Quarterly Sanctions Update | Q4 2024 / Q1 2025 | McDermott Will & Emery

What’s New? The European Union and the United Kingdom remain committed “to keep up the pressure on the Kremlin” by way of imposing further sanctions as Russia’s illegal invasion of Ukraine enters the fourth year. Within a course of the last three months, the EU adopted two new sanctions packages, with new restrictions ranging from asset freezes imposed on over a hundred of individuals, companies and vessels to banning imports of aluminum originating in Russia. The United Kingdom followed the European Union’s suit, imposing new sanctions as recently as February 24, 2025.

US Policy Changes. Stay ahead of US law and policy changes, including shifting restrictive trade measures under the current administration, with our dedicated resource center available here.

Clarifying the Rules. The European Commission issued a series of long-awaited clarifications on the ‘best efforts’ and ‘no re-export to Russia’ clause requirements. The UK Office of Trade Sanctions Implementation (OTSI) also provided new guidance on ‘no Russia’ clauses, highlighting their role in due diligence best practices.

Expanding Sanctions Reporting. In the United Kingdom, a new group of companies, including insolvency practitioners, letting agents and art market participants, now fall under the reporting requirements relating to Russia sanctions.

Easing Pressure on Syria. The EU agreed to suspend certain sanctions against Syria following the collapse of President Assad’s regime in December 2024. The United Kingdom has announced its willingness to implement similar measures on February 13, 2025.

In Depth

European Union

The European Union adopted its 16th sanctions package against Russia on February 24, 2025, barely two months after adopting the 15th sanctions package. Both packages reinforce anti-circumvention measures as well as expand the lists of sanctioned individuals, entities and vessels. Moreover, the deadline for applying for licenses authorizing prohibited activities in the context of divestment from Russia has been extended until December 31, 2025. EU sanctions against Belarus have been updated accordingly.

Whilst the focus remains on weakening Russia’s energy revenues by listing nearly 150 vessels and further targeting actors associated with trade in crude oil or petroleum products, the European Union did not reach an agreement on prohibiting the import of liquefied natural gas (LNG) from Russia.

Below are some key new restrictions introduced by the 16th sanctions package which, with a few exceptions, apply from February 25, 2025:

• Foreign entities and individuals: The European Union continues to exert extraterritoriality by listing 34 new companies established in countries other than Russia which are suspected of supporting Russia’s military-industrial complex or are otherwise engaged in sanctions circumvention. This builds on from the 15th sanctions package which listed two senior officials from North Korea as well as the ‘fully-fledged listings’ (i.e. a travel ban, an asset freeze and a prohibition to make funds available) on seven Chinese persons and entities facilitating the circumvention of EU sanctions, supplying sensitive drone and microelectronic components to the Russian military industry.
• Russian banks and financial institutions: Engaging in transactions with a number of banks is now prohibited. As of March 17, 2025, providing specialised financial messaging services to a set list of Russian banks and financial institutions will also be prohibited.
• Media outlets: Broadcasting, including through satellite and internet video-sharing platforms or applications, any content provided by a number of Russian media outlets is no longer authorised.
• Import restrictions: Importing primary aluminum from Russia into the European Union is now prohibited. This builds on the existing prohibition relating to the import of processed aluminum goods from Russia. However, to ensure a smooth transition for EU businesses, a quota mechanism has been introduced over a 12-month period.
• Export restrictions: The list of restricted goods now includes additional minerals, chemicals, steel, glass materials and fireworks, as well as software related to machine tools used to manufacture weapons and video-game controllers. The export of these goods to Russia is prohibited.
• Transport: Engaging in transactions with certain Russian airports, including Vnukovo Airport, Zhukovsky Airport, and four regional airports, as well as certain Russian ports, including Volga, Astrakhan, Makhachkala, Ust-Luga, Primorsk, and Novorossiysk, is now prohibited.
• Services: Providing construction services to the Russian Government or entities established in Russia is no longer permitted. While no exemptions are available for pre-existing contracts, EU companies may apply to the relevant authorities for a license authorizing any such activities.
• Crypto: Garantex, a Russian crypto-currency exchange is now subject to EU asset-freeze restrictions and any engagement with Garantex is prohibited. In a first, EU sanctions have listed the known blockchain wallet address of the sanctioned entity.
• New guidance: The European Commission amended its Frequently Asked Questions on Russia sanctions (FAQ) with long-awaited clarifications (available here). Specifically:
  • Best efforts: On November 22, 2024, the European Commission clarified that the determination on whether a business has actually exercised its ‘best efforts’ under Article 8a of EU Regulation 833/2014 will depend on the nature, size and risk profile of the business itself. The Commission holds that ‘best efforts’ may include: the implementation of internal compliance programs, systematic sharing of corporate compliance standards, sending internal newsletters and sanctions advisories, organizing mandatory reporting on sanctions breaches, and/or organising mandatory sanctions trainings.

