On 14 June 2023, Law Decree No 69 of 13 June 2023 entered into force, amending inter alia Legislative Decree No 221 of 15 December 2017. Law Decrees must be converted into law by the Italian Parliament within 60 days from the date of publication, lest becoming ineffective.

Legislative Decree No 221/2017 is the legislative act laying down the Italian rules on:

• the movement of dual-use goods as defined by Regulation (EU) 2021/821 (the ‘Dual Use Regulation’) and of goods subject to Regulation (EU) 2019/125 (the ‘Anti-Torture Regulation’), and
• the penalty system relating to the above matters and to restrictive measures imposed by the European Union (e.g, the restrictive measures against Russia imposed by Regulation (EU) No 833/2014).

The newly adopted Law Decree No 69/2023 introduces the most significant changes with respect to EU restrictive measures. In particular, the new decree turns infringements of import bans imposed by EU restrictive measures into criminal offences. It hence lays down a comprehensive domestic regulation on the subject of EU sanctions, which had been inconsistent and partially illogical. For example, until the entry into force of Law Decree No 69/2023, Italian law provided for highly unbalanced sanctions, from mere administrative sanctions of no excessive importance for restricted import to criminal sanctions of significant severity for restricted export.

Please find summarised below the main amendments introduced by Law Decree No 69/2023 on dual-use items and EU restrictive measures, starting with those affecting the penalty system for infringement of EU provisions.

• Amendments to the penalty system relating to the violation of EU restrictive measures

Previously, Article 20 of Legislative Decree No 221/2017 provided for the imprisonment between two and six years for any person engaging in exportation, brokering or technical assistance operations prohibited under EU restrictive measures. This provision has been modified regarding the prohibited conducts and the penalty provided for in the event of infringement of EU restrictive measures. Consequently, Article 20 of Legislative Decree No 221/2017 now imposes imprisonment of up to six years (i.e. the previous reference to the minimum of two years has been deleted) for anyone who, in breach of EU restrictive measures, carries out the following operations:

• Export or import of restricted products;
• Provision of services of any kind subject to EU restrictive measures;
• Participation in any capacity in public procurement or concession contracts procedures subject to EU restrictive measures.

With specific reference to Russia, therefore, it is now clear that infringements of the import bans from Russia and the provision of services or goods restricted to Russian entities under Regulation (EU) No 833/2014 are now a criminal offence whereas in the past it carried only mild administrative fines.

Conversely, infringement of asset freezes and the prohibition to make funds and resources available (the so-called ‘individual sanctions’, among which those with respect to Russia referred to in Regulation (EU) No 269/2014) is still punishable by an administrative penalty between EUR 5.000 and EUR 500.000 under Article 13 of Legislative Decree No 109/2007.

In addition, carrying out the above described import/export activities without the required license, or with a license obtained by providing false declarations or documentation, is now punishable by imprisonment of up to six years and a fine between EUR 25.000 and EUR 250.000 (see Article 20(2) of Legislative Decree No 221/2017). The same applies to the performance of restricted operations in breach of the requirements laid down in the granted authorisation, which is currently punishable by imprisonment of up to four years and a fine ranging between EUR 15.000 and EUR 150.000. Under the new Law Decree, in the event of such infringements, the imprisonment and the fine are penalty measures to be applied together, whereas in the preceding system they were alternative.

Under the new paragraph 3-bis, an administrative penalty ranging between EUR 15.000 and EUR 90.000 has been introduced for violations of some procedural requirements set out by the applicable legislation (e.g. notification to the Authority of changes to the data contained in the application for authorisation, retention of the relevant documentation, submission of the requested documentation to the Authority).

A detailed comparison between the previous rules on penalties and those currently in force is provided in the Appendix at the end of this document.

