In a written circulation procedure, the Federal cabinet today approved a tool to help formulate the bill for a first Sanctions Enforcement Act. The draft tool will now be presented to the German Bundestag via the parliamentary groups and further considered in parliamentary proceedings.

The EU sanctions against Russia comprise the freezing of the assets of listed individuals, as well as restrictions on travel, economic cooperation, and imports and exports. The Sanctions Enforcement Act is intended to ensure the effective implementation of sanctions in Germany. Sanctions Enforcement Act I will improve the legal foundations for the agencies responsible for enforcing the sanctions to be able to access existing administrative information. It also clarifies the legal position and amends and extends agencies’ competences and powers in respect of sanctions enforcement. The Act widens the possibilities for clarifying ownership and securing assets and requires listed persons to declare their assets (failure to do so being a punishable offence).

Sanctions Enforcement Act I puts new legislation in place and is a compilation of amendments to the following laws: Foreign Trade and Payments Act, Money Laundering Act, Banking Act and Securities Trading Act.

The following points in the Act are to be emphasised:

  • To clarify ownership issues, the competent authorities are entitled to summon and examine witnesses, secure evidence, search residences and business premises, and examine land registers and other public registers. The possibilities for investigating and accessing details of accounts and investigating the safety deposit boxes and security deposits of sanctioned persons are being extended.
  • In a further move to clarify ownership questions, a requirement to declare frozen funds and other economic resources is being introduced, failure to do so being a punishable offence. The sanctioned persons will be obliged to declare their assets to the German Bundesbank or the Federal Office for Economic Affairs and Export Control without delay. Failure to do so may incur imprisonment of up to one year or a fine.
  • Funds and other economic resources can be secured until ownership has been clarified.
  • The Act makes it clear that the Länder, too, are responsible for applying and enforcing the provisions of foreign trade and payments law.
  • The scope for exchanging information relevant to sanctions between authorities is being expanded. This also applies to personal data, in compliance with data privacy regulations. Authorities will be given additional possibilities to call up data from the transparency register in which the beneficial owners are listed. The authorities are to use this information within their area of competence, thus contributing to the even more effective implementation of financial sanctions.
  • The authorities cooperating in sanctions enforcement include the German Bundesbank, the Federal Financial Supervisory Authority (BaFin), the Central Financial Transactions Investigation Agency (FIU), the Customs Criminological Office (ZKA) and the Federal Office for Economic Affairs and Export Control (BAFA).

For the ensuing second Sanctions Enforcement Act (SDG II) it is intended to establish a national register for assets of unclear origin and for assets subject to sanctions. An independent administrative process for clarifying assets of unclear origin is to be introduced, and a special whistleblower hotline is to be set up.