Risks, Regulations and Russia: How EU Sanctions are Evolving?

The European Union (EU)  has been imposing sanctions against individuals and entities who were involved in Russian aggression against Ukraine or associated with key sectors of the Russian economy.

In recent years, the EU sanctions on Russia have significantly expanded, particularly in the aftermath of the Russia-Ukraine Conflict.

Businesses operating within the EU must understand the concept and scope of Russia’s EU sanctions to comply with the sanctions regime and avoid regulatory fines for non-compliance.

Businesses must grasp what EU sanctions are, why they are implemented, and how they are enforced to discourage unlawful behavior and maintain international peace to fully understand the EU sanctions Russia 2025.

The EU has imposed restrictive measures, including financial sanctions, trade restrictions, and travel bans, targeting key sectors of the Russian economy.

What Are EU Sanctions and Why Has the EU Imposed Sanctions on Russia?

The EU imposes sanctions for many reasons, including geopolitical conflicts, human rights violations, terrorism threats, and cybercrime concerns. The EU sanctions on Russia due to the Ukraine conflict are considered to be the strictest and extensive sanctions in EU history.

The target of EU sanctions against Russia could be entities, individuals, and businesses, depending on who is involved in the earlier-mentioned violations.

There are certain limitations in the implementation of different types of sanctions.

All individuals and entities operating within the European Union (EU) are mandated to comply with EU sanctions regulations. Obliged entities include financial institutions, businesses, and payment service providers (PSPs).

Effective sanctions screening helps identify and prevent dealings with sanctioned russian persons or entities, thereby combating the risk of regulatory penalties or reputational damage.

Screening of clients against EU sanctions lists in business is conducted by AML Solutions using a risk-based approach.

Timeline of EU Sanctions on Russia

Initial EU sanctions against Russia (Crimea Annexation 2014)

The first round of EU sanctions on Russia was imposed in 2014 after Russia’s annexation of Crimea, which involved military forces and a political strategy.

“Sanctions against Russia make up almost 46.4% of all sanctions imposed by the European Union.”

European Commission

Russia has faced different types of sanctions that aimed to target individuals and businesses linked to the conflict in Ukraine.

The EU has implemented various sanctions targeting individuals and entities involved in an ongoing conflict in Ukraine. The following are key sanctions imposed on Russia.

Asset Freezing and Travel Bans

Restricting access to assets and banning the travel of individuals, companies,  and politicians who were suspected of being involved in Russia’s aggression against Ukraine.

Sectoral Sanctions

Sectoral sanctions were imposed to target the following key sectors of the Russian economy,

• Finance: Restricting dealings between  Russian banks and EU companies to limit financial growth.
• Energy: limiting export of certain technologies and services related to deepwater oil exploration and Arctic projects to Russia.
• Defense: The Export of military equipment and related services that could help in fueling the conflict against Ukraine is banned.

All imposed sanctions had mainly one reason behind them, which was to pressure Russia so that it could reverse its actions in Crimea and engage in “diplomatic dialogue” to restore peace.

The impact of enforced EU sanctions was significant, and economic, political, and technological growth was hindered, thus restricting the ability to operate globally.

These measures have greatly hindered Russia’s economic, technological, and political growth by limiting its ability to operate internationally.

Escalation of EU Sanctions After Russia’s Invasion of Ukraine

In 2022, Russia launched a full-scale military invasion of Ukraine, intensifying the conflict. As a result, the EU had strengthened its sanctions framework and covered additional sanctions, including asset freezes, travel bans, and broader sectoral sanctions.

Energy Sector Sanctions: Many Sectors, including the energy sector, have been subjected to stricter restrictions. The import of Russian oil, coal, and gas had been restricted to eliminate dependency on Russia.

Investment and technology Sanctions: Investment and technology transfer were also limited by the imposition of sanctions on state-owned businesses, thereby aiming to weaken Russia’s industrial and economic growth.

Airspace bans: Russian Aircraft had not been allowed to enter the premises of the EU due to Russian maritime vessels being subject to sanctions.

Russia could easily use third countries to evade EU sanctions, so Anti-circumvention rules were introduced.

