Global sanctions present unique challenges for General Counsels, board members and in-house legal teams. As we move through 2025, organisations of all sizes and across all industries face increased scrutiny. Compliance with global sanctions is challenging due to the complexity of the rules, the potential for conflicting regimes and the evolving nature of enforcement efforts.
Sanctions are restrictive measures that can be put in place to fulfil a range of purposes. In the UK, these include complying with UN and other international obligations, supporting foreign policy and national security objectives, as well as maintaining international peace and security, and preventing terrorism.
The UK may impose the following types of sanctions measures:
- financial sanctions, including asset freezes
- director disqualification
- trade sanctions, including arms embargoes and other trade restrictions
- aircraft and shipping sanctions, known as transport sanctions
- immigration sanctions, known as travel bans
The UK currently has 36 live sanctions regimes under the Sanctions and Anti-Money Laundering Act 2018 ("SAMLA"). These regimes are focused on specific countries or policy objectives. The UK also has two additional regimes under the Export Control Order 2008, bringing the total to 38.
UK companies are legally obliged to comply with the UK's financial sanctions regime, which imposes restrictions on designated persons, including freezing their assets and restricting access to financial services. Failure to comply can lead to significant financial penalties and criminal prosecution. To ensure compliance, businesses need to understand their obligations, keep abreast of changes in sanctions and implement effective screening and reporting procedures.
Whilst this is true across all of the regimes, the focus of this article will be Russia. Sanctions policy towards Russia remains a key feature in the global sanctions landscape in 2025. Since Russia's full-scale invasion of Ukraine in 2022, international sanctions regimes have grown in volume and complexity.
The UK sanctions regime on Russia continues to expand in order to increase pressure on President Putin. Russia's military, energy and financial sectors have again been the focus of recent UK designations. This includes the producers and suppliers supporting Russia’s military production, such as suppliers of munitions, machine tools, electronics and dual-use goods to Russia’s military, including entities based in China, India, Thailand, Israel, Kyrgyzstan and Turkey. The UK is also actively expanding its specification of ships, to disrupt Russia's revenue streams, especially from oil exports. This includes the specification of "shadow fleet" vessels and individuals who support Russia's trade in oil. As at the date of writing, the UK has specified 269 ships under the Russia sanctions regime and around 159 of these specifications were made in 2025.
The more recent sanctions packages clearly signal the willingness of the UK government to target individuals and entities based in third countries, active in circumventing and undermining Western sanctions on Russia.
It is increasingly important for directors of all UK companies to realise and appreciate the expanding reach of sanctions. Sanctions permeate all areas. By way of example, corporate acquisitions carry a significant risk of inadvertently engaging with entities or jurisdictions subject to sanctions, potentially leading to legal and financial penalties. Managing sanctions risk in real estate transactions can be challenging. The risk increases significantly if the compliance function lacks the strength to detect and prevent illicit activities. Advising financial services firms, banks, or pension funds holding investments in Russian sanctioned banks involves navigating complex regulations and potential risks. It requires understanding the scope of sanctions, identifying affected investments and ensuring compliance with reporting and other obligations.
As many predicted, the focus in 2025 has shifted to enforcement. On 13 May 2025, the UK government published a policy paper setting out the results of a cross-government review of sanctions implementation and enforcement which was launched last year to consider ways to further strengthen the UK's sanctions framework. One of the stated aims of the review was to increase the deterrent effect of enforcement and the report identified that "… Underpinning our sanctions with strong enforcement is critical to their impact".
Companies (and individuals) face significant challenges when navigating sanctions regimes, potentially leading to severe financial penalties and reputational damage. These challenges arise from complex regulations, the need for robust compliance programs, and the risk of unwittingly engaging in transactions that violate sanctions. The need to boost compliance defences will be a formidable task for many businesses who will need to approach sanctions risks on many levels: from technical expertise on the movement of certain goods, the complicated diligence of control and ownership structures, the need to conduct thorough due diligence on their trading partners to ensure they are not dealing with sanctioned entities or engaging in prohibited transactions, the exposure faced through supply chains or other third-party relationships. Sanctioned entities often employ sophisticated techniques to evade sanctions, making compliance even more challenging. Large corporations can be exposed to sanctions risks even if they are not directly trading with sanctioned entities. For example, a company may be indirectly involved in a transaction chain that violates sanctions if goods are re-exported to a sanctioned jurisdiction.
