Money in the Account, No Payments: How a Sanctions Chain Locked Cohiba’s European Route

The record

On 7 October, Habanos S.A. opened Cohiba’s 60th-anniversary celebrations in London before about 400 guests. The occasion centred on adding Cohiba Talismán, first produced as a limited edition in 2017, to the permanent range. The press release issued the next day said nothing about sanctions.

Meanwhile, in the German town of Waldshut-Tiengen, near the Swiss border, the company distributing those same cigars to Germany, Austria and Poland had not shipped a single box for a month. Since 9 September, 5th Avenue Products Trading GmbH has been under court-appointed provisional insolvency administration.

Administrator André Berbuer describes a striking situation: all the company’s accounts are blocked and payments cannot be made, although sufficient cash is available. In his account, EU sanctions against an indirect shareholder are the sole cause of the financial distress.

That shareholder is Chen Zhi, indicted in the United States on fraud and money-laundering conspiracy charges and held in China since January 2026. Court notices, corporate statements, sanctions decisions and reporting based on registry records trace how sanctions travelled from Cambodia to Europe’s cigar shelves.

One distinction is essential: neither Cohiba nor Habanos, which markets the brand internationally, is the company in insolvency proceedings. The case concerns Habanos’s exclusive importer in those three countries.

The Waldshut-Tiengen case: 4 IN 194/26

The crisis became visible on Friday, 4 September. A letter from managing director Christoph A. Puszkar told retailers that the company could neither accept new orders nor ship goods “until further notice” (halfwheel, Nicotine Insider).

It cited two reasons: “temporary restrictions” affecting banking relationships, and an ongoing compliance and sanctions review affecting a shareholder. It did not identify that shareholder.

Five days later, on 9 September, the Waldshut-Tiengen Local Court ordered provisional insolvency administration, case 4 IN 194/26 (DTZ, Northdata). It appointed lawyer André Berbuer of Freiburg firm BSK Berbuer Speier Kuhn as provisional administrator and established a provisional creditors’ committee.

The company itself filed the application. Its stakeholder information note confirms that it requested insolvency proceedings and aims to resume business as soon as possible. Its website emphasises that the reasons for this step do not lie in its operating business.

The same note says it sought official confirmation from the competent authorities of its status regarding restrictions associated with the applicable sanctions. According to German legal-news site Verbraucherschutzforum, the court tightened measures on 25 September by imposing a general prohibition on asset dispositions; this decision could not be confirmed in official notices during our research.

A profitable business

5th Avenue is no ordinary importer. Founded in 1989 as a joint venture with Habanos, it distributes 27 cigar brands and employs 49 people (t-online).

The 2024 registry figures sharpen the picture: about €63.8 million in revenue, €20.2 million in operating profit and €14.4 million in net profit (finews). This is a payment system that has seized up, rather than a failed operating business.

The disruption extends beyond Cuban cigars. One retailer says shipments of non-Cuban brands using the same channel — VegaFina, Flor de Copán and Henry Clay — also stopped (Rauch Lounge). Habanos Day, scheduled for 10 October at Bückeburg Palace, was cancelled because of restrictions linked to an ongoing review of a shareholder (habanosday.de).

Money available, payments blocked: how sanctions reached the bank

Brussels pulled the trigger on 30 July 2026. The EU Council listed seven people and three entities under its Global Human Rights Sanctions Regime. Its announcement specifically targeted Prince Holding Group and its chairman Chen Zhi (EU Council).

The Council described Prince Holding Group as a Cambodia-based multibillion-dollar conglomerate building scam-centre compounds. Listed parties faced asset freezes; EU citizens and companies were prohibited from making funds available to them, and individuals received travel bans. The legal instruments were Implementing Regulation 2026/1895 and Council Decision 2026/1896.

5th Avenue is not listed. EU implementation nevertheless extends asset freezes to companies owned or controlled by a listed person. Guidance updated in 2024 defines ownership as 50% or more, aggregating dispersed holdings (Akin Gump).

