- What are the recent sanctions enforcement trends in the Netherlands?
Recent sanctions enforcement trends in the Netherlands are mainly focused on Russia. Although the Dutch government previously already took a more restrictive (sanctions) policy position towards Russia, this is particularly the case since the Russian invasion of Ukraine last year.
According to a letter to parliament of February 2023, the Dutch government considers it important to maintain high pressure on Russia through sanctions in light of the ongoing Russian aggression, whereby it indicated to be looking on an ongoing basis for additional possibilities, on top of existing sanctions measures, to further increase such pressure.
Similarly, enforcement of EU Russia sanctions is a priority of the Dutch supervisory authorities. Dutch Customs actively investigates shipments to and from Russia and Belarus. Between the beginning of the invasion and April 2023, Dutch Customs investigated approximately 37,000 export shipments, 35,000 import shipments and 4,500 parcel shipments involving these countries. Of these shipments, approximately 375 shipments were stopped for further scrutiny by the authorities.
We also see an increase in criminal investigations by the Dutch Public Prosecution Service (“PPS“) in relation to EU Russia sanctions. Although the PPS does not pro-actively publish details on ongoing investigations, press reports indicate that the PPS currently has 45 pending criminal investigations in relation to potential violations of EU Russia sanctions. This shows an increasing trend, as 27 investigations were pending at the end of 2022.
We expect additional enforcement actions going forward. This is also as the EU Russia sanctions will likely remain to apply in the (near) future and the standard of proof for “intentional” violations of EU sanctions under Dutch law is generally low (as recently confirmed by the Dutch Supreme Court, see our blog post here).
- What are the maximum penalties for violations?
In the Netherlands, violations of EU sanctions may result in criminal liability for both companies and natural persons (e.g. for violations committed in their personal capacity or where they are considered commissioning persons or factual managers to a violation committed a company).
The main penalties that could be imposed by a court include:
- For intentional violations: (i) imprisonment of up to 6 years; (ii) community service order; or (iii) fine up to EUR 90,000;
- For unintentional violations: (i) imprisonment of up to 1 year; (ii) community service order; or (iii) fine up to EUR 22,500.
The maximum monetary fines may be increased to EUR 900,000 (intentional) or EUR 90,000 (unintentional) if the value of items related to the violation exceeds a quarter of the maximum fine. For companies, the maximum fine may be further increased to 10% of the annual turnover of the legal entity (intentional) or EUR 900,000 (unintentional) if it is determined that the otherwise provided maximum fine is insufficient punishment.
In addition to main penalties, supplementary penalties may be imposed, including but not limited to disgorgement of illegally obtained proceeds, confiscation of goods or publication of the judgement.
- Is there a mechanism by which companies can submit a voluntary self-disclosure of possible violations to mitigate penalties?
There is no formal mechanism for companies to submit a voluntary self-disclosure of possible sanctions violations. Although an informal practice for voluntarily self-disclosing export controls and sanctions violations has developed, whether to submit a self-disclosure requires careful consideration on a case-by-case basis. This is also given the absence of a formal framework for self-disclosures and, so, potential criminal liability for entities and natural persons for violations that were disclosed.
- Do you anticipate increased coordination on enforcement matters with allies?
Yes, the Dutch government has been actively advocating for more effective enforcement and combatting of circumvention of Russia sanctions, including through enhanced coordination and cooperation with other EU Member States and allied countries. In this regard, the Dutch government published a so-called “Non-Paper” in February 2023, where it states that “the EU and its partners need to do everything in their power to limit the ability of Russia to wage its war of aggression. Tough enforcement of sanctions offers the EU a possibility to increase pressure and acts as a deterrent. Imposing sanctions should not be seen as the end of a policy process, but rather the beginning.” According to the Dutch government, “it is therefore urgent that the EU and its partners counter sanctions circumvention together.”
- What is one thing that you would recommend companies do now to get ready for increased enforcement?
Sanctions measures have been rapidly developing and may continue to do so. Therefore, it is important for companies to remain up-to-date on the latest status of these measures. For example, we have seen a significant increase in the number of parties that were designated under the EU’s financial sanctions throughout the past year. This means that your screening results of a few months ago may well have become outdated by now. The lists of items that are subject to product controls have also been significantly expanded, as a result of which these contain a wide variety of items that are produced and used in various sectors. This could mean that certain exports or sales that were previously allowed are now restricted or prohibited. We therefore recommend that companies keep track of current restrictions and how these may impact their business.