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Overview of Council Regulation (EU) 2024/2642 of 8 October 2024

This Regulation establishes a framework for imposing restrictive measures in response to Russia’s destabilizing activities that threaten democracy, the rule of law, and security within the European Union (EU), its Member States, international organizations, or third countries.

Key Provisions

Article 1: Definitions

This article provides definitions for terms used throughout the Regulation, ensuring clarity and consistency. Key definitions include:

“Funds”: Financial assets and benefits of every kind, such as cash, deposits, securities, interest, dividends, and credits.
“Economic resources”: Assets of any kind that are not funds but can be used to obtain funds, goods, or services.
“Freezing of funds”: Preventing any movement, transfer, or use of funds that would result in changes enabling their use.
“Freezing of economic resources”: Preventing the use of economic resources to obtain funds, goods, or services.
“Territory of the Union”: Territories of Member States where the Treaty on European Union applies, including airspace.

Article 2: Freezing of Funds and Economic Resources

Paragraph 1: Imposes a freeze on all funds and economic resources belonging to individuals and entities listed in Annex I.
Paragraph 2: Prohibits making funds or economic resources available, directly or indirectly, to those listed.
Paragraph 3: Details criteria for listing individuals and entities, including those responsible for actions undermining democracy, the rule of law, or security in the EU or associated with such activities.

Article 3: Derogations for Basic Needs and Legal Services

Allows competent authorities to authorize the release of certain frozen funds or resources under specific conditions, such as:

Meeting basic needs like food, rent, medicines, and utilities.
Paying reasonable professional fees for legal services.
Covering service charges for routine holding or maintenance of frozen assets.
Addressing extraordinary expenses, subject to notification requirements.
Supporting official purposes of diplomatic missions or international organizations.
Ensuring the functioning of diplomatic representations or international organizations in Russia.
Providing necessary electronic communication services by EU telecommunication operators.

Article 4: Exemptions for Humanitarian Assistance

Paragraph 1: Specifies that the prohibitions do not apply to the provision of funds or resources necessary for humanitarian assistance or activities supporting basic human needs by designated organizations, including the UN, international organizations, and certain NGOs.
Paragraph 2: Notes that this exemption does not apply to persons identified with an asterisk in Annex I.
Paragraph 3: Allows competent authorities to authorize the release of funds or resources necessary for humanitarian efforts.
Paragraph 4: Establishes that if no negative decision is made within five working days of a request, the authorization is considered granted.
Paragraph 5: Requires Member States to inform others and the Commission of any authorizations granted under this article.

Article 5: Legal Decisions and Frozen Assets

Permits the release of frozen funds or resources to satisfy claims based on judicial or administrative decisions made before the listed person or entity was added to Annex I, provided certain conditions are met, including that the decision is not in favor of a listed individual or entity.

Article 6: Pre-existing Contracts and Obligations

Allows competent authorities to authorize payments due under contracts or obligations that predate the listing in Annex I, ensuring that prior agreements can be honored under specific conditions.

Article 7: Handling of Frozen Accounts

Paragraph 1: Clarifies that financial institutions may credit frozen accounts with funds transferred by third parties, provided these additions are also frozen.
Paragraph 2: Specifies that interest, dividends, or payments due under contracts or judicial decisions can be added to frozen accounts, but these funds must remain frozen.

Article 8: Obligation to Provide Information

Requires individuals and entities to:

Immediately supply information that facilitates compliance, such as details of frozen accounts and amounts, to the competent authority.
Cooperate with competent authorities in verifying this information.

This ensures transparency and aids in the effective implementation of the Regulation.

Article 9: Prohibition of Circumvention

Paragraph 1: Prohibits participating knowingly and intentionally in activities that circumvent the restrictive measures.
Paragraph 2: Obligates listed individuals and entities to report funds or resources within the EU jurisdiction and cooperate with competent authorities.
Paragraph 3: States that failure to comply with reporting requirements is considered participation in circumvention activities.

Article 10: Protection from Liability

Paragraph 1: Provides that those who freeze funds or refuse to make them available, in good faith belief of compliance with the Regulation, are not liable for their actions unless negligence is proven.
Paragraph 2: Clarifies that no liability arises for those unaware and without reasonable suspicion that their actions infringed the Regulation.

Article 11: Non-satisfaction of Certain Claims

Specifies that no claims, including indemnities or guarantees, connected to contracts affected by the restrictive measures shall be satisfied if made by listed individuals or entities, preventing them from seeking compensation due to the imposed measures.

Article 12: Information Sharing

Mandates that the Commission and Member States share information regarding actions taken under the Regulation, such as frozen funds, granted authorizations, violations, enforcement actions, and relevant court judgments, to ensure cohesive application across the EU.

Article 13: Amendments to Annex I

Outlines the procedure for adding individuals or entities to Annex I:

The Council decides on listings and communicates decisions, including grounds for listing.
Provides an opportunity for listed parties to submit observations.
Requires regular reviews of the list, at least every 12 months.

Article 14: Content of Annex I

Specifies that Annex I must include the grounds for listing and sufficient identifying information about listed individuals and entities, such as names, dates of birth, nationalities, addresses, and for legal entities, registration details.

Article 15: Penalties

Requires Member States to establish rules on penalties for infringements of the Regulation. Penalties must be effective, proportionate, and dissuasive. Member States must also provide measures for confiscating proceeds from infringements and notify the Commission of these rules.

Article 16: Data Protection

Addresses the processing of personal data by the Council, the Commission, and the High Representative to carry out tasks under the Regulation. It ensures compliance with data protection regulations and designates these bodies as “controllers” for data processing purposes.

Article 17: Competent Authorities

Paragraph 1: Requires Member States to designate competent authorities responsible for implementing the Regulation and make their contact details available on websites listed in Annex II.
Paragraph 2: Mandates that Member States notify the Commission of their competent authorities and any changes thereafter.
Paragraph 3: Provides contact details for communications with the Commission.

Article 18: Use of Information

Stipulates that any information provided or received under the Regulation shall be used solely for the purposes for which it was communicated, safeguarding confidentiality and data protection.

Article 19: Territorial Scope

Defines the territorial application of the Regulation, stating it applies:

Within the EU, including its airspace.
On board any aircraft or vessel under a Member State’s jurisdiction.
To nationals of Member States, whether inside or outside the EU.
To legal entities incorporated under Member State laws, whether inside or outside the EU.
To any legal entity concerning business conducted wholly or partly within the EU.

Article 20: Entry into Force

States that the Regulation enters into force on the day following its publication in the Official Journal of the European Union and is binding in its entirety across all Member States.

Annexes

Annex I: Listed Individuals and Entities

Contains the list of natural and legal persons, entities, and bodies subject to the restrictive measures outlined in Article 2. This annex is crucial as it specifies who is affected by the asset freezes and prohibitions.

Annex II: Competent Authorities and Contact Information

Provides a comprehensive list of websites and contact details for the competent authorities in each Member State responsible for implementing the Regulation. It also includes the address for notifications to the European Commission.

Conclusion

This Regulation establishes a legal framework for imposing restrictive measures against individuals and entities involved in activities undermining democracy, the rule of law, and security within the EU or in third countries, specifically in view of Russia’s destabilizing actions. It outlines detailed procedures for freezing assets, exemptions, obligations of concerned parties, and mechanisms for enforcement and information-sharing among Member States and EU institutions.

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