The history of the EU sanctions packages against Russia is also a history of big announcements. It was only in February that the list of people and companies whose assets in Europe were to be frozen was extended. It is already the 13th sanctions package since the war against Ukraine broke out two years ago. That sounds good, but sanctioning is not that easy, because Russian oligarchs like to hide their assets behind front companies and front people. Germany had a particularly difficult time hunting from the start. In mid-June 2022, Federal Finance Minister Christian Lindner (FDP) quantified the assets from Russia frozen in Germany to 4.48 billion Euro – in Great Britain it was significantly more at more than 18 billion pounds (21 billion euros).
But now, almost two years later, the amount of sanctioned assets in Germany has not increased, but has fallen to 3.9 billion euros, as the General Customs Directorate announced at the SZ’s request. Price fluctuations in assets are one reason for the decline, and some people have now been removed from the sanctions list, probably because they were successful complained against it had.
Nevertheless, experts are certain that Germany could freeze more Russian assets if the federal government provided the necessary resources and powers. “The central office for sanctions enforcement is supposed to track down sanctioned assets,” says Frank Buckenhofer, customs investigator and chairman of the customs police union. But the authority is neither present in the area nor does it have the necessary powers that are needed to search for oligarchs’ assets like the professional financial investigators from customs and police, says Buckenhofer.
Is Lindner’s law a toothless tiger?
Federal Finance Minister Lindner promised in 2022 that he would finally take tougher action against money laundering and other financial crimes. The big fish should be hunted, Lindner said at the time, he meant mafia, tax evaders, clans, kleptocrats and sanctioned oligarchs who show enormous finesse in concealing their ownership of yachts, companies or aircraft behind shell companies. The federal government is currently working on – be careful, long word – the Anti-Assets Concealment Act, short: VVBG. The most important measure: a reversal of the burden of proof. In the future, suspected criminals will have to prove who the owner of their assets is and where the money for them came from. If the answer is not satisfactory, the authorities could confiscate the yacht or property. This rule would require the suspect to have a legal obligation to answer relevant questions.
But it is precisely this condition that is missing from the draft law. The authorities are allowed to question people who do not have to answer them, the Association of German Criminal Investigators complained in its statement. One has to hope that a suspected criminal, who has often previously put a lot of effort into concealment, will suddenly make a confession about the criminal origin of his assets without any need. “With this law, at best, you can take away the assets of the stupidest criminals. Lindner’s law is a toothless tiger. Instead, Germany would need a customs or financial police based on the Italian model of the Guardia di Finanza,” demands Buckenhofer. Birgit Rodolphe, who is responsible for the fight against money laundering at the Bafin financial regulator, also says: The issue of asset concealment is an important issue. “I’m more in favor of stricter rules.”
But it’s not just the hunt for oligarchs’ assets that’s a problem. The entire EU is having difficulty enforcing sanctions against Russia. One reason is the different regulations. Therefore, in April the European Council adopted a legal act that introduces EU-wide minimum rules for the prosecution of EU sanctions violations or their evasion in the member states. Member States have twelve months to transpose the provisions of the revised Directive into their national legislation.
One problem is the confusion in the EU
So far, the field of combating sanctions has been a major mess: in 14 member states, the maximum prison sentence for intentional sanctions violations is between two and five years. In eight member states, however, maximum sentences of between eight and twelve years are possible. The fines also vary greatly in the member states and range from 1,200 euros to five million euros. But is this standardization of regulations enough? Experts have doubts.
“What is much more important is the question of whether the existing sanctions are being enforced, whether companies are sticking to the rules and whether there are harsh penalties for sanctions violations,” says sanctions expert Viktor Winkler. In addition, the EU lacks a sanctions plan. There is no discernible structure as to who and what is being sanctioned and for what reason. “Some oligarchs are on the list, some are not, the diamond trade with Russia was not sanctioned for two years, why so late?” asks the lawyer. At the same time, the oil business with Russia is also sanctioned, but there are exceptions for LNG, complains Winkler: “It’s chaos.”