2024 – Page 8 – European Sanctions Enforcement

September 25, 2024September 25, 2024 by Mark Handley

Luxembourg – CSSF imposes fine for sanctions compliance failings

Luxembourg’s financial services regulator, the CSSF, has today announced a fine of €40,000 on Dock Financial S.A.

The fines relates to AML and sanctions compliance failings identified as part of an on-site inspection between December 2021 and November 2022.

In relation to sanctions, the CSSF has found that:

“A substantial part of the EMI’s client portfolio was not subject to name screening controls on a daily basis, over a substantial period of time, thus constituting a failure to comply with the obligation to detect persons, entities and groups subject to restrictive measures in financial matters without delay so that the necessary restrictive measures can be applied to them in line with all United Nations Security Council resolutions, acts adopted by the European Union (resolutions and acts directly applicable in Luxembourg) and national regulations“.

This was identified as a breach of CSSF regulations requiring detection of designated persons.

September 25, 2024September 25, 2024 by Mark Handley

Netherlands – fines imposed for making funds available to a designated person

Further to our earlier post from July 2023 regarding the arrest of a 73-year old individual, the Dutch Public Prosecution Service has announced that it has reached a settlement both with the individual and a related company. The press release is only available in Dutch and was not included amongst those published in English.

The company has been fined €195,000 and the individual, the company’s director, has been fined €20,000. The company and the individual have not been named.

The fines have been imposed because at the end of 2021 the company paid out dividends of approximately €18m to one of its shareholders who was a designated person under the EU’s Russian sanctions. The company also did not freeze the designated person’s shares, and continued to allow the shares to vote.

In addition, in 2019, a loan of €100,000 was repaid to a different Russian designated person in breach of the EU’s asset freeze.

September 23, 2024September 23, 2024 by Mark Handley

Romania – authorities arrest and extradite suspect to the US

The US Attorney’s Office for the Eastern District of New York has issued a press release concerning the guilty plea by Mohammad Bazzi on charges of conspiracy to conduct unlawful transactions with a Specially Designated Global Terrorist.

The press release confirmed that Bazzi was arrested in Romania in March 2023 by the Romanian authorities, and was then subsequently extradited to the United States to face the charges there.

September 18, 2024September 18, 2024 by Mark Handley

Lithuania – seizure of fire trucks exported from Belarus

It is being reported in the Zimbabwe press that 17 fire trucks purchased by the government of Zimbabwe from a supplier in Belarus were seized in March 2023 by the Lithuanian authorities on suspicion of the export and/or sale of the fire trucks breaching the EU’s Belarus sanctions.

It is also being reported that diplomatic efforts by Zimbabwe to secure the release of the trucks have so far been unsuccessful.

The report further states that the trucks are said to contain components manufactured by an entity included as a designated person under the Belarus sanctions.

While an investigation remains ongoing into the transshipment of the fire trucks to Zimbabwe via Lithuania it is unclear on what basis the fire trucks remain detained.

September 12, 2024 by Mark Handley

Netherlands – conviction for breach of ISIS sanctions upheld by Court of Appeal

Yesterday the Court of Appeal in the Hague issued judgment on an appeal against a conviction for multiple terrorism-related offences including one of making funds or economic resources available to a person designated under the EU’s ISIS sanctions.

The transfers were of €200 and €300 respectively.

The conviction was upheld on the basis that the necessary criminal intent was present:

“In order to prove that the regulations have been deliberately violated, it is not necessary to prove that there was intent to violate the standards set out in the indictment. The intent is colorless. However, it must be proved that the defendant intended that the sums of money would end up directly or indirectly with [person 1] and [person 2], to whom the Terrorism Sanctions Regulations 2007-II applied at the time“.

The total sentence was for a custodial prison term of 48 months, but it is not possible to identify what proportion of that was for the sanctions offence and what proportion for the other non-sanctions convictions.

September 11, 2024 by Mark Handley

Romania – CJEU upholds confiscation of entire revenue of a transaction in breach of sanctions

Further to our earlier post, regarding an Advocate-General’s opinion on a case arising from a fine and confiscation order imposed by Romania’s ANAF enforcement agency, the CJEU has now issued its judgment.

