Three Years On: New UK and EU Sanctions against Russia

In response to ongoing geopolitical tensions, on 24 February 2025 both the United Kingdom and the European Union published significant updates to their respective sanctions regimes. These measures are wide-ranging and aim to further constrain Russia’s ability to continue its illegal war and come at a key moment in the dynamic between Russia, Ukraine and western powers.  From a broader perspective, the package of sanctions provides a direct contrast to the potential softening of the US stance in respect of Russia. 

This article provides a detailed overview of the latest sanctions, highlighting key changes and their potential implications, along with actionable steps for global businesses.

UK Sanctions: New Designations and Vessel Specifications

The UK government has issued 107 new designations, identifying:

• 40 “shadow fleet” tankers carrying Russian oil, bringing the total listed to over 130;
• 14 “New Kleptocrats”;
• Producers and suppliers of machine tools, electronics and dual-use goods for Russia’s military, including microprocessors used in weapons systems;
• Senior North Korean officials complicit in deploying over 11,000 DPRK forces to Russia;
• 13 Russian targets, including LLC Grant-Trade, its owner Marat Mustafaev and his sister Dinara Mustafaeva, who have used the company to funnel advanced European technology into Russia to support its illegal war; and
• Kyrgyzstan-based OJSC Keremet Bank, the first foreign financial institution designated for supporting Russia’s activity.  

These designations are part of a broader strategy to target entities and individuals involved in activities that undermine international peace and security.  By designating individuals and entities across a spectrum of geographies and sectors the UK government is signposting its direction of travel in respect of compliance and, ultimately, enforcement.

EU Sanctions: Enhanced Regulations and New Prohibitions

The European Union has introduced several amendments to its existing Regulations, reinforcing its commitment to maintaining international order and security. Key updates include:

1. Council Regulation 2025/390 and Council Implementing Regulation 2025/389: The EU has amended Regulation 269/2014 to add additional designation criteria for listing:
   • “natural or legal persons, entities or bodies that own, control, manage or operate vessels that transport crude oil or petroleum products, originating in Russia or exported from Russia, while practicing irregular and high-risk shipping practices as set out in the International Maritime Organisation General Assembly resolution A.1192(33), or that otherwise provide material, technical or financial support to the operations of such vessels”; or
   • “natural or legal persons, entities or bodies forming part of, supporting, materially or financially, or benefitting from Russia’s military and industrial complex, including by being involved in the development, production or supply of military technology and equipment”
   • high-risk shipping practices and those supporting Russia’s military and industrial complex.

The EU designated a further 48 individuals and 35 entities for a variety of reasons, including supporting the Russian military complex, being active in sanctions circumvention, Russian crypto assets exchanges and in the maritime sector.  Of note is the inclusion of an additional bank and parties in countries other than Russia.

2. Council Regulation 2025/395: The EU has amended Regulation 833/2014. Key changes include:
   • Introduction of a new article 3nb, which prohibits the temporary storage of crude oil and petroleum products in the EU if the goods originate in Russia or are exported from Russia. This prohibition is subject to a wind-down period and specific exemptions.
   • Introduction of a new article 3t, which prohibits the sale, supply, transfer, or export of goods and technology, and the provision of services, to any person or entity in Russia if these are intended for liquefied natural gas or crude oil projects, including terminals, plants, exploration, and production.
   • Introduction of a new article 5ad, which prohibits direct or indirect engagement with non-EU credit and financial institutions and crypto assets services, which facilitate transactions supporting Russia’s defence-industrial base, as listed in Annex XLV.
   • Introduction of a new article 5ae, which prohibits any transactions, subject to limited exceptions, with specified ports, locks, and airports in Russia.  The restrictions are broadly drafted and will apply to any relevant port call, even where there is no direct transaction with the port authorities themselves.
   • Amendments to derogation grounds and exceptions which may be employed by competent authorities to authorise otherwise prohibited activity.
   • A direct ban on EU imports from Russia of aluminium. There will be an initial transitional period, during which a quota mechanism will operate, allowing 275,000 tons of aluminium over a 12 month period. Following this there will be a complete prohibition on the import of Russian aluminium into the EU.
   • The addition of 74 targeted vessels, bringing the total number of listed vessels to 153. These vessels are alleged to be part of the shadow fleet or have contributed to Russia’s energy revenues.  These ships are subject to a port access ban, and it is prohibited to provide a range of maritime services to them.
3. Council Regulation 2025/398: The EU has amended Regulation 2022/263, introducing new prohibitions and expanding existing restrictions:
   • A new article 3a prohibits the supply of banknotes in any EU currency to the oblasts of Donetsk, Kherson, Luhansk and Zaporizhzhia (the Specified Regions).
   • Article 5 has been replaced, bringing into scope a full range of professional service restrictions, including accounting, auditing, business and management consulting, and legal advisory services provided to legal entities in the Specified Regions. 
4. Council Regulation 2025/401: The EU has amended Regulation 692/2014, implementing similar restrictions concerning Crimea and Sevastopol:
   • Article 2aa introduces the same banknote supply restrictions as those applied to Specified Regions.
   • Article 2c expands professional service restrictions as per the Specified Regions.
5. Council Regulation 2025/392: The EU has amended Regulation 765/2006 concerning Belarus, introducing several key changes:
   • Amendments to derogation grounds and exceptions.
   • The addition of a new article 1gd, relating to trade restrictions on specified software for use in oil and gas exploration and listed in Annex XXXII. 
   • The expansion of article 1u, which now prohibits the acceptance of deposits over EURO100,000 from Belarusian nationals, residents, or entities, and providing crypto-asset wallet, account, or custody services to them. From 26 March 2025, it also bans Belarusian nationals or residents from owning, controlling, or holding posts in entities providing these services in the EU. 
   • The introduction of a new article 4d, providing derogation grounds for the release of frozen funds where a designated person acted as an intermediary bank during a transfer of funds. This measure aims to ensure that legitimate transactions are not unduly hindered by sanctions.