These new sanctions on Russia by the EU are still evolving in 2025, demonstrating the EU’s commitment to limit the growth in Russia’s economic, political, and technological sectors, thereby putting pressure on Russia.

17th Sanctions Package Against Russia

After 16 rounds of sanctions, the 17th package reflects the EU’s continued support for Ukraine and its commitment to maintaining pressure on Russia through targeted economic measures.

Statement following the EU’s 17th Sanctions Package:

The following were key elements of the package:

Anti-Circumvention Measures

The sanctions lists now include 189 additional ships linked to Russia’s shadow oil fleet, bringing the total to 342 vessels. These ships are banned from entering EU ports or accessing related services as part of Anti-Circumvention Measures aimed at illicit shipping operations.

It is the largest G7 sanctions focusing on Russia’s shadow fleet vessels. Significant reductions in Russia’s oil exports and its revenue have been observed. Oil shipments through these vessels dropped by 76%.

Thirty-one companies have been added to the sanction lists for involvement in sanction evasion or helping Russia’s military. (18 in Russia and 13 companies in other countries, including Turkey, Vietnam, UAE, Serbia, Uzbekistan.

Additional Measures

17 new individuals and 58 entities have been sanctioned for trying to compromise Ukraine’s sovereignty. New additions to the lists belong to people who have been linked to Russia’s defense sector.

Sanctions include asset freezing, travel bans, and economic restrictions.

Trade-related Measures

Sanctions have been expanded to exports of advanced technology goods that can be used for dual use. New banned items include chemicals used for missile production, such as “sodium chlorate, potassium chlorate, aluminium, magnesium, boron powders.”

Trans bans make it challenging for Russia to import banned items and chemicals from other countries.

Sakhalin Exemption

Japan is allowed to continue importing crude oil from Russia’s Sakhalin-2 project without sticking to the international price cap on Russian oil. This exemption has been extended to one more year and is applicable until June 28, 2026, to protect Japan’s energy security.

EU sanctions have reduced Russia’s oil and gas revenues by about 80% and decreased its trade with the EU by over 60%, weakening its economy.

To ensure these sanctions are more than just policy declarations, the EU has taken strict steps to enforce them effectively. From increasing pressure on financial institutions to expanding daily screening obligations, these measures aim to prevent any gaps in enforcement.

A key example of this enforcement framework is the regulatory update affecting instant payment providers across the EU.

Sanctions Screening Requirements for SEPA Instant Payments Service Providers

The EU’s Instant Payments Regulation (Regulation (EU) 2024/886) introduces a new compliance layer that impacts payment service providers dealing with SEPA instant payments. Screening against the European Union sanctions list is now mandatory for SEPA Instant Payments to prevent illicit financial flows.

Regulation mandates the screening of clients against sanctions lists before onboarding to avoid payments linked to sanctioned entities and screen all existing clients against up-to-date sanctions lists to ensure compliance with sanctions.

Conduct daily sanction screening against updated sanctions lists. OFAC’s secondary sanctions may impose regulatory fines or penalties on EU-based firms for transactions that may be legal under EU laws and framework.

It escalated the regulatory conflict as complying with certain obligations may be considered a violation of the act under other laws.

Requirement to Screen against the EU Consolidated Sanctions List

Financial institutions, payment service providers (PSPs), and businesses operating within or connected to EU markets are required to screen the clients and transactions against the EU consolidated sanctions lists.

The EU maintains an up-to-date registry of individuals, entities, and businesses subject to sanctions in the EU Consolidated Sanctions lists.

It also includes individuals and entities from the lists of sanctions against Russia. Sanctions Regimes include:

EU’s Autonomous Sanctions

The EU creates and enforces its own sanctions framework to promote peace globally, and these sanctions measures become official after getting approval from EU council decisions and regulations.

All EU members must comply with these sanctions, including Russia, Syria, and Venezuela.

Reinforced UN Sanctions

The EU adds more sanctions to the UN sanctions regime to make it more impactful and address global security threats.

Approval from all EU member states is a requirement to incorporate the targets into the consolidated sanctions lists. Both the public and private sectors are required to comply.

