Russia – European Sanctions Enforcement

July 23, 2024 by Mark Handley

UK – two law firms reported to OFSI by legal regulator

It is being reported that two law firms have been reported by the Solicitors Regulation Authority (SRA) to the UK’s OFSI.

it is alleged that the law firms were facilitating financial transactions valued at more than £300,000. It is unclear whether the conduct relates to designated persons, trade sanctions, or the UK’s prohibitions on Russian investment.

The attention on law firms chimes with the report yesterday that there has been an investigation in Germany relating to a potential breach of the EU’s prohibitions on legal advice.

July 22, 2024July 22, 2024 by Mark Handley

Germany – sanctions enforcement statistics: at least 1988 investigations since February 2022

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:

- Saxony – 451 investigations
- Bavaria – 448 investigations
- Hesse – 406 investigations
- Hamburg – 161 investigations
- Schleswig-Holstein – 112 investigations
- Brandenburg – 107 investigations (of which 38 discontinued)
- Bremen – 103 investigations
- Baden-Württemberg – 90 investigations (of which 52 in Stuttgart, of which 44 discontinued)
- Rhineland-Palatinate – 73 investigations (of which 50 discontinued)
- Saarland – 21 investigations
- Mecklenburg Western Pomerania – 9 investigations
- Thuringia – 7 investigations

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.

July 19, 2024July 19, 2024 by Mark Handley

Poland – investigation and charge in relation to dual-use exports to Iran

It is being reported by Reuters that the Polish state-owned company WSK Poznan is being investigated by the National Prosecutor’s Office and the Internal Security Agency on suspicion of supplying parts to Iranian manufacturer, Motorsazan Company, which were then incorporated into drones used by Russian combat forces in Ukraine.

The National Prosecutor’s Office is also reported to have charged the CEO of the company in relation to the export of dual-use goods.

Another report states that the investigation has been ongoing for two years, and notes that the Polish National Prosecutor has denied evidence that parts were used for drones and stated that the investigation relates more to the sale of fuel pumps to Iran.

July 18, 2024July 18, 2024 by Mark Handley

Switzerland – updated sanctions enforcement statistics with 5 new fines

Switzerland’s SECO has updated its Russian and Belarusian sanctions enforcement statistics. The previous update was in February 2024 (see our previous post).

The reported new data states that SECO has brought:

- 56 administrative criminal proceedings (up from 47 in February);
- 41 of which have been finalized (up from 29 in February);
- including 26 discontinuation orders (up from 20 in February);
- 14 penalty notices (up from 9 in May when these were published on this blog here, here, here and here); and
- 1 penalty order (this is case 6 previously published on this blog here).

Accordingly, SECO has started 9 new criminal administrative proceedings since February 2024, and imposed 5 new fines since May of this year.

July 18, 2024 by Mark Handley

Poland – updated enforcement statistics with new proceedings and new fines

The Polish authorities have released updated enforcement statistics showing changes since those release just a few weeks ago.

The new data confirms:

- 51 administrative proceedings commenced (up from 48 on 1 July)
- 37 final decisions taken (up from 33 on 1 July)
- 24 fines imposed to date (up from 22 on 1 July)

Further, in response to a Freedom of Information request made on behalf of this blog, the Polish Ministry of Finance has provided the following data (available here: MF do M. Handley’a odpowiedź na wniosek 2879.2024):

- 12 of the fines imposed for breaches of EU Regulation 833/2014 with a total of fines of 1,513,244.00 zloty (c. €353,326);
- 2 of the fines imposed for breaches of EU Regulation 269/2014 with a total of fines of 451,946 zloty (c. €105,000); and
- 10 of the fines imposed for breaches of the Polish 2022 sanctions regulation for total fines of 18,868,137 zloty (c. €4,405,000).

No other European country has imposed so many fines for breaches of Russian sanctions.

July 18, 2024July 22, 2024 by Mark Handley

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.

July 15, 2024July 15, 2024 by Mark Handley

Netherlands – corporate fine and confiscation for company’s role in building Kerch bridge

The Dutch Public Prosecution Service has issued a press release relating to a settlement with the company Dieseko Group BV for its role in supplying equipment and expertise for the construction of the Kerch bridge in breach of the EU’s sanctions in relation to Crimea.

The prohibited activities took place during 2015 to 2016 and were uncovered through press reporting in 2017. An investigation was commenced in 2017 (see our earlier post) and then expanded to include Dieseko (see our earlier post).

The company exported equipment and machinery (via Finland but with the knowledge that the goods were to go to Crimea) and supplied staff to the site to provide technical assistance.

The company was given the maximum available fine per each of the three counts with a discount for its cooperation with the investigation for a fine of €180,000. The cooperation includes document production and making staff available for interview.

The company has also had its entire “gain” from its work on the bridge confiscated of €1.6m. It is not entirely clear if this is gross or net profits.

The company has put in place remediation and compliance measures. The senior management of the company were interviewed as part of the investigation but will not be prosecuted as two have since passed away and one is seriously ill.

For the Statement of Facts see here.

For the Settlement Agreement see here (in Dutch).

The Dutch version of the Press Release includes comment that the Dutch intend to prosecute another company and several individuals for their involvement in the building of the Kerch bridge.

July 15, 2024 by Mark Handley

Czechia – conviction, fine and confiscation for export of luxury cars to Russia

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:

- a fine of 300,000 crowns (c. €11,500)
- confiscation of €132,000 (being the sums paid by the customers for the cars)
- a ban on buying and selling any cars for 20 months.

This is the first known conviction or fine imposed in Czechia for breaches of EU sanctions.

July 11, 2024July 12, 2024 by Mark Handley

France – Russian vessel barred from entering the port of Brest

It is being reported that the French port of Brest has barred the Russian vessel Shtandart from entering thereby enforcing the EU’s prohibition on Russian vessel entering EU ports.

The vessel has been re-flagged to the Cook Islands but remains operated by Russians. It is a modern replica of a frigate of Tsar Peter the Great which was sailing to Brest to take part in the Maritime Festival.

The same report notes that the vessel had previously been in another French port at La Rochelle.

July 11, 2024 by Mark Handley

Lithuania – company operating crypto exchange fined €8.23m for EU sanctions violations

Lithuania’s Financial Crimes Investigation Service has imposed a fine of €8.23m for breaches of the EU’s sanctions and a fine of €1.06m for breaches of Lithuania’s Law on the Prevention of Money Laundering and Terrorist Financing.

The company fined is UAB Payeer. The press release notes that the company did not cooperate with the investigation and did not provide responses to questions raised.

The investigation commenced after an inspection in 2023 that was conducted after Payeer commenced its operations in Lithuania.

Payeer operated a crypto exchange at Payeer.com which allowed customers to make transfers to or from Russian banks that were designated under EU sanctions.

The AML fine relates to the failure to conduct KYC and the failure to report suspicious transactions.

The press release notes that Payeer had revenues of more than €164m during the 1.5 years of its breaches, but does not note what proportion of this came from prohibited activity.