Bribery, misappropriation, embezzlement, abuse of functions, trading in influence… Corruption has many faces. It fuels poverty and environmental destruction, threatens democracies and deprives millions of people around the world of prospects in life. “Recently, a single person stole 500 million dollars of assets from one of the poorest countries in the world. That is outrageous”, says Dr Iryna Bogdanova, a postdoctoral researcher at the University’s Department of Law. She refers to the case of a former minister in Bangladesh, who is suspected of having bought luxury real estate in London, Dubai, and New York with public funds.
Iryna Bogdanova holds a PhD degree in law from the World Trade Institute, University of Berne, with her dissertation dedicated to the study of economic sanctions, their effectiveness and legality under international law. The young scholar and Silvia Allegrezza, Associate Professor of Criminal Law at the University of Luxembourg, are part of a consortium covering eight EU member states and more than 30 countries including associate partners, through the KLEPTOTRACE project. This two-year project, funded by the European Union, is built around five concrete actions to tackle the challenges of transnational corruption.
Economic sanctions as political tools
EU sanctions are part of the Common Foreign and Security Policy and their operation involves many actors and EU entities. Sanctions include prohibitions on imports or exports, investment restrictions, freezing assets on foreign bank accounts, or travel bans, and can be imposed on individuals, non-state actors such as companies, governments or entire countries. “Being able to impose sanctions against high-level corruption worldwide is not only important for our economic security. It is also politically important for the EU as an international actor. The Union needs to live up to its principles and values such as the rule of law and human rights”, explains Prof. Allegrezza, who is also a member of an EU expert group on criminal law.
“Moreover, there are increasing signs that regimes based on kleptocracy are becoming autocratic regimes and military threats”, adds Iryna Bogdanova. Russia’s invasion of Ukraine and the EU’s massive economic sanctions against Russian energy resources and assets are the best example.
The Luxembourg team is leading the fourth action of the KLEPTOTRACE project: the assessment of the current EU sanction regimes and their limitations as well as the assessment of national enforcement systems. They will also propose policy and legal recommendations to render EU sanctions more effective. As a first milestone, the University of Luxembourg team analysed the legal constraints imposed by both international and EU law on the adoption and use of sanctions, called EU restrictive measures. Their first report was published in June 2024.
Among other aspects, the researchers investigated how human rights considerations influenced the design of EU restrictive measures. The experts showed, for example, that this led to a shift from comprehensive economic sanctions to targeted sanctions in order to limit the negative impact on the civilian population. Also, the Court of Justice of the EU plays an instrumental role in maintaining human rights of the sanctions targets by allowing them to challenge such measures.
A general EU sanction regime in the works
However, unlike countries such as the US, Canada or the UK, the EU has no legal framework for imposing sanctions for significant acts of corruption worldwide. Currently, only country-specific measures have been adopted. This makes decisions highly political and difficult. The researchers are now checking the feasibility of a new, general EU sanctions regime against high-level corruption activities wherever they happen. Such a new legal framework is currently under discussion, following a proposal by the President of the European Commission, Ursula von der Leyen. The Luxembourg researchers’ policy recommendations are planned to be published in February 2025.
As the home to one of Europe’s major international financial centres, Luxembourg has a particular interest in not permitting its facilities to be abused. Moreover, new European sanctions rules would not cause the country too many headaches, according to the law experts. “Luxembourg has a very big and knowledgeable compliance sector with experts who know how to deal with sanctions”, says Iryna Bogdanova.
Despite the fact that such a new regime requires an unanimous decision by the Council, and despite the many legal steps and stakeholders involved, the researchers are confident, as Prof Allegrezza emphasizes: “If the political will is there, it can happen very quickly.”