Chen Zhi’s indirect stake in 5th Avenue is far below that threshold. Multiplying the percentages through the former ownership chain yields approximately 16% (DTZ). Using the structure after the September 2025 share transfer gives approximately 23%.

The same guidance identifies warning signs of control even when the ownership threshold is not reached, including a sanctioned person being the largest shareholder and complex structures involving shell companies. The Habanos chain is multilayered, passing through Hong Kong, the Cayman Islands and the British Virgin Islands.

Who makes the final decision? European Commission spokesperson Saul Goulding’s response was brief: due diligence and risk management fall to each operator (Nicotine Insider). According to Swiss financial publication finews, Brussels requires ownership and control to be assessed individually for each unlisted subsidiary. German banks carried out that assessment and reached a restrictive outcome (finews).

Berbuer says the company’s assets have been frozen since late August and payments require approval from Germany’s central bank, the Bundesbank (für-Gründer). He is seeking at least a partial release from federal authorities (t-online).

Banks had begun distancing themselves earlier. Following US sanctions in October 2025, reports in March 2026 said some accounts belonging to Benelux importer Laguito 1492 and 5th Avenue had been closed (Nicotine Insider). An unnamed importer described bank compliance as an enormous black box.

The industry objects. Bodo Mehrlein, managing director of Germany’s Federal Association of the Cigar Industry (BdZ), noted that the sanctioned individual no longer controlled his stake. He called the German measures disproportionate, warning of serious economic difficulties and unpredictable effects on premium retailers (DTZ).

The ownership chain: from Havana to the British Virgin Islands

Habanos S.A. sells 27 brands, including Cohiba, Montecristo, Partagás and Romeo y Julieta, in more than 130 markets (Habanos). Half belongs to Cuba’s state tobacco company Cubatabaco; the other half to a private partner (14ymedio).

That private half was long held by Spain’s Altadis, then by Britain’s Imperial Brands after 2008. On 27 April 2020, Imperial announced the sale of its global cigar business for €1.225 billion (Imperial Brands).

Madrid-based Allied Cigar Corporation bought the non-US business for €1.04 billion. The package included 50% of Habanos, 50% of Altabana S.L., which distributes Cuban cigars through more than 20 affiliated importers, and factories in Honduras and the Dominican Republic. Imperial described the buyers only as investment consortia of individual investors.

Their identity was debated from the outset. In October 2022, Radio Free Asia cited an unnamed industry source saying Chen Zhi had secretly bought the company a year and a half earlier (RFA). Prince Group referred questions to its public-relations agency; no response followed.

Reporting based on Spanish registry records and Swedish documents now makes much of the chain visible (halfwheel, finews). The private Habanos holding runs through ITI Cigars, Tabacalera and Allied Cigar Corporation to Hong Kong’s Asia Uni, then to Allied Cigar Fund in the Cayman Islands. At the top, 57.1% is held by Simply Advanced Ltd, a British Virgin Islands (BVI) company wholly owned by Chen Zhi.

The remaining 42.9% reportedly belongs to Abu Dhabi-based Renovaire Group (finews). The US Treasury’s OFAC listed Simply Advanced on 14 October 2025 because of its Chen Zhi connection; Allied, Tabacalera and Habanos are not listed (OFAC).

On that calculation, Chen indirectly owned approximately 28.5% of Habanos in August 2025, making him its second-largest shareholder after the Cuban state (halfwheel). The circulating claim that Prince Group owns half of Habanos is therefore incomplete. The interest is held through a BVI company wholly owned by Chen and linked by the US to the Prince network; its effective Habanos stake is approximately 28.5%, not 50%.

Habanos ownership chain — October 2026

Chen Zhi and Simply Advanced are sanctioned. The indirect interest reaching the German importer remains well below the EU’s 50% ownership threshold.

Tabacalera confirmed the connection in December 2025. A spokesperson told AFP that Chen was Allied’s majority shareholder and that steps were being taken to remove him completely from operations (swissinfo/AFP).

