The Act amending Criminal Offences and Penalties for Violations of European Union Restrictive Measures (Gesetz zur Anpassung von Straftatbeständen und Sanktionen bei Verstößen gegen restriktive Maßnahmen der Europäischen Union, the “Sanctions Act”) was published on 5 February 2026. The Act transposes Directive (EU) 2024/1226 on the definition of criminal offences and penalties for the violation of Union restrictive measures and amending Directive (EU) 2018/1673 (the “Sanctions Directive”) into German law. The reforms markedly tighten German criminal sanctions law, turning many actions formerly deemed administrative offences into criminal offences when undertaken intentionally. Potential fines and penalties have also been significantly increased.
Background
The Sanctions Directive came into force on 19 May 2024 (see article of 27 May 2024), introducing EU-wide minimum standards for the prosecution of violations of EU sanctions. Member States had previously taken differing approaches when categorising sanctions violations as administrative offences or criminal offences, and the ceilings for company fines had also varied considerably between EUR 133,000 and EUR 37.5 million.
The Sanctions Directive specifies which sanctions violations committed with intent or through serious negligence Member States must criminalise and introduces a binding minimum penalty framework that is significantly stricter than under the prior legal regime.
Most of the Sanctions Directive’s requirements were already covered by Germany’s existing regulatory framework. However, a premature change of government put a stop to a 2024 bill that would have transposed the remainder of the Sanctions Directive, causing the 20 May 2025 transposition deadline to be missed and the European Commission to subsequently open infringement proceedings in July 2025. The Sanctions Act now passed by the Federal Parliament (Bundestag) largely corresponds to the 2024 bill.
Key provisions of the Sanctions Act
First and foremost, the Sanctions Act amends sections 18 and 19 Foreign Trade and Payments Act (Außenwirtschaftsgesetz, “AWG”) and section 82 Foreign Trade and Payments Ordinance (Außenwirtschaftsverordnung, “AWV”). The key changes are as follows:
More criminal offences
The Sanctions Act significantly increases the scale and scope of criminal offences relating to foreign trade set out in section 18(1) AWG. Some actions previously classified as administrative offences under the AWV have been upgraded to criminal offences, while some sanctions violations have become criminal offences for the first time.
- Section 18(1), no. 1, letter (c) AWG now comprehensively criminalises the provision of financial services in breach of sanctions alongside the breach of other financial-sector prohibitions. Such provision of financial services was already subject to criminal penalty under the previous version of the AWG, but the loopholes for other sanctioned actions in the financial sector have now been closed.
- While violations of transaction bans in certain sectors, such as those on leasing real estate (Article 20(1) Regulation (EU) 2017/1509), were already subject to administrative fines, these are now criminal offences (section 18(1), no. 1, letter (e) AWG). This new provision is explicitly limited to sectoral transaction bans with state entities, therefore also applying to the ban on transactions with entities linked to the Russian government (Article 5aa(1) Regulation (EU) 833/2014), for example.
- Awarding or renewing public contracts in breach of sanctions is now a criminal offence for the first time (section 18, no. 1, letter (f) AWG).
- Violations of investment bans were previously either administrative or criminal offences, but are now all criminal offences (section 18(1), no. 1, letter (g) AWG).
Some criminal offences have been relocated within the AWG, such as making funds available to listed persons (now in section 18(1), no. 1, letter (h)).
Sanctions circumvention
Circumventing sanctions does not constitute an offence in its own right under the Sanctions Act, but disguising assets to circumvent sanctions does (section 18(1), no. 3, letter (a), (b) AWG). Where public authorities are given false information with intent to disguise assets, the penalty has been raised to between six months and ten years (section 18(6a) AWG).
Expanded reporting obligations
More violations of reporting obligations will become criminal offences (section 18(5a) AWG). This applies to the general obligation to report information to the competent authority where such information is needed to implement a sanction, was obtained in the performance of a professional duty, and concerns assets to be frozen. The only exemption is for legal advisors (section 18(13) AWG). To date, it was possible to avoid prosecution by later volunteering the information wrongly withheld (section 18(13) AWG), but this avenue has been closed off.
Neither the relevant AWG provision (section 18(5a)) nor the Sanctions Directive make it a criminal offence to fail to report information not obtained in the performance of a professional duty. Such violations remain subject to administrative fines only (section 19(5), no. 1 AWG).
Reckless violations of dual use rules
In some cases, even the reckless violation of export bans on dual use goods constitutes a criminal offence (section 18(8a) AWG). This applies to dual use goods listed in Annexes I or IV of Regulation (EU) 2021/821, such as certain sensors, lasers and particularly robust telecommunications equipment. A reckless violation is an aggravated form of negligence where, due to a high degree of imprudence or indifference, the perpetrator disregards the obvious risk of committing the criminal offence even though he or she possesses the requisite knowledge and skills to recognise it. Such knowledge and skills are expected from legal, financial and business professionals, for example.
Exemption for humanitarian assistance
Violations will only be exempted from prosecution if they occur in the course of humanitarian assistance to people in need (section 18(11) AWG). This covers international development, for example, including the provision of food, accommodation, healthcare, water and sanitation.
