs of such persons and their dependent family members. The failure to report such activities should also be excluded from criminalisation. In addition, and in line with international humanitarian law, it is appropriate to exclude from criminalisation the delivery of humanitarian assistance or activities that support basic human needs by providers of humanitarian services, such as the United Nations, humanitarian organisations having observer status with the United Nations General Assembly and members of those humanitarian organisations, bilaterally or multilaterally funded non-governmental organisations participating in the United Nations Humanitarian Response Plans, Refugee Response Plans, other United Nations appeals or humanitarian clusters coordinated by the United Nations Office for the Coordination of Humanitarian Affairs (OCHA), public bodies or legal persons, entities or bodies which receive public funding from the Union or from Member States to ensure the timely delivery of humanitarian assistance or to support other activities that support basic human needs for the civilian population, organisations and agencies to which the Union has granted the Humanitaria…

Added:Recital 10: (10) Penalties for the offences should be effective, dissuasive and proportionate. To this end, minimum levels for the maximum term of imprisonment should be set for natural persons. Additional penalties or measures should also be available in criminal proceedings. They should include fines, taking into account that the violation of Union restrictive measures is mostly motivated by economic considerations. Fines should be proportionate to the gravity of the offence as well as to the financial benefits accrued by committing the offence. Additional penalties should also include withdrawal of permits and authorizations to pursue activities which have resulted in committing the offence, disqualification from exercising a leading position within a legal person of the type used for committing the offence, temporary bans on running for elected or public office, national or Union-wide publication of the judicial decision relating to the conviction or any sanctions or measures applied.

Recital 11: (11) Given that legal persons are also subject to Union restrictive measures, legal persons should also be held criminally liable for offences related to the violation of Union restrictive measures according to this Directive. Member States whose national law does not provide for the criminal liability of legal persons should ensure that their administrative sanctioning systems provide for effective, dissuasive and proportionate sanction types and levels.

Change 3

Changed:Recital 12: (12) A further approximation and effectiveness of level of penalties imposed in practice should be fostered through common aggravating circumstances that increase the criminal responsibility of the individual and reflect the severity of the crime committed. The notion of aggravating circumstances should be understood either as factscircumstances surrounding the commission of an offence and allowing the national judge or court to pronounce a higher sentence for the same offence than the one incurred without these facts, or as the possibility of retaining several offences cumulatively in order to increase the level of the penalty. Member States should provide for the possibility of these aggravating circumstances in accordance with applicable rules established by their legal system on aggravating circumstances. In any case, it should remain within the discretion of the judge or the court to determine whether to increase the sentence, taking into account all the circumstances of the individual case.

Change 4

Removed:Recital 19: (19) To ensure the effective investigation and prosecution of violations of Union restrictive measures, Member States’ competent authorities should cooperate through and with Europol, Eurojust and the European Public Prosecutor’s Office (EPPO). These competent authorities should also share information among each other and with the Commission on practical issues. For the purposes of this Directive and notwithstanding a possible extension of the competence of the EPPO, the institutions, bodies, offices and agencies of the Union and the authorities of the Member States which participate in enhanced cooperation on the establishment of the EPPO, should closely cooperate with the central and decentralised levels of the EPPO. They should in particular fulfil the reporting obligations under Regulation (EU) 2017/1939, including where the EPPO is competent in respect of criminal offences for the violation of Union restrictive measures because they constitute offences regarding participation in a criminal organisation or criminal offences inextricably linked to offences referred to in Article 22(2) and (3) of Regulation (EU) 2017/1939.

Added:Recital 16: (16) Given, in particular, the global activities of the perpetrators of illegal conduct covered by this Directive, together with the cross-border nature of the offences and the possibility of cross-border investigations, Member States should establish jurisdiction in order to counter such conduct quickly, consistently and effectively.

Added:Recital 18: (18) To ensure an effective, transparent, integrated and coherent enforcement system, Member States should organise internal cooperation and communication between all actors along the administrative and criminal enforcement chains, in full compliance with Member States’ national rules on criminal proceedings, as well as with the Charter of Fundamental Rights of the European Union (the Charter) and with the Member State’s obligations under Article 6 TEU.

Added:Recital 19: (19) To ensure the effective investigation and prosecution of violations of Union restrictive measures, Member States’ competent authorities should cooperate through and with Europol, Eurojust and the European Public Prosecutor’s Office (EPPO). The Commission should establish a permanent network of experts and practitioners to share best practices and provide technical and operational support in order to facilitate the coordination of investigations and prosecutions by Member States competent authorities’, Europol, Eurojust, the EPPO, and the European Anti-Fraud Office.

