2024 – European Sanctions Enforcement

July 19, 2024July 19, 2024 by Mark Handley

Poland – investigation and charge in relation to dual-use exports to Iran

It is being reported by Reuters that the Polish state-owned company WSK Poznan is being investigated by the National Prosecutor’s Office and the Internal Security Agency on suspicion of supplying parts to Iranian manufacturer, Motorsazan Company, which were then incorporated into drones used by Russian combat forces in Ukraine.

The National Prosecutor’s Office is also reported to have charged the CEO of the company in relation to the export of dual-use goods.

Another report states that the investigation has been ongoing for two years, and notes that the Polish National Prosecutor has denied evidence that parts were used for drones and stated that the investigation relates more to the sale of fuel pumps to Iran.

July 18, 2024July 18, 2024 by Mark Handley

Switzerland – updated sanctions enforcement statistics with 5 new fines

Switzerland’s SECO has updated its Russian and Belarusian sanctions enforcement statistics. The previous update was in February 2024 (see our previous post).

The reported new data states that SECO has brought:

- 56 administrative criminal proceedings (up from 47 in February);
- 41 of which have been finalized (up from 29 in February);
- including 26 discontinuation orders (up from 20 in February);
- 14 penalty notices (up from 9 in May when these were published on this blog here, here, here and here); and
- 1 penalty order (this is case 6 previously published on this blog here).

Accordingly, SECO has started 9 new criminal administrative proceedings since February 2024, and imposed 5 new fines since May of this year.

July 18, 2024 by Mark Handley

Poland – updated enforcement statistics with new proceedings and new fines

The Polish authorities have released updated enforcement statistics showing changes since those release just a few weeks ago.

The new data confirms:

- 51 administrative proceedings commenced (up from 48 on 1 July)
- 37 final decisions taken (up from 33 on 1 July)
- 24 fines imposed to date (up from 22 on 1 July)

Further, in response to a Freedom of Information request made on behalf of this blog, the Polish Ministry of Finance has provided the following data (available here: MF do M. Handley’a odpowiedź na wniosek 2879.2024):

- 12 of the fines imposed for breaches of EU Regulation 833/2014 with a total of fines of 1,513,244.00 zloty (c. €353,326);
- 2 of the fines imposed for breaches of EU Regulation 269/2014 with a total of fines of 451,946 zloty (c. €105,000); and
- 10 of the fines imposed for breaches of the Polish 2022 sanctions regulation for total fines of 18,868,137 zloty (c. €4,405,000).

No other European country has imposed so many fines for breaches of Russian sanctions.

July 18, 2024 by Mark Handley

Germany – two individuals convicted of electronics exports to Russia

A court in Stuttgart has convicted two individuals for their role in the export of 120,000 dual-use items to Russia between January 2020 and May 2023. The parts included those used for the “Orlan 10” drone. The value of the goods was estimated at €875,000.

One individual was given a custodial sentence of 6 years and 9 months and the other was given a suspended sentence of 1 year and 9 months.

The scheme had involved disguised sales and invoices involving Hong Kong and Turkey, as well as false documents indicating that some of the goods had been sold to customers in Germany.

As per our earlier post, the individuals were charged had been charged in March 2024.

July 15, 2024July 15, 2024 by Mark Handley

Netherlands – corporate fine and confiscation for company’s role in building Kerch bridge

The Dutch Public Prosecution Service has issued a press release relating to a settlement with the company Dieseko Group BV for its role in supplying equipment and expertise for the construction of the Kerch bridge in breach of the EU’s sanctions in relation to Crimea.

The prohibited activities took place during 2015 to 2016 and were uncovered through press reporting in 2017. An investigation was commenced in 2017 (see our earlier post) and then expanded to include Dieseko (see our earlier post).

The company exported equipment and machinery (via Finland but with the knowledge that the goods were to go to Crimea) and supplied staff to the site to provide technical assistance.

The company was given the maximum available fine per each of the three counts with a discount for its cooperation with the investigation for a fine of €180,000. The cooperation includes document production and making staff available for interview.

The company has also had its entire “gain” from its work on the bridge confiscated of €1.6m. It is not entirely clear if this is gross or net profits.

The company has put in place remediation and compliance measures. The senior management of the company were interviewed as part of the investigation but will not be prosecuted as two have since passed away and one is seriously ill.

For the Statement of Facts see here.

For the Settlement Agreement see here (in Dutch).

The Dutch version of the Press Release includes comment that the Dutch intend to prosecute another company and several individuals for their involvement in the building of the Kerch bridge.

July 15, 2024 by Mark Handley

Czechia – conviction, fine and confiscation for export of luxury cars to Russia

It is being reported (and here) that the Czech authorities have obtained a conviction of Vladimir Lihutin, a Czech national, for an attempt to export three luxury cars to Russia.

The sentence includes:

- a fine of 300,000 crowns (c. €11,500)
- confiscation of €132,000 (being the sums paid by the customers for the cars)
- a ban on buying and selling any cars for 20 months.

This is the first known conviction or fine imposed in Czechia for breaches of EU sanctions.

July 12, 2024 by Mark Handley

Luxembourg – CSSF imposes fine for AML and sanctions compliance failings

The Commission de Surveillance du Secteur Financier (CSSF) in Luxembourg has imposed fines of €109,000 and €17,200 for compliance failings on abrdn Investments Luxembourg S.A.

The fine of €17,200 related to failings in relation to AML/CFT, and included in these failings was failure to “perform initial name screenings controls against international and European financial sanctions lists”.

The CSSF had conducted on-site inspections in 2020.

July 11, 2024 by Mark Handley

Netherlands – conviction for making funds available to designated person under Dutch sanctions

The District Court of Rotterdam has convicted an individual on one count of making funds (€350) available to a person designated under the Dutch Terrorism Sanctions Regulations 2007.

The defendant was acquitted of another charge of making funds available to ISIS on the basis of a lack of evidence that the defendant knew the recipient was connected with ISIS and because the transfer had taken place after ISIS had been largely defeated in Syria.

The individual was sentenced to 60 hours of community service, although this time had already been performed by virtue of a lengthy pre-trial detention.

July 11, 2024July 12, 2024 by Mark Handley

France – Russian vessel barred from entering the port of Brest

It is being reported that the French port of Brest has barred the Russian vessel Shtandart from entering thereby enforcing the EU’s prohibition on Russian vessel entering EU ports.

The vessel has been re-flagged to the Cook Islands but remains operated by Russians. It is a modern replica of a frigate of Tsar Peter the Great which was sailing to Brest to take part in the Maritime Festival.

The same report notes that the vessel had previously been in another French port at La Rochelle.

July 11, 2024 by Mark Handley

Lithuania – company operating crypto exchange fined €8.23m for EU sanctions violations

Lithuania’s Financial Crimes Investigation Service has imposed a fine of €8.23m for breaches of the EU’s sanctions and a fine of €1.06m for breaches of Lithuania’s Law on the Prevention of Money Laundering and Terrorist Financing.

The company fined is UAB Payeer. The press release notes that the company did not cooperate with the investigation and did not provide responses to questions raised.

The investigation commenced after an inspection in 2023 that was conducted after Payeer commenced its operations in Lithuania.

Payeer operated a crypto exchange at Payeer.com which allowed customers to make transfers to or from Russian banks that were designated under EU sanctions.

The AML fine relates to the failure to conduct KYC and the failure to report suspicious transactions.

The press release notes that Payeer had revenues of more than €164m during the 1.5 years of its breaches, but does not note what proportion of this came from prohibited activity.