CHD ¦ Bill 8579: Luxembourg Criminalises Sanctions Violations and Circumvention

Luxembourg turns EU sanctions breaches into precisely defined crimes

Bill 8579 transposes Directive (EU) 2024/1226 on criminal offences and penalties for violations of EU restrictive measures, for which the deadline was 20 May 2025. The Minister of Justice filed the bill on 11 July 2025. The Council of State gave its opinion with formal objections on 3 February 2026, and the Justice Committee adopted four amendments on 2 July 2026, which now await the Council of State’s further opinion. In place of Luxembourg’s broad offence of not complying with a restrictive measure, the bill lists specific violations and acts of circumvention. It also raises penalties in trade matters, introduces fines of up to 5% of worldwide turnover for companies, makes certain grossly negligent breaches a crime and creates a committee to coordinate prosecutors with the authorities that implement sanctions.

Why the EU harmonised sanctions crimes

The directive is based on Article 83 TFEU and sets minimum rules for defining sanctions offences and their penalties. Member states had taken very different approaches: some, Luxembourg among them, punished violations through a general reference to non-compliance with restrictive measures, while others listed prohibited conduct in detail. The directive’s list covers making funds or economic resources available to a designated person, failing to freeze them, allowing a designated person to enter or transit, prohibited transactions with third countries, trade in prohibited goods, prohibited financial and other services, breaches of authorisation conditions and circumvention. It also deals with incitement, aiding and attempt, aggravating and mitigating circumstances, jurisdiction, limitation periods, freezing and confiscation, and cooperation between authorities.

Luxembourg applies the new rules to all restrictive measures, whether they stem from the UN, the EU or national law. Trade sanctions remain in the export control law of 27 June 2018, and financial sanctions in the law of 19 December 2020 on the implementation of restrictive measures in financial matters.

Bastian Schwind-Wagner _Follow

"Bill 8579 replaces a single, broad offence with a precise catalogue of sanctions crimes. That gives prosecutors and firms more legal certainty, but it also raises the stakes: companies face fines of up to 5% of worldwide turnover, and penalties can be doubled when an AML/CFT professional commits the offence in the course of business.

For compliance teams, failing to freeze, making funds available and hiding who really owns or controls assets are now named crimes. Screening, ownership and control analysis and a documented decision trail become the first line of defence against criminal liability, while the Council of State still has to give its view on the amendments."

The new list of financial sanctions offences

Article 10 of the 2020 law is rewritten. The listed violations are making funds or economic resources available to a designated person, entity, body or group; failing to freeze funds that such persons own, hold or control; concluding or continuing prohibited transactions with a third country or with entities it owns or controls; providing prohibited financial services or carrying out prohibited financial activities; and breaching the conditions of an authorisation granted by the Minister of Finance. Following a remark by the public prosecutors, the amendments add the prohibited sale, supply, transfer or export of banknotes. That restriction, found in Article 5decies of Regulation (EU) 833/2014, would otherwise have fallen outside the new list.

Circumvention covers using or transferring frozen funds in order to conceal them, giving false or misleading information to hide that a designated person owns or benefits from funds that should be frozen, a designated person’s failure to report its funds to the authorities, and failing to provide required information on frozen or unfrozen funds of designated persons obtained in a professional activity. The public prosecutors pointed out that the courts already treat circumvention, as the Court of Justice defined it in Afrasiabi, as non-compliance under the 2020 law. A closed list may therefore narrow what can be prosecuted.

Trade sanctions and the new circumvention offence

Article 58 of the export control law now lists allowing a listed person to enter or transit Luxembourg, prohibited transactions with third countries, prohibited trade in goods and related brokering or technical assistance, prohibited non-financial services and breaches of the conditions of a ministerial authorisation. The government’s text contained no circumvention offence for trade sanctions. After the prosecutors warned that this would leave such conduct unpunished, the amendments add one: knowingly carrying out or taking part in acts that aim at or result in evading a restrictive measure, even where those acts are not a violation as such. The example given is exporting goods to a third country in the knowledge, and with the intention, that they will be re-exported to a restricted destination. A residual category captures restrictions that fit none of the listed types, such as the ban on broadcasting certain media content in Article 2f of Regulation (EU) 833/2014.

