Defence in AWG Investigations and Sanctions Cases in Germany

By Dr. Julius Hagen, Attorney-at-Law

What AWG investigations mean in practice

German foreign trade criminal law is one of the most technical areas of white-collar defence. Criminal exposure rarely arises from one self-contained rule. It usually results from the interaction of the German Foreign Trade and Payments Act (AWG), the Foreign Trade and Payments Ordinance (AWV), directly applicable EU sanctions regulations, and constantly evolving sanctions prohibitions and listing regimes. The field is highly dynamic, international, and difficult to navigate even for experienced practitioners.

Why the allegation is serious

A sanctions matter is not merely a compliance issue. Depending on the facts, it may involve a serious criminal offense or at least a substantial regulatory offense under German foreign trade law.

• Section 17 AWG addresses particularly serious embargo and military-goods cases.
• Section 18 AWG covers a broad range of other sanctions-related violations, including breaches of embargoes, licensing requirements, freezing and provision prohibitions, and circumvention conduct.
• Section 19 AWG deals with less serious breaches as administrative offenses.

How investigations typically begin

These cases often start long before an indictment. Common starting points are blocked payments, bank compliance alerts, customs controls, export reviews, internal whistleblower reports, dawn raids, or official requests for documents and explanations. They may also arise from business contacts involving listed persons, frozen assets, indirect provision of funds or economic resources, prohibited services, transit constellations, or suspected circumvention. EU sanctions rules apply directly and do not affect only the listed person; they also shape the conduct of banks, financial institutions, investors, and other market participants.

Which risks matter first

Many AWG proceedings do not concern classic export shipments alone. Cases involving listed persons, frozen assets, and prohibitions on making funds or economic resources available are especially sensitive. In such situations, it is rarely enough to look only at the formal contractual counterparty or the immediate payment recipient. The key question is who may ultimately benefit from a transaction, service, transfer of assets, or other economic advantage, whether directly or indirectly.

Companies and individuals should therefore not assume that the issue is merely a paperwork problem or a routine export-control question. In practice, these matters often begin with blocked payments, bank escalations, frozen accounts, suspended deliveries, or internal compliance alerts.

At that stage, it is critical to distinguish between a legally sustainable sanctions allegation and a mere screening hit, bank-driven escalation, or market reaction. That distinction is central to criminal exposure, regulatory liability, confiscation risk, and the overall defence strategy.

These proceedings do not affect only classic exporters

The risk is not limited to arms or dual-use exporters. Investigations may also affect trading companies, logistics providers, directors, finance teams, compliance officers, consultants, intermediaries, and others involved in payments, approvals, supply chains, or internal release processes. Restrictive measures may affect not only the direct target, but also a broad range of third parties dealing with sanctioned funds or economic resources.

Recent reforms have increased the pressure

The German framework has become stricter through the implementation of the EU Directive on sanctions-related criminal law. The more recent materials describe a significant expansion of section 18 AWG in particular, including service prohibitions, sectoral transaction bans, investment bans, freezing obligations, circumvention prohibitions, and reporting duties. Anyone dealing with sanctions exposure today must therefore distinguish even more carefully between criminal liability, administrative offenses, licensing issues, and directly applicable EU prohibitions.

Experience with foreign trade investigations

We represent companies, directors, compliance personnel, and other affected persons in complex foreign trade and sanctions investigations. Our work includes assessing allegations under sections 17, 18, and 19 AWG, analysing EU sanctions regulations and listing consequences, reviewing asset-freezing measures and prohibitions on making funds or economic resources available, defending clients during searches and seizures, and managing communications with prosecutors, customs authorities, BAFA, banks, and counterparties.

At an early stage, we distinguish between what may genuinely support criminal liability and what is driven by operational uncertainty, market reaction, screening hits, or an incomplete factual picture. That distinction is often decisive in AWG proceedings.