Author: Mark Handley

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European sanctions enforcement: the custodial sentences

Although one of the filters on this blog is “custodial sentence”, I thought it might be helpful to collect all the examples in one place.

As such, here is the full list of custodial sentences that have been imposed across Europe for sanctions offences since 2017. Please note this excludes suspended sentences.

2017:

2018:

2019:

2020:

2021:

2022:

2023:

2024:

Overall the figures are dominated by the Netherlands and Germany with approximately 68 of the 80 years of sentences between them. Indeed, as the graph below demonstrates, other than Finland’s 40-day sentence for breaching a travel ban, the Netherlands and Germany are the only European countries to have sent someone to prison for sanctions offences since 2019.

Posted on by Mark Handley

Netherlands – conviction and confiscation for exporting sanctioned goods to Russian companies

The Rotterdam District Court has issued two judgments relating to the conviction and sentencing of an individual for exporting computer goods and software destined for Russian companies via intermediaries in Kazakhstan, Kyrgyzstan and Uzbekistan.

According to the judgment convicting the individual, the man had been selling computer equipment to two Russian companies prior to 2022. After the goods in questions became sanctioned, a fact he was made aware of by his customs agent, the man directed the exports to affiliates of his Russian customers in Kazakhstan, Kyrgyzstan and Uzbekistan. All the communications, however, remained with the Russian companies.

In an attempt to cover his tracks the man forged a contract between his company and the central Asian entities and provided this in response to questions from his bank.

The court convicted him of the charges, including forgery, holding that the EU Regulations did not require proof that the goods were actually delivered to Russia.

The exports in question were of thousands of items which were either dual-use or luxury goods and were predominantly computer equipment and software.

At sentencing the court made a number of comments:

  • firstly that “the court looked at penalties imposed in comparable cases, although there is not much comparative material”; and
  • the court’s aim in sentencing was to “give the suspect a good rap on the knuckles”, but not to hinder the man’s ability to continue operating his business.

The man was given a custodial sentence equivalent to the length of his time served in pre-trial detention (450 days), a suspended sentence of just over 11 months, suspended for two years, and a community service order of 240 hours.

Goods which had been seized during the investigation were returned to him.

The second judgment related to confiscation of the proceeds of crime from the man.

The court calculated that the gross proceeds of the crimes were €1,924,579, from which the court deducted €1,626,269 in what it described as “deductible costs”, leaving a final figure for confiscation of €298,310 which the court considered to be the company’s “profit”. This was the amount the man was ordered to pay by way of confiscation order.

The judgment does not record the Court (or the prosecution) giving consideration to the recent CJEU judgment which upheld a confiscation of the gross proceeds of crime.

Posted on by Mark Handley

United Kingdom – revised (and increased) figures for the number of OFSI’s oil price cap investigations: 60 to date

As of 27 September 2024, the position as regards OFSI’s investigations into alleged breaches of the UK’s oil price cap was as follows (covering the period from 5 December 2022 to 21 August 2024:

  • total number of investigations commenced: 60
  • total number of investigations commenced where the alleged suspect is a UK person or company: 52
  • total number of investigations which remain open: 42
  • total number of investigations which remain open where the alleged suspect is a UK person or company: 37

These figures revise those we published last month which were based on the BBC’s reporting of the results of a Freedom of Information request it had made to OFSI.

After obtaining a copy of what was released to the BBC by making our own Freedom of Information request we have been able to revise the figures. The BBC did not include in its figures the investigations into non-UK persons potentially breaching the UK’s oil price cap.

What the complete figures reveal is that a further 8 investigations have been commenced into non-UK persons suspected of breaching the oil price cap, of which 5 remain ongoing.

A copy of HM Treasury’s response to our asking for the response provided to the BBC is here.

FOI2024-15950 – Copy of FOI release redactedDownload

Posted on by Mark Handley

Germany – seven year sentence for exports of military and dual-use goods to Russia and confiscation of profits

It is being reported that the Higher Regional Court in Stuttgart has convicted Ulli S, a 56 year old man, of breaches of the EU sanctions against Russia and the German foreign trade law.

As per our earlier posts, the man was arrested in August 2023, and had been charged in November 2023.

The exports were of machinery which can be used for the manufacture of sniper rifles and other weapons. Some of the exports were sent to Russia via Switzerland and others via Lithuania, while the customs data was falsified.

