Sanction breaches still continuing in Latvia

According to the Customs Administration of the State Revenue Service (VID), the number of cases of sanctions violations has increased this year. While last year 2,175 infringements were detected during the whole year, this year in ten months it has been 2,623.

However, unless there are specific indications of a deliberate breach of sanctions, no one is immediately detained.

"Of course, there are situations where it is clear that there has been a deliberate breach of sanctions. If a person has tried to go through Lithuania, we received risk information from Lithuania and now they are trying to go through Latvia. And there are [other] situations where a person comes and says - he had no information that the goods were banned. They say - now you gave me this information, the control was carried out, I go back and try to sell the goods in another way," commented Atis Pīlāts, Head of the Risk Management Unit at the Customs Administration of the VID.

The Latvian central bank (Bank of Latvia) has assessed that businesses tend to circumvent sanctions by sending banned goods, including luxury goods, to countries where there are no such restrictions. These include Central Asian countries, the United Arab Emirates, and China. Exports to these countries have risen significantly since the outbreak of the war.

"We have spoken to the financial sector about the supervision of customers, the supervision of companies. If you continue to work with these regions, you have to have internal control systems. How do you make sure that you are not participating in sanctions evasion? That is one criterion. And the other criterion is the product. If you are producing a sensitive commodity that could potentially be used for war on the Russian side, then you also need to have these additional controls," said Kristaps Markovskis, Head of the Anti-Money Laundering Department at the Bank of Latvia.

The VID Customs Administration also suspects that entrepreneurs do not have enough integrity.

But at the border, it is difficult to know whether the goods are really destined for, say, the Uzbek market, or whether the destination is Russia. In suspicious situations, the Customs Authority turns to third countries to check. This year, 113 requests have been sent up to September, and in most cases (63%) suspicions are confirmed – the goods did not reach their destination. This information can serve as a basis for criminal proceedings.

Artūrs Kovaļenko, Deputy Director of the Tax and Customs Police Directorate of the VID, said that the focus is on catching big offenders who may even be professionally trying to offer services to circumvent sanctions.

"There are also some cases that have been referred for prosecution where companies registered in Latvia provided declarant and broker services, knowing that they were engaging and providing advice on how to properly circumvent sanctions. They tried to arrange the paperwork so that the Customs Service would not have additional questions. Thank God, it did not work," said Arturs Kovaļenko.

To date, €662,498.27 worth of goods have been confiscated in favor of the State in criminal proceedings for breach of sanctions.
Sanctions evasion cases are a new practice in Latvian courts. Last year, 14 criminal cases were opened for the same offense - cooperation with the sanctioned Russian propagandist Dmitry Kiselyov and publication on the websites Sputnik and Baltnews. Two of these cases were settled with the prosecutor last year. This year, three more cases have ended in fines and community service.

There are two more first-instance judgments, but none of this year's judgments has yet entered into force.

Source: LSM+