Switzerland – publishing SECO’s five most recent fines for sanctions breaches

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.

Cyprus – Russian-German national extradited to the US

A press release from the United State’s Attorney’s Office for the Southern District of New York has included details of an arrest and extradition by the Cypriot authorities in support of US charges of sanctions and export control violations.

On 26 August 223, Arthur Petrov was arrested in Cyprus in relation to:

“export control violations, smuggling, wire fraud, and money laundering offenses in connection with his alleged participation in a scheme to procure U.S.-sourced microelectronics subject to U.S. export controls on behalf of a Russia-based supplier of critical electronics components for manufacturers supplying weaponry and other equipment to the Russian military”.

Mr Petrov operated the scheme through his Cypriot company Astrafteros Technokosmos LTD.

His extradition from Cyprus was completed and he arrived in the US on 8 August 2024.

UK – extradition to the US for person suspected of Iran sanctions breaches

A press release from the  US Department of Justice records that an individual, Saeid Haji Agha Mousaei, was arrested in the UK on 24 January 2023 pursuant to an Interpol diffusion notice.

Mr Mousaei was then subsequently extradited to the US where he faces multiple charges arising from the alleged supply of “controlled electronics with military applications, including signals equipment like oscilloscopes and spectrum analyzers, for export and re-export to Iran”.

It is alleged that false documentation was prepared which indicated that the goods were to remain in countries such as the UAE and Armenia, but the goods were all transshipped to Iran via the UAE.

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. Another report states that this amount was confiscated as part of the sentencing.

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.

 

Sweden – companies called to Foreign Ministry to explain possible circumvention

It is being reported (e.g. here and here) that a number of large Swedish companies have been called to the Foreign Ministry to attend a meeting also attended by a number of other authorities.

The meeting concerned information received by Sweden from the European Commission about exports to Russia which may have been in breach of, or circumvented, the EU’s sanctions.

The companies called to attend the meeting included Atlas Copco, Ericsson, Volvo, SKF and Sandvik.

The companies deny breaches of sanctions.

The Swedish authorities are now considering what further action to take.

Netherlands – court permits sanctions defendant to resume trading pending trial

Further to our earlier post from July 2023 concerning raids and an arrest in the Netherlands of a 41-year old on suspicion of breaching Russian sanctions, the District Court of Rotterdam has released a judgment concerning a pre-trial application by the accused seeking the release from attachment of the stock in trade of his business.

The criminal trial is stated as “not expected to take place until the autumn at the earliest”.

The court granted the application, ruling that “the complainant has (for some time now) no other source of income, while his fixed costs continue” and that “the interest of the complainant in being able to trade in the company stock … and thus obtain some income, outweighs” the government’s interest in maintaining the attachment.

 

Estonia – charges against individuals for alleged Russian sanctions breaches

Further to our earlier post, it is being reported that Estonia’s Office of the Prosecutor General has laid charges against Mati-Dmitri Terestal and Elena Cherysheva on suspicion of breaching the EU’s Russian sanctions.

It is alleged that the defendants received €500,000 funds from a designated person, and made economic resources (in the form of their services) available to a designated person – namely Dmitry Kiselyov, the Director General of Rossiya Segodnya which operated in Estonia as Sputnik.

Germany – trial starts of three individuals accused of drone exports to Russia

Further to our earlier post about the laying of charges against three individuals accused of exporting drones and drone parts to Russia in breach of the EU’s sanctions, the criminal trial of these individuals started on Friday.

The three are, between them, accused of 54 counts of breaching sanctions.

The conduct is alleged to have included exports to front companies in Kazakhstan, Kyrgyzstan, Hong Kong, Turkey and the United Arab Emirates, and of deceiving component suppliers based in the US by saying that Germany was to be the final destination of the products.

Germany – charges laid in relation to exports to China

The German Federal Prosecutor’s office issued a press release earlier today in relation to the charging of three individuals for alleged export control violations.

The three charged are German nationals named as Herwig F., Ina F. and Thomas R.

It is alleged that the three were working for or on behalf of a Chinese intelligence agency and that they worked to procure information in relation to technology with military application, including ship engines.

The defendants are also charged with the unlicensed export of a laser to china in breach of the EU’s Dual-Use Regulation.

 

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

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