Key takeaways
- Sanctions are increasingly complex: US, UK, EU coordinate yet diverge. Companies should apply the strictest regime, consider secondary sanctions, and monitor indirect exposure across jurisdictions and structures.
- Russia measures now target shadow fleets, intermediaries, oil, LNG, refined products, and major producers. Conduct enhanced upstream due diligence across supply chains and counterparties to detect concealed Russian links.
- Banks and insurers de‑risk beyond law, reshaping feasibility. Compliance needs continuous screening, robust documentation/escalation, flexible clauses, strong governance/training, alignment with counterparties, and vigilance on AML/KYC and ownership/control.
Sanctions Seminar Summary and Key Takeaways
Since 2022, the global sanctions landscape has changed dramatically, with the US, UK, and EU expanding and refining their programs in response to geopolitical events, particularly Russia’s actions and tensions with Iran. Regulators such as OFAC, OFSI, SECO and EU bodies are coordinating more closely and sharing information, but their policies don’t always align. For example, the EU and UK have continued adding new measures against Russia, while the US has focused more heavily on enforcing restrictions against Iran and other regions like Venezuela. This combination of coordination and divergence makes it harder for companies to operate internationally, as they must navigate overlapping rules and often follow the strictest set of requirements among them. As a result, businesses are under growing pressure to carry out deeper due diligence, continuously monitor transactions, and ensure contracts reflect up to date sanctions obligations in a number of jurisdictions, not just those they sit in.
A major theme discussed was the growing reach of sanctions and the way indirect exposure can create risk. The EU and UK have introduced wider restrictions on Russian oil, gas, and shipping, targeting vessels and intermediaries involved in “shadow fleets” that attempt to conceal the origin of Russian products. Similarly, the US has strengthened “secondary sanctions,” which allow it to penalise non US companies that do business with sanctioned parties, even if those companies operate entirely outside the US. These policies have broad implications for supply chains, shipping, and financial transactions, making it essential for businesses to look upstream to detect any hidden connections to sanctioned entities. Many companies are also finding that long-standing trading relationships are becoming difficult to maintain, as banks and insurers increasingly apply internal policies that are stricter than legal requirements. This heightened caution reflects the severe financial and criminal penalties that can be imposed on both individuals and organisations for breaches, even when unintended.
Speakers also noted that funds and corporates need stronger systems to manage these risks. Investment funds are tightening investor screening and documentation, especially in response to stricter anti-money laundering and KYC rules in jurisdictions like Singapore. Traditional contracts and joint ventures are, therefore, being restructured to include flexible clauses that can adapt as sanctions regimes change. A further area of focus was the concept of ownership and control, where a business can be treated as sanctioned if a sanctioned person owns or effectively influences it, even without formal majority ownership. Overall, the clear message was that effective compliance now demands continuous monitoring, detailed record-keeping, and strong internal governance. To safeguard access to financing, trade, and investment, businesses must go beyond legal compliance and align their practices with the increasingly cautious standards of their banks and commercial partners.
Key Takeaways
- Increasing complexity and coordination across sanctions regimes
- Regulators in the US, EU, UK, and Switzerland are sharing information and aligning enforcement approaches.
- Despite coordination, policy divergence, especially on Russia and Iran creates compliance uncertainty.
- Companies must identify and manage the “lowest common denominator” across all applicable regimes
- Expanding scope of Russia-related measures
- Sanctions now target “shadow fleet” vessels, intermediaries, and indirect involvement in Russian trade
- EU/UK restrictions extend to oil, LNG, and refined products, with new bans planned through 2026 on EU entry of refined products made from Russian crude. The UK has announced that it will introduce similar measures on refined products.
- Both the EU and the UK have now started to target Russian LNG projects, which they have not done previously.
- The United States has now sanctioned Russian oil majors Lukoil and Rosneft, as has the UK.
- Firms must conduct enhanced due diligence across transaction chains and counterparties.
- Aggressive US enforcement on Iran and secondary sanctions
- The US continues to pursue non-US persons aiding designated Iranian sectors or entities.
- SDN listings can devastate business operations as counterparties disengage globally.
- The EU and UK have also re-imposed measures against Iranian entities, tightening the overall risk profile
- Financial institutions’ conservatism and counterparty risk
- Banks and insurers are enforcing policies stricter than the law, declining otherwise permissible trades.
- Policy-based refusals and de-risking are reshaping market access and transaction feasibility.
- Businesses must anticipate counterparties’ internal thresholds when structuring deals.
- Compliance frameworks and practical risk management
- Continuous screening, documentation, and escalation protocols are essential.
- Contracts and fund terms should allow for flexibility to adapt to evolving sanctions.
- Effective programs require strong governance, training, and alignment with counterparties’ expectations.
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Client Alert 2025-272