    According to the FAQ, any of the following activities may amount to a breach of the ‘best efforts’ obligation: knowledge of activities undermining EU sanctions, failure to block transactions undermining EU sanctions and/or failure to carry out appropriate due diligence regarding activities of non-EU subsidiaries which resulted in undermining EU sanctions. Explore more on the impact of this FAQ on EU investment funds and corporates here.

  • Circumvention and due diligence. On December 11, 2024, the European Commission reiterated that due diligence must be conducted on multiple levels, including at stakeholders’ level, transaction level including flows of money, as well as the transportation of goods level. Furthermore, EU operators should remember to identify any threats and vulnerabilities in their sanctions compliance processes, conduct an appropriate risk analysis and regularly update their policies.
  • Enhanced due diligence for manufacturers of common high priority items. On December 11, 2024, the European Commission clarified that the sanctions policies of exporters of Common High Priority Items should include:
    • model risk management practices,
    • customer due diligence (‘know your customer’ (KYC)),
    • product life-cycle monitoring and tracking;
    • reporting from the compliance team to the management team;
    • reporting from commercial counterparts;
    • record-keeping procedures;
    • internal control systems;
    • involvement of senior management;
    • appointment of a compliance officer at management level; and
    • employee screening and training.
• ‘No re-export to Russia’ clause. On December 18, 2024, the European Commission confirmed that a general clause prohibiting the re-exportation of prohibited goods to Russia can be sufficient if the other requirements set out in Article 12g of EU Regulation 833/2014 (notably the existence of adequate remedies) are satisfied. Furthermore, the FAQ stated that a unilateral communication to the counterparty prohibiting re-exportation to Russia is sufficient if the EU company concerned faces persistent difficulties in inserting the ‘no re-export to Russia’ clause in a contract.

• Syria: On February 24, 2025 the European Union suspended the energy (including oil, gas and electricity) and transport sanctions imposed against Syria, and the asset-freeze measures imposed on five Syrian commercial banks and the national bank. This means that it is no longer prohibited to engage in transactions within these sectors, or with those Syrian banks. The European Commission explained that the Council “will also continue to closely monitor the situation in [Syria] to ensure that such suspensions remain appropriate.” These measures follow a similar action introduced by the US on January 6, 2025. The UK government has also announced its willingness to lift a number of UK sanctions against Syria on February 13, 2025.