Penalties for individuals and companies

For financial sanctions offences, individuals face eight days to five years in prison and a fine of €12,500 to €5,000,000. For trade sanctions the range is eight days to five years and €1,250 to €5,000,000, or eight days to three years and €12,500 to €1,250,000 for allowing a listed person to enter or transit. Trade sanctions fines currently run from €251 to €250,000, so the increase is considerable. Under both laws, the fine could also be raised to four times the amount involved where the offence produced a “substantial financial gain”. The Council of State objected formally because that term is not defined, and the amendments remove the aggravation from both laws.

Companies face a fine of €12,500 up to 5% of their worldwide turnover in the year before the offence, or up to 1% for the reporting failures. Where turnover cannot be determined from official publications freely accessible to the Luxembourg authorities, or is below €12,500, the court can impose €12,500 to €40,000,000, or up to €8,000,000 for the reporting failures. Penalties can be doubled where the offence forms part of the activities of an association or organisation, or where a professional subject to AML/CFT obligations commits it in the course of business. A conviction will also allow exclusion from public procurement and concession procedures.

Luxembourg does not use the directive’s option to exempt conduct involving less than €10,000, nor does it adopt the €100,000 threshold the directive uses for minimum maximum prison terms. It leaves minor cases to prosecutorial discretion.

Gross negligence for military and dual-use goods

As the directive requires, trading in breach of sanctions in goods on the EU Common Military List or in dual-use items listed in Annexes I and IV of Regulation (EU) 2021/821 is also punishable when committed through gross negligence, with the same penalties as intentional conduct. The bill does not define gross negligence. The commentary describes it as conduct without fraudulent intent but showing a lack of the foresight and precaution that should have been applied. The Superior Court of Justice, the Public Prosecutor General, the public prosecutors, the Bar and the Chamber of Commerce all point to how hard it is to separate simple from gross negligence, and the Chamber of Commerce asks for lower penalties than for intentional breaches.

A new coordination committee

A committee of 24 members, co-chaired by the representatives of the foreign affairs and finance ministers, will bring together ministries, the CRF, the prosecution services, the police, customs, the AED, the CSSF and the Commissariat aux assurances. It sets common priorities for criminal and administrative enforcement, exchanges strategic information and can be consulted on individual investigations without prejudice to the secrecy of investigations. Following the Council of State and the prosecutors, the amendments make its deliberations confidential. The Bar asks what consultation in individual criminal cases means for the separation of powers, and the Chamber of Commerce wants a permanent observer seat for the private sector. Both the Chamber of Commerce and the Public Prosecutor General ask how the new body fits with the committee for monitoring financial sanctions created by the law of 20 July 2022.

Lawyers, supervisors and other changes

An amendment taken from the directive provides that lawyers need not report information received from clients while assessing their legal position or defending them. Both laws now reach Luxembourg nationals acting abroad and persons on board Luxembourg-registered aircraft and ships, and a good-faith disclosure to the competent authorities does not breach contractual or professional secrecy. The CSSF and the Commissariat aux assurances will be able to specify by regulation or circular the measures supervised entities must take. The draft extended this power to all supervisors, but the Council of State objected because the AED has no legal personality and cannot be given regulatory power. The plan to add trade sanctions offences to the list of predicate offences in Article 506-1 of the Criminal Code was dropped once the law of 12 December 2025 replaced that list with all crimes and misdemeanours.

What compliance teams should take from it

Banks, funds, payment institutions and other obliged entities gain legal clarity and face heavier exposure at the same time. Failing to freeze, making funds available and hiding designated persons’ ownership are named crimes, the penalty for an AML/CFT professional can be doubled, and companies face turnover-based fines. The prosecutors also warn that administrative fines imposed by supervisors for the same facts could raise a ne bis in idem problem. Sanctions screening, ownership and control analysis and a documented decision trail now protect directly against criminal liability. The bill is still before Parliament, and the Council of State’s opinion on the amendments may bring further changes.

Dive deeper

• CHD ¦ Projet de loi 8579 – Dossier consolidé (création d’un comité de coordination et de coopération en matière de mesures restrictives et transposition de certaines dispositions de la directive (UE) 2024/1226 relative à la définition des infractions pénales et des sanctions en cas de violation des mesures restrictives de l’Union) ¦ Link