Amendments to the AWG and AWV to implement Directive (EU) 2024/1226

The Act on the Adjustment of Criminal Offenses and Penalties for Violations of Restrictive Measures of the European Union (Gesetz zur Anpassung von Straftatbeständen und Sanktionen bei Verstößen gegen restriktive Maßnahmen der Europäischen Union), which came into force on 6 February 2026, adapts in particular the Foreign Trade and Payments Act (Außenwirtschaftsgesetz – AWG) and the Foreign Trade and Payments Ordinance (Außenwirtschaftsverordnung – AWV) to the requirements of the EU Directive on the definition of criminal offences and penalties for the violation of Union restrictive measures, Directive (EU) 2024/1226. The aim is to close loopholes in criminal liability and create a hrmonized, effective EU-wide criminal regime for violations of EU sanctions. The changes will in some cases lead to an increase in penal risks for companies and responsible persons. Numerous violations of EU sanctions that were previously only punishable as administrative offenses under German law will in future be prosecuted as criminal offenses, while at the same time new offenses will be introduced and existing penalties expanded. The most important changes for companies are outlined below.

Regulations on the implementation of arms embargoes

First, the criminal provisions for violations of arms embargoes in Section 17 AWG were amended. However, this was not due to Directive (EU) 2024/1226, but rather due to a new way of regulating arms embargoes by the EU legislator: Arms embargoes are now partly regulated directly in EU sanctions regulations and no longer, as previously, exclusively at national level by the individual EU member states (which, through nationally regulated arms embargoes, implement corresponding Council decisions in the area of common foreign and security policy, which are not legally binding on individuals). Under the previous wording of Section 17 (1) AWG, violations of the embargoes regulated in EU sanctions regulations would not be punishable under the AWG. The introduction of a new Section 17 (1a) AWG now creates a uniform framework of penalties, regardless of whether the arms embargo is based on an EU regulation or on national law.

Restructuring of the penal provisions

The reform focuses on the comprehensive restructuring of the penal provisions in Section 18 AWG. The offenses in paragraph 1 are adapted to the requirements of Article 3 (1) of the Directive (EU) 2024/1226 and expanded significantly. In future, almost all main sanctions violations will be explicitly classified as criminal offenses in Section 18 (1) AWG.

Bans on services

This is particularly evident with regard to services. Whereas service bans were previously only penalized in some cases, the various service bans under EU sanctions regulations are now differentiated and fully covered. In addition to goods-related services (technical assistance, brokering services, financing, financial assistance), this includes all other financial services and other services, such as consulting, market and opinion research, or rating activities. Violations of financial services bans, including goods-related restrictions on financing or financial assistance, are grouped together in a separate category of offenses in accordance with the provisions of Directive (EU) 2024/1226. Consequently, numerous acts that were previously only prosecuted as administrative offenses are now classified as criminal offenses.

Sectoral transaction bans and investment bans

Also being introduced is the criminal liability of violations of so-called sectoral transaction bans. This covers certain prohibited legal transactions, such as cooperation, rental, or lease bans, which previously could not be assigned to a traditional category such as import or export bans or service bans and therefore did not constitute criminal offenses, but merely administrative offenses until now. The same applies to violations of investment bans, which will be comprehensively punishable under criminal law in the future. The previous division of the various violations into criminal offenses and administrative offenses will be abandoned, as all investment bans are considered to carry the degree of injustice.

Prohibition of circumvention

The general prohibition of circumvention contained in all EU sanctions regulations is considered too vague to attach direct criminal consequences to its violation. However, in the course of adapting criminal offenses, the legislator has introduced criminal liability for certain types of prohibited circumvention activities in Section 18 (1) No. 3(a) and (b) AWG. In particular, the intentional concealment of ownership or control of funds or economic resources subject to sanctions will be punishable in future. This also covers cases in which false, misleading, or incomplete information is disseminated in order to conceal the fact that listed persons are economically benefiting. In practice, however, the explicit inclusion of circumvention offenses hardly introduces a change in prosecution, as such violations were already sanctioned previously as indirect violations or participation in violations by third parties.

Personal financial sanctions

Regulations on personal financial sanctions have been reformulated. Intentional failure to freeze assets is now explicitly defined as a criminal offense. However, the obligation to prevent freezing that is codified in this context merely represents an editorial clarification of the existing freezing obligations; it does not entail any material expansion of administrative enforcement. In particular, there is still no need for official action to effectively freeze assets. In terms of content, therefore, nothing changes regarding the freezing requirement.

Criminal liability for reckless violations

Probably one of the most relevant changes in practice can be found in the new Section 18 (8a) AWG. It introduces criminal liability for reckless violations of certain prohibitions under sanctions law, insofar as dual-use goods listed in Annexes I or IV to Regulation (EU) 2021/821 are concerned. Recklessness is an increased form of negligence and occurs when the perpetrator violates the required duty of care to a particularly high degree. If the competent authorities and courts interpret the term "recklessness" (Leichtfertigkeit) as broadly as in the context of other regulations, this new provision could result in a significant expansion of criminal prosecution. In addition, this abandons the previously applicable principle that only intentional violations of sanction law are treated as criminal offenses.

Deletion of the 48-hour grace period

The penalty exemption previously regulated in Section 18(11) AWG, which stipulated a waiting period of two working days from the date of publication of the listing in the Official Journal with regard to the penalty for violations of personal sanctions, no longer applies. The Directive (EU) 2024/1226 does not provide for such a sanction-specific postponement of enforcement. However, the general criminal law provisions on the issue of error and the possibilities for discontinuing proceedings under Sections 153 et seq. of the Code of Criminal Procedure (Strafprozessordnung) remain unaffected. This means that an economic operator can continue to claim that he was unable to take note of the new regulation in the short time available or that he was unable to stop the delivery.

Increase in corporate fines

To implement the EU requirements on sanctions against legal entities, new paragraphs 7 and 8 are being added to Section 19 AWG. While the maximum corporate fine (Section 130, 30 of the Administrative Offenses Act (Ordnungswidrigkeitengesetz)) was previously EUR 10 million, administrative fines of up to EUR 40 million may be imposed in certain circumstances in the future. The German legislature has decided not to introduce fines based on turnover.

Individual provisions remain exempt from penalties or fines

The amendments to the AWV are largely limited to editorial adjustments, such as the deletion of administrative offenses that are now criminal offenses. Despite the amendments to the AWG and AWV, some violations of sanctions regulations remain not subject to criminal or administrative penalties: This applies, on the one hand, to the so-called "best efforts" obligation, which is regulated in the Russia and Belarus sanctions, and, on the other hand, to the obligation to include a so-called "No-Russia/No-Belarus clause" in the contract when concluding certain transactions.

Conclusion

In summary, however, it should be noted that the tightening of criminal prosecution of sanctions violations is accompanied by an increase in risk for companies in the area of trade compliance. For companies dealing with dual-use goods in particular, careful reviews of their own compliance systems and regular training of employees to make them aware of the potential consequences of violations of EU sanctions law are essential.