German Bundestag tightens sanctions in foreign trade criminal law: Important changes for companies

The German Bundestag has taken a long-awaited step: With the passage of the law on the adjustment of criminal offenses and sanctions for violations of restrictive measures of the European Union, German foreign trade law has been significantly tightened. For companies, this means above all that sanctions violations will more quickly become criminal offenses and potentially much more expensive. The changes will take effect immediately on the day after the law is expected to be announced in late January/early February.

The legislature is implementing EU Directive 2024/1226, which aims to establish uniform and effective criminal sanctions law in the EU.

The most important new regulations at a glance:

From administrative offense to criminal offense

At the heart of the reform is a comprehensive revision of the provisions on penalties and fines in the Foreign Trade and Payments Act (AWG) and the Foreign Trade and Payments Ordinance (AWV).

Numerous intentional violations that were previously considered only administrative offenses will now be criminal offenses. These include violations of financial sanctions and transaction bans, as well as the concealment of assets to circumvent sanctions. The possibility of voluntary disclosure to avoid punishment (Section 22 (4) AWG) no longer applies in these cases.

Elimination of the "48-hour grace period"

The previous grace period regulated in Section 18 (11) AWG will be abolished without replacement. EU sanctions will thus apply immediately upon publication. Although the explanatory memorandum to the law acknowledges that practical implementation difficulties in individual cases could negate the intent required for criminal liability, the risk for companies will nevertheless increase significantly.

Criminal liability even in cases of recklessness for dual-use goods

In future, recklessness will be sufficient for criminal liability in the case of violations in connection with dual-use goods (Section 18 (8a) AWG-RegE). This increases the risk, particularly in operational export and import processes with complex goods classification.

New criminal liability for violations of reporting requirements

The criminal liability for violations of reporting requirements is also being expanded. Under certain conditions, the universal obligation to report information on sanctioned funds and economic resources (Section 18 (5a) AWG-RegE) will be punishable by law, increasing the risk even outside of standard export control functions. Professional groups authorized to provide legal representation remain exempt from this obligation.

New trust administration for subsidiaries of Russian corporations

In response to the 18th EU sanctions package, § 6a AWG-RegE creates a national framework for public-law trust administration. This is intended to ensure that domestic companies can continue to operate despite sanctioned ownership structures. In addition, the new Sections 6b to 6g AWG-RegE regulate the share guardianship, which is intended to ensure the company's quorum.

Corporate fines: Maximum amounts quadrupled

The reform is particularly painful for companies in terms of sanctions: the maximum corporate fine increases from EUR 10million to EUR 40 million – plus skimming of profits or saved expenses.

Criminal violations of sanctions by individual employees can thus entail existential risks for the entire company.

Classification: More deterrence, more responsibility

With this amendment to the law, Germany is consistently following the European line of strengthening the enforcement of sanctions as a security and economic policy instrument. The reform is not merely a "technical update," but a clear change of course toward genuine criminal deterrence. For companies, this means a significant increase in liability and reputational risks.

Recommended action: Act now instead of reacting later

The message from lawmakers is clear: lack of awareness and organizational shortcomings no longer provide protection. Companies should use the new regulations as an opportunity to review their sanctions compliance. We recommend focusing in particular on the following areas:

• Review your compliance culture: Embed the importance of sanctions compliance explicitly in your corporate culture ("tone from the top") and review your contractual safeguards with respect to business partners (sanctions clauses).
• Risk-based training concepts: Train not only your specialist departments, but all employees who come into contact with sanction-relevant processes – from purchasing and sales to financial accounting.
• Procedural and technical adjustments: Ensure that your internal processes and IT systems enable new listings to be implemented in real time. The elimination of the grace period requires immediate responsiveness.
• Careful classification of goods: The new criminal liability for recklessness in the area of dual-use goods requires an even more robust and comprehensively documented classification of goods.
• Implementation of reporting procedures: Define clear internal processes and responsibilities for fulfilling the extended reporting requirements so that information about sanction-relevant matters does not leave the company.

This article was written in collaboration with our research assistant Jakob Döllner.