Further to our earlier post from February 2024, it is being reported that the Paris Court has ordered that the prosecution of the French cement maker Lafarge and eight individuals on charges of terrorist financing and breach of EU sanctions against ISIS should proceed to trial.
The case is part of a long running saga arising from allegations that the company paid money to ISIS in order to keep a cement plant open and operating.
OLAF – the European anti-fraud agency – has issued a press release setting out the assistance it has given to Spain’s National Police. The assistance appears to have been largely on the intelligence and analysis side.
As stated in the press release:
“As part of the investigation, the Spanish National Police and Customs Surveillance Service arrested four individuals in the Spanish region of Catalonia, three of whom are Russian nationals. The operation also resulted in the seizure of 13,000 kilograms of a chemical compound subject to export restrictions, at the Port of Barcelona.
The investigation revealed that a Spanish company, managed by Russian nationals, had established a sophisticated logistical and economic scheme to export internationally sanctioned chemical products to Russia. This network involved the use of shell companies in Armenia and Kyrgyzstan to disguise the true destination of the goods, which were later rerouted to Russia”.
The Police have also issued a press release, stating that the arrests were in the Catalan towns of Sant Feliu de Guisols (Girona), Cerdanyola del Vallès and Santa Perpètua de Mogoda (Barcelona), and that the operation included searches at residential properties.
This is the first announced enforcement of EU sanctions in Spain since April 2023.
This is also the first announced operation said to have been aided by intelligence-gathering by OLAF.
Further to our earlier post from May when three Russian national university students were arrested in Finland, an update on the case has now been reported.
The investigation of all three individuals continues, with two having been released from custody over the summer and the third recently released.
The conditions of bail include a travel ban, and it is said that the three are being investigated in relation to the “gross regulatory crime” of exporting dual use goods from Finland to Russia in breach of EU sanctions.
It is unclear whether this case is related to Tampere University recently reporting itself to the Finnish police.
With the news of OFSI imposing a civil penalty, Europe has today hit its 300th successfully-concluded enforcement action in relation to trade and financial sanctions and export controls since the start of 2017.
To mark the occasion we are publishing updated enforcement graphs which we last posted back in January when this blog first went live.
Total number of fines/penalties/convictions: 2017-2024
As the graph shows 2024 has, to date, been the most prolific in terms of sanctions enforcement in recent years with 69 so far this year. Already there have been three times as many successfully-concluded enforcement actions in Europe in 2024 as there were in 2017.
Total value of fines/penalties: 2017-2024
While the volume of enforcement has increased, the shape of this graph illustrates that the value of the fines imposed did not keep pace in the years following when the UK and French financial services regulators having imposed fines of £102m, €50m, and £38m.
After several years of plateau 2024 is, however, showing signs of acceleration with fines of over €32m imposed so far this year – more than double the figure for 2023.
Russian / Belarusian sanctions enforcement
Focusing just on enforcement of the sanctions against Russia and Belarus, perhaps unsurprisingly, the picture varies across Europe, although the total of 111 examples to date is worth stressing in and of itself.
This graph includes only enforcement actions that have concluded with a fine, penalty, conviction or confiscation. A total of 18 countries show no examples, although it is possible that there are such examples and they have not been made public. Poland, the Netherlands, Switzerland and Latvia are the only countries with more than 10 examples.
This is another way of looking at the same data. Again, this is specific to the Russia/Belarus sanctions, and is the number of concluded enforcements. This does not reflect the scale of the fines. A few countries dominate the picture.
Current investigations
Looking at publicly-available data on the number of current/live investigations reveals a similar picture. Many states appear to be currently inactive, while there are more than 2000 investigations which are reported as ongoing across Europe. That is a figure which bears repeating – more than 2000 ongoing regulatory/criminal sanctions investigations across Europe.
It should be remembered, however, that for most states such information has not been made public. In Germany alone nearly 2000 investigations have been started since early 2022, but the information is limited on how many of these remain active.
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.
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.
The German media outlet Südwestrundfunk has conducted a survey of Germany’s state justice ministries, public prosecutors office and the Federal Prosecutor’s Office to compile statistics on recent sanctions investigations in Germany.
The vast majority of these are said to relate to Russian and Belarusian sanctions although enforcement of other regimes is included.
The results are:
This is a total of 1,988 investigations conducted since 24 February 2022. No data were reported for the states of Lower Saxony or Anhalt, so this figure is not complete.
In September last year (see earlier post) it was reported that there were 150 on-going investigations in Germany. The new survey reports a minimum of 176 investigations now reported as ongoing, although many regions did not provide a figure for currently ongoing investigations.
As part of the press article (behind a paywall) on the recent fines against Novatek Green Energy and Geleo (see our post here), the Polish authorities have also provided an update on their enforcement activity more broadly.
Certainly the figure for total fines does not include the fine against Novatek Green Energy (which was 12 million zloty), but it is also a little unclear whether or not the figure includes the fine against Geleo (which was 4m zloty).
The report also notes that most of the 20 penalties have been imposed in 2024, with only two imposed by the end of 2023 for a combined total of 71,000 zloty (c. $17,700).
These enforcement actions appear to relate to a mix of EU and the separate Polish sanctions.
No information has been provided as to the conduct which gave rise to the fines, or who the fines were imposed on.
Further to our earlier post regarding an investigation by the Danish Business Authority into allegations that the Danish shipping company Hafnia, was importing refined fuels from a refinery in India that may have been owned or controlled by Rosneft (which is a designated person under the EU’s sanctions), it is now being reported (here – behind a paywall), that the Danish Business Authority has concluded its investigation having determined that it could not establish that there had been a breach of Russian sanctions.
As yet the Danish Business Authority has not issued a statement on its website.
Back in April we posted about a Compound Penalty imposed by HMRC on a company for breaching the UK’s Russian Sanctions Regulations.
The company was fined £1,058,781.79.
HMRC has today issued a changed Notice to Exporters about this fine. The changed description removes any reference to the UK’s Russian sanctions regulations and replaces it with:
“March 2024 – £1,058,781.79 was paid relating to the unlicensed exports of dual use goods controlled by Retained Regulation 428/2009“.
No explanation for the change is given.
