Staying Compliant: EU Guidelines on Avoiding Sanctions Evasion in Russia and Belarus

This sanctions framework, which also includes restrictive measures on Belarus, seeks to curb the financial and logistical support facilitating these actions. Given the close ties between the Russian and Belarusian economies, however, entities in both countries have developed complex methods to circumvent these sanctions—often through third-country jurisdictions. These efforts to evade sanctions present a substantial compliance risk for EU operators.

Evolving Compliance Requirements for EU Operators

The European Commission regularly updates guidelines emphasizing the importance of vigilance and due diligence for EU businesses. With circumvention tactics evolving, often involving the use of intermediaries or third-country jurisdictions, EU operators must stay alert to ensure compliance. These guidelines underscore the need for all businesses to proactively adopt and enhance internal compliance programs, especially when engaging in cross-border trade or transactions in sensitive industries.

Broad Compliance Focus

The enhanced sanctions apply to various sectors, with an emphasis on tightening control across trade, services, and transport activities. To ensure compliance, EU operators should review their business relationships and supply chains comprehensively. This includes conducting rigorous due diligence to verify the legitimacy of counterparties, their origins, and the nature of their transactions.

Anti-Circumvention Strategies for EU Operators

The risk of circumvention has led the EU to emphasize specific anti-evasion measures for companies operating under its jurisdiction. EU operators are now advised to:

• Strengthen Due Diligence Practices: Companies should bolster due diligence protocols, especially in transactions involving high-risk regions or third countries that may serve as potential circumvention channels.
• Reassess Contractual Terms: It is prudent to review and update contractual terms to ensure they align with current compliance requirements and avoid exposing businesses to indirect sanctions violations.
• Monitor Foreign Subsidiary Activities: EU companies should maintain oversight of foreign subsidiaries and affiliates, ensuring they also operate in full compliance with EU sanctions.

Sector-Specific Vigilance

As sanctions affect multiple sectors, the EU highlights that businesses within industries with high exposure to international trade and sensitive goods need to be particularly vigilant. The expectation is that operators in these sectors will adopt enhanced internal controls to prevent unintentional support of prohibited activities through their supply chains.

Penalties and Compliance Incentives

To encourage compliance, the EU has provided measures that allow operators to claim compensation for damages related to sanctions enforcement. There is also an increasing likelihood of targeted sanctions on individuals or entities found to be aiding circumvention efforts, regardless of their location or sector.

Moving Forward with Comprehensive Compliance

The European Commission continues to monitor for circumvention patterns, offering periodic guidance updates. EU operators are therefore encouraged to stay informed, adapt their practices to evolving compliance standards, and ensure they do not unintentionally engage in activities that could violate sanctions.