Who controls the stake now?

On 9 January 2026, following an application by the BVI Attorney General, Interpath’s Paul Pretlove, James Drury and David Standish were appointed provisional liquidators of 30 Prince Group-linked companies (Interpath). Their task is to secure assets and make possible repayments to alleged victims.

Simply Advanced is among those companies. On 11 June 2026, the US Bankruptcy Court for the Southern District of New York recognised the BVI liquidation as a foreign main proceeding, rejecting objections from Cosimo Borrelli, who described himself as a director of some of the companies (court decision). This supports the context behind BdZ’s objection that the sanctioned individual no longer controls the stake.

According to finews, Renovaire is the most likely buyer of Chen’s 57.1% holding. Our research found no completed sale.

The Chen Zhi file: charges, sanctions and detention

Born in 1987, Chen Zhi founded and chairs Cambodia-based Prince Holding Group. China describes him as a Chinese citizen; his Cambodian citizenship was revoked by royal decree in December 2025 (Cambodianess).

Our research found no final conviction against him in any country. The charges below remain allegations; Prince Group denies them all.

United States. On 14 October 2025, the Justice Department announced an indictment in the Eastern District of New York. Chen is charged with conspiracy to commit wire fraud and money laundering; conviction could bring up to 40 years in prison (DOJ).

The indictment alleges that he ran Cambodian compounds using forced labour to conduct cryptocurrency investment scams known as “pig butchering”. A civil forfeiture action concerning approximately 127,271 bitcoin was filed the same day. Valued then at about $15 billion, it was the department’s largest forfeiture action. Proceedings continue; there is no final forfeiture judgment.

Sanctions. That day, the US Treasury sanctioned 146 people and entities within what it calls the Prince Group Transnational Criminal Organization (US Treasury). Britain also listed Chen and Prince Group; a £12 million mansion north of London was frozen (GOV.UK).

In further sanctions announced on 23 June 2026, the Treasury said the network invested criminal proceeds in areas including property, aviation and luxury cigars (US Treasury). The cigar connection therefore also appears in Washington’s records.

Detention. Following an operation on 6 January 2026, Cambodia handed Chen and two other Chinese citizens over to China. China’s Ministry of Public Security said he was brought from Phnom Penh on 7 January. It said he was held on suspicion of operating casinos, fraud, unlawful business activities and concealing criminal proceeds (Xinhua).

Chinese financial outlet Caixin, citing unnamed sources, reported that his arrest was approved on 6 July (Caixin). In Taiwan, 62 individuals and 13 companies were indicted on 4 March 2026 in a Prince Group-linked money-laundering case (Focus Taiwan).

The defence. In November 2025, Prince Group categorically rejected allegations of unlawful activity by itself or its chairman. It called the accusations baseless and said they sought to justify the unlawful seizure of billions of dollars in assets (Malay Mail/AFP).

Timeline

The domino effect: Gothenburg, Madrid and both banks of the Rhine

5th Avenue is not alone. Importers in the Altabana network have been affected to differing degrees. National sanctions regimes and banks’ willingness to accept risk determined the outcome.

Germany. Germany was Habanos’s fifth-largest market worldwide in 2024 (Cigar Aficionado). A 2025 Cuban foreign-ministry statement described it as the largest market for the La Casa del Habano retail chain, with 20 stores (OnCuba).

Retailers can continue selling existing stock (DTZ). A cigar shop in Heinsberg expects shortages to bring higher prices and more counterfeits (Rauch Lounge).

Spain. The Spanish Treasury froze Tabacalera’s accounts on 30 July; every payment has required prior approval since then (finews). Salary payments were delayed before the necessary authorisations were obtained (14ymedio). In an early-August email, chief executive Fernando Domínguez said Tabacalera was now subject to the sanctions (Nicotine Insider).

