Defence in EU Sanctions Cases under Section 18 AWG in Germany

By Dr. Julius Hagen, Attorney-at-Law

What section 18 AWG means in EU sanctions cases

Section 18 AWG is the central German criminal provision for a wide range of violations of directly applicable EU sanctions regulations. The difficulty for companies and individuals is that criminal exposure rarely follows from one simple rule alone. It usually depends on the interaction between the AWG, the relevant EU sanctions regulation, annexes and listings, licensing rules, and available exceptions.

Section 18 AWG is criminal law, not just compliance law

A suspected EU sanctions breach is not merely an internal governance issue. Section 18 AWG can expose both companies and individuals to criminal proceedings, confiscation risks, severe disruption of business operations, and long-term reputational damage.

The first task is therefore not to label the matter broadly as a “sanctions issue”, but to determine with precision which EU prohibition is said to have been breached, what the relevant transaction actually was, and why that conduct is supposed to amount to criminal liability under section 18 AWG.

The focus is on EU restrictive measures and their prohibitions

These cases usually do not concern weapons embargoes. The practical focus is on other EU restrictive measures: asset-freeze obligations, prohibitions on making funds or economic resources available, service bans, sectoral transaction prohibitions, investment bans, circumvention rules, and licensing requirements. Typical scenarios involve outwardly ordinary payments, contracts, or services that are alleged to benefit a listed person, a sanctioned structure, or a prohibited end use.

That is why defence work in section 18 cases cannot stop at the formal counterparty. The decisive issues are often control, economic benefit, intermediary structures, indirect availability, ownership, and the actual function of the transaction within the wider business arrangement.

Why section 18 cases are especially technical

EU sanctions cases are among the most demanding areas of German white-collar defence. Section 18 AWG operates through cross-references to EU regulations whose scope may depend on the text of the regulation, annexes, listings, carve-outs, licences, and frequent amendments. That structure makes the allegation serious, but it also means that early assumptions are often legally unstable.

In practice, initial suspicions are frequently based on incomplete facts: an overbroad reading of control, an uncertain beneficial ownership analysis, an untested assumption of indirect benefit, or a bank block that is too quickly treated as proof of a criminal sanctions breach.

Typical fact patterns in section 18 AWG proceedings

Common starting points include blocked wire transfers, frozen accounts, refused payouts, suspended deliveries, sanctions hits in payment screening, business with Russia-, Iran-, or Syria-related touchpoints, intermediary structures through third countries, and internal escalations after compliance reviews. Allegations may also concern services, advisory work, financing, investment structures, brokering, or the use of third parties said to conceal the true beneficiary of a transaction.

These proceedings therefore affect far more than traditional exporters. They may involve directors, finance teams, in-house counsel, compliance officers, logistics managers, treasury personnel, banks, wealth managers, intermediaries, and others involved in approvals, payments, structuring, or asset movements.

Freezing obligations and no-funds-available rules are particularly sensitive

Some of the most difficult cases concern frozen assets and the prohibition on making funds or economic resources available, directly or indirectly, to listed persons or entities associated with them. In those situations, formal documentation alone is rarely enough. What matters is whether the economic benefit of a payment, transfer, release, or service could ultimately reach a sanctioned person or entity.

Where assets are already frozen, the legal analysis becomes even more specific. The key question is whether there has been any prohibited use, release, transfer, re-designation, or other handling of those assets that violates the relevant EU sanctions regime.

Circumvention allegations are often the real battleground

Many investigations do not revolve around an openly obvious breach, but around circumvention. The allegation may concern rerouted payments, intermediary companies, alternative supply chains, trustees, nominee structures, third-country vehicles, or service arrangements said to disguise the true end beneficiary.

Such allegations are particularly serious, but also highly dependent on proof and legal interpretation. Defence strategy therefore turns on whether there is credible evidence of a circumvention purpose, what the client actually knew, how the transaction was structured in practice, and whether the facts truly support a criminal circumvention case.

Defence in complex EU sanctions investigations

We represent companies, directors, and individuals in cases involving EU sanctions regulations, no-funds-available rules, frozen assets, circumvention allegations, prohibited services, investment restrictions, and related foreign trade investigations.

Our work includes analysing the applicable EU rule, reconstructing the underlying transaction, managing communications with prosecutors, customs authorities, BAFA, and banks, and developing a defence strategy that protects both legal and commercial interests.