The contracts for the supply of the goods had been entered into in 2015.

The individual is said to have profited by 2.1 million euros, while a Swiss holding company benefitted by roughly 3 million euros. According to Der Spiegel these sums have been confiscated.

The trial lasted several months and is subject to a possible appeal.

Posted on by Mark Handley

United Kingdom – 9 law firms referred for investigation for possible sanctions breaches

The Solicitors Regulation Authority for England and Wales has, in its Annual Report for Money Laundering covering 2023/2024, has stated that it has required 9 law firms to report themselves to the Office of Financial Sanctions Implementation.

In eight of these instances the breach was a breach of a licence condition. It is unclear whether these were specific licences or a General Licence. The breaches are said to have varied between late or no reporting, and taking payments not actually covered by the licence in question.

While many have related to the UK’s Russian sanctions no information is given as to the identity of the sanctions regime(s) in question.

Posted on by Mark Handley

United Kingdom – HMRC compound penalties for Russian sanctions and export control violations totaling £1.9m

The UK’s HMRC has issued several “Notices to Exporters” with updates as to recent enforcement activity.

In one Notice, HMRC states that is has agreed three compound penalties with different entities:

  • “August 2024 – £402,417.75 was paid relating to the unlicensed exports of military goods controlled by The Export Control Order 2008
  • August 2024 – £37,743.34 was paid relating to the unlicensed exports of dual-use goods controlled by Retained Regulation 428/2009
  • September 2024 – £1,480,785.44 was paid relating to the unlicensed exports of military goods controlled by The Export Control Order 2008″

As ever with such penalties the nature of the offending is not given, the identity of the offender is not given, and no indication is given as to whether or not the fine includes a confiscation element for the proceeds of the crimes.

In a second Notice, HMRC describes the compound penalty:

“August 2024 – £58,426.45 was paid relating to the export of goods in breach of The Russia (Sanctions) (EU Exit) Regulations 2019”.

Again, no other details or information is provided, although HMRC notes that this is its 6th compound penalty in relation to Russian sanctions totaling £1,363,129.

Posted on by Mark Handley

Germany – raids related to luxury car exports of €10m to Russia

German Customs has issued a press release (actually dated 18 September but not spotted until now) reporting on an investigation and raids of several premises in the Aschaffenburg area.

The investigation by Essen Customs Investigation Office and the Würzburg Public Prosecutor’s Office relates to alleged exports of luxury cars to Russia valued at over €10 million.

As part of the raids evidence was collected, while cars valued at over €1.5m and bank accounts with over €1m were also seized.

Posted on by Mark Handley

Germany – arrest and raids for alleged exports to Russia

It is being reported that a 55-year old man has been arrested in Germany on suspicion of violating the Foreign Trade Act and EU sanctions against Russia.

Six properties were raided and searched in Nuremberg, Frankfurt am Main, Gross-Umstadt and at Frankfurt-Hahn Airport by the Essen Customs and the Frankfurt Public Prosecutor’s Office.

The man, who is a German and Russian national, is alleged to have procured and exported to Russia satellite antennas and sonars for deep-sea use through a company in Germany.

The press release from Essen Customs is here.

Posted on by Mark Handley

Latvia – 94 criminal proceedings commenced this year for Russia/Belarus sanctions breaches

In a reported interview with Raimonds Zukuls, the Deputy Director General of Latvia’s State Revenue Service, details of ongoing enforcement activity in Latvia have been provided.

These figures are specific to the EU’s sanctions against Russia and Belarus and include:

  • 94 criminal proceedings commenced during 2024;
  • more than 300 criminal proceedings overall (nb. as per our earlier post, the figure was 310 back in February 2024);
  • 2170 instances of blocked exports/imports during 2023; and
  • more than 2400 instances of blocked imports/exports during 2024.

Zukuls is also quoted as saying that the most frequent blocked exports to Russia and Belarus were cars, tractors, electrical equipment and appliances, and the most frequent blocked imports from Russia and Belarus were wooden products, animal feed and metal products.

Posted on by Mark Handley

European Sanctions Enforcement – performance league tables (2017-2024)

The figures are, naturally, based on publicly-available information as collated in this blog.