Sanction screening against consolidated sanctions lists ensures that businesses do not start a business relationship with sanctioned entities.

Ongoing monitoring helps identify whether existing clients pose risks and are added to updated sanctions lists.

Implementing a Risk-Based Approach to Comply with EU Sanctions

The extension of the EU’s restrictive measures on Russia requires businesses to adopt a risk-based approach by implementing targeted strategies rather than relying solely on sanctions screening.

Compliance with Sectoral Sanctions

Restrictive measures cover a wider range of sanctions, it’s not just limited to asset freezing or travel bans. Businesses review their dealings in consideration of sectoral sanctions that target specific sectors, including finance, defense, and energy.

Anti-Circumvention Measures

Businesses should establish Anti-Circumvention Controls that prevent indirect business with sanctioned parties through intermediaries or non-EU subsidiaries, and ensure that these controls prevent violations of EU sanctions on Russia.

Businesses are not allowed to engage in business relationships even through third parties. For example, if a Russian company has a branch in Dubai and operates in Germany.

Although Germany has not directly engaged with the Russian company, it is still benefiting from the Russian company, so it is still a violation.

Compliance with EU restrictive measures enables the implementation of a risk-based approach, helping businesses identify and mitigate EU Russia sanctions 2025 risks.

Compliance Checklist for Businesses Following EU Sanctions Russia 2025

Adopting a risk-based approach to daily business compliance requires understanding and following best practices under the EU Russia sanctions 2025. Key compliance practices include:

Sanction Screening and Ongoing Monitoring

Businesses are required to use an automated and reliable AML solution at the start of business deals for EU sanctions lists search to avoid illicit exports.

All countries’ sanctions must undergo ongoing monitoring to ensure businesses don’t miss the newly updated EU Consolidated Sanctions List.

Record Keeping

Keep detailed records of all sanction screening operations and compliance outcomes to avoid regulatory fines as a result of audits and reviews.

Submission of Suspicious Activity Reporting (SAR)

If a potential match with a sanctioned party is identified, notify the compliance team and submit a report to the relevant Financial Intelligence Unit (FIU).

Internal Controls and Staff Training

Implement robust internal procedures and ensure staff are trained to identify and effectively combat sanctions-related risks.

AML Watcher Ensures Global Sanctions Compliance

Sanction compliance is not just about screening clients against sanctions lists; it’s about identifying risks before they impact compliance. AML Watcher empowers businesses to meet evolving EU regulatory expectations with precision and speed.

AML Watcher streamlines sanctions compliance, helping businesses stay ahead of regulatory requirements and mitigate risks.

Real-Time Sanctions Screening

AML Watcher allows businesses to screen clients against the EU Consolidated Sanctions List and avoid starting business deals with and involving the transactions of sanctioned entities

It maintains compliance with EU regulations by reducing manual efforts and automating the alerts. It quickly identifies sanctioned entities and stays ahead of regulatory changes, and helps avoid penalties.

Screens against updated global lists such as OFAC, UN, and other relevant sanctions lists to ensure cross-border compliance.

Adverse Media Screening for Early Risk Detection

AML Watch empowers businesses and enhances compliance strategies by scanning international news sources, Press releases (PRs), and media reports through adverse media screening.

Compliance decisions cannot rely solely on official EU sanctions lists. It means that if an individual appears in new or media reports before being added to the EU sanctions lists, AML Watcher can flag the risks before sanctions screening.

Custom Risk Scoring

AML Watcher provides custom-built solutions to simplify global growth, empowering businesses to assess and manage the risk profiles of clients across low, medium, and high-risk thresholds.

Custom alert thresholds help teams to prioritize high-risk entities and meet obligations under the EU’s risk-based AML framework.

Global Coverage & 90% Automation

AML Watcher covers data from 100,000+ sources across 235+ countries, screening in 80+ languages with phonetic matching and transliteration. 90% automation minimizes manual efforts, reducing false positives and negatives in your AML compliance program.

Contact us now to automate your sanctions screening with AML Watcher and stay compliant with EU and global regulations.