Transatlantic Russia Sanctions – Navigating EU Rules, OFAC Reach, and Secondary Risk

Corporate Clients, AML, White collar crimes and investigations

Sanctions on Russia imposed by the European Union (EU) and the United States (US), primarily through the Office of Foreign Assets Control (OFAC), remain among the most comprehensive in modern international law. In July 2025, the EU adopted its eighteenth sanctions package, targeting energy exports, banking, and military-industrial supply chains, while intensifying anti-circumvention enforcement. 

Simultaneously, OFAC continues to expand US restrictions and has signalled the possibility of imposing further, more stringent measures. For businesses, understanding sanctions compliance, including secondary sanctions risk, due diligence obligations, and cross-jurisdictional requirements, has never been more critical.

Evolution of EU and OFAC Sanctions Frameworks

The EU’s eighteenth sanctions package, adopted by the Council of the European Union in July 2025, represents a notable escalation. Measures include 1) a reduction of the oil price cap to USD 47.60 per barrel;2) an expansion of asset freezes to more than fifty individuals and entities, and 3) reinforced prohibitions targeting the so-called “shadow fleet” engaged in sanctions evasion. Council Regulation (EU) No 833/2014, as amended, remains the core legal instrument governing these measures, complemented by successive Council Decisions under the Common Foreign and Security Policy (CFSP).

OFAC, operating under the International Emergency Economic Powers Act (IEEPA) and a series of Executive Orders, including EO 14024 and EO 14071, continues to apply primary and secondary sanctions with extraterritorial reach. Designations in early 2025 targeted financial institutions, shipping operators, and commodity traders facilitating Russian exports outside authorised frameworks. The US Department of Justice’s KleptoCapture task force remains central to enforcement, seizing assets and prosecuting entities for sanctions evasion.

Legal Intersection: EU and US Sanctions Frameworks—Overlap and Tensions

While the EU and US share goals they operate via distinct legal architectures. The EU employs comprehensive but consensus-based regulatory tools such as Council Regulation (EU) No 833/2014, amended through successive CFSP decisions. Enforcement can vary among Member States, reflecting structural differences in implementation.

In contrast, the US sanctions architecture, rooted in IEEPA, EO 14024, and EO 13662, allows rapid executive action and extraterritorial reach, including secondary sanctions that penalise non-US individuals and entities for indirect involvement. Dual compliance is therefore a legal imperative for multinational businesses. Activities permitted under EU licences may still expose entities to US sanctions risk. For instance, an EU company legally trading oil at USD 47.60 per barrel may still face OFAC secondary sanctions due to involvement in Russia’s energy economy. Similarly, US-based firms must navigate EU sanctions involving refined product bans or shipping restrictions.

The contrasting enforcement instruments underscore structural tensions in interjurisdictional compliance. EU decisions require unanimity and periodic updates, whereas US designations can be issued swiftly, with global implications.

Legal Implications for Businesses under Escalated US Sanctions

Should the US impose further sanctions, businesses could face significant consequences, including heightened compliance obligations and increased exposure to enforcement actions. Enhanced secondary sanctions raise legal risks for non-US entities engaged in Russian trade involving energy, technology, or financial services. The OFAC may broaden prohibitions to cover additional service restrictions, advanced technology transfers, and transactions routed through intermediary jurisdictions.

Such measures would elevate compliance costs, require detailed legal risk mapping, and may force companies to consider operational restructuring or even withdrawal from high-risk markets.

For businesses already navigating EU sanctions, additional US measures would introduce a dual compliance burden. Divergences between EU sectoral prohibitions and US extraterritorial controls could necessitate parallel legal analyses, enhanced due diligence, and case-by-case licensing to maintain lawful operations.

Failure to comply exposes companies to severe penalties, including:

• Civil penalties – The maximum civil penalty per violation under the IEEPA is the greater of USD 377,700 or twice the amount of the transaction that caused the violation. Additional penalties that might be incurred are asset freezes, and loss of export privileges.
• Criminal penalties – For willful violations penalties may include up to USD 1 million per violation, individual fines up to USD 1 million, and potential imprisonment for up to 20 years.
• Reputational and operational risks – Exclusion from US and EU markets, increased regulatory scrutiny, and disruption of financial and trade relationships.

Strategic Compliance Strategies for EU and OFAC Russia Sanctions Regimes

To mitigate risks under evolving sanctions frameworks, businesses must adopt a comprehensive compliance