“We are aware there is an implementation issue” with the European financial sanctions regime at Member State level, said John Berrigan, the European Commission’s Director-General for Financial Services, at a public hearing of the European Parliament’s Committee on Economic and Monetary Affairs, on Thursday 25 September.
Questioned by Eero Heinäluoma (S&D, Finnish), Mr Berrigan said it was necessary to “build [administrative] capacity” in the Member States so that the national units responsible for enforcing European sanctions have sufficient resources to adapt to the increased workload as the EU adopts new financial sanctions, in particular those targeting Russia for its military aggression against Ukraine. The European official noted that all Member States had legally set up their national units, although they were not operational in all Member States.
Paulis Iļjenkovs, Deputy Director of Latvia’s Financial Intelligence Unit (FIU), believes that European financial sanctions can “work only if implementation and enforcement at national level are effective, uniform and coordinated”. He also called for a consistent interpretation of the rules in the EU, including the possibility of seizing subsidiaries of groups owned by Russian oligarchs, hoping that the European Anti-Money Laundering Authority (AMLA) would be able to play this role.
Several MEPs - Luděk Niedermayer (EPP, Czech), Marlena Maląg (ECR, Polish) - questioned the Commission representative on the forthcoming proposal to grant a loan to Ukraine by mobilising Russian public assets tied up in the EU. This loan will only be repaid once Russia has compensated Kyiv for the destruction committed in Ukraine (see EUROPE 13713/2).
Without going into detail, Mr Berrigan stressed several times that the proposal would not seek to confiscate the Central Bank’s assets. “These assets enjoy sovereign immunity under international law”, he argued, adding that the EU sanctions regime is designed to put pressure on a state while remaining “temporary and reversible”. And, in his view, going back on this principle would force the EU to treat other sovereign assets in the same way, thereby jeopardising the stability of Europe’s position as a financial centre.
To Billy Kelleher (Renew Europe, Irish), who questioned whether Member States were really doing all they could to freeze the assets of Russian oligarchs in the EU, Mr Berrigan pointed out that a ‘seize and freeze’ task force was helping EU countries to take action. Here again, he stressed, it is not possible to confiscate these assets, unless it is proven, through legal proceedings, that they originate from criminal activities.
Mr Iljenkovs referred to a FATF recommendation that facilitates the confiscation of suspicious assets without the need for a court conviction. It is therefore “easier” to act while remaining within the law, he said.
As for the possible inclusion of Russia on the EU list of high-risk jurisdictions for combating money laundering and terrorist financing (see EUROPE 13677/9), mentioned by Mr Heinäluoma, Mr Berrigan confirmed that the Commission was trying to put together a file on this issue. However, proving that Russia is in breach of EU rules remains complicated, not least because Moscow has been “suspended but not excluded” from the FATF and in situ inspections are impossible, he stated.
Furthermore, in response to a question from Jussi Saramo (The Left, Finnish), he felt that Russia’s inclusion on the EU list would be “rather symbolic for the EU”, since under the financial sanctions regime, European banks are no longer permitted to carry out financial transactions with their Russian counterparts. (Original version in French by Mathieu Bion)