Financial Crime World

Spanish Customs Crackdown on Sanctions Violations: A Closer Look at Recent Enforcement Actions

In the latest development of our ongoing investigation into sanctions enforcement around the world, we turn our attention to Spain. With Russia sanctions escalating, the Spanish authorities have ramped up their efforts to prevent sanctions violations. In this article, we’ll explore some significant cases, penalties for sanctions violations, and Spain’s cooperation with its allies on sanctions enforcement.

Heightened Enforcement and Recent Arrests and Seizures

In the context of the ongoing investigations, Spanish Customs has intensified its checks on exports destined for Russia to ensure compliance with export control regulations and EU sanctions. This assertive approach is supported by recent arrests and seizures of assets.

  • Two women arrested: In February 2023, two women were taken into custody for allegedly illegally shipping dual-use goods to Russia.
  • Seizure of assets: Assets belonging to Russian oligarchs continue to be seized, including funds, bank accounts, properties, and yachts.

Pivotal Cases: Magellan and Black Star

Spanish authorities have made headlines by denying entry to specific ships with connection to Russian-flagged vessels. Two significant cases are:

  • The Magellan: Spanish authorities prevented the Magellan, a Singapore-flagged vessel, from entering the Port of Tarragona in February 2023 due to diesel on board originally sourced from a Russian-flagged vessel named Nobel. The diesel was transferred via a third ship, the Elephant, in the Alboran Sea.
  • The Black Star: The Barcelona Maritime Authority took similar action against a Maltese-flagged ship, Black Star, in April 2022.

Penalties and Compliance

Spain’s legal framework distinguishes between import/export offenses, treating them as either criminal or administrative offenses depending on the offense’s value and nature.

Criminal offenses can carry:

  • Prison terms of up to five years
  • Fine equal to six times the value of the illegal goods

Administrative cases face financial penalties up to 350% of the illegally imported/exported goods’ value. Both criminal and administrative offenses come with additional penalties such as temporary import/export privileges suspension.

Non-compliance with financial sanctions (asset freeze measures and the prohibition on making funds or economic resources available to designated parties) results in fines equaling the greater of:

  1. 10% of the annual turnover of the offender
  2. Twice the amount of the underlying transaction
  3. Five times the amount of profits derived from the infringement, or
  4. EUR 10,000,000

Although there’s no formal voluntary self-disclosure mechanism, informal self-disclosures may lead to mitigated penalties.

Closer Collaboration with Allies

Spain has been cooperating more closely with its allies on enforcement actions, as evident in the establishment of the Enforcement Coordination Mechanism at the G7 level. This collaboration includes asset seizures and investigations on vessels and yachts belonging to designated individuals and entities in accordance with US Department of Justice requests.

To prepare for increased enforcement, companies should:

  1. Ensure accurate and up-to-date product classifications
  2. Adopt an appropriate and responsive sanctions screening program tailored to current risk exposure.