18th Regulation Amending the Foreign Trade and Payments Regulation in effect
On 3 May 2022, the 18th Regulation Amending the German Foreign Trade and Payments Regulation (18. Verordnung zur Änderung Außenwirtschaftsverordnung – AWV) entered into force. This law defines new administrative offences that are subject to fines so that penalties can be imposed for violations of sanctions entailing restrictive measures against Belarus, Russia and the regions of Ukraine not controlled by the Ukrainian government, Donetsk and Luhansk.
As regards Belarus, this concerns prohibitions of
- transactions in connection with reserves and assets of the Belarussian Central Bank,
- listing shares of Belarussian companies in which the state holds more than 50% on European stock exchanges,
- granting new loans, credits or entering into similar agreements with the Republic of Belarus, its government, public institutions, companies and agencies or with organisations designated in Annex IX of Council Regulation (EC) No 765/2006 or organisations directly or indirectly controlled by the above,
- accepting deposits of more than €100,000.00 from Belarussian citizens or entities domiciled there.
In connection with restrictive measures against Russia, this concerns violations of the prohibition
- to participate in or contribute to a project co-financed by the Russian Direct Investment Fund,
- to expand a participation in a company that was founded according to Russian law or the law of a third country and that is active in the energy sector in Russia,
- to participate in granting loans, credits or funds to a company active in the energy sector in Russia,
- to establish a joint venture to be active in the energy sector in Russia,
- to purchase, trade in or list on a stock exchange securities or money market instruments from the companies designated in Annex III of Regulation (EU) No 833/2014,
- to reach any agreements with companies designated in Annex III, V, VI, XII or XIII on granting new loans or credits,
- to conduct any transactions in connection with the administration of reserves and assets of the Russian Central Bank,
- to conduct transactions with any organisations listed in Annex XIX,
- to accept deposits of more than €100,000.00 from Russian citizens or from entities domiciled there,
- to grant Russian individuals or entities access to rating activities,
- to support Russian persons in procuring funds or financial aid,
- to register a trust or legal structure for any Russian persons.
In connection with restrictive measures against the regions Donetsk and Luhansk, this concerns violations of the prohibition
- to expand a participation in real estate or companies,
- to grant loans, credits or similar agreements,
- to establish joint ventures and
- to cooperate in performing sanctioned contracts or transactions.
It was necessary to amend section 82 of the Foreign Trade and Payments Regulation in order to close sanction loopholes in the event of violations of sanction measures. Section 18(1) of the Foreign Trade and Payments Act only provides that export, import, transit, shipment, sale, acquisition, delivery, provision, passing on, service, investment and disposal are punishable. However, a number of the newly introduced prohibitions do not fall under any of the abovementioned categories, which has meant that violations of them were not punishable either as a crime or as an administrative offence.
It should be noted that the references to the sanction regulations in section 82 of the Foreign Trade and Payments Regulation are “static references” that refer to the version of the sanction regulations designated in each law. Consequently, any future expansions of the prohibitions in the sanction regulations will not fall under the elements of an administrative offence. Only violations of the abovementioned provisions of the sanctions regulations that occurred after entry into force of the amended version of section 82 of the Foreign Trade and Payments Regulation are subject to punishment.