Germany: New SDG I for Effective Implementation of Sanctions

Jul 8, 2022 Benn-Ibler Rechtsanwälte

The new German Sanctions Implementation Package I (SDG I) was announced on May 28, 2022. It is intended to enable a more effective enforcement of EU sanctions imposed against Russia. The SDG I changes the existing Foreign Trade and Payments Act, the Money Laundering Act, and the Banking Act and Securities Trading Act.

In response to Russia's invasion of Ukraine, the EU has adopted a number of sanctions packages, such as import and export restrictions, asset freezes, and export stops. The EU's basic regulations issued in 2014 have direct applicability in Germany. Hence, there is no need for separate national legislation to implement these sanctions.

However, existing national legal provisions are not sufficiently specific in order to ensure sanction enforcement and therefore not adequately effective for German authorities to be able to implement all respective sanction objectives effectively and in their entirety. For example, it has not yet been possible to identify certain assets and freeze them until relevant ownership information has been ascertained. Sanctioned individuals were also still able to make use of their property, as only financial assets had been ‘frozen’.

SDG I is intended to now close any existing regulatory gaps as quickly as possible. It is to be considered an anticipatory step towards even more fundamental solutions.

In particular, SDG I provides for the following regulatory means:

• Seizure of assets until ownership situations have been clarified
• Authorisation of competent authorities to summon witnesses, demand information and documents, search homes and business premises, and seize evidence for the purpose of investigating economic resources, funds, and ownership
• Clarification of the responsibility of German state authorities as pertaining to the application and enforcement of provisions of foreign trade law
• Expansion of data transmission powers to sanctioning authorities involved, including access to the transparency register as well as performing account enquiries into the German Federal Financial Supervisory Authority (BaFin).
• Under punishment of law, sanctioned persons are under obligation to disclose information on their financial assets as well as other economic resources.
• The Federal Financial Supervisory Authority (BaFin) shall be authorized to order all measures necessary to enforce trading bans in the event of sanctions being imposed.

Act of Parliament Printed Material 218/22