AUSTRIA Law and Practice Contributed by: Martin Schiefer and Christian Richter-Schöller, Schiefer Rechtsanwälte GmbH
4.5 Extraterritorial Sanctions and Secondary Sanctions Risk Austria does not recognise or give effect to extrater - ritorial third-country sanctions. The EU Blocking Stat - ute prohibits compliance with the listed US measures and provides for the non-recognition of related judg - ments; breaches are penalised under national admin - istrative penal law. The practical reality for defence groups is nonetheless significant US exposure through ITAR- and EAR-con - trolled components, US dollar clearing and US per - sons within the organisation. Risk management typi - cally includes mapping the US nexus of products and transactions, tracking licence conditions attached to US-origin content, drafting sanctions clauses so that they remain compatible with the EU Blocking Statute, and establishing escalation procedures for situations of conflicting obligations. 4.6 Sanctions Compliance Programmes An effective programme for a defence sector partici - pant should include: clear management responsibility and a designated sanctions officer; a documented risk assessment by business line, geography and product; counterparty and payment screening with sensibly cal - ibrated matching; end-user and end-use due diligence integrated with the export control process; contrac - tual protections, including no-re-export clauses, and audit rights; training; escalation, reporting and record- keeping; and periodic independent review. Integrating sanctions, export control and procurement-exclusion checks into one due diligence process is best practice in the defence sector. Guidance exists on several levels: Financial Market Authority communications and the EBA guidelines for financial market participants, the European Commis - sion’s recommendation on internal compliance pro - grammes for dual-use trade, and the Federal Ministry for Economy’s requirement for an internal compliance programme as a condition for global export licences. 4.7 Enforcement, Penalties and Voluntary Disclosure Sanctions breaches are criminal offences prosecuted before the ordinary courts and can lead to impris - onment and forfeiture; legal entities are liable under
the Corporate Criminal Liability Act. Directive (EU) 2024/1226 obliges EU member states to criminalise defined violation and circumvention conduct with maximum penalties of at least five years’ imprison - ment for serious cases; the status of its implementa - tion into Austrian law should be verified at the time of reading. Supervisory breaches by financial market participants attract administrative penalties imposed by the Financial Market Authority. There is no formal self-disclosure or leniency mecha - nism for sanctions matters. Voluntary disclosure, co- operation and remediation are taken into account as mitigating factors in sentencing, in corporate liability proceedings and in the authorities’ exercise of discre - tion, while the duration of the breach, concealment and senior management involvement are aggravating factors. 4.8 Recent Enforcement Actions and Developments The most significant recent institutional development is the transfer of financial sanctions supervision to the Financial Market Authority on 1 January 2026, with an expanded scope covering insurers, investment firms and crypto-asset service providers and stronger on- site inspection powers. On the substantive side, the successive EU packages against Russia through 2025 tightened export restrictions, targeted circumvention via third countries and expanded the contractual no- re-export obligations. Austrian enforcement attention has focused on cir - cumvention structures and on the administration of freezing measures. Court statistics on sanctions pros - ecutions remain limited, and investigations are typi - cally not publicised. 5. National Security Regulation 5.1 National Security Legislation Applicable to the Defence Sector There is no single national security statute; instead, the framework is built from several layers. • Article 9a of the Federal Constitutional Act estab - lishes comprehensive national defence.
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