United Kingdom

• New asset-freeze restrictions. On February 24, 2024, the United Kingdom imposed its “largest sanctions package since the early days of [Russia’s] invasion [of Ukraine].” In total, the United Kingdom sanctioned 107 new targets, covering producers and suppliers for Russia’s military, individuals and entities helping Russia to funnel foreign advanced technology to Russia, and North Korean officials complicit in helping Russia’s war efforts. For the first time ever, the United Kingdom sanctioned a foreign financial institution assisting Russia in accessing the international financial system.
• New powers of OFSI: A of November 14, 2024, the UK Office of Financial Sanctions Implementation (OFSI) has the power to impose civil monetary penalties for breaching the prohibitions on investing in land in non-controlled Ukrainian territory or in Russia.
• Reporting obligations: As of May 14, 2025, high value dealers, art market participants, insolvency practitioners and letting agencies will be required to report to OFSI their dealings with sanctioned persons and any suspicions relating to breaches of UK sanctions. This measure builds on the reporting requirements that cover UK regulated entities, such as banks or investment firms.
• Licenses for intra-group services. Currently, the provision of restricted business services to group entities established in Russia is subject to a license from the UK Export Control Joint Unit (ECJU). As of October 31, 2024, any such activity is no longer considered by the ECJU as “likely to be consisted with” UK sanctions aims. This means that anyone wishing to obtain a license is now required to “explicitly demonstrate how such activity aligns with” UK sanctions, which adds additional complexity to the licensing process and widens the ECJU’s powers to refuse granting of any such licenses.
• New guidance: On January 7, 2025, for the first time ever, OTSI issued guidance on UK trade sanctions (available here). Specifically:
  • Trading under Russia sanctions. OTSI provided a user-friendly summary of trade sanctions against Russia, including explanations relating to: sanctions applicability, definitions and commodity codes, trading via third countries, professional and business services to persons connected with Russia, exceptions to trade sanctions and licenses to carry out prohibited activities, trade sanctions licensing, export control licensing, import control licensing, tariffs on Russian goods (including rules of origin), and shipping sanctions.
  • Circumvention: OTSI also issued guidance aimed at helping UK exporters reduce the risk of being targeted by companies seeking to evade sanctions. OTSI reiterated that UK businesses must fully determine the extent of their specific sanctions risk exposure and develop an appropriate set of safeguards and controls tailored to their business operations. This guidance was updated on February 25, 2025.
  • ‘No Russia’ clause: OTSI confirmed that while the UK Russia sanctions do not require the inclusion of a ‘no Russia’ clause in commercial agreements, the existence of such a clause should be considered best practice and may constitute a deterrent to non-UK persons seeking to redirect restricted goods to Russia.
• Lite: A new system for applying for export licenses. The ECJU has rolled out a new system, Lite, for applying for standard individual export licenses (SIEL), available here. However, applications for licenses relating to exports of restricted goods to sanctioned jurisdictions, such as Russia, should be still completed on the previous platform, SPIRE.

Explore Further Insights

Your Essential Guide to Recent US Policy and Law Developments

Stay ahead of US law and policy changes, executive orders, and strategic shifts under the current administration with our dedicated resource centre (available here):

• The latest insights and analyses on executive orders impacting employers, government contractors, privately held corporations, healthcare organizations, businesses engaging in global trade, and more;
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• Recent commentary from McDermott’s industry leaders on key issues.

Conference on ‘Dealing with Sanctions and Anti-Corruption Compliance Issues After an Internal Audit’

On January 23, 2025, McDermott Will & Emery, along with the French Compliance Society and the Association of Certified Sanctions Specialists (ACSS), organized a conference on ‘Dealing with Sanctions and Anti-Corruption Compliance Issues After an Internal Audit.’ Our expert panel of speakers provided insights into how authorities in France, the US and the UK address breaches and the strategies available for negotiation, giving participants a deeper understanding of compliance and enforcement nuances across these key regions.

Speakers:

• Edouard Shailend Leeleea, Group Compliance Officer at MBDA and President of the French Compliance Society
• Arnaud Douville, General Counsel & Chief of Compliance at ERAMET
• Raminta Dereskeviciute, Partner (London)
• Nicolette Kost de Sèvres, Partner (Paris/Washington DC)
• Sabine Naugès, Partner (Paris)

Recent sanctions-related posts on our Regulatory and International Trade Blog:

• Navigating EU Sanctions: How Investment Funds and Corporates Can Meet the ‘Best Efforts’ Standard. Available here.
• Relaxation of Long-Standing Restrictions on Foreign Investment in the Healthcare Sector in China. Available here.
• New US Sanctions Against Gazprombank and Several Russian Financial Institutions. Available here.
• Understanding French Export and Re-Export Prohibitions: Ministry of Armed Forces Releases FAQ on Non-Re-Exportation Certificates. Available here.

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