This was not its first setback. According to finews, ING España ended its relationship with Tabacalera in late 2025. The company sought pre-insolvency protection in late February 2026 and has operated under a time-limited US licence since spring.

Sweden. Gothenburg revoked Elite Trading Scandinavia’s tobacco licence on 15 December 2025 because of Chen’s connection. Shareholders resolved on voluntary liquidation on 1 July 2026. Hatem Sabbagh, interviewed by Flamman, said the company held approximately 45% of Sweden’s cigar market (Flamman).

Switzerland. The situation differs in Switzerland, where The Ledgers is based. Bern did not implement the EU’s 30 July listing. According to finews, Switzerland has no human-rights sanctions programme covering Chen Zhi (finews).

His indirect stake in Pratteln-based Intertabak AG is 14.3%, below banks’ 25% beneficial-ownership reporting threshold. finews says Swiss banks trace intermediary companies only where an individual controls more than 50%. So far, no restriction on Intertabak is known.

The difference matters. Switzerland was Habanos’s third-largest market in 2024, behind China and Spain (Habanos). Roughly 40 kilometres and the Rhine separate Waldshut-Tiengen and Pratteln: on one side accounts are blocked; on the other, business continues normally.

Türkiye. Habanos’s official list names Limassol-based Phoenicia Trading T.A.A. (Cyprus) Ltd as Türkiye’s exclusive distributor, also covering Greece, Pakistan, Kuwait and Yemen (Habanos). No sanctions-related disruption has been reported in Türkiye.

Havana’s silence, London’s lights

Habanos’s only known statement about the crisis came in early September. It said it was working closely with distribution partners worldwide to preserve continuity and prioritised long-term business sustainability. It declined to discuss specific situations or individual commercial matters (Cigar Aficionado).

Its press office had not answered OnCuba’s questions by that outlet’s publication deadline (OnCuba). Our research found no announced replacement importer for Germany, Austria or Poland.

Habanos presented the launch as the first major step in the 60th-anniversary celebrations, designated the Year of Cohiba (Habanos). The release quoted Jemma Freeman, chairman of UK distributor Hunters & Frankau. Altabana owns 50% of that company, which operates under a British licence following the sanctions.

Talismán is not a new cigar. It first appeared in the 2017 Edición Limitada and now becomes the ninth size in the permanent Línea Clásica. Habanos development vice-president José María López Inchaurbe described Cohiba as representing a unique luxury: authentic, uncompromising and deeply rooted in Cuba.

What the figures show

Habanos reported record revenue of $827 million in 2024, up 16%. Europe accounted for 54% of sales; its largest markets were China, Spain, Switzerland, the UK and Germany, in that order (Habanos). Our research did not locate publicly available 2025 figures.

According to figures cited by finews, Habanos earned €119.6 million in 2024 and distributed roughly 87% of profit; each ownership side received €52.3 million (finews). This indicates the scale of funds reaching the private partner.

Pricing also contributed to revenue growth. According to 14ymedio’s account of an early-September Financial Times investigation, the brand doubled prices in 2023. A Cohiba Behike 52 selling for €55 in January 2022 cost €230 in January 2026 (14ymedio). London cigar retailer Laurence Davis said they had destroyed the image of the ordinary Cuban-cigar smoker.

Analysis: sanctions reach beyond the shareholder register

This case exposes the distance between sanctions rules on paper and their practical implementation. The EU ownership threshold is 50%; Chen’s indirect interest in 5th Avenue is at most 23%. Accounts were nevertheless blocked because, amid uncertainty over the control test, banks’ compliance departments draw the practical boundary.

Brussels’s position that each operator must perform its own due diligence leaves the most cautious bank bearing the uncertainty. The bank closes the door rather than accept the risk. A profitable business, its 49 employees and its retailers are left paralysed.

The second contradiction concerns control. Asset freezes are intended to prevent a listed person accessing money. Yet Chen has been held in China since January 2026, and the company holding his stake is controlled by court-appointed liquidators. Employees, retailers and supply-chain partners who are not sanctions targets bear the costs.

