In order to tackle democratic backsliding in EU member states, the European Commission proposed a new financial conditionality in May 2018 that would allow the suspension of EU funds in cases of systematic rule of law infringements. This article seeks to evaluate the Commission’s proposal in terms of its chances at successfully deterring or redressing such infringements. Drawing on both the literature on EU enlargement and on international sanctions, we identify a list of scope conditions for conditionality in order to systematically evaluate the institutional design and analyze the context of application of the proposed rule of law conditionality on EU funds with regard to its expected effectiveness. We find that the current proposal would indeed improve the speed and likelihood of sanctions compared to existing mechanisms, but lacks in the determinacy of conditions and procedures, thus undermining its perceived legitimacy and chances of success.