On 15 January 2026, the German Bundestag passed a bill significantly expanding and tightening German criminal sanctions law. The core elements are the extension of criminal liability to violations previously treated as administrative offences, a fourfold increase in corporate fines to up to EUR 40 million, the elimination of the two-day grace period after the publication of new person listings, among other things, and the criminal liability of reckless sanctions violations in connection with dual-use goods.
For companies, this means significantly increased liability risks. In addition, there is an urgent need to overhaul compliance systems. The amendments will come into force immediately after their expected publication in the Federal Law Gazette.
The amendments adopted in the German government's draft bill "on the adjustment of criminal offences and sanctions for violations of restrictive measures of the European Union" (21/2508) are intended to transpose the EU requirements of Directive (EU) 2024/1226 on the definition of criminal offences and sanctions for violations of restrictive measures of the European Union into national law.
The aim of the EU Directive is to harmonise and standardise the enforcement of sanctions, which has varied significantly between Member States to date, by aligning the criminal law definitions and consequences for offenders who violate EU sanctions. Although the EU itself can issue binding sanctions regulations, the responsibility for criminal prosecution (criminal jurisdiction) of violations remains with the respective Member States.
Although the German Foreign Trade and Payments Act (Aussenwirtschaftsgesetz, AWG) already went beyond the minimum requirements of the EU, the directive requires further additions to the criminal offences (e.g. circumvention, reporting obligations, reckless dual-use violations) as well as specific sanction frameworks for legal entities.
In order to implement the requirements of the directive, the Foreign Trade Act is being amended, primarily. This primarily affects the key criminal and administrative offence provisions of Sections 18 and 19 AWG as well as consequential amendments to Section 82 of the Foreign Trade Ordinance (Außenwirtschaftsverordnung, AWV). Further amendments concern the Customs Investigation Service Act (Zollfahndungsdienstgesetz) and the Residence Act (Aufenthaltsgesetz), which will not be discussed here.
2.1 Sanctions violations, particularly in the financial sector, become criminal offences
One of the most significant changes is the upgrading of numerous offences from administrative offences to criminal offences. Violations that could previously only be prosecuted as administrative offences are now subject to mandatory penalties if committed intentionally. This applies in particular to intentional violations of certain transaction bans, financial services and payment bans, circumvention activities and, beyond the requirements of the directive, investment bans. These include, among other things, the acts previously listed in Section 82 (9) Nos. 4, 6, 7 and 9 AWV, such as the purchase, trading or listing of Russian securities and money market instruments issued after 9 March 2022. Violations may in future be punished with prison sentences of between 3 months and 5 years.
Similarly, a violation of the so-called duty to report – the duty to report information, in particular about possible sanctions violations, to the competent authorities – is no longer punishable as an administrative offence, but as a criminal offence with a prison sentence of up to 1 year or a fine, provided that the information was obtained in the exercise of a professional duty. The legal profession is exempt from criminal liability if the information was entrusted to them in their professional capacity or disclosed to them.
A particularly critical aspect is that the existing possibility of avoiding fines for a large number of negligent violations by means of voluntary disclosure pursuant to Section 22 (4) AWG will no longer apply in future due to the reclassification of administrative offences as criminal offences. This increases the pressure on companies to take action against preventive sanctions violations, as it will be much more difficult to limit the damage retrospectively.
2.2 Criminal circumvention of EU sanctions
A new separate criminal offence has been introduced in Section 18 (1) No. 3 AWG with regard to certain acts intended to circumvent EU sanctions. This makes any use of frozen funds and resources a criminal offence if it is done with the intention of concealment. In addition, the dissemination of false, misleading or incomplete information with the intention of concealing the sanctioned ownership or possession of funds or economic resources will in future be punishable by imprisonment of between three months and five years.
2.3 Tougher penalties for violations of goods-related sanctions
The tightening of goods-related sanctions is particularly relevant in practice. Here, new risks arise in particular in the trade in goods that can be used for both civilian and military purposes (so-called dual-use goods). Until now, reckless behaviour was only punishable in the case of certain violations of arms embargoes involving goods listed on the EU Military Goods List. However, reckless violations of certain prohibitions relating to goods listed on the EU dual-use goods list were only punishable as administrative offences. In future, reckless conduct in the export of dual-use goods will also be prosecuted as a criminal offence for the first time and punished with imprisonment of up to three years or a fine.