• Amendments to the penalty system relating to the breach of the obligations imposed by the Dual Use Regulation

The new Decree brings a number of innovations. Firstly, the exportation of dual-use items without the necessary authorisation, or with an authorisation obtained with false information, is now punishable by imprisonment of up to six years and a fine ranging between EUR 25.000 and EUR 250.000 (see Article 18(1) of Legislative Decree No 221/2017). The same applies to transactions in breach of the requirements laid down in the authorisation, which is punishable under the Law Decree by imprisonment of up to four years and a fine between EUR 15.000 and EUR 150.000. Once again, Italian law now provides that the imprisonment and the financial penalty are to be applied together, whereas they were previously alternative.

In addition, under amended Article 18(3), operators who do not inform the Italian Competent Authority (i.e. the Ministry of Foreign Affairs and International Cooperation, National Authority – UAMA) when the conditions for the application of the catch-all clauses laid down in the Dual Use Regulation are met can be subject to up to two years’ imprisonment and a fine of between EUR 15.000 and EUR 90.000.

With reference to the application of the catch-all clauses, Article 9 of Legislative Decree No 221/2017 has also been amended by introducing a new undertaking for exporters, who are obliged to notify the National Authority in case they “suspect” that a particular item not included in the list attached to Regulation (EU) 2021/821 is destined to the “proliferation” activities described under Art. 4 par. 1 of Regulation (EU) 2021/821. To be noted is that while the Regulation requires actual knowledge of the proliferating purpose of the export, Italian Law simply requires the existence of a “suspect”.

Finally, the failure to submit biannual reports on the use of general authorisations with scope applicable to the Union (‘UGEA’) and Italy (national, ‘AGN’) is now punished by means of an administrative fine ranging between EUR 15.000 and EUR 90.000, pursuant to the new Article 18(4)(c).

The Italian government, however, did not make any reference to the case in which the same omissive conduct is connected to a global individual authorisation.

A detailed comparison between the previous rules on penalties and those currently in force is provided for by the Appendix at the end of this document.

• Compulsory seizure

While in the previous version of Legislative Decree No 221/2017 various articles, including article 18 and article 20, individually provided for the compulsory seizure of the goods involved in the criminal activity, the newly amended Legislative Decree No 221/2017 has gathered all these provisions in a single article, article 21-bis.

Contrary to the previous version of the Legislative Decree, the new article 21-bis provides that – whenever it is not possible to seize goods, money or any other possession resulting from the criminal activities – the judge may order the seizing of other sums of money, other goods or possessions having an equal value and owned by the convicted person. It is important to note that such seizure can affect also goods and/or other resources indirectly owned by the convicted person.

• Amendments to the authorisations and other relevant aspects

The amendments introduced by Law Decree No 69/2023 also changed the authorisation rules for exportations regulated by Legislative Decree No 221/2017.

In this respect, the articles on individual specific authorisations (see Article 10 of Legislative Decree No 221/2017) and individual global authorisations (see Article 11 of Legislative Decree No 221/2017) have been amended. In particular, the new Articles 10 and 11 specify that such authorisations may be granted for a maximum period equal to that provided for in the Dual Use Regulation, that is to say, for a maximum of two years.

Finally, the new paragraph 2a of Article 15 of Legislative Decree No 221/2017 introduced a new authorisation requirement with regard to intra-EU transfers of classified materials or information included in dual-use items, which have been subject to prior authorisation by the Department of Security Information (DIS).

Studio Legale Padovan has more than 15 years of experience in dual use and restrictive measures in the EU towards third countries. We remain at your full disposal for any clarification on the new provisions and to support commercial and financial operators in updating risk analyses and defining appropriate company controls to prevent violations of the applicable laws and regulations.

