Quadripartite Select Committee Written Evidence

Memorandum from Dr Sibylle Bauer



  Customs plays a crucial role in enforcing export controls. Enforcement aims to prevent the proliferation of WMD and other export control violations, and to implement the EU acquis and obligations in the field of non-proliferation and counter-terrorism. Enforcement relates to export control legislation but is closely connected to other criminal statutes, such as conspiracy, money laundering, and anti-terrorism legislation.

  Enforcement tasks include: preventing and detecting violations of national laws and regulations, denying exports that lack authorization, investigating and prosecuting suspected violations, and helping partners in international law enforcement cooperation. The organizational distribution of legal powers to perform these tasks and their precise implementation varies from country to country. In Germany, the Zollkriminalamt (ZKA, literally "Criminal Customs office" or "Customs Office for Criminal Investigations") has comparatively wide-ranging powers in preventing and investigating export control violations. The German model is presented in detail in this paper.


  The Zollkriminalamt is a federal authority directly subordinate to the Federal Ministry of Finance. It was established in July 1992 and is based in Cologne. Its origins go back to the Customs Criminological Institute, ZKI, established in 1952. The ZKI focused on forensic matters, but over the years its powers and tasks were expanded. It was authorised to coordinate the Customs Investigation Service, and to conduct investigations. In the early 1990s, export control laws were tightened and the ZKA established through expansion of the powers, tasks, equipment and staff of the ZKI. This was intended to enable the agency to prevent export control scandals such as "Rabta", the setting up of a chemical weapons factory in Libya by a German company. The scandal led to wide-ranging changes in the export control law. Criminal penalties were stiffened considerably by transforming certain violations from civil breaches of administrative regulations to a criminal offence; raising the maximum prison sentence for serious export control violations from three to 15 years; and introducing new criminal offences, such as breaches of a UN embargo (in 2006 extended to EU embargoes decided through a Common Position). Cooperation between relevant agencies was enhanced. A catch-all clause introduced in 1990. and later included in the EU dual-use regulation, applies not only to WMD end-use and embargoed destinations, but also to military end-use in certain destinations, such as Iran (country list K).

  Since entry into force of the Law on the Zollkriminalamt and the Customs Investigation Offices in 2002, the restructured Customs Investigations Offices are directly assigned to the ZKA, and no longer to the regional finance offices. Currently, there are eight customs investigation offices and 24 branches. In 2004, the ZKA and Customs Investigations Offices employed approximately 3,100 people. In 2004 there were 16,344 investigations, of which 507 concerned the foreign trade law.

  The ZKA has the following tasks:[93]

  —  "Supporting the Customs Investigation Offices (Zollfahndungsa­mter) and other offices of the Customs Administration in the prosecution and prevention of criminal offences and administrative offences under the Fiscal Code and other laws;

    —  Gathering and evaluating information for the Customs Investigation Service, making it available to the Customs Investigation Offices and other Customs units;

    —  gathering and exchange of data in information systems run by the Customs Administration and systems in which the Customs Administration participates;

    —  cooperation in the control of the trade with foreign economic areas;

    —  control of mail and telecommunication for the prevention of criminal offences under the Foreign Trade Law and the War Weapons Control Act;

    —  cooperation in the combat of:

      —  illegal transfer of technologies;

      —  subsidy fraud in the agricultural sector;

    —  central unit for the exchange of information in the European Customs Administrations" combat of drug smuggling by land, air and sea transport;

    —  control of the trade in precursor substances prone to be misused for the illicit manufacture of narcotic drugs;

    —  counteracting money laundering with the help of a "Joint Finance Investigation Group Bundeskriminalamt/Zollkriminalamt";

    —  central agency of the Customs Investigation Service in the area administrative and judicial assistance, within the limits of the authorization by the Federal Ministry of Finance;

    —  coordinating and directing Customs Investigation Offices" measures in investigations with more than local consequences; and

    —  advanced technical training for Customs Investigation Officers."

  While not all of these tasks are directly relevant to counterproliferation, the same criminal networks have been used to traffic drugs, human beings, military equipment and dual-use items. Similarly, financial traces can lead to the prosecution and conviction of proliferators.


  German customs has legal powers to: physically examine goods, take samples, examine documents (eg business correspondence, bookkeeping documents as well as private correspondence), search property and persons, seize evidence, monitor the market, preventively monitor/intercept telecommunications and mail (following a court order and a specified procedure), control exports, and conduct administrative and criminal enforcement. If a customs officer has doubts about an export, the customs law provides that it is up to the exporter to remove those doubts.

  Risk analysis and product identification: To identify dual-use items, which poses a challenge to customs, identification tools and a correlation list (correlating the categories of control lists and customs codes) are used, and special training courses are provided to customs officers. Customs also relies on technical expertise in the German licensing agency (Federal Office for Economics and Export Control, Bundesamt fr Wirtschaft und Ausfuhrkontrolle, BAFA). For analysis and data collection purposes, the ZKA established a central internet research unit.

