Nina M. Hart

Ireland has long maintained a framework for implementing the European Union’s economic sanctions, or restrictive measures, but not prioritised enforcing them.

Currently, Ireland is debating adoption of a bill to implement EU Directive 2024/1226, which requires member states to criminalise certain violations of the EU’s economic sanctions.

Implementing EU obligations is important, but Ireland’s broader enforcement framework for economic sanctions and historic lack of enforcement actions despite several investigations (see e.g. here) raise questions about its long-term capacity to generate and maintain a strong enforcement environment.

At a minimum, effective enforcement requires adoption of penalties sufficient to deter; investment in enforcement resources; development of enforcement strategies; and actual enforcement actions that show consistent enforcement practise.

Although Ireland already criminalises sanctions violations, issues relating to resourcing, messaging and expertise highlight the need for greater debate on how to improve the functioning and credibility of its enforcement regime.

This article first provides an overview of the enforcement framework in Ireland and then focuses on two considerations that may enhance Ireland’s enforcement environment: 1) creation of administrative penalties and 2) implementation changes to improve consistency of messaging about enforcement.

Overview of sanctions enforcement in Ireland

The two statutes used to set penalties for violations of EU sanctions are the European Communities Act 1972 (ECA 1972) and Criminal Justice (Terrorist Offences) Act 2005 (CJA 2005).

The ECA 1972 is the statute most frequently used for setting penalties for EU sanctions violations. Currently, it permits ministers to create indictable offences that may lead to fines of up to EUR 500 000 or imprisonment of no more than three years, or both, as well as summary offences.

Under the Criminal Justice (Terrorist Offences) Act 2005, the Minister for Finance may make regulations to implement financial sanctions.

Breaches of these regulations may lead on conviction on indictment to fines up to €10 million or twice the values of the assets involved in the offence or up to 20 years’ imprisonment, or both, or to conviction of a summary offence.

Under current practice, statutory instruments issued under the ECA 1972 and CJA 2005 all include penalties set at the maximum levels allowed by law.

To oversee enforcement, Ireland has empowered several actors. The Central Bank of Ireland (CBI) is responsible for authorisations related to financial sanctions and may bring summary prosecutions in some cases. The Department for Enterprise, Trade and Employment (DETE) may grant authorisations related to trade sanctions.

Additionally, the An Garda Síochána and Department of Public Prosecutions (DPP) are responsible for investigating and enforcing sanctions violations. Within the Garda Síochána, the National Economic Crime Bureau (GNECB) investigates economic crime, including sanctions offences.

Introducing administrative penalties: a step with multiple benefits

There have been no enforcement actions related to sanctions violations in Ireland to date, raising questions about Ireland’s capacity to enforce EU sanctions. Complicating the criminal penalties-only approach in Ireland are resourcing and expertise constraints on the actors involved in enforcement.

First, despite having summary prosecution powers, the CBI has used them only once and not in relation to sanctions. Not only does this suggest the CBI views these powers as a poor use of its limited resources, but interviews with the author suggest that the CBI is uncomfortable using these authorities for two related reasons: 1) it could lose the case and 2) it lacks familiarity with the procedure.

Second, the GNECB and DPP also face challenges significant resourcing issues, as described in a 2020 review. Moreover, a 2021 assessment found that the Garda Síochána has not addressed “strategic deficits in terms of enabling functions”, including human resources, financial planning and training.

To its credit, Ireland has taken some steps to address these issues, including by enhancing the budgets for both offices and adopting laws to improve Garda organisation and governance (see e.g. here and here).

However, it is important to place these challenges into their broader context. In particular, Ireland has been criticised for not thinking strategically about how to combat cross-border variants of organised crime and illicit finance (see e.g. FATF report 2017).

This critique is especially important given the significant presence of foreign actors in Ireland’s criminal landscape and Ireland’s exposure to financial crime via less-regulated structures such as special purpose vehicles. Academic research and anonymous sources confirm indicators suggesting abuse of these structures to engage in economic crime, potentially including sanctions violations.

Against this backdrop, it is unclear that credible deterrence in Ireland can be achieved through continued reliance solely on criminal penalties. Instead, Ireland should consider adopting administrative penalties for violations as well.

