Penal Enforcement Act: Oligarchs must report assets in the future

Status: 06.05.2022 1:45 pm

The sanctions imposed on the Russian oligarchs due to the Ukraine war have often been difficult to enforce. A new law aims to change that. It can also help fight organized crime.

Written by Philip Eckstein, ARD Capital Studio

The federal government plans to improve enforcement of penalties with a legislative package. In doing so, it responds to the problems that have emerged in implementing the EU’s sanctions packages as a result of the Russian attack on Ukraine. The Bundestag is set to vote on two legislative packages.

The first part is already being coordinated between the federal ministries. Cabinet must approve by Monday, after which the Bundestag will discuss the project. Government departments say: The goal is to pass the law before the summer vacation, which begins in July. The second part will follow later this year.

Enforcement weaknesses

This concept was developed by the Sanctions Working Group, which is headed by the Federal Ministry of Economy and Finance. The task force was formed in mid-March after it became clear that there were problems in implementing the sanctions.

Since then, her job has been to coordinate the work of the various federal and state authorities involved, to clarify responsibilities and help with questions. At the same time, the task force has identified weaknesses that now need to be addressed with the Sanctions Enforcement Act.

In government circles, there is a lot of talk about hanging and hanging fruits. Drop fruits are measures that can be implemented quickly and that will immediately facilitate the work of the authorities in tracking wealth. These regulations can be found in the first part of the law.

More complex in execution, but also more effective, are the drooping fruits. This includes structural changes, such as how sanctions are implemented in Germany and asset tracking. According to the information received from ARD Capital Studios From government departments, it must also be harvested – to stay in the picture.

The oligarch must reveal the assets

The planned actions are far-reaching. The first part of the Sanctions Enforcement Act provides for a regulation that obliges sanctioned persons to report their assets. This means that the Russian oligarch who has been punished, for example, will then have to reveal what property he owns in Germany and whether he owns a yacht or an airplane.

This reporting obligation shall be subject to penalties and fines. If a sanctioned person violates it, the assets can even be confiscated and checked, according to government departments. This far exceeds the previous “Freeze” tool. Frozen property, for example, may continue to be used privately, but sale or rent is prohibited.

In addition, the authorities should be given the opportunity to secure the assets until the ownership status is clarified. For example, an aircraft can be prevented from taking off if it is suspected that the owner is a sanctioned person.

Additionally, the authorities responsible for sanctions should have access to more account data and information from the Transparency Registry. The exchange of data between the Bundesbank and the Banking Supervision Authority will also be facilitated.

An urgent need for structural change

For the second part, which will be worked on during the year, there are only the main points so far. According to government circles, there is a clear need for structural change. Responsibilities will be simplified and a central coordination office will be established. A special whistleblower office has also been planned. In addition, a national registry for assets of unclear origin will be established.

An independent administrative procedure should enable the authorities to investigate assets of unclear origin. According to government departments, these tools should also help in the fight against tax evasion, money laundering and organized crime.

Complex structures and fictitious companies

The enforcement of sanctions has made it clear once again that huge assets are often hidden behind complex corporate structures and shell companies. The structures in the area of ​​concealment of assets and circumvention of penalties are similar to those used in money laundering and organized crime.

For the authorities, it is often only possible with great effort to determine the true owners of the asset. Over and over again until they fail completely.

However, this finding is not new. Journalists have reported this repeatedly in recent years through research projects such as the Panama Papers, Paradise Papers or Pandora’s Papers. In the context of Russian sanctions, the topic seems to be moving again. But these are still just plans: the Bundestag is due to discuss the first part of the penal enforcement law for the first time next week. The second part is in the works.

Eleven planes are not allowed to take off

According to the Federal Ministry of Finance, 137.9 million euros were frozen until April 29 as part of the sanctions against Russia. In Hamburg, the super yacht “Dilbar” was arrested legally.

At the request of ARD Capital Studios The Federal Department of Transportation also announced that 11 aircraft were included in the sanctions and were not allowed to take off. These are three Antonov freighters in Leipzig, four private jets in Baden-Baden, a Boeing 747 in Frankfurt-Hahn, an Airbus A320 in Munich, a Boeing 737 and a Bombardier Challenger 300 in Cologne.

Leave a Comment