European Countries Increasing Russia Sanctions Enforcement, Lawyers Say
The EU and the U.K. are stepping up Russia sanctions enforcement, mirroring U.S. efforts to increase prosecutions and designations of companies helping Moscow evade trade restrictions, two Europe-based lawyers said this week. They said European countries are increasingly taking steps to expand the extraterritorial reach of their sanctions authorities, warning companies to make sure they’re conducting careful due diligence.
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Goran Danilovic, a Bird & Bird trade lawyer in the Netherlands, said he has specifically seen an uptick in sanctions enforcement by the U.K. He said the government has recently started “taking a more proactive approach," which has included more audits of companies and a rise in prosecutions. “There's a sense and an approach of expanding the jurisdictional scope when it comes to the enforcement of penalties,” Danilovic said during a March 29 webinar hosted by Thompson Hine. “They are really looking at what the U.S. is doing and are more focused on taking the U.S. approach.”
The U.S. this year announced plans to increase its export control and sanctions enforcement, which will include more outreach by the Bureau of Industry and Security’s export enforcement agents (see 2303030035, 2303240060 and 2303220037). Law firms said they are also expecting a sharp increase in DOJ export control and sanctions prosecutions in the coming months (see 2303200051), particularly after the agency previewed plans to add 25 new prosecutors (see 2303070023).
The increased U.S. focus on enforcement appears to be spilling into Europe. Daniel Wiedmann, a Poellath lawyer in Germany, said sanctions enforcement was previously “a bit of a dormant activity in the EU.” But “that is changing,” he said during the webinar. “There's a very strong political will that this is changing.”
He said the German government created a “special unit” to focus on sanctions enforcement and its economics ministry recently proposed strengthening sanctions due diligence rules for German companies. One proposal, Wiedmann said, would require German companies to use an end-use certificate for every transaction involving a sanctioned good. "A violation of that end-user certificate could become criminally sanctioned," he said.
It can be complicated for companies operating in the EU to comply with each country's evolving due diligence rules, Danilovic said. “It's up to you to ensure which EU jurisdiction am I dealing with, and then zooming in to the enforcement and penalties framework in that relevant EU member state,” he said. “We know that some EU member states, let's say, are not that strong in enforcement, and others are much more out there.”
Danilovic said he’s expecting the EU’s next Russia sanctions package, which would be the 11th released by the bloc, to target more companies in third countries helping Russia evade sanctions. He specifically mentioned Turkey and Kazakhstan as jurisdictions where “companies will definitely be listed.”