  Risk assessment is a key feature of export control. Through collecting and reviewing export documents and trade data customs looks for signs of shipments to countries of concern, which in turn could lead to the discovery of a possible violation and an investigation. Customs also helps to build a watchlist and identifies networks, acquisition patterns and supply routes. ZKA uses an elaborate electronic data collection system (COBRA, currently in the process of being updated), which can be accessed by customs offices.

  Company audits: The finance authority and BAFA can request information to enforce the implementation of foreign trade laws. To this purpose, the Foreign Trade Act (para. 44) authorises the finance authority to conduct audits, and BAFA can contribute experts to such audits. All those directly or indirectly involved in foreign trade are obliged to provide information (shipping agents, individuals, banks, brokers, suppliers etc.). Foreign trade audits (Aussenhandelspru­fungen) include both routine audits and special audits initiated due to information provided through sources such as government agencies, information generated through other audits, data in the electronic risk assessment system etc. Routine audits are conducted with major exporters of sensitive products in regular intervals. They involve the examination of documents and ITT to verify compliance with procedures, licensing requirements, embargoes, and documentation of foreign financial transactions.

  Investigations: The ZKA can conduct its own investigations and coordinates investigations of the customs investigations offices. A 2002 law reorganized the Customs Investigation Service and the tasks and powers of the ZKA. It connected the customs investigation offices to the ZKA, extended the ZKA's investigative powers and authorized the ZKA to transfer data directly to police authorities. In a prosecution, customs helps to build a case by contributing to the collection and analysis of evidence, and providing expert testimony.

  Interagency and international cooperation: At the national level, customs cooperates with the licensing agency, intelligence, the foreign office, the police, prosecutors etc. Customs works with law enforcement agencies in other countries and has its own liaison officers in a number of countries. Forms of international cooperation include the participation of customs experts in meetings of international export control regimes and mutual assistance agreements.

  Cooperation with licensing authority BAFA: Close cooperation and shared databases between licensing authorities and customs are key features of effective enforcement. ZKA has direct access to the licensing agency's database. Customs provides important data input into the licensing process, and in turn uses licensing officers' information and technical expertise. After an alleged violation, information collected by ZKA and BAFA can determine the types of items shipped, whether the item was licensable and whether a license was obtained. Customs and BAFA also cooperate to conduct reliability checks of exporters, to raise awareness, to prepare audits of exporting companies and analyse subsequent reports; and to prepare prosecutions. BAFA has a unit solely dedicated to the "co-operation with investigating and monitoring authorities". It supports export procedures at local customs offices, checks customs inspection reports and assists in investigations.

  Information: ZKA publishes information on the internet and in print regarding a range of subjects, including: the ZKA, the customs investigation services, export control (explaining WMD programmes in sensitive countries and mentioning past prosecutions); and proliferation (a leaflet which briefly explains the role of customs in preventing proliferation, ways to recognize proliferation relevant activities, e.g by explaining typical procurement methods, and contact details of ZKA and customs investigations offices).

  In April 2006, the ZKA held a well-attended three-day information seminar for prosecutors. Speakers included government agencies involved in a prosecution and covered a wide range of issues, such as legal provision, the role of different institutions, threat assessment, investigations, prosecutions etc.

  Outreach: Beyond training its own customs officers, the ZKA supports specialized training of customs officers in third countries, in particular EU candidate and accession countries. This included a two-week training course for Polish customs officers before accession, and participation in customs training events in the framework of the 2004 EU Pilot Project implemented by SIPRI and EU Pilot Project 2005 implemented by BAFA.


  According to the German arms export report for 2004, ZKA and the Customs Investigations Offices concluded 24 investigations against a total of 40 individuals during 2004, of which most were under the foreign trade law and one under the weapons of war control act. Most of these investigations were discontinued, one resulted in a fine, and one in a criminal conviction (four year nine months imprisonment). This involved spare parts for fighter aircraft and tools for artillery production destined for Jordan and Iraq.

  According to the arms export report for 2003, 26 investigations concluded against a total of 42 individuals (including five against unknown). Of these, four resulted in convictions: two separate cases with suspended sentences of two years imprisonment, one investigation resulting in seven convictions (between four and six months imprisonment or fines between 6,000 and 14,850€); and one sentence of two years and 10 months imprisonment. In 2003, 21 investigations against 22 individuals were ongoing.

  On the dual-use side, many export control related prosecutions have resulted in prison sentences over the years, including the following cases: four years six months imprisonment and 80,000 German marks fine (equivalent of 40,000€) in a case which involved the delivery of parts to Iran through falsified end-use certificates; a four year prison term for shipments of aluminium tubes to North Korea; and seven years three months imprisonment for exports destined for Pakistan.

  Appendix 1: Organisational chart ZKA [not printed]

June 2006

93   URL <http://www.zollkriminalamt.de>.

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