Added:Recital 19 a (new): (19a) For the purposes of this Directive, the institutions, bodies, offices and agencies of the Union and the authorities of the Member States which participate in enhanced cooperation on the establishment of the EPPO, should closely cooperate with the central and decentralised levels of the EPPO. They should in particular fulfil the reporting obligations under Regulation (EU) 2017/1939, including where the EPPO is competent in respect of criminal offences for the violation of Union restrictive measures because they constitute offences regarding participation in a criminal organization or criminal offences inextricably linked to offences referred to in Article 22(2) and (3) of Regulation (EU) 2017/1939. In order to optimize criminal prosecution and the effective application of sanctions for any violation or circumvention of Union restrictive measures, it is necessary to extend the EPPO's current competences, including the criminal offences covered by this Directive. Furthermore, all Member States should participate in the EPPO to make it more efficient.

Added:Recital 20: (20) Whistleblowers can be crucial in providing valuable information to competent authorities concerning past, ongoing or planned violations of Union restrictive measures, including attempts to circumvent them. This information can relate, for example, to vital facts concerning violations of Union restrictive measures, their circumstances, the individuals, companies and third countries involved. Therefore, it should be ensured that adequate arrangements are in place to enable such whistleblowers to alert the competent authorities and to protect them from retaliation. For that purpose, it should be provided that Directive (EU) 2019/1937 of the European Parliament and of the Council49 is applicable to the reporting of violations of Union restrictive measures and to the protection of persons reporting such violations. / 49 Directive (EU) 2019/1937 of the European Parliament and of the Council of 23 October 2019 on the protection of persons who report breaches of Union law, (OJ L 305, 26.11.2019, p. 17).

Added:Recital 21: (21) To ensure the effective investigation and prosecution of violations of Union restrictive measures, those responsible for investigating or prosecuting these measures should have the possibility of using investigative tools such as those which are used in combating organised crime or other serious crimes. The use of such tools, in accordance with national law, should be targeted and comply with the principles of necessity and proportionality and the nature and seriousness of the offences under investigation as well as respecting the right to the protection of personal data.

Added:Recital 23: (23) Since 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 the Member States taking into account the inherent cross-border nature of the violation of Union restrictive measures and its potential to undermine the achievement of the Union objectives to safeguard international peace and security as well as to uphold Union common values, but can rather, by reason of the scale and effects of this Directive, be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in 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 those objectives.

Added:Recital 24: (24) This Directive respects fundamental rights and observes the principles recognised in particular by the Charter, including the right to liberty and security, the protection of personal data as further specified by Regulation (EU) 2016/679, Regulation (EU) 2918/1725 and Directive (EU) 2016/680, the freedom to conduct a business, the right to property, the right to an effective remedy and to a fair trial, the presumption of innocence and the right of defence including the right not to incriminate oneself and to remain silent, the principles of legality, including the principle of non-retroactivity of criminal penalties and proportionality of criminal offences and penalties, as well as the principle of ne bis in idem. It is essential that Member States provide for an effective appeal against judgments issued pursuant to this Directive, before a higher court, in accordance with procedures provided for in national law. Where a decision to prosecute has been taken by a competent authority other than a judicial authority, national law should provide for a judicial review of such decision to prosecute, within a reasonable time, before the prosecution is initiated. This Directive seeks to ensure full respect for the aforementioned rights and principles and should be implemented accordingly.

Added:Article 1 – paragraph 1: This Directive establishes common minimum rules concerning the definition of criminal offences and penalties with regard to the violation of Union restrictive measures.

Article 2 – title: Scope

Change 5

Removed:Separate articles for scope and definitions

Added:Article 2 – paragraph 2: deleted / (deleted) / (deleted) / (deleted) / (deleted) / (deleted) / (deleted) / (deleted) / (deleted) / (deleted) / (deleted) / (deleted) / (deleted) / (deleted) / (deleted)

Removed:Article 2 a (new): Article 2a / Definitions

Added:Article 2 a (new): Article2a / Definitions / For the purposes of this Directive, the following definitions apply: / (a) ‘Union restrictive measures’ means restrictive measures adopted by the Union on the basis of Article 29 TEU or Article 215 TFEU; / (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; / (c) ‘funds’ means: / (i) cash, cheques, claims on money, drafts, money orders and other payment instruments; / (ii) deposits with financial institutions or other entities, balances on accounts, debts and debt obligations; / (iii) publicly- and privately-traded securities and debt instruments, including stocks and shares, certificates representing securities, bonds, notes, warrants, debentures and derivatives contracts; / (iv) interest, dividends or other income on or value accruing from or generated by assets; / (v) credit, right of set-off, guarantees, performance bonds or other financial commitments; / (vi) letters of credit, bills of lading, bills of sale; / (vii) documents showing evidence of an interest in funds or financial resources; (viii) crypto-assets as defined in Article 3(5) of Regulation (EU) 2023/1114 of the European Parliament and of the Council1a; / (d) ‘economic resources’ means assets of every kind, whether tangible or intangible, movable or immovable, which are not fun…

