Having focused on the enforcement of sanctions by the United States, United Kingdom and the European Union in the past weeks, this week we will take a closer look at the current enforcement practice of the German authorities and the changes to be expected following the newly announced G7 Enforcement Coordination Mechanism.

  • What are the recent sanctions enforcement trends in Germany?

We note that the enforcement of the EU sanctions, particularly against Russia, is taken very seriously by the German authorities; especially when compared to other EU member states. It is expected that the new G7 enforcement coordination mechanism will tighten the future enforcement practice in Germany further – in combination with two other crucial developments: The recent establishment of the new Central Office for Sanctions Enforcement in Germany and the German Government’s announcement of increased investigations on sanctions evasion practices (see our recent post on this internationally emerging topic here)

New Central Office for Sanctions Enforcement

In order to be able to enforce sanctions more effectively at the national level, the government established a Central Office for Sanctions Enforcement (agency of the Federal Ministry of Finance; initially attached to the Central Customs Authority) at the beginning of 2023. Its main tasks are to coordinate the work of the authorities responsible for sanctions enforcement, i.e., the Federal Office of Economic Affairs and Export Control (BAFA), the public prosecutor’s office, the police, customs and banks, and to act as a new central office for receiving tip-offs about potential crimes. Since the new central office has only just been established, it remains to be seen which exact impact this will have on the effectiveness of sanctions enforcement.

Increased focus on sanctions evasion practices

At the beginning of February 2023, a large-scale raid made its headlines in Germany. This concerned three companies in North Rhine-Westphalia. With regards to one company there has been the suspicion of having supplied electronic components, which could also be used for military purposes, to Russia via a Turkish company. Another notable unannounced raid at various companies in northern and southern Germany took place in August 2022. The focus was primarily on one company that allegedly made more than 30 unauthorized supplies in the past 3.5 years. These concerned toxic substances, some of which are classified as dual use and were supplied mainly to a Russian company.

In particular the latest raid is in line with current German enforcement practice: it was announced last month by the Federal Ministry for Economic Affairs and Climate Action that there would be a broader focus on modified goods flows via third countries to Russia being used to circumvent the existing EU sanctions.  In this respect, the responsible minister, Robert Habeck, posted on LinkedIn (see here): “It is of great importance for our country, for Europe, that the sanctions unfold their full force. If that is undermined, our collective power will be weakened. (…) Those who circumvent sanctions must be sanctioned. For this purpose, together with our EU partners, we should consistently use the possibility to list companies based in third countries that deliver to Russia” (translated from German). Besides the circumvention of EU sanctions via intermediate deliveries to Turkey, the significant increase of German exports to, for example, Armenia, Kazakhstan or Kyrgyzstan, suggests that circumvention is also taking place via other countries.

Backlog in asset freezing

In terms of the illegal use of frozen assets, a significant raid was carried out by German authorities at several houses of the Russian oligarch Usmanov in September 2022. Nonetheless, with regard to the enforcement of financial EU sanctions, it became known at the beginning of this month through a questioning of the government by the German Parliament that currently only assets in the amount of approximately 5.25 billion euros are actually frozen; in August 2022, the total amounted to approximately 4.28 billion euros. To put this into perspective: A few days after the war began, Der Spiegel reported, citing information from German authorities, that “Russian citizens have assets worth about 25 billion euros in Germany that could be frozen.” (see here) Hence, the current progress was criticized as unsatisfactory in German parliament and in the media (see e.g. Reuters). Furthermore, the questioning in parliament revealed that only eight agencies reported 31 frozen asset positions, amounting to approximately 577 million euros in value. Increased enforcement is to be expected in the future due to the new EU reporting obligation for listed persons and entities (see Sec. 10 Sanctions Enforcement Act) that came into force on 01 January 2023. This provision also stipulates a mutual obligation for the new Central Office for Sanctions Enforcement, BAFA and the German Central Bank to inform each other in the event of a report being received.

Other known investigations

In September 2022 at least about 150 cases were under investigation for alleged violations of EU sanctions against Russia and Belarus by the German authorities (incl. preliminary investigations). The investigations covered a wide range of infringements. It is to be expected that this number has since increased significantly. Last week, for example, a company in northern Germany hit the headlines after being fined 1.3 million euros for violating sanctions against Russia. The company delivered a machine to Russia that was used to build the Crimean Bridge. While the number of enforcement actions is thus substantial, the authorities have also emphasized that the severity of the cases under investigation varies – from many minor breaches to a few larger penalties such as the recent Crimean bridge example.

