EU Directive on violation of restrictive measures (2024)
A 2024 directive harmonizing across the EU the criminal definition of sanctions violations and the penalties for individuals and companies, including circumvention.
Until 2024, EU sanctions were decided at Union level but their violation was punished by each member state under its own law: some treated it as a serious crime, others as an administrative offense, and penalties varied widely. This inconsistency left gaps for circumvention. Directive (EU) 2024/1226 of 24 April 2024 harmonizes the regime. It defines conduct amounting to criminal offenses when intentional: making funds available to a designated person, failing to freeze assets, trading in prohibited goods, providing prohibited financial or insurance services, and circumventing measures, notably through structures concealing the beneficiary. Some violations are also punishable for serious negligence regarding military goods. It sets minimum penalties, prison terms for individuals, fines that may be calculated as a percentage of worldwide turnover for companies. Member states had to transpose it in 2025. For insurance, it matters in two ways. Insurers are themselves exposed, since providing cover to a sanctioned person is an offense. And it makes directors' insurance more sensitive: a criminal fine is not insurable, and defense costs become the core of the cover.
Textbook case: a Dutch freight forwarder arranges shipments of electronic components to Russia through a Turkish front company. Prosecuted after transposition of the directive, due by May 20, 2025, it faces a fine calculated on worldwide turnover; its directors' liability policy covers only their defense costs.
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