Removed:Separate articles for scope and definitions

Added:(What was paragraph 2 of Article 2 in the Commission text has become Article 2a in Parliament’s amendment. Points (a.), (viii) and (e) have further modifications and new points (g) to (h) have been inserted.)

Removed:Article 3 – paragraph 2 – point h – point i: (i) moving, transferring, altering, using, accessing, dealing with, selling, hiring or mortgaging funds or economic resources owned, held, or controlled by a designated person, entity or body, which should be frozen in accordance with a Union restrictive measure, in a way that results in a change in the volume, amount, location, ownership, possession, character or destination of those funds or economic resources or any other change that would enable those funds and resources to be used, including by a third party or through portfolio management;

Added:Article 3 – title: Violation and circumvention of Union restrictive measures

Added:Article 3 – paragraph 1: (1) Member States shall take the necessary measures to ensure that the violation of a Union restrictive measure by any natural, legal person, entity or body constitutes a criminal offence when committed intentionally and provided it falls in one of the categories defined in paragraph 2.

Added:Article 3 – paragraph 2 – point a: (a) making funds or economic resources available directly or indirectly to, or for the benefit of, a designated person, entity or body in violation of a prohibition by a Union restrictive measure;

Added:Article 3 – paragraph 2 – point c: (c) enabling the entry of designated natural persons into the territory of a Member State, including its territorial seas and airspace, or their transit through the territory of a Member State in violation of a prohibition by a Union restrictive measure including through international zones situated in the territory of the Member State;

Added:Article 3 – paragraph 2 – point c a (new): (ca) enabling the stay in the territory of a Member State of a designated natural person, including by granting citizenship by investments or residence by investments schemes, in violation of a Union restrictive measure;

Added:Article 3 – paragraph 2 – point d: (d) entering into financial or corporate transactions or public procurement with a third State, bodies of a third State, entities and bodies directly or indirectly owned or controlled by a third State or bodies of a third State, which are prohibited or restricted by Union restrictive measures;

Added:Article 3 – paragraph 2 – point e: (e) trading in goods, services or technology whose import, export, sale, purchase, transfer, transit or transport is prohibited or restricted by Union restrictive measures, as well as acting as an intermediary or providing brokering services or other services relating to those goods and services;

Added:Article 3 – paragraph 2 – point h – point i: (i) moving, transferring, altering, using, accessing, dealing with, selling, hiring or mortgaging funds or economic resources directly or indirectly owned, held, or controlled by a designated person, entity or body, which should be frozen in accordance with a Union restrictive measure, to a third party to conceal those funds or economic resources enabling the designated persons to continue to use them;

Added:Article 3 – paragraph 2 – point h – point ii: (ii) concealing the fact that a person, entity or body subject to Union restrictive measures is the ultimate owner or beneficiary of funds or economic resources, through the provision of false or incomplete information;

Added:Article 3 – paragraph 2 – point h – point v a (new): (va) conduct that has the same effect as one of the offences referred to in points (d) to (g) of this paragraph, in particular the concealment of goods, transactions, services or activities subject to a Union restrictive measure, or information about their nature, origin, destination or the identity of parties involved;

Article 3 – paragraph 3: (3) The conduct referred to in paragraph 2, points (a) to (g) shall constitute a criminal offence also if committed with negligence.

Change 6

Changed:Article 3 – paragraph 5: (5) Nothing in paragraph 2 shall be understood as imposing an obligation on legal professionals to report information which is obtained in strictthe connectionperformance withof the task of defending or representing a client in, or concerning judicial, administrative or arbitral proceedings, whether before, during or after judicial proceedings, or in the course of ascertaining the legal position of a client. Legal advice in those circumstances shall be protected by professional secrecy, except where the legal professional is taking part in the violation of Union restrictive measures, the legal advice is provided for the purposes of violating Union restrictive measures, or the legal professional knows or has reasonsa towell-grounded believethatsuspicion on the basis of factual circumstances that the client is seeking legal advice for the purposes of violating or circumventing Union restrictive measures.