A particularly serious case with prison sentences of 6 months to 10 years is introduced in Section 18 (6a) AWG. This is the case for example, if, in the context of a goods trading transaction, incomplete or incorrect information is provided to public authorities about the end use, transport route, recipient, consignor, origin, buyer, seller, quantity, value or nature of the goods in order to conceal a violation of EU sanctions. The use of a third-country company to conceal such a violation is also punishable if the perpetrator exercises a controlling or decisive influence over that company.
2.4 Significant increase in corporate fines
The new law brings with it a significant tightening of the rules for legal entities and associations of persons. The upper limit of the penalty portion of a corporate fine under Section 30 of the Administrative Offences Act (OWiG) will be quadrupled from the current EUR 10 million to EUR 40 million for underlying sanctionable offences committed by managers. This also applies to breaches of supervisory duties under Section 130 of the Administrative Offences Act (OWiG). However, no use was made of the option provided for in the EU Directive to impose fines of up to 5% of global annual turnover.
2.5 Elimination of relief measures for the timely implementation of new sanctions
The grounds for exemption from punishment in Section 18(11) AWG, according to which no punishment was previously imposed on anyone who committed the offence by the end of the second working day after publication of the legal act in the Official Journal of the European Union, has been deleted. In practice, this particularly affects the inclusion of new natural or legal persons on the EU sanctions list and the associated business prohibitions. For companies, this effectively means that they are forced to implement new sanctions requirements almost immediately.
2.6 Trust administration for Russian subsidiaries
New are explicit regulations that allow for public-law trust administration for European subsidiaries of Russian parent companies in the event of a concrete threat to public security and Germany's foreign interests. At the request of the company, a share custodian can also be appointed by the court to exercise the administrative rights arising from the shareholder position. This is intended to strike a balance between preventing circumvention or violations of the EU sanctions packages against Russia on the one hand and preserving jobs and safeguarding creditor interests on the other.
The reform of criminal sanctions law leads to a significant increase in liability risk for companies and their managers. The risk landscape in the area of sanctions is shifting significantly to the detriment of companies. Almost all intentional violations of EU sanctions regulations will be punishable by law, in some cases supplemented by reckless offences, and the upper limit for fines for companies will rise to up to EUR 40 million. This increases both the financial risks and the personal liability risk for executives and compliance officers, especially since typical organisational deficits (e.g. missing or insufficient sanctions list checks, incomplete documentation, inadequate training) can now quickly become relevant under criminal law. The elimination of the grace period forces companies to record changes in the EU sanctions situation on a daily basis and to implement them immediately in their operations; delays in IT systems, processes or internal communication can now directly result in criminal liability risks.
Against this backdrop, companies should comprehensively review and refine their sanctions compliance systems. This includes, in particular, a risk-based approach with systematic risk analysis along the entire value chain, robust sanctions list screenings (customers, suppliers, business partners, beneficial owners), clear process responsibilities and complete documentation of checks and decisions. In the area of dual-use goods in particular, technical classification, end-use and end-user checks, and the monitoring of re-exports and transit trade relationships with third-country companies are essential in order to counter the new circumvention and recklessness provisions.
Companies should also design reporting processes for frozen assets and other sanction-related information in such a way that deadlines are met and responsibilities are clearly assigned. Finally, in view of the stricter penalties, regular training of sales, export control, finance, procurement, logistics and management staff is essential in order to raise awareness of the increased personal and corporate responsibility under sanctions law.
ADVANT Beiten's tax and white-collar crime practice specialises in the prevention, support and resolution of tax and criminal law risks in the financial sector. As a highly specialised unit with many years of industry experience in the financial sector, we combine expertise in criminal law with in depth tax law and regulatory know-how.
We provide advice on tax and commercial criminal law, tax controversy, anti-financial crime financial sanctions, and all related compliance issues, as well as the conduct of internal investigations.
In addition to preventive advice, we provide comprehensive defence for companies and individuals in tax and white-collar crime cases and represent them before financial and specialist authorities (e.g. BaFin). All lawyers in the team are also qualified as Certified AML & Anti Fraud Officers.
Our team provides comprehensive support and advice on all aspects of criminal law law, including representation and defence in cases of sanctions violations. We also offer individual legal advice on embargo law issues, and assistance with the drafting, operational review and adaptation of your sanctions compliance programme (SCP).
Martin Seevers, LL.M. Tax (USA)
Guido Storck
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