The figures are not always easy to reconcile into a coherent picture. For example:

  • The Netherlands has the most convictions, but none of the longest sentences;
  • Germany has far fewer convictions than the Netherlands, but all of the longest sentences;
  • Finland has a massive number of ongoing investigations but has only imposed fines to date of €11,080;
  • Switzerland has 15 convictions, but no custodial sentences and €58,435 in fines;
  • Poland has the highest number of successfully-concluded enforcement actions under the Russian sanctions but has no criminal convictions; and
  • The UK dominates the figures on total fines, but has a low number of criminal convictions.

Most criminal convictions since 2017:

  1. Netherlands – 40
  2. Switzerland – 15
  3. Germany – 10
  4. Latvia – 7

Fewest criminal convictions since 2017:

  1. Austria, Bulgaria, Croatia, Cyprus, Estonia, France, Greece, Hungary, Ireland, Lithuania, Luxembourg, Malta, Moldova, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden – 0
  2. Czechia and Norway – 1
  3. Denmark, Italy and United Kingdom – 3

Most Russian/Belarusian sanctions convictions/fines/penalties since 2017:

  1. Poland – 24
  2. Netherlands – 21
  3. Switzerland – 15
  4. Latvia – 11

Fewest Russian/Belarusian sanctions convictions/fines/penalties since 2017:*

  1. Belgium, Bulgaria, Croatia, Cyprus, Denmark, France, Greece, Hungary, Ireland, Luxembourg, Malta, Moldova, Portugal, Slovakia, Slovenia, Spain, Sweden – 0
  2. Czechia, Italy, Norway, Romania – 1
  3. Finland – 4
  4. United Kingdom and Lithuania – 7

* The Estonia figure is uncertain based on this story, but how high/low is uncertain.

Most currently-ongoing investigations:*

  1. Finland – 800
  2. Latvia – 310
  3. United Kingdom – 307
  4. Netherlands – 192

* Germany probably belongs on this list. It has commenced at least 1988 investigations since February 2022, but many of the States that responded to Freedom of Information Requests did not provide data on ongoing investigations, but only the total number of investigations commenced since the start of the full-scale war.

Longest custodial sentences since 2017 (where the sanctions element can be distinguished):*

  1. Germany – 7 years (2020)
  2. Germany – 6 years and 9 months (2024)
  3. Germany – 5 years (2023)
  4. Germany – 3 years and 9 months (2021)

* The list excludes convictions where there are also non-sanctions offences and where the sentence cannot be divided, such as the 19-year sentence imposed in the Netherlands which included war crimes offences.

Most extraditions to the United States to face US sanctions charges

  1. Latvia – 4
  2. Cyprus, Estonia, Spain, United Kingdom – 2
  3. Croatia, Germany, Greece, Italy, Romania – 1
  4. All other European countries are at zero.

Highest total value of fines/confiscations/penalties (in Euros) since 2017:

  1. United Kingdom – €268,344,548 (of which the FCA’s fines make up €228,465,751)
  2. France – €50,600,000
  3. Germany – €26,112,903
  4. Lithuania – €23,513,079

Lowest total value of fines/confiscations/penalties (in Euros) since 2017 where value is known:*

  1. Bulgaria, Croatia, Cyprus, Greece, Hungary, Ireland, Moldova, Portugal, Slovakia, Slovenia, Spain and Sweden – €0
  2. Norway – €4260**
  3. Finland – €11,080
  4. Switzerland – €58,435
  5. Czechia – €143,500

* Malta has imposed a fine of unknown size but greater than €800, and Austria has imposed at least 10 fines of unknown value.

** This is an underestimate for Norway as it has concluded 23 confiscations of goods where no value was published.

Highest single fines/confiscations/penalties within 2024

  1. UK – £29m by the FCA
  2. Lithuania – €13.6m by Customs
  3. Lithuania – €8.23m by the Financial Crimes Investigation Service
  4. Poland – €2.78m by Customs

Most successfully-concluded enforcements within 2024

  1. Poland – 22
  2. Netherlands – 10
  3. Lithuania – 7
  4. Switzerland – 6
  5. UK – 5*
  6. Germany – 4
  7. Luxembourg – 3
  8. Estonia – 2**
  9. Finland – 2
  10. Latvia – 2
  11. Czechia – 1
  12. Malta – 1
  13. All other European countries are at zero.

* The UK figure excludes export control enforcements unrelated to sanctions.

** The Estonia figure is likely to be higher based on this story, but how much higher is uncertain.

© 2009- Duane Morris LLP. Duane Morris is a registered service mark of Duane Morris LLP.

The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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