Criminal Defense Liability of the management

Embargo and violation of sanctions

The violation of sanctions (“embargo violation”) is punishable by considerable sanctions – and especially in the past months it is by no means such an exotic violation that one should not have it on one’s radar. In recent months, our law firm has been confronted mainly with requests for advice in the area of software and technology goods, where the question of import or export arises via quite tricky detours.

General information on german sanctions law

In essence, it is about trade and action restrictions used by states to react to – mostly aggressive – political actions and developments of other countries. The sanctions complex is very convoluted, as there are partly international and complementary but also national and overlapping regulations. Especially the U.S. with its sanctions is to be emphasized next to the sanctions of the EU. Not least because of the considerable importance of the U.S. financial system, it is fair to speak of a sanctions system that in fact has to be observed worldwide.

The design of sanctions is very individual, meanwhile it goes beyond the already classical export ban of certain critical goods and regulates bans on services and financial services as well as individually identified persons and companies. A violation of sanctions is by no means a remote possibility when importing or exporting from non-European countries, if only because of the complexity involved.

The legal bases are very different, on the highest level there are certainly the resolutions of the UN Security Council (Art. 39 and 41 UN Charter) as well as specifically with regard to Russia the EU sanctions standards, based on a CFSP decision according to Art. 29 TEU. Of course, one must be familiar with the Foreign Trade and Payments Act (AWG), the Foreign Trade and Payments Ordinance (AWV) and the Dual-Use Ordinance.

Violation of sanctions: Consequences

In the event of a breach of sanctions, there are extensive consequences. Personally, those responsible face considerable prison sentences, as a crime is regularly committed (1 year minimum prison sentence), depending on the type of goods involved, with an increased range of punishment upwards.

For the company and, if applicable, the managing director, even negligence can result in severe fines of up to half a million euros, especially in the area of the Dual-Use Regulation (also see Section 82 of the AWV for fines for negligence).

In addition, there are continuing effects in the event of a breach of sanctions: On the one hand, there is the skimming off of sales, and on the other hand there are possible accompanying offenses, for example in criminal tax law.

Defense in case of violation of sanctions

It is more the rule than the exception that entrepreneurs come forward and first want to explain to us “in great detail” why the distribution model they have developed is permissible. Welcome to the club.

Many who have worked on their own, without an internal legal department or AWG consulting, and who are accused of violating sanctions, believe they have the sole view. This is normal, but for us it is a rather tedious task to get these people out of their rant and to communicate that this very attitude has led them exactly to where they are now. Apart from the fact that many of our clients who do not seek professional feedback believe that they know everything better precisely because of the lack of feedback.

The defense of AWG violations, especially the violation of sanctions, is extensive and a filling task. The first thing to do is to analyze the distribution model factually and professionally and, in particular, to put it to the test of the sanctions lists (at least those who have tried to achieve a so-called zero decision). After the enormously strength- and time-intensive clarification of the material-legal side follows the process-tactical side, whereby AWG offences can cost many years of life. Here it must be weighed, which behavior is reasonable, there can be no blanket tips. An honest assessment of where one stands material-legally is worth more than stupid castles in the air, since only in this way several years of imprisonment can be saved.

Verstoß gegen Sanktionen: Rechtsanwalt bei Verstoß gegen Sanktionen; Fachanwalt für Strafrecht & IT-Recht Jens Ferner

The violation of sanctions is not always equal to the supply of weapons or other ordnance – a look at the Dual-use Regulation shows extensively affected technologies. A specialist lawyer for criminal law and IT law, especially in our law firm focused on white collar criminal law, can help!

Einfuhr und Ausfuhr von Software

Special case software for sanctions

A particular challenge – and our focus in the area of technologies in foreign trade criminal law – is dealing with software. In this context, software can play a significant role on various levels, which is sometimes not yet clear in every company:

If, for example, the use of open source software components is in question that were primarily developed in Russia, this can affect the entire software project. Likewise, if software components are distributed (such as OCR software) for which the connection to Russia once existed, but today it is not at all clear where the focus of the company lies at all.

Finally, there is a significant problem in dealing with cryptocurrencies and other blockchain-based products such as NFT and the question of whether sanctions are circumvented in specific individual cases. Regarding the violation of sanctions, it should be briefly stated that cryptocurrencies including crypto wallets are covered by EU sanctions – nevertheless, even if the legal literature claims otherwise, cryptocurrencies can be used for the transfer of funds.

In the case of other technologies, it is obvious that everything directly or indirectly related to weapons and weapons systems will be covered – the scope, including with respect to services related to technologies, must be examined on a case-by-case basis when sanctions are violated.

FAQ on the violation of sanctions

What exactly do the sanctions against Russia still mean? There are some clear answers, but overall it always depends on the individual case. There are no blanket approaches – and the constant changes at the EU level require a day-to-day view.

How far does the embargo go?

At least so far, there is no real total embargo, so business relations that are not prohibited are still allowed.

Effect on existing contracts

The legal interplay is very fine-grained; as a rule, a legal impossibility will occur in the case of an existing contract, so that here the general contractual law of interference with performance has solutions ready.

In principle, sanctions apply to both existing and new business from the time they come into force. As always, there are exceptions; some sanctions ordinances provide for special regulations, such as transitional arrangements.

What about dual-use goods

Regulation (EU) 2022/328 has tightened the prohibition framework of Art. 2 Regulation (EU) 833/2014 :

  • Export, sale and transfer of all dual-use goods and technologies listed in Annex I of the EU Dual-Use Regulation to Russia or for use in Russia is now prohibited in principle regardless of the recipient or end-user, Art. 2 para. 1.
  • In addition, the provision of technical assistance, brokering services or financial assistance i. In addition, the provision of technical assistance, brokering services or financial assistance is also prohibited in principle, Art. 2 para. 2 letters a and b.
Who is responsible

Compliance with legal requirements in sanctions law must be ensured autonomously by the company or the management/board of directors. This also corresponds to the general legal situation; companies are responsible for their own compliance! If you are unsure whether a specific transaction is compatible with the EU sanctions, you should seek legal advice. In the event of a house search, an experienced criminal defense lawyer should be consulted immediately!

German Lawyer at Law Firm Ferner Alsdorf
I am a specialist lawyer for criminal law + specialist lawyer for IT law and dedicate myself professionally entirely to criminal defence and IT law, especially software law. Before becoming a lawyer, I was a software developer. I am an author in a renowned commentary on the German Code of Criminal Procedure (StPO) as well as in professional journals.

Our law firm specialises in criminal defence, white-collar crime and IT law / technology law. Note our activity in digital evidence in IT security and software law.
German Lawyer Jens Ferner (Criminal Defense & IT-Law)