Third is transparency. In the 2020 sale, buyers were described only as individual-investor consortia; the Chen connection surfaced in reporting in 2022. Concrete action followed the US indictment: OFAC’s listing in October 2025, then Gothenburg’s licence revocation in December. Knowing the beneficial owner at the outset would have been far cheaper than unravelling the chain six years later.

Fourth, the same supply chain faces four different rule systems. US and British licences offer breathing room; German banks freeze accounts; Switzerland has not implemented the EU listing. This fragmentation creates a market in which geography, more than a uniform legal framework, determines a supply chain’s fate.

Two exits are visible: selling Simply Advanced’s stake to a buyer free of the sanctions problem, or obtaining Bundesbank licences. Until then, Cuba’s most famous export appears likely to remain hostage to proceedings in New York, the British Virgin Islands and China.

The lesson for Turkish companies is also clear: a person at the far end of a supplier’s or distributor’s ownership chain can cause accounts to be frozen within days. Beneficial-owner checks are no longer a formality when choosing partners.

All cited pages were accessed on 9 October 2026 in preparing the article. The September 2026 Financial Times article was not accessed directly; its findings are attributed through 14ymedio.

Based on reporting from: Northdata: 5th Avenue, 4 IN 194/26; 5th Avenue: Stakeholder information, September 2026; 5th Avenue: Notice, 14 September 2026; Habanos Day: Cancellation notice; Imperial Brands: Disposal, 27 April 2020; Habanos: Cohiba Talismán, 8 October 2026; Habanos: 2024 results, 24 February 2025; Habanos: Distributors; US Bankruptcy Court (SDNY): In re Prince Global Holdings Limited, 11 June 2026; Interpath: Provisional liquidators, 13 January 2026; EU Council: Sanctions, 30 July 2026; US Department of Justice: Chen Zhi indictment, 14 October 2025; US Treasury: Prince Group sanctions, 14 October 2025; US Treasury: Further sanctions, 23 June 2026; OFAC: SDN update, 14 October 2025; GOV.UK: Joint UK–US sanctions, 14 October 2025; Xinhua: Ministry of Public Security statement, 8 January 2026; DTZ: 5th Avenue unter vorläufiger Insolvenzverwaltung, 11 September 2026; t-online: Kubanische Zigarren-Exklusivimporteur ist insolvent, 16 September 2026; für-Gründer: EU-Sanktionen treffen deutschen Premium-Zigarrenimporteur; Verbraucherschutzforum: Allgemeines Verfügungsverbot, 27 September 2026; Rauch Lounge Heinsberg: Notice, 23 September 2026; finews (EN): Habanos, Chen Zhi and 5th Avenue, 14 September 2026; finews (DE): Habanos, Chen Zhi and 5th Avenue, page 2; halfwheel: 5th Avenue pauses deliveries; halfwheel: Sanctions and the premium cigar business, December 2025; Cigar Aficionado: Germany halts distribution of Cuban cigars, 8 September 2026; Nicotine Insider: Banks cut off European Cuban cigar distributors, 18 March 2026; Nicotine Insider: Zhi sanctions hit EU cigar distribution network, 5 September 2026; 14ymedio: Tabacalera accounts frozen, 13 September 2026; 14ymedio: Financial Times reporting, 4 September 2026; OnCuba: European Habanos sales under pressure, 8 September 2026; Flamman: Swedish importer in liquidation, 17 August 2026; swissinfo/AFP: Chen Zhi and Habanos, 16 December 2025; RFA: Hun Sen ally linked to secretive billion-dollar Cuban cigar deal, 7 October 2022; Cambodianess: Chen Zhi deported, 7 January 2026; Caixin: Arrest approval, 27 July 2026; Focus Taiwan: Indictment, 4 March 2026; Malay Mail/AFP: Prince Group denies allegations, 12 November 2025; Akin Gump: EU ownership and control guidance, July 2024.