The EU has also implemented a number of “horizontal provisions”, designed to create better alignment between the various regulations.  Of particular note is the addition by the EU of a “best efforts” requirement to each EU Regulation. This mandates EU persons to “undertake their best efforts” to ensure that any entity outside the EU that they own or control does not act in breach of the multiple regulations related to Russia, Ukraine, and Belarus. This measure aims to prevent circumvention of sanctions through foreign subsidiaries or controlled entities.  For example, the EU has included a “best efforts” requirement in Regulation 269/2014, which now requires EU entities to take steps to ensure entities they own/control do not undermine the sanctions by dealing with designated persons.

Action Points for Global Businesses

The new sanctions are clearly wide-ranging and cover multiple sectors. Given the complexity and breadth of these sanctions, global businesses must take proactive steps to ensure compliance and mitigate risks. Here are some actionable points:

1. Understand the new restrictions

There is a lot to digest in the various updated regulations and time would be well spent by Compliance understanding the new restrictions.  As always, the devil is in the detail and the EU sanctions updates will need to be fully reviewed to understand the impact on business operations. Companies can help themselves by ensuring that Compliance and Legal functions are supported in this process.

2. Best Efforts

While it is important to note that the “best efforts” obligations do not cause EU sanctions jurisdiction to attach to a non-EU entity and, in the event of breach, it is the EU parent that would face potential liability under EU sanctions, it is clear that the EU is looking to further constrain Russia’s ability to circumvent sanctions. ‘Best efforts’ was originally clarified in FAQ 1 of the EU FAQs on the “Best Efforts” Obligation as “comprising all actions that are suitable and necessary to achieve the result of preventing the undermining of the restrictive measures [which] can include, for example, the implementation of appropriate policies, controls and procedures to mitigate and manage risk effectively, considering factors such as the third country of establishment, the business sector and the type of activity of the legal person, entity or body that is owned or controlled by the Union operator. At the same time, best efforts should be understood as comprising only actions that are feasible for the Union operator in view of its nature, its size and the relevant factual circumstances, in particular the degree of effective control over the legal person, entity or body established outside the Union”

The ‘best efforts’ obligation is therefore limited by feasibility by reference to the particular factual circumstances. As such, an EU parent of a non-EU entity might conclude that it is unable to prevent the non-EU entity that it owns and / or controls from undermining the EU restrictions. That is a fact specific assessment. It is, however, now incumbent on EU organisations to consider, among other items, their corporate structures, reporting lines, and financial arrangements with a view to assessing their risk of being found liable for breaches of their non-EU subsidiaries.

3. Focus for the maritime sector

For those operating in the maritime sector there are a number of key actions reflective of the increased focused on anti-circumvention measures.  Of key importance are:

• Continued and continuous focus on screening of vessels.  Once a vessel is designated for being a member of the shadow fleet, dealing with that vessel where EU or UK (as applicable) nexus applies is prohibited, which can cause significant legal, operational and regulatory challenges. Therefore, it is key to maintain continued and full knowledge of the status of vessels.
• As Russian aluminium imports have been restricted, traders and manufacturers must reassess sourcing strategies to avoid supply bottlenecks.  This requires a holistic look at supply chains with a view to mitigating potential issues.

4. Systems and Control Framework

As with every update in the sanctions landscape, the new restrictions present an opportune moment to consider the efficacy of systems and control frameworks. Key areas for focus are updated risk assessments, enhanced due diligence measures, review of contractual protections and updated contingency planning.  

Conclusion

The recent updates to UK and EU sanctions reflect a concerted effort to address ongoing geopolitical challenges and reinforce international norms. By targeting specific entities, individuals, and activities, these measures aim to further curtail the financial and operational capabilities of those involved in destabilising actions.

For businesses and individuals operating within the UK and EU, it is crucial to stay informed about these changes and ensure compliance with the updated regulations. Failure to adhere to these sanctions can result in significant legal, financial and reputational consequences.

As the geopolitical landscape continues to evolve, further updates to sanctions regimes are likely, as is divergence between the various regimes. Staying abreast of these developments will be essential for navigating the complex regulatory environment and mitigating potential risks.