Expert Guide to Financial Sanctions Enforcement in the Czech Republic

As a member of both the United Nations (the “UN”) and the European Union (the “EU”), international sanctions and restrictive measures applied by the two bodies are legally binding on the Czech Republic. 

Act No. 69/2006 Coll., on Implementation of International Sanction (the “Sanctions Implementation Act”) and Act No. 1/2023 Coll., on Restrictive Measures Against Certain Serious Conduct Applied in International Relations (the “Sanctions Act”) provide for UN and EU sanction regimes to be directly implemented into Czech law. 

Other relevant regulations are the Government order No. 210/2008 Coll., on Implementation of Special Measures to Combat Terrorism and Decree No. 281/2006 Coll., on Details of the Manner of Fulfilling Notification Obligation under Sanctions Implementation Act.

The Czech Republic implements and enforces all international sanctions (including financial sanctions) on the basis of the same legal framework. There is a national sanctions list, which contains a list of persons sanctioned purely on the basis of national law.

Vnitrostátní sankční seznam | Ministerstvo zahraničních věcí České republiky 

In the Czech Republic, international sanctions imposed by the EU are binding and directly applicable to the administrative authorities on the basis of Article 29 of the EU Treaty. Sanctions promulgated by the UN Security Council in the form of its resolutions, although binding, are not directly applicable in the Czech Republic. As a rule, they are implemented in the Czech Republic through directly applicable EU "sanctions" regulations. In the event that the EU does not implement the UN sanctions, the Czech Republic implements these international sanctions through a government regulation under the Sanctions Act. 

For a complete overview of the sanctions imposed by the Czech Republic, it is essential to check the UN and EU sanctions lists.

The decision on granting of the import/export license is issued by the Ministry of Industry and Trade based on the binding statements provided by the Ministry of Foreign Affairs, Ministry of Interior and Ministry of Defence. 

Section 9 of the Sanctions Implementation Act lists situations in which competent authorities may apply exemptions, such as waiving powers to restrict transactions, payments, or activities with sanctioned parties.

Please keep in mind as well, that in the Czech Republic, we have to follow more than one list. We need to check national, EU and UN list of persons sanctioned. Current lists can be found in a link below.

https://fau.gov.cz/informacni-zdroje-885 

Violations of EU and UN sanctions and restrictive measures by private individuals or businesses and other entities may be punished substantial fine and, in the most serious cases, by criminal prosecution (criminal offence violation of the international sanctions under Section 410 of Act No. 40/2009 Coll., Criminal Code).

The offence of criminal offence violation of the international sanctions is punishable by a monetary fine and up to 8 years of imprisonment. Additional criminal sanctions may also apply. 

The authorities investigating criminal activity are the law enforcement authorities, in particular the police and the public prosecutor's office.

Administrative penalties or fines may also be imposed on the basis of the Sanctions Implementation Act. 

It should be borne in mind that, in addition to penalties and fines, compensation for damages (both pecuniary and non-pecuniary) may be recovered in connection with breaches of international sanctions on the basis of the subsidiary application of the Act No. 89/2012 Coll., Civil Code.

Details of the administrative penalties and fines available to the authorities can be found in Part 6 of the Sanctions Implementation Act, among others:

• violation of the restrictions set out in Sections 4 to 8d of the Sanctions Implementation Act;
• breach of an obligation under a directly applicable EU regulation imposing international sanctions;
• failure to comply with the obligation to notify authorities of possible violations of sanctions;
• the disposal of property subject to international sanctions. 

The maximum possible fine is CZK 50,000,000 (approx. EUR 2,000,000) or 10% of the annual turnover, whichever is higher. Additionally, fines can be double the benefit obtained or the damage caused by the offense. For specific violations related to international sanctions or confidentiality, the maximum fine is CZK 1,000,000 (approx. EUR 40,000). 

It is also possible to impose coercive fines to enforce cooperation in the maximum individual amount of CZK 5,000,000 (approx. EUR 200,000) and in the maximum aggregate amount of CZK 25,000,000 (approx. EUR 1,000,000).

Either the Ministry of Industry and Trade or the Financial Analytical Office. Fines are collected by the Financial Analytical Office (coercive fines can be also enforced with the assistance of customs authorities).

Please see the link (only Czech versions exist).

https://fau.gov.cz/legislativa-a-metodika-882

https://fau.gov.cz/seznam-zadosti-o-poskytnuti-informaci-dle-zakona-c-1061999-sb

https://fau.gov.cz/files/odpovedi-na-casto-kladene-dotazy.pdf