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Sanctions Screening in Germany: Key Changes and Implications

Germany’s Second Sanctions Enforcement Act (SDG II) has come into force, introducing significant changes to the country’s sanctions enforcement regime. The Act builds on the First German Sanctions Enforcement Act of May 2022 and aims to improve the enforcement of sanctions, particularly in response to those imposed on Russia and to combat money laundering.

Key Changes

  • Creates a central authority responsible for enforcing sanctions at the federal level
  • Establishes an administrative procedure for investigating sanctioned assets
  • Sets up a whistleblowing agency
  • Introduces a ban on cash payments in real estate transactions
  • Provides for the possibility of appointing special representatives to monitor compliance with sanctions in companies

Additional Requirements

  • Organizations registered abroad that hold real estate in Germany are required to report their holdings to the transparency register
  • The Act increases the transparency of the concept of the deemed beneficial owner
  • Paves the way for authorities to access information on ownership and control structures
  • Makes the UN’s sanctions list directly applicable in Germany

Comparison with Draft Bill

Compared to the draft bill, the final version of the SDG II introduces some significant changes:

  • Imposes a reporting duty on both the Central Authority for Sanctions Enforcement and other authorities involved in enforcement
  • Increases the requirements placed on one category of data to be collected in relation to the sanctioned assets register

Impact and Expectations

The SDG II is expected to lead to an improvement in the enforcement of sanctions and increase the impact of EU sanctions on Russia. Its introduction of an asset register will make dealing with and attributing asset ownership significantly easier, while its creation of a central authority may add value by providing a single point of contact for sanctions enforcement.

Future Developments

It is likely that there will be further changes to the legislative basis for sanctions enforcement after the SDG II comes into force. For example:

  • Plans are underway to link the assets register with other registers
  • Establish a register for recording real estate transactions

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