Malta joins EU countries opposing penalties on Russian sanctions reporting

Malta has joined a group of 13 countries – including Austria, Germany, Belgium, the Czech Republic, France, Italy, Latvia, and Portugal – who are objecting to a Commission proposal for fines for EU countries for failing to meet reporting obligations on Russian state assets.

The European Commission’s plan for penalties was part of its 10th sanctions package against Russia, but failed to bet unanimous backing in the EU Council.

The Commission’s goal is to map Russia’s frozen assets, including what portion of the nearly $300 billion in Russian foreign reserves that are frozen in G7 and EU countries is held in the bloc, where, and by whom.

Malta joined a phalanx of countries that requested legal clarifications on the proposals, although the country is not against the proposal.

The Commission wanted sweeping obligations on “natural and legal persons, entities and bodies” to report on the whereabouts, market value and type of funds belonging to sanctioned entities, including the Central Bank of Russia, which have been frozen by national authorities.

The failure to report on these obligations would massive fines fines of up to 10% of global annual turnover for legal entities and €50,000 for individuals who willingly or negligently fail to report this information. A lower €5,000 fine would prevail for individuals who compel asset holders to cooperate.

Sanction implementation is a national competence, and such fines can be seen as overreach by the European Commission.

Brussels agreed to take out the fines from the sanctions package, even though they formed a key component for the war anniversary and in coordination with the G7.