It is being reported, based on Freedom of Information requests made to Norway’s custom office by the Barents Observer, that 23 confiscations of luxury and other goods being exported to Russia have taken place since 2023.
One of the confiscations was at an unspecified port, and the other 22 were at the land crossing at Storskog, with 10 during 2023 and 12 so far in 2024.
The reporting makes no mention of other enforcement actions taken after the confiscation.
Back in July we published a post highlighting that Switzerland’s SECO had imposed 5 new fines for sanctions breaches.
Through a Freedom of Information request we have obtained anonymized and redacted copies of these five Final Administrative Criminal Decisions.
These five decisions, and machine-generated translations are provided below, as well as summaries of the enforcement actions. The numbering sequence from when this blog published the previous 10 decisions is continued.
As previously, the value of the fines are all fairly low and these five cases combine for a total of CHF 13,490.
11. Final administrative criminal decision, dated 19 February 2024
Original: 2024-02-19-I.77-Strafbescheid.pdf
Translation: 2024-02-19-I.77-Strafbescheid_Translation.pdf
This case concerned the attempted export of CHF 10,569.90 of electrical switches to Russia. The export was stopped at Zurich Airport Customs in December 2023.
The goods in question had been included on the Swiss sanctions list as of 25 January 2023.
The company claimed it was unaware the goods were sanctioned, and SECO accepted this finding that the export was negligent rather than intentional.
In light of the company’s cooperation, and the company being able to show a track record of refusing sales to Russia which they knew were sanctioned, SECO set the fine at CHF 750, plus CHF 250 in costs.
The goods in question were returned to the seller.
12. Final administrative criminal decision, dated 26 February 2024
Original: 2024-02-26-I.78-Strafbescheid.pdf
Translation: 2024-02-26-I.78-Strafbescheid_Translation.pdf
This case concerned the attempted export of €57,263 worth of pressure transmitters, pressure transducers and pressure gauges to Russia. The export was stopped at Zurich Airport Customs in December 2022.
The goods in question had been added to the Swiss sanctions list during November 2022.
SECO had earlier written to the company, in 2021, to say that the export of the goods could be done without a licence, subject to the changing requirements of Swiss sanctions.
SECO accepted the argument that the export was not intentional, but found it was negligent and that the company should have been more aware of the sanctions in place.
In light of the company’s cooperation, SECO set the fine at CHF 2,900, plus CHF 970 in costs.
The goods in question were returned to the seller.
13. Final administrative criminal decision, dated 26 February 2024
Original: 2024-02-26-I.67-Strafbescheid.pdf
Translation: 2024-02-26-I.67-Strafbescheid_translation.pdf
This case concerns two attempted exports of spare parts for medical and dental devices to Russia. Within wider sales of nearly €27,000 worth of parts, sanctioned goods with a value of approximately €3,600 were included.
On both occasions the goods were stopped by customs.
The company sought to explain the two prohibited exports by saying that the wrong HS code had been entered into its internal system (9026.2000 instead of 8481.1010) and so it had not been caught by its systems. In the other instance the company said it searched for the HS code using the format in the customs tariff (which used a full-stop in the number), while in the relevant Appendix in the Ordinance the HS code used a space instead of a full stop. The company’s searches against its products therefore resulted in false negatives and the shipments were incorrectly authorised.
The company relied heavily on its detailed procedures and training as mitigation, and had appointed an outside consultant to assist further with compliance. In addition, the company sought a retrospective approval for the exports on humanitarian/medical grounds.
SECO denied that request saying “a retroactive authorization cannot be issued to regularize exports”.
While not alleging an intention to breach the sanctions, SECO decided that the company had been negligent and commented that a “more precise check” of the prohibited codes would have prevented the export. It is as good an example of the importance of fuzzy searching as you’ll find.
The company was fined CHF1,000 and costs of CHF590. The seized goods were returned to the company.
14. Final administrative criminal decision, dated 11 March 2024
Original: 2024-03-11-I.79-Strafbescheid.pdf
Translation: 2024-03-11-I.79-Strafbescheid_Translation.pdf
This case concerned two blocked exports of goods valued at €2000 which were stopped by the Zurich Customs office. The goods included foam generators and level sensors.
In the first example the attempted export took place on the same day as the respective goods were announced as being added to the lists of prohibited items. The version of Annex 23 to the Ordinance had been updated on SECO’s website, but not on other versions. Nonetheless, SECO determined that the export fell under the heading of “negligent”.
In the second example, the company argued that the prohibition against certain goods which are “suitable for use in the aerospace industry” could be negatived by evidence that this was not going to be the actual use. SECO disagreed.
The company was fined CHF2,300 and ordered to pay costs of CHF970. The seized goods were returned to the company.
