Practical and legal implications in Poland following the EU harmonization of enforcement and penalties for sanctions violations

On 24 April 2024, the EU adopted a new directive (Directive (EU) 2024/1226 of the European Parliament and of the Council) which establishes EU-wide rules for defining criminal offences and penalties related to the violation of EU sanctions (the "Directive"). Member States are required to implement the Directive into national law by 20 May 2025.

In Poland, the degree of effort for implementation can be considered comparatively high, especially because violations of EU sanctions are considered either an administrative offense or a criminal offense, only if they are explicitly incorporated into national law.

As to current legislation, Poland enforces certain EU sanctions with the Law on the National Revenue Administration ("NRA Law"), which provides that an entity or a person who violates these EU sanctions can be subject to an administrative penalty in the maximum amount of PLN 20 million (approx. EUR 4,6 million) ("Administrative Penalty").

Poland also adopted its own law ("Polish Sanctions Law"), which generally (i) mimics the personal sanctions set out in Regulation 765/2006, Regulation 833/2014 and Regulation 269/2014, (ii) indicates to whom these sanctions apply, and (iii) implements measures to ensure compliance with the EU and Polish sanctions. Article 6(2) of the Polish Sanctions Law also establishes the Administrative Penalty for certain violations of the Polish sanctions. In addition, under Article 15 of the Polish Sanctions Law, a violation of the EU sanctions mimicked in the Polish Sanctions Law or the Polish Sanctions Law itself is a crime subject to at least 3 years and up to 30 years of imprisonment ("Criminal Penalty").

The Polish legislator has recently suggested that it intends to (i) update the Polish Sanctions Law to align it with the new sanctions packages that have been adopted against Russia since April 2022, and (ii) adopt a comprehensive new law, which would fully reflect the EU sanctions regime, including the rules for defining criminal offences and penalties set out in the Directive.

However, as of the date of this alert, no draft law regarding explicitly the implementation of the Directive has been proposed and the enforcement of sanctions in Poland is rather undeveloped. Thus, the need for a comprehensive implementation of the Directive is pressing.

In detail:

First, there is a need for implementation regarding the maximum level of fines that can be imposed on companies, as the current fixed maximum limit of the Administrative Penalty in Poland is only PLN 20 million (approx. EUR 4,6 million) (see Article 6(2) of the Polish Sanctions Law and Article 143e of the NRA Law) and therefore significantly lower than required by the Directive.

As regards the minimum levels for the maximum term of imprisonment set out by the Directive, it is uncertain whether there will be any changes in Polish law, where the Criminal Penalty for violation of EU sanctions is no less than 3 years' imprisonment, with no maximum term set, meaning that it can last up to 30 years. Given that the Directive only requires that a maximum term of imprisonment for certain offences should be at least (i) 1 year, (ii) 3 years, or (iii) 5 years, the Polish legislator could potentially establish special maximum terms for imprisonment pursuant to the Directive.

There may also be changes in Polish law regarding what constitutes a criminal offence. Even if Polish criminal and administrative offence law already covers a wide range of EU sanctions, the legislator will have to carefully review the current Polish Sanctions Law. As violation of sanctions may be either an administrative offence or a criminal offence, the Polish legislator will have to examine whether the existing criminal provisions (See Article 15 of the Polish Sanctions Law) already adequately reflect the offences and prohibitions on circumvention contained in Article 3(1) of the Directive, or whether there is a need to introduce new criminal offences covered by the Directive into the Polish legal system and/or criminalize acts that previously constituted administrative offences. This is also necessary in order to meet other specific requirements of the Directive, such as criminal liability for gross negligence for criminal offences specified in Article 3(3). In this respect, a tightening of Polish criminal law seems possible. As regards the requirement to criminalize the circumvention of specific EU sanctions, it is likely that some of the specified acts of circumvention mentioned in the Directive will be considered as already covered by the existing Polish criminal provisions, as Article 15(2) of the Polish Sanctions Law, Criminal Penalty applies where a person engages in activities the object or effect of which is to circumvent prohibitions.

Poland will most likely meet all the above requirements by introducing a special new sanctions law including provisions relating exclusively to the scope of the Directive, as announced by the Polish legislator in April 2024.

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