Fine – Page 4 – European Sanctions Enforcement

September 25, 2024September 25, 2024 by Mark Handley

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.

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 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

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.

August 16, 2024 by Mark Handley

Lithuania – company fined over €1.2m for importing Russian coal and rubber from designated persons

The Customs Office of Lithuania has issued a press release confirming that it has imposed a fine of €1,274,960 on an unnamed Lithuanian company for the importation of both coal and rubber from Russia in breach of EU sanctions.

The Russian suppliers are themselves said to be the subject of sanctions, but have not been named.

The enforcement action was conducted by the Business Entity Inspections Department of the Kaunas Region.

August 7, 2024 by Mark Handley

Lithuania – company fined €13.6m for sanctioned exports to Russia

The Lithuanian Customs Service has issued a press release regarding a fine of €13,618,175 imposed on a company.

The company had exported vehicles to Russia through third countries Belarus, Kazakhstan and Turkey.

Six tractor semi-trailers were also confiscated.

Although the Customs press release does not name the company, press reports have identified the company as Biovarda based in Vilnius.

The press release also states, opaquely, that “After the Lithuanian customs started to apply stricter inspection measures, it is not the first time that such sanctions have been applied to companies for violations of the Law on International Sanctions”. No ore detail on these other enforcements was provided.

July 29, 2024August 1, 2024 by Mark Handley

UK – confiscation of more than £750,000 from family and estate of Petr Aven

It is being reported that the UK’s National Crime Agency has completed the confiscation of funds related to Petr Aven.

The sum of £750,000 was confiscated from bank accounts held in the name of Petr Aven’s wife and others.

A sum of cash initially recovered by the NCA from a residence outside London was also confiscated.

The funds were confiscated under the Proceeds of Crime Act 2002.

Updated on 1 August to reflect issuance of NCA’s press release:

The NCA has stated that the funds, totalling £783,827.34 were held for the benefit of Petr Aven although not in his name, and that the breaches of sanctions giving rise to the funds being the proceeds of crime were: “Attempts to relocate the funds, as well as transactions made after March 15 2022 by Aven’s estate manager, Stephen Gater … . These included the payment of salaries to over 20 members of Aven’s household staff, and the sale of a Bentley Bentayga worth £160,000“.