The Lithuanian Customs reported on Wednesday that a Lithuania-registered company exporting vehicles has been fined 13.6 million euros for violating international sanctions.
The Lithuanian Customs said the company reportedly failed to ensure compliance with sanctions in its transactions with companies registered in Kazakhstan, Belarus, and Turkey. Transporting the detained vehicles to their recipients was deemed a violation of international sanctions.
This is not the first time companies have been subjected to such a measure for breaches of the Law on International Sanctions, following the introduction of enhanced screening measures by the Lithuanian Customs.
Revenues of the company in 2022
According to investigation data available to BNS, more than 200 vehicles exported via Lithuania to Kazakhstan, Belarus, and Turkey were registered in Russia, probably before reaching those countries. A Belarusian company purchased the six seized cars.
According to Biovarda’s website, the company sells and supplies trucks and luxury cars. The Rekvizitai.lt portal indicates that the company exports vehicles specifically to Kazakhstan, Belarus, and Turkey.
According to the Centre of Registers data, Jūratė Pacyno has been the sole shareholder of Biovarda, founded in 2018, since November 2023. Before that, Bozko, the company’s current CEO, was the sole shareholder of Biovarda from December 2022; before that, Henrikas Pacyno, the company’s founder, was the sole shareholder.
The company has not submitted its financial statements for 2023 to the Centre of Registers. In 2022, Biovarda generated revenue of 2.8 million euros and a net profit of 48,000 euros, compared to 0 to 17,000 euros in other years. Biovarda closed the years 2018–2021 with a net loss.
Recommendations of ECOVIS ProventusLaw:
The Lithuanian Customs’ actions reflect increased scrutiny and enforcement of international sanctions, particularly in transactions involving high-risk jurisdictions such as Kazakhstan, Belarus, and Turkey. Based on this incident, financial market participants should consider the following recommendations to mitigate risk and ensure compliance:
Strengthen Compliance with International Sanctions:
- Ensure comprehensive compliance programs are in place to adhere to international sanctions laws. This includes having a detailed understanding of the sanctions imposed by different jurisdictions and incorporating these requirements into internal policies and procedures.
Conduct Enhanced Due Diligence on High-Risk Transactions:
- Transactions involving countries at a higher risk of sanctions violations, such as Kazakhstan, Belarus, Turkey, and others with complex political landscapes, should be subject to enhanced due diligence. This includes verifying the end users and ultimate destinations of goods and services to ensure they do not contravene sanctions.
Regularly Update Risk Assessments:
- Regularly review and update risk assessments to account for changes in international sanctions regimes and emerging geopolitical risks. This proactive approach helps identify potential compliance gaps and implement necessary controls.
Implement Robust Know Your Customer (KYC) Procedures:
- Reinforce KYC procedures to thoroughly vet clients, including ultimate beneficial owners and related entities. Understanding the full spectrum of clients’ relationships and business operations can help prevent indirect sanctions violations.
Increase Awareness and Training on Sanctions Compliance:
- Provide ongoing training for employees, particularly those in compliance, sales, and logistics, to understand the complexities of sanctions laws and the severe implications of non-compliance. Ensuring staff are aware of red flags and proper reporting channels is essential.
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