 

 

Appendix

COMPARATIVE TABLE ON THE AMENDMENTS TO THE DOMESTIC PENALTY SYSTEM FOR THE VIOLATION OF THE OBLIGATIONS UNDER T“E “DUAL ”SE” REGULATION AND THE EU REGULATIONS IMPOSING RESTRICTIVE MEASURES

Relevant article of Legislative Decree 221/2017	Conduct	Previous penalty	Penalty in force
Article 18(1)	Exportation of dual use products and/or provision of related brokering services withoutout the necessary authorisation or with an authorisation obtained with false information	Imprisonment from two to six years or fine ranging from 25.000 to 250.000 EUR	Imprisonment up to six years and fine ranging from 25.000 to 250.000 EUR
Article 18(1)*	Provision of technical assistance with reference to dual use products without the necessary authorisation or with an authorisation obtained with false information	Not regulated under Legislative Decree 221/2017	Imprisonment up to six years and fine ranging from 25.000 to 250.000 EUR
Article 18(2)*	Exportation of dual use products and/or provision of related brokering services in breach of the obligations under a granted authorisation	Imprisonment from one to four years or fine ranging from a 15.000 to 150.000 EUR	Imprisonment up to four years and fine ranging from 15.000 to 150.000 EUR
Article 18(2)*	Technical assistance with reference to dual use goods in breach of the obligations under a granted authorisation	Not regulated under Legislative Decree 221/2017	Imprisonment up to four years and fine ranging from 15.000 to 150.000 EUR
Article 18(3)	Failure to notify the information on the application of the catch-all clauses under articles 4 (2), 5 (2), 6 (2), e 8 (2) of the Dual Use Regulation.	Not regulated under Legislative Decree 221/2017	Arrest up to two years and fine from 15.000 to 90.000 EUR
Article 18(3)	Breach of the notification obligation under article 9 (7) of Legislative Decree No 221/2017	Arrest up to two years or fine from 15.000 to 90.000 EUR	Arrest up to two years and fine from 15.000 to 90.000 EUR
Article 18(4)	Other breaches of obligations regarding notifications/bookkeeping	Administrative fine ranging from 15.000 to 90.000 EUR	Administrative fine ranging from 15.000 to 90.000 EUR
Article 20(1)	Exportation of listed goods, provision of related technical assistance/brokering services and other restricted services in breach of EU restrictive measures	Imprisonment from two to six years	Imprisonment up to six years
Article 20(1)*	Importation of goods listed under EU restrictive measures, participation in procedures for the award of public procurement contracts or concession contracts subject to EU restrictive measures	Not regulated under Legislative Decree 221/2017	Imprisonment up to six years
Article 20(2)*	Exportation of listed goods and provision of restricted services under the EU restrictive measures without the necessary authorisation or with an authorisation obtained with false information	Imprisonment from two to six years or fine ranging from 25.000 to 250.000 EUR	Imprisonment up to six years and fine ranging from da 25.000 to 250.000 EUR
Article 20(2)*	Importation or participation in procedures for the award of public procurement contracts or concession contracts subject to EU restrictive measures without the necessary authorisation or with an authorisation obtained with false information	Not regulated under Legislative Decree 221/2017	Imprisonment up to six years and fine ranging from 25.000 to 250.000 EUR
Article 20(3)	Exportation of listed goods and provision of restricted services under the EU restrictive measures in breach of the obligations under a granted authorisation	Imprisonment from one to four years or fine ranging from 15.000 to 150.000 EUR	Imprisonment up to four years and fine ranging from 15.000 to 150.000 EUR
Article 20(3)	Importation or participation in procedures for the award of public procurement contracts or concession contracts subject to EU restrictive measures in breach of the obligations under a granted authorisation	Not regulated under Legislative Decree 221/2017	Imprisonment up to four years and fine ranging from 15.000 to 150.000 EUR
Article 20(3-bis)	Other breaches of obligations regarding notifications/bookkeeping	Not provided for under Legislative Decree 221/2017	Administrative fine ranging from 15.000 to 90.000 EUR
* Pursuant to the newly amended Article 21-bis of Legislative Decree No 221/2017, “in case of conviction, or application of the penalty pursuant to Article 444 of the Italian Code of Criminal Procedure, the confiscation of the goods that served or were intended to commit the offences” referred to in Articles 18(1) and (2) and 20(1) and(2) shall always be imposed. Although a similar provision was already present in Legislative Decree No 221/2017 before the amendment of 13 June 2023, the new article 21-bis provides that such seizure can affect also goods and/or other resources indirectly owned by the convicted person.