Violations of sanctions can result in significant fines, reputational harm and even criminal charges as can be seen from the following recent examples:
- On 14 March 2025, the Office of Financial Sanctions Implementation ("OFSI") published details of an enforcement action for information offences against three charities under the UK’s International Counter-Terrorism sanctions regime. The enforcement action offers an important reminder to all companies of the breadth of their obligations under UK financial sanctions regulations and, in particular, the importance of implementing and communicating procedures to ensure the provision of timely responses to OFSI information requests. This case is significant in that it represents the first OFSI enforcement action for a breach relating to a failure to respond to requests made under OFSI’s information gathering powers. This was also the first OFSI enforcement action brought under a thematic (as opposed to a geographic) sanctions regime. It demonstrates the willingness of OFSI to make use of its disclosure enforcement (i.e. “name and shame”) powers. It also highlights OFSI’s willingness to bring enforcement actions involving a wide-range of industries, in this case the charity sector.
- On 20 March 2025, OFSI imposed a monetary penalty of £465,000 on UK-registered Herbet Smith Freehills CIS LLP Moscow ("HSF-Moscow") for breaches of Financial Sanctions on Russia. OFSI’s £465,000 penalty related to six payments with a collective value of £3,932,392 to designated persons subject to an asset freeze. The payments, which took place over a period of seven days as the firm wound down its Russian offices, demonstrated a pattern of failings brought about primarily by inadequate due diligence and sanctions screening, and errors caused by the hasty closure of the HSF Moscow office. HSF London, on behalf of HSF Moscow, voluntarily disclosed the breaches to OFSI, and a 50% reduction was applied to the final penalty amount.
- On 11 April 2025, the UK's first criminal sanctions case concluded, with Dmitrii Ovsiannikov, the former Russian-appointed governor of Sevastopol, found guilty of sanctions circumvention and money laundering offences. Mr Ovisannikov is a designated person subject to UK asset freezing sanctions and travelled to the UK in February 2023. Whilst in the jurisdiction, he applied for a bank account into which his wife transferred £76,000 to enable Mr Ovisannikov to pay a deposit on a car. When the bank account was subsequently frozen, Mr Ovisannikov's brother, Alexei Owsjanikow, bought the car and insured it for Mr Ovisannikov to drive. Mr Owsjanikow also paid school fees for his brother's children and allowed his brother the use of his debit card. These payments amounted to a breach of the UK asset freeze and both brothers were convicted of sanctions circumvention offences. Mr Ovisannikov was sentenced in April 2025 to 40 months' imprisonment, and Mr Owsjanikow to 15 months' (suspended for 15 months).
- On 11 April 2025, OFSI imposed a monetary penalty of £5,000 on the UK-registered company Svarog Shipping & Trading Company Limited (“Svarog”). This penalty relates to an information offence and is the first of its kind to be issued by OFSI. Svarog failed to respond within the required timeframe to a statutory Request for Information ("RFI") made by OFSI, and failed to provide a reasonable excuse. Aggravating factors included Svarog's failure to address the RFI until after the deadline had passed, and the fact that it operated in a sector (maritime oil shipment) with elevated exposure to sanctions, which ought to have made the company more vigilant to OFSI's request. This case highlights the importance of firms and individuals responding in a timely manner to OFSI RFIs.
The key message is that robust due diligence remains crucial. Company directors need to understand their obligations, keep abreast of changes in sanctions and implement effective screening and reporting procedures.
If you would like to get in touch, please contact Jonathan Moss or Laura Segger
