This week in our Sanctions Enforcement Around the World series, we bring you the view from Spain.
- What are the recent sanctions enforcement trends in Spain?
In Spain, fines for sanctions violations are not published but sanctions enforcement actions have been the subject of reports in the press. Generally, the overall sanctions enforcement environment in Spain has not been as active as in other EU Member States.
However, in the context of Russia sanctions, there has been a slight uptick in enforcement actions. By way of example:
- Spanish Customs is now closely scrutinizing Russia-bound exports for any sanctioned goods;
- Two women were recently arrested and accused of allegedly exporting dual-use goods to Russia;
- There have been multiple seizures of oligarchs’ assets, including funds, bank accounts, properties and yachts; and
- There have been several enforcement cases regarding the prohibition of access to EU ports by Russia-flagged vessels and vessels that changed their Russian flag or registration to other states.
On this last point, in February 2023, the Magellan, a Singapore-flagged vessel, was refused entry to the Port of Tarragona because it was carrying diesel that originated from another vessel that had sailed under a Russian flag until 1 July 2022. Apparently, the Magellan had carried out a ship-to-ship transfer from a third ship, Elephant, in the Alboran Sea, which diesel cargo originally came from the Nobel, a ship that flew the Russian flag until it changed to the Cameroon flag. Based on information published by the Spanish authorities, this is not the first time that the Spanish Maritime Administration has prohibited the entry into a Spanish port of a ship whose cargo originally came from a Russian-flagged ship. In April 2022, the Barcelona Maritime Authority denied port access to a Maltese-flagged ship, Black Star, for transporting cargo from a Russian-flagged ship, after carrying out a ship-to-ship transfer near Malta.
- What are the maximum penalties for violations?
Violations of sanctions restricting the import or export of certain goods are either considered to criminal offenses or administrative offenses depending on the value or the nature of the imported or exported product. In this regard:
- Criminal penalties apply if (i) the value of the imported or exported goods is EUR 50,000 or more; or (ii) if the goods are weapons, explosives or any other goods which are illegal to possess. Maximum criminal penalties are imprisonment for up to five years and a fine of up to six times the value of the illegally imported / exported goods.
- Administrative penalties apply where the import/export of goods does not fall into the categories set forth in (i) or (ii) above. Maximum administrative monetary penalties are 350% of the value of the illegally imported / exported goods.
In both the criminal and administrative setting, collateral penalties such as a denial of import/export privileges for a period of up to 2 years (criminal offense) or 12 months (administrative offense) are also available.
The maximum fine for non-compliance with financial sanctions (asset freeze measures and the prohibition on making funds or economic resources available to designated parties) is the greater of: (i) 10% of the annual turnover of the offender; (ii) twice the amount of the underlying transaction; (iii) five times the amount of the profits derived from the infringement; or (iv) EUR 10,000,000. In addition to a fine, violations can also lead to a public or private reprimand or the temporary suspension or revocation of the administrative authorization to operate.
- Is there a mechanism by which countries can submit a voluntary self-disclosure of possible violations to mitigate penalties?
Apart from the European Commission’s EU sanctions whistle-blower tool, there is no formal voluntary-self disclosure mechanism for sanctions non-compliance in Spain.
However, the submission of an informal voluntarily self-disclosure of possible non-compliance with sanctions would likely result in mitigation of any eventual fine that is sought to be imposed.
- Do you anticipate increased coordination on enforcement matters with allies?
Although Spanish authorities have not been as active as other EU Member State authorities in this regard, Spain is also taking part in broader EU enforcement efforts.
At a G7 level, the creation of the Enforcement Coordination Mechanism will lead to increased coordination among G7 members on sanctions enforcement. For example, in April 2022, Spanish authorities seized the luxury yacht “Tango” owned by sanctioned Russian oligarch, Viktor Vekselberg, pursuant to a request from the U.S. Department of Justice.
Based on press reports, it appears that Spain will propose to the European Commission the introduction of a certification system to identify the source of EU energy imports to ensure enforcement of sanctions restricting the import of Russian energy products.
- What is one thing that you would recommend companies do now to get ready for increased enforcement?
Spain’s focus on enforcement of sanctions on the import and export of goods and dealings with sanctioned parties means companies should ensure that their (i) product classifications are correct and have been assessed against the most recent sanctions and (ii) sanctions screening program is appropriately scoped for their current risk exposure.