EU Officials Want Stronger Russia Sanctions Penalties, Implementation
European officials and Parliament members called on EU member states to double down on Russia-related sanctions implementation and enforcement, saying they know evasion is occurring, but countries have been too slow to act on sanctions rules or haven’t levied large enough penalties. They also expressed frustration that the EU hasn’t yet been able to confiscate frozen Russian assets for Ukraine, even as the European Commission said it’s preparing a proposal that would allow the bloc to indirectly use those funds while still complying with international law.
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During a European Parliament hearing last week, Paulis Iljenkovs, deputy director of Latvia’s Financial Intelligence Unit, said EU criminal enforcement of sanctions breaches “could be better.” Some member states “have not reported any cases of sanctions violations, although we all know that they occur.”
“When sanctions circumvention or sanctions violations occur, and they do occur, we must be very stringent about penalizing those who are engaged in this illicit behavior,” he said. “The consequences have to be very severe.”
Iljenkovs said Latvia, which borders Russia and Belarus, saw a dramatic surge in its “sanctions compliance workload” after Russia invaded Ukraine in 2022, and the country’s government had to overhaul its sanctions oversight system to keep up. Latvia “completely centralized” its sanctions implementation into a single agency, the Financial Intelligence Unit, and increased its resources and powers. Since then, it has issued “thousands” of guidance notes to businesses to help them comply with sanctions, and it has launched about 600 criminal proceedings against alleged sanctions violators, Iljenkovs added.
Despite Latvia’s work to strengthen its sanctions enforcement, Iljenkovs said the country still sees “fragmentation among EU member states in the implementation and enforcement of sanctions. And if there is fragmentation, it dilutes the impact of sanctions.” He said the “path forward, in our opinion, is coherence, one interpretation, one standard of reporting, one level of enforcement across the union.”
John Berrigan, the European Commission’s financial services and capital markets chief, acknowledged that EU member states aren’t all aligned. “The commission is aware that there's an implementation issue around sanctions.” But he also said the surge in new sanctions has caused the commission and many member states to go from “zero to maximum capacity in a very short phase of time,” and they’re still figuring out how to manage that workload.
“We're in the process of imposing more and more sanctions through packages, now 19 packages over three years. So it's quite a rhythm,” Berrigan said. “I think we have to be a little bit realistic here and understand that the member states, like us, are having to resource this, they're having to organize this, while at the same time implement pretty aggressive, pretty large-scoped packages.”
Berrigan added that the EU would “love to have a moment of calm so we can all sit down and talk about how we can do that better. But we are not in a moment of calm. We’re in a moment of continuously ramping up the pressure on Russia through sanctions.”
Ludek Niedermayer, a European Parliament member from the Czech Republic, said he’s particularly concerned about companies using third countries, especially "ex-Soviet" states, to circumvent Russia sanctions. He questioned whether the EU should follow the U.S. in threatening sanctions or tariffs against countries that continue to allow business with Russia.
“We know that the EU is not very strong in enforcing sanctions on the third countries that are undermining our effort to get Russia economically under pressure. We also know that the White House is very much pushing in this direction,” Niedermayer said, adding that the use of third countries is “really undermining” European sanctions.
The commission is increasingly looking to target third-country sanctions evaders in its Russia sanctions packages, Berrigan said, including through transaction bans with foreign banks that facilitate payments involving Russia. He said he’s expecting more of the same in future sanctions packages.
Iljenkovs said Latvia regularly sees companies using third countries as “evasion jurisdictions,” particularly countries that are in the same “economic and customs union” as Russia, referring to the Eurasian Economic Union. “This is by far the most common typology of sanctions violation that we have seen.”
Iljenkovs applauded the EU for its move last year to criminalize violations of sanctions (see 2404150010), which he said helps serve as a “deterrent effect” for evaders. “Only through proper sanctions enforcement -- with criminal fines, with jail times, with huge confiscations -- can we achieve a deterrent effect, so that businesses and people who wish to violate sanctions and make money from that are held accountable.”
But Iljenkovs also stressed that more needs to be done, saying the EU must “reevaluate the effectiveness of all types of sanctions that have been imposed” to make sure they can be implemented by industry.
“I'm talking about compliance officers, the usual trade-related businesses that have to implement them, the financial institutions,” he said. “They take a lot of resources to implement all of them. And if some particular types of sanctions are not effective, we should be honest about it and put the pressure on the measures which are the most effective.”
Several Parliament members said the EU should be confiscating frozen Russian assets and using that revenue to help Ukraine fight the war and rebuild its country. But Berrigan said those assets are protected by “sovereign immunity under international law,” and confiscating them raises complicated legal issues.
Niedermayer said it’s “very frustrating” that the EU hasn’t yet been able to use those assets, adding that Russia’s “criminal” actions should allow the bloc to take them. “We are not in 2022. We are in 2025,” he said. “And it's frustrating that we haven't found a way through.”
Billy Kelleher, a Parliament member from Ireland, said the EU should be able to confiscate assets of Russian oligarchs that involve “some form of criminality.”
“The idea that an oligarch in Russia can make billions without some of it, at least, being some form of criminality is beyond belief,” he said. “I just do not think that we have made enough effort to look at Russian money, Russian assets, Russian properties owned by oligarchs and other named individuals, and we haven't done more to seize it.”
Berrigan stressed to multiple Parliament members that the EU can’t confiscate those assets under its Russian sanctions laws. “If you want to confiscate these assets, you need to prove criminality, and that requires due process,” he said. “So it's not a question of whether we're happy or unhappy with the member states. It's the member states that have to identify if this criminal behavior exists, and then through due process, prove it. And then, of course, they can confiscate the asset.”
Berrigan also noted that the EU is working on an alternative way to finance Ukraine's defense efforts through frozen Russian assets. He pointed to comments that Commission President Ursula von der Leyen made earlier this month (see 2509190029) that the EU is considering giving Ukraine a “reparations loan” based on the “cash balances associated” with those Russian assets.
This could be a “new, comprehensive and legally sound solution to leverage these assets to aid Ukraine obtaining compensation from Russia,” Berrigan said.