15. Final administrative criminal decision, dated 13 March 2024
Original: 2024-03-13-I.76-Strafbescheid-002.pdf
Translation: 2024-03-13-I.76-Strafbescheid_translation.pdf
This case concerned a shipment of 8,640kg of products with customs code 3824.9919 valued at €19,612.80.
The goods were seized by the St. Gallen customs office in October 2022.
The company claimed that it had no knowledge that the goods in question were subject to Switzerland’s Russian sanctions.
SECO’s response was to state:
“However, it is not the actual knowledge of the persons concerned of the criminal nature of the sale and export transaction that establishes criminal liability, but it is sufficient if the knowledge of the criminal liability should have been present in the company with due diligence. This must be affirmed in the present case.”
SECO accordingly concluded that the company was guilty of a negligent breach of sanctions.
A fine of CHF2,800 was imposed and costs of CHF960. The seized goods were returned to the company.
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:
This is the first known conviction or fine imposed in Czechia for breaches of EU sanctions.
In a civil judgment handed down earlier this week, it was revealed (at paragraph 63) that an individual, David Crisp, was arrested by HMRC on 10 October 2023 and electronic devices were seized.
The allegation is that companies managed by Mr Crisp were knowingly exporting perfume to Russia in breach of the UK’s sanctions.
As of the date of the judgment, HMRC had confirmed (at paragraph 69) that the criminal investigation remains ongoing but so far no charges have been made and Mr Crisp is no longer on bail.
The judgment itself is of note for the Court removing Mr Crisp as a director of the relevant companies on the basis that there was a “strong prima facie evidential basis for the allegations” of breaching the UK’s sanctions. The orders were a form of interlocutory relief as part of an unfair prejudice petition brought by another of the shareholders of the companies.
On Friday the Customs office in Frankfurt raided and searched 24 residential and business premises mostly in Offenbach am Main and Aschaffenburg although Customs said the network extended across Germany. Four individuals were arrested. The actions were part of an investigation into the suspected export of luxury cars to Russia in breach of EU sanctions.
The individuals arrested were aged between 39 and 44 with one woman and three men.
The allegation is that 170 luxury cars had been exported since 2022.
Five cars were seized as part of the raids along with evidence and €300,000 in cash. In addition a freezing order was obtained over €13.3m in bank accounts said to be the profits from the enterprise.
The German authorities have been particularly active in enforcement related to luxury cars of late:
On Wednesday more than 60 officers from customs offices and prosecutors raided seven premises in Germersheim in the Rheinland-Palatinate region.
The investigation relates to the export of approximately 190 luxury cars to Russia valued at €4.5m, with the exports conducted via Kazakhstan, Kyrgyzstan, Belarus and Turkey.
As well as evidence significant amounts of cash were seized and attachment orders have been obtained over bank accounts and real estate.
It is being reported (in German and English) that the Customs Investigation Office in Essen and the Public Prosecutor’s Office in Bochum conducted raids on two premises including on a luxury car dealership on suspicion of exporting more than €5 million in cars to Russia.
The allegations include that fictitious destinations for the exports were put forward when the real destination was Russia.
Evidence and cars were seized as part of the raids.
Below is the first in our series of publishing the 10 final administrative criminal decisions reached by SECO in Switzerland. The examples below relate to Russian and Belarusian sanctions.
The next instalment will be published on Monday.
1. Final administrative criminal decision dated 21 November 2022
Original: 2022-11-21 – I.41 – Strafbescheid
Translation: 2022-11-21 – I.41 – Strafbescheid_Translated to English
The company in question attempted to export 1,850kg of a kind of lubricant (customs code 3403) included in the list of banned exports from Switzerland to Russia. The value of the products was €17,440.
The goods were stopped by Swiss customs at Mendrisio. An investigation was commenced.
The company cooperated and admitted the breach but submitted in writing that it was unaware that the product was included on the sanctions list.
SECO accepted this evidence and undertook its assessment of the penalty based on the fact that the breach was negligent and not intentional. This distinction gives rise to significantly different penalties under Swiss law.
A negligent breach can give rise to a maximum penalty of CHF 100,000 and/or a custodial sentence of up to three months.
Given the low value of the breach, and the accepted evidence of negligence rather than intent, SECO relied upon a provision of Swiss criminal procedure whereby if a fine is of no more than CHF 5,000 then the company can pay the fine without the need for further investigation to determine the specific individuals responsible. This was said to be proportionate compared to the time and cost of a full-blown investigation.
In light of this a fine of CHF 4,500 was imposed plus costs of CHF 1,260.
Comment: while the result may be proportionate to the value of the goods, it is unclear from the final decision whether the company in question received the payment of €17,440. It may be hoped that if such payment had been received that those funds would have been confiscated.