The case concerned a challenge to the confiscation order of €2,984,961.40 being 100% of the gross revenue obtained by the company Neves 77 Solutions SRL in breach of sanctions.

Neves argued that confiscation of the gross revenue was disproportionate, particularly in light of the right to property enshrined in the European Convention of Human Rights. The CJEU disagrees at [93]:

“the confiscation of all the proceeds of the prohibited brokering transaction thus appears necessary in order to dissuade effectively and efficiently economic operators from infringing the prohibition“.

This provides important clarification on whether confiscation orders should target the gross revenue or just the net revenue obtained from the breaches of sanctions.

The CJEU also dealt with the question of whether the prohibition on “brokering services” contained in Regulation 833/2014 requires the goods in question to, at some stage, have entered the territory of the EU. The CJEU has ruled that there is no such requirement.

September 11, 2024 by Mark Handley

UK – HMRC fines two companies for export control breaches

The UK’s primary export controls enforcement body, HMRC, has today issued a Notice to Exporters giving some details on two compound settlements reached with two UK companies.

The first was reached in April 2024 and the unnamed company agreed to pay £258,000 in relation to the “unlicensed transfer of dual-use goods controlled by Retained Regulation 428/2009”.

The second was reached in June 2024 and the unnamed company agreed to pay £90,853.20 in relation to the “the unlicensed exports of military goods controlled by The Export Control Order 2008”.

No other information has been made available.

September 10, 2024 by Mark Handley

Germany – CJEU rules on appeal against conviction and interpretation of Myanmar sanctions

Further to our earlier post, in 2022 a German individual was convicted of importing timber from Myanmar in breach of EU sanctions and was sentenced to 19 months in jail and a substantial confiscation order of over €3m was also issued.

The case then went on appeal through the German system, and ultimately a referral was made to the Court of Justice of the European Union (“CJEU”).

The argument on the appeals, and for consideration by the CJEU, was that the timber in question underwent sufficient processing in Taiwan, such that it should no longer be considered timber of Myanmarese origin.

The CJEU has ruled that the timber which only underwent “debranching and debarking” was not processed to a level as to amount to a change of origin. The CJEU also held that the timber which was sawn into “wooden cuboids” also did not undergo sufficient processing as to amount to a change of origin.

By contrast the timber which was sawn into finished boards of lumber was held to have undergone sufficient processing to properly be considered of Taiwan origin.

On the referred question of whether the prohibition against goods “exported from Burma/Myanmar” in article 2(2)(a)(ii) of the EU Regulation prohibits imports via third countries, the CJEU held the prohibition “must be interpreted as meaning that that provision covers only goods that have been imported into the European Union directly from Burma/Myanmar“.

It should be noted that this last ruling was in the context of a separate prohibition against the importation of goods which “originate in Burma/Myanmar”, with the court ruling that this other provision was the one which caught imports via third countries.

The German courts will now need to apply these findings to the existing conviction.

September 10, 2024 by Mark Handley

France – trial underway against the captain of a Russian cargo ship for sanctions breaches

The trial of the captain of a Russian cargo ship is now underway in Rouen.

It is being reported that the Rouen Prosecutor’s Office is seeking a fine of €8m, plus confiscation of the ship (valued at €8m) plus a suspended prison sentence of 10 months.

The case arises from the departure from the port of Rouen on 25 February 2022 of the vessel the “Baltic Leader” which was Russian flagged and carrying wind turbines.

Part of the prosecution’s case is that the vessel was ultimately owned and/or controlled by Promsvyazbank which is a designated person under the EU’s Russian sanctions.

September 10, 2024 by Mark Handley

Lithuania – two companies fined for Russian sanctions breaches

The Lithuanian Customs Department has today issued a press release confirming that two companies – unnamed – have each been fined €10,000.

The breaches were the provision of services – described as “temporary storage, clearance of customs documents, representation at customs” – to entities included on the EU’s list of designated persons under the EU’s Russian sanctions.