Abolition of 48-hour deadline
The new AWG abolishes the 48-hour grace period under section 18(11) AWG (old version). This has special practical relevance. Previously, violations of newly announced sanctions were not prosecuted if they occurred within 48 hours of the sanctions’ announcement and the violator was unaware of the new sanctions. Following extensive debate in the legislative proceedings, the grace period has been dropped entirely.
Business associations and banking-sector interest groups in particular have criticised the abolition of the provision because of the impact on compliance systems, arguing the abolition of the grace period would oblige companies to engage in continuous sanctions screening at considerable cost and effort – which small and medium-sized companies in particular were not in a position to afford. Implementing sanctions measures across an entire organisation immediately after publication was not feasible due to the need for group-level coordination, they said. The Bundesrat, the constitutional body representing the federal states, likewise advocated for retaining the grace period and asked the Federal Government to make appropriate revisions, pointing out that analysing new sanctions and implementing them technically inevitably takes some time.
Both the Federal Government and the Committee on Economic Affairs and Energy (Ausschuss für Wirtschaft und Energie) countered that the negotiations on the Sanctions Directive and exchanges with the European Commission showed that a grace period of this type had deliberately been excluded from the Sanctions Directive. Retention in national law would therefore constitute inadequate transposition of the Sanctions Directive. Furthermore, the concerns of the interest groups and the Federal Council were unfounded since only intentional sanctions violations are punishable under section 18(1) AWG. For the period in which necessary measures cannot yet be implemented for technical reasons, no intent could generally be assumed. The separate statement by the Committee on Economic Affairs and Energy also pointed out that the general rules on error in criminal law apply without restriction. The option to discontinue proceedings pursuant to section 153 et seq. Code of Criminal Procedure (Strafprozessordnung) would allow delayed implementation to be dealt with in a manner appropriate to the individual case.
Increased corporate fines
With the newly introduced section 19(7) and (8) AWG, the cap on corporate fines for intentional offences has been raised from EUR 10 million to EUR 40 million. This increase also applies to breaches of supervisory duties pursuant to section 130 Act on Regulatory Offences (Gesetz über Ordnungswidrigkeiten). In this regard, the German government chose not to make use of the option under the Sanctions Directive of introducing a turnover-based fine or a materiality threshold, according to which transactions under EUR 10,000 would be exempt from penalties. Companies should however be aware that, in addition to the new and existing sanctions, any advantages obtained from a sanction violation may still be clawed back at the company’s expense.
Fiduciary management
Section 6a AWG enables the Federal Ministry for Economic Affairs and Energy (Bundesministerium für Wirtschaft und Energie) to place German subsidiaries of sanctioned Russian parent companies under fiduciary management if there is a clear risk to public security or the country’s foreign interests. In such a case, a court may appoint a share custodian upon request, with the aim of allowing the subsidiaries concerned to carry on their business operations. The provision was subsequently added by the Committee on Economic Affairs and Energy and is intended to reflect Article 5aa(2f) Regulation (EU) 833/2014 rather than implement the Sanctions Directive.
Amendments to the AWV
The Sanctions Act amends section 82 AWV in particular, which governs administrative offences related to EU sanctions regulations. The reclassification of many administrative offences as criminal offences under the AWG necessitated corresponding amendments to the AWV. In addition, the export, trade and brokering bans set out in section 74 et seq. AWV have been aligned with the arms embargoes enacted by the EU Council.
The AWV was already previously amended with effect from 1 November 2025 to bring the export list in line with the Wassenaar Arrangement. At the same time, new sanctions violations were for the first time classified as administrative offences punishable by fines. As some of these offences have now been upgraded to criminal offences under the Sanctions Act, those AWV amendments have to be modified or repealed.
Cooperation of public authorities
A new legal basis for coordinating cooperation between law enforcement and sanctions enforcement authorities has been established in the Customs Investigation Service Act (Zollfahndungsdienstgesetz).
Scope
The amendments to the AWG are essentially limited to implementing the requirements of the Sanctions Directive. For the most part, lawmakers have decided not to extend the Sanctions Act to cover and penalise the breach of sanctions adopted after the Sanctions Directive entered into force on 19 May 2024 – including violations of prohibitions on the transfer of intellectual property (e.g. Article 2(2), letter (c) Regulation (EU) No. 833/2014) and non-compliance with requirements such as both the inclusion of “No Russia” clauses (Article 12g and Article 12ga Regulation (EU) No. 833/2014) and special due diligence obligations under Article 8a or Article 12gb Regulation (EU) No. 833/2014. Only the breach of the investment prohibition in EU sanctions law – previously only partially subject to criminal and administrative penalties – has now been fully criminalised beyond the provisions of the Sanctions Directive.
Outlook: What companies need to do
The Sanctions Act’s amendments to the AWG have far-reaching practical implications for compliance with foreign trade law. Companies should not delay in assessing what measures they need to take:
- The reclassification of many administrative offences to criminal offences underscores the need to review and, if necessary, bolster compliance structures.
- Penalties for reckless violations make internal control and approval processes all the more important. Careful documentation of these processes is advisable to demonstrate that appropriate care was exercised if a dispute arises.
- With the previous two-day grace period no longer in place, companies are obliged to implement new EU sanctions immediately after they are published. Companies are therefore advised to stay on top of developments in Brussels and establish internal processes that allow them to respond to new sanctions fast.
Forward
