David Savage has written the EU Sanctions Enforcement chapter of the second edition of Global Investigations Review’s Guide to Sanctions.

The full guide is split into three sections: Sanctions and Export Control Regimes Around the World; Compliance Programmes; and Sanctions in Practice.

David’s chapter falls under the first part, and in it, he gives an overview of the EU enforcement framework and looks at the criticism of it. David also looks at how it investigates suspected breaches as well as its approach to reporting, professional secrecy and legal professional privilege under the framework. Lastly David looks at the future of EU sanctions enforcement.

GIR say about their guide:

“We live in a new era for sanctions. More states are using them, in more creative (and often unilateral) ways. This creates ever more complication for everybody else. Hitherto no book has addressed all the issues raised by the proliferation of sanctions regimes and investigations in a structured way. GIR’s The Guide to Sanctions addresses that. Written by contributors from the small but expanding field of sanctions enforcement, it dissects the topic in a practical fashion, from every stakeholder’s perspective, providing an invaluable resource.”

The fourth part of David’s chapter, considering the future of EU sanctions is below.

The future of EU sanctions enforcement

Sanctions are a key tool for supporting the EU’s foreign policy objectives, which include ‘safeguarding EU’s values, fundamental interests, and security’. However, for that tool to achieve its full potential, proper implementation and enforcement of sanctions by EU Member States is fundamental. Indeed, in September 2019, Ursula von der Leyen called for ‘proposals to ensure Europe is more resilient to extraterritorial sanctions by third countries and to ensure that the sanctions imposed by the EU are properly enforced throughout its financial system’

To reinforce this objective, on 19 January 2021, the Commission published a Communication entitled ‘The European economic and financial system: fostering openness, strength and resilience’ (the Communication). The Communication ‘sets out how the EU can reinforce its open strategic autonomy in the macro-economic and financial fields by […] improving the implementation and enforcement of EU’s sanctions’ regimes, and increasing the EU’s resilience to the effects of the unlawful extra-territorial application of unilateral sanctions and other measures by third countries’. Proposals in the Communication include:

• The Commission, as the institution in charge of monitoring and coordinating the implementation of EU sanctions under the TFEU, will from 2021 contribute to the assessment of the effectiveness of EU sanctions.
• In 2021, the Commission will also conduct a review of practices that circumvent and undermine sanctions, including the use of cryptocurrencies and stablecoins. The results of this will inform possible legislative proposals or implementation guidelines from 2022.
• In 2021, the Commission will develop a database, the Sanctions Information Exchange Repository. This will enable prompt reporting and exchange of information between Member States and the Commission on the implementation and enforcement of sanctions.
• The Commission is setting up an expert group of representatives of Member States on sanctions and extra-territoriality.
• The Commission will work with Member States to set up a system to centralise notifications and the dissemination of information across Member States, and to help coordinate Member States’ replies, in full compliance with the division of competences in the treaties.
• The Commission will discuss the implementation of EU sanctions with Member States to ensure a harmonised approach in this regard.

The proposals fall short of the establishment of an EU-wide sanctions enforcement body, which could have built on the work already undertaken by RELEX. The bloc has historically been reticent, in establishing a centralised monitoring body, as it would require significant funding and a legislative mandate for which there currently appears to be little appetite. Given the focus of the Communication, it does not appear likely that such a body will be established in the near term.

To that end, the implementation and enforcement status quo looks set to remain. While this inconsistent approach has garnered much criticism and looks set to be the subject of scrutiny in 2021 and 2022, the gradually increasing rate of enforcement activity would tend to indicate that certain EU Member States are prepared to take sanctions-busting activity seriously and companies should prepare for an increased focus on enforcement of EU sanctions going forward.

An extract from the second edition of GIR’s The Guide to Sanctions. The whole publication is available here.

The full EU Sanctions Enforcement chapter can be found here.

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