EU Approves Criminal Penalties for Circumventing Sanctions with Cryptocurrencies

On March 12, Members of the European Parliament approved a directive criminalizing violations and circumvention of EU sanctions.

The directive includes standardized and stricter penalties for:

• refusing to freeze accounts and wallets, as well as conducting transactions with fiat or cryptocurrency assets of sanctioned individuals and companies;
• concealing the true owner of property and failing to provide necessary information;
• doing business with state enterprises of sanctioned countries;
• providing financial services or legal advice;
• failing to comply with travel bans;
• violating arms embargoes.

The directive classifies sanction violations as a criminal offense, carrying a prison sentence of up to five years in all EU member states.

The new measures aim to prevent the circumvention of restrictions by Russia. According to the European Commission, inconsistent enforcement of EU sanctions has undermined their effectiveness.

The document awaits approval by the EU Council. It will come into effect 20 days after publication in the Official Journal of the European Union. Member states will have one year to incorporate its provisions into national law.

In April 2022, the EU banned crypto companies from providing digital asset-related services to Russian residents with deposits exceeding €10,000.

Later, the European Parliament completely prohibited servicing their cryptocurrency wallets within the eurozone and owning any amount of such assets.

The EU, along with the US, also imposed sanctions against several Russian banks, effectively banning transfers from cards issued by them.

In December 2023, the European Union agreed on a twelfth package of sanctions against Russia, which, among other things, prohibits Russians from owning, controlling, or holding any positions in the management bodies of companies providing cryptocurrency services.