It is also noteworthy that the investigation was commenced on 5 September 2022 and finished by 26 October 2022, with the final decision issued on 21 November. As described the defendant was able to make written submissions but no person was interviewed and no documents or other evidence was sought. The submission of negligent ignorance of the sanctions appears to have been accepted without being tested.
2. Final administrative criminal decision dated 18 January 2023
Original: 2023-01-18 – I.42 – Strafbescheid
Translation: 2023-01-18 – I.42 – Strafbescheid_Translated to English
The company in question sought to export pumps (customs code 8413.9130) to Belarus valued at €39,619.20. Such goods are prohibited from sale, delivery or export to Belarus under article 6 of the Swiss Ordinance dated 16 March 2022. The goods were stopped at Zurich airport and had been due to arrive in Belarus after first being transported through Turkey and Russia.
The company accepted the breach, but submitted that it had obtained SECO clearance when the order was first placed in January 2022, but that it had mistakenly failed to re-check the tariff code against the Ordinance at the time of export in June 2022. The company also undertook remediation measures and appointed a sanctions compliance officer.
SECO accepted that the breach was not intentional, but stated that “as a company active in international trade, it had a duty to carefully analyse the embargo ordinances imposed by Switzerland and to take the necessary measures to ensure that they were not contravened“.
As with the earlier final decision, SECO relied upon the provision whereby a fine of under CHF 5,000 could be paid by the company without having to investigate the culpability of individual employees.
SECO considered as aggravating factors the value of the intended export and the fact that “more thorough control and monitoring” was expected of such a company. Mitigation consisted of the company’s cooperation, the remediation undertaken, and the fact that the export was not completed.
In light of this a fine of CHF 2,000 was imposed plus costs of CHF 560.
Comment: The case is a noteworthy statement of SECO’s expectation of a trading company’s duty to ensure compliance. Also noteworthy is the credit received for cooperation and remediation.
While one may wonder whether an export routed to Belarus through Turkey and Russia was intended as circumvention it appears that it was the company’s own customs declaration which indicated accurately both the nature of the goods and the destination. Accordingly, it is understandable why SECO took the view that the conduct was not intentional especially when combined with the fact that the company had earlier sought (and obtained) clearance for the export.
3. Final administrative criminal decision dated 1 May 2023
Original: 2023-05-01 – I.63 – Strafbescheid
Translation: 2023-05-01 – I.63 – Strafbescheid_Translated to English
The company in question attempted to exporte a painting valued at CHF 1,500 (i.e. a prohibited luxury good) to Russia, with the painting seized by the customs office at Mülligen.
An investigation was commenced as part of which the company admitted the alleged facts. The company, however, also noted that the painting had first been shipped to Moscow on 22 February 2022 (prior to the prohibition on the export of luxury goods) but that it had been returned to Switzerland undelivered as the customer was not at home at the time of the attempted delivery. By the time of the second attempted export in September 2022, the prohibition had come into place.
SECO accepted the company’s submission of a negligent rather than intentional breach noting, however, that the company “was obliged to examine more closely whether the export of the said goods to or for use in the Russian Federation was permissible“.
SECO availed itself of the same provisions allowing a simplified investigation where a company is fined CHF 5,000 or less. A fine of CHF 700 was imposed plus costs of CHF 370.
Comment: SECO noted the early admission of fault and the company’s cooperation, as well as the mitigating circumstance that the sale (when first conducted) had been lawful and that if the customer had been home at the first attempt there would have been no breach. Also noted was the low value of the breach.
The case is, however, illustrative of the expectations of due diligence and compliance expected by SECO even on a company that “is a family business and very rarely exports to Russia“, and that even a one-off, low value breach may still be the subject of investigation, conviction and fine.
It is being reported that he Lithuanian Customs Authority has today prevented the attempted export of two Tesla Cybertrucks valued at over €400,000 and has commenced a preliminary criminal investigation into the case.
The vehicles were being exported to Belarus, but the Customs Authority suspected that Russia was the intended final destination.
The drivers have been questioned and subsequently released.
On 24 April the Cologne District Court convicted a unnamed 52-year old individual of breaching the EU’s Russian sanctions by exporting 38 luxury cars and two motorcycles to Russia.
The cars were said to have totaled €4.7m in value, and were largely shipped to Russia via Belarus (where the goods are not prohibited exports). The prosecution was able to show through invoice addresses, the origins of payments and the ultimate Russian registrations of the vehicles that the individual was knowingly exporting to Russia.
The man was given a suspended two-year prison sentence, ordered to pay €20,000 and ordered to do 200 hours of community work.
It is unclear if the proceeds of the sales will be the subject of confiscation proceedings.
In terms of the sentence the court accepted as mitigating factors: i) that a previously legitimate business was made unlawful almost overnight; and ii) that the goods in question were not military or dual use. Given that these factors would be present in very many cases it is unclear why they were considered as mitigating.
