How to reduce the risk of sanctions arising from the inclusion of smuggling offences in Legislative Decree 231/2001

It is interesting to note that, with the entry into force of Legislative Decree No. 75 of 14 July 2020 (“Legislative Decree 75/2020”) [1], companies may also be held liable – pursuant to Legislative Decree No. 231 of 8 June 2001 (“Legislative Decree 231/2001”) [2]- for smuggling offences [3] committed by their management or employees in the interest or to the advantage of the companies themselves.

In general, the establishment of smuggling offences is aimed at protecting the State’s right to timely and fully collect customs duties (or border fees) that apply to trade with non-EU countries.

We should mention that the establishment of smuggling offences punish, inter alia, the illicit handling of goods (including by air or sea), the unlawful use of goods imported with customs facilities, the unlawful detention of foreign goods in customs warehouses or the unlawful establishment of warehouses for foreign goods, the handling of goods in order to evade payment of customs duties due, the use of fraudulent means in order to obtain the refund of custom duties, the unlawful introduction into the State of foreign manufactured tobacco, as well as any other conduct, not included in the cases mentioned above, resulting in the non-payment of the customs duties due.

So, in terms of commission of offences, conducts aimed at avoiding payment of customs duties on goods purchased from - or sold to - entities located in a non-EU country, including, by way of example the actions listed below, could be relevant for the purposes of Legislative Decree 231/2001:

• introduction of foreign goods by crossing national borders at places other than the points established by legislation for the crossing of the customs line;
• concealment of foreign goods or failure to declare such goods in the transport documents in order to evade customs control, or “indication, in the customs documents certifying their transport, of a quantity of goods lower than the surplus quantity ascertained during the physical examination by the officer in charge of the control”; [4]
• fraudulent compilation of the relevant customs documents in order to evade part of the goods from the relevant taxation;
• setting up of warehouses of foreign goods, not yet nationalised, in the absence of the necessary authorisation from the competent authorities, or the conduct of a person who “[...]operating a VAT warehouse, is taking part in the importation of non-EU goods using a favourable tax warehouse regime, when the goods are not actually in transit through the agent’s warehouse” [5];
• attribution to the goods of a purpose or use different from the actual ones in order to take advantage of applicable customs benefits.

Thus, all companies which, as part of their activities, purchase or sell goods or merchandise outside the borders of the European Union, having direct commercial relations with counterparties established in non-EU countries, are more exposed to the risk of committing said offences.

So, in order to benefit from one of the conditions for exemption from administrative liability provided for in Legislative Decree 231/2001, said companies should update their Model 231 (or adopt one, if they do not yet have one), identifying the activities potentially at risk of committing smuggling offences and defining the appropriate control measures to mitigate such risks.

In this perspective, activities concerning, for example, the management of relations with suppliers of goods or the management of relations with customers, depending on the type of relationship actually existing with the counterparty established in non-EU countries, as well as the management of relations with Italian and foreign customs authorities, could be relevant.

With regard to said sensitive activities, the company may implement appropriate measures to limit cases of non-payment or incorrect payment of customs duties/border fees, which may assume criminal relevance with respect to the offences in question.

But there is more. The risk of being charged with smuggling offences for the purposes of Legislative Decree 231/2001 could also concern, potentially on the grounds of participation in the commission of the offense, all those companies which, although not importing or exporting their own goods, are nonetheless involved in the performance of import and export activities and in the fulfilment of obligations which are preparatory and/or instrumental thereto.

This includes, purely by way of example, companies acting as customs agents or companies providing transport or handling services for goods, as well as companies authorised to manage customs warehouses in which goods are placed pending the payment of customs duties.

Therefore, in our opinion, it could be necessary that also such companies update their Models 231 by identifying areas that may be potentially exposed to the risk of committing smuggling offences, albeit on the grounds of participation, by defining specific measures aimed, for example, at ensuring the proper handling and registration of incoming and outgoing goods or the proper fulfilment of custody obligations for stored goods through adequate security measures, as well as, especially with reference to customs agents, the proper accounting of customs charges.

It is precisely the updating or adoption of Model 231 that makes it possible to mitigate the risks of possible sanctions (financial penalties and bans) against the company.

This article is for information purposes only and is not, and cannot be intended as, a professional opinion on the topics dealt with. For further information please contact Luca Cavagnaro and Laura Perrone.

[1] By means of Legislative Decree 75/2020, entered into force on 31 July 2020, the legislator implemented Directive (EU) 2017/1371 (the so-called “PIF Directive”) “on the fight against fraud to the Union’s financial interests by means of criminal law”.

[2] As is well known, Legislative Decree 231/2001 lays down a special system of liability for entities (companies, consortia, other entities with and without legal personality, associations) arising from the commission of certain offences, expressly referred to in the same Legislative Decree 231/2001, by “top management” or “employees/collaborators” in the interest or to the advantage of the entities themselves, providing, in the event of conviction of the entity, for the application of financial penalties of up to approximately Euro 1,500,000 and bans (including disqualification from carrying on business, suspension or revocation of authorisations, licences or concessions functional to the commission of the offence, ban on contracting with the public administration, exclusion from grants, loans, contributions or subsidies and the possible revocation of those already granted, and prohibition on advertising goods or services). Legislative Decree 231/2001 also provides that a company is not liable (and is therefore exempt from liability) for an offence committed by one of the persons referred to above if it can prove, inter alia, that (i) the management body has adopted and effectively implemented, before the offence was committed, organization and management models capable of preventing offences of the kind committed (the so-called “Model 231”); (ii) a body with autonomous powers of initiative and control within the company (the so-called “Supervisory Body”) has been entrusted to supervise the operation of and compliance with Model 231 and to take care of its updating.

[3] Indeed, Legislative Decree no. 75/2020 introduced Article 25-sexiesdecies into Legislative Decree no. 231/2001, thus extending the range of predicate offences for said liability to include also smuggling offences referred to in Articles 282 et seq. of Presidential Decree No. 43 of 23 January 1973 (“Presidential Decree 43/1973”), the “Consolidated Law on Customs”.

[4] Criminal Court of Cassation, Third Division, No. 26143 of 26/05/2010. Accordingly, see Third Division, 25 March 1982, No. 7773, (“Inspection smuggling (“contrabbando intraispettivo”) occurs not only when customs checks are evaded by withholding part of the imported goods from inspection, but also when the declared value of the imported goods is lower than the actual value; to this end, however, a mere verbal declaration, which can easily be verified by the customs officers, is not sufficient, but the declaration must be accompanied by fictitious indications or documents showing the declared value”).

[5] Criminal Court of Cassation, Fifth Division, No. 7750 of 09/11/2017.