As one stakeholder indicated, there have been some “close shaves” in less heavily regulated sectors, often due to lack of awareness of how sanctions apply. Such cases, if they materialised into violations, might be best addressed via administrative rather than criminal penalties.

Introducing administrative penalties would not only provide greater options for deterring wrongdoing and addressing violations, but it would also potentially allow Ireland to develop a stronger reputation as a sanctions enforcer.

Ireland’s regulatory landscape is arguably already amenable to such a change. First, the penalties could potentially be enforced by the CBI, which has experience with administrative sanctions.

In theory, administrative sanctions authority could be split between the CBI and DETE, as is the case in the United Kingdom (see OFSI and OTSI). However, this would introduce some fragmentation in the enforcement system. Consistency and coherence in enforcement action may therefore indicate instead that a single agency should be responsible for all administrative actions, as in the United States.

Second, given that Ireland already has administrative penalties for other economic regulation infractions, this change would better integrate economic sanctions into the economic crime landscape in Ireland.

An indirect benefit of providing these regulators with administrative enforcement powers is an enhancement in their capacity to provide guidance to the public about how to comply with sanctions. Although these agencies have learned a great deal since the onset of Russia’s full-scale invasion of Ukraine in 2022, there remains a perception in the private sector that they remain on a steep learning curve.

For example, some stakeholders report the CBI often takes the view, “just ask the EU”. In short, because the CBI generally defers to the European Commission’s guidance on how to comply with sanctions, its expectations remain opaque unless the Commission has given a view. Providing administrative power to one or more agencies would sharpen their expertise and perhaps thereby incentivise them to provide more guidance, as such guidance would then serve as evidence of their expectations.

Implementing this approach is not without challenges, but this is no reason for complacency. Moreover, the experiences of other jurisdictions suggest a multi-track enforcement method may prove more effective long-term. For instance, the Netherlands and Canada have proposed or implemented administrative penalties to address the difficulties of relying solely on criminal enforcement. Given Ireland’s enforcement record, these experiences suggest it may benefit from engaging with similar proposals.

Enhancing consistency of messaging around enforcement

Ireland’s current approach to sanctions enforcement sometimes sends inconsistent messages, which may undermine deterrence. As noted above, Ireland’s sanctions penalty landscape is fragmented between two statutes that lead to substantially different penalties (e.g. the maximum terms of imprisonment vary between three to 20 years).

There may be sound justification for adopting greater penalties for terrorist-related sanctions violations than for other sanctions violations. However, some terrorist-related sanctions are still implemented using the ECA 1972, raising the question of whether Ireland has adequately addressed issues of proportionality and deterrence, and done so in a consistent way.

For instance, Council Regulation (EU) 2016/1686 imposes financial sanctions to address terrorist threats from Al-Qaeda, ISIL and associated entities. Similarly, Council Regulation (EC) 2580/2001 imposes financial sanctions to combat terrorism. Penalties for the first regulation are implemented using the ECA 1972 (see e.g. here) while penalties for Council Regulation (EC) 2580/2001 are implemented using the CJA 2005 (see e.g. here).

Why the disparity exists is unclear and highlights that the ECA 1972 was amended in 2007 without public debate about whether the penalties permitted under the Act are appropriate in the sanctions context. Ireland’s consideration of how to implement Directive 2024/1226 offers an opportunity to revisit this overarching penalty structure and eliminate discrepancies to better promote deterrence.

Conclusion

The Irish history of sanctions enforcement is very quiet. While Ireland has been diligent in adopting laws to enable enforcement, practise suggests legal, strategic and political changes need to be made.

Not only would such changes potentially enhance the effectiveness of Ireland’s enforcement system, but they could also benefit Ireland’s credibility and messaging on foreign policy. As a former foreign minister stated, “Irish foreign policy is about much more than self-interest. The elaboration of our foreign policy is also a matter of self-definition.”

And as Ireland continues shaping its role as an active member in European foreign policy, leveraging its capacity for transformation to revisit its approach to sanctions enforcement should certainly be a part of this journey.

• Nina M. Hart is a visiting lecturer at King’s College London and previously advised policy-makers on legal issues related to international affairs. This opinion piece reflects data and arguments that form part of her larger research project into economic sanctions enforcement in the European Union, United Kingdom, and United States.