  • What are the maximum penalties for violations?

In Germany, potential penalties and fines for violating EU sanctions against Russia can be severe. Please note that there is no corporate criminal law in Germany to date, albeit the possibility of imposing fines does exist.

Criminal willful offenses can trigger prison sentences ranging from 3 months to 10 years, depending on the nature of the offense and its severity. In this respect, it should be noted that intent is to be understood considerably more broadly under German criminal law than under common law. A criminal offense is also committed in case of a negligent violation of an arms embargo, which is also subject to a prison sentence of up to 3 years or a fine.

In the case of negligent violations, civil penalties apply which can amount to up to 500,000 euros against private individuals. However, so far we do not see fines in this amount in our practice. Nonetheless, it is possible to go beyond these amounts if this is the only way to exceed the economic benefit derived from the violation.

The company may also be fined directly, provided that either a manager was directly responsible for the violation or supervisory or organizational culpability was involved. In the case of a wilful violation, a fine of up to 10 million euros is possible; in the case of negligence, the maximum fine is 5 million euros and 1 million euros in the event of a breach of supervisory duty. Furthermore, the profits from the transactions that violate the EU sanctions can be siphoned off by the authorities.

  • Is there a mechanism by which countries can submit a voluntary self-disclosure of possible violations to mitigate penalties?

Yes, in strict exceptional cases of negligent violations of EU sanctions, the possibility of voluntary self-disclosure to avoid any prosecution exists, provided that no investigations have yet been initiated. In this respect, it is also important that appropriate measures were taken to prevent similar violations in the future.

  • What do you think the G7 Enforcement Coordination Mechanism means for Germany?

The creation of the G7 Enforcement Coordination Mechanism is in line with Germany’s previous approach to Russia sanctions: to act in close cooperation with its international partners. It also goes hand in hand with the clear trend of increasing enforcement at the EU level. The European Commission set up a ‘Freeze and Seize’ Task Force to enhance coordination in sanctions enforcement among Member States and EU agencies such as Europol and Eurojust. The Commission also proposed to add “violation of restrictive measures” to the list of EU crimes which aims to make it easier in the future to investigate, prosecute and punish violations of EU sanctions in all Member States alike (see EU blog post here).

The overall closer cooperation will most likely result in an increase in the number of enforcement action in Germany. Additionally, efficiency of investigations is likely to increase due to the intensified flow of information between enforcement agencies.

  • What is one thing that you would recommend companies do now to get ready for increased enforcement in Germany and increased coordination with the other G7 members?

Increased international cooperation means that companies also need to think with greater global awareness by conducting trainings and audits and continuously working on their sanctions compliance.

We are happy to announce that next week our French colleagues will provide insights into the sanction’s enforcement practice in France.


Anahita heads Baker McKenzie's International Trade Practice in Germany and is a member of our EMEA Steering Committee for Compliance & Investigations. Anahita is Global Lead Sustainability Partner for our Industrials, Manufacturing and Transportation Industry Group and a member of the ABA International Human Rights Steering Committee. Anahita focuses her practice on global investigations and white-collar crime proceedings before German authorities and courts. She has significant experience advising on internal compliance programs, accompanying internal and external investigations and self-disclosures, inter alia in cases of breaches of sanctions, export control, human rights, data protection and foreign investment review, closely collaborating with the competent authorities.


Alexander advises clients on the international, European and public law governing international trade. His practice encompasses advising on sanctions and embargoes, trade defense instruments, export control regulations, foreign investment review and international investment law as well as human rights and sustainability due diligence and compliance, including on the German Supply Chain Due Diligence Act and the EU Directives on ESG compliance. Alexander furthermore advices on trade policy, free trade agreements, disputes arising out of these and customs matters.


Kimberley focuses on international, European and public law governing international trade compliance and sustainability. She advises clients on internal compliance systems, sanctions and embargo regimes, export control law and foreign investment reviews. She accompanies internal and external investigations and self-disclosures of export control and sanctions breaches. In addition, she assists clients in complying with the rapidly evolving EU and German legal landscape on sustainability, in particular the new directives and regulations under the EU Green Deal and the German Supply Chain Due Diligence Act. This includes setting up and improving corporate governance structures and internal compliance programs with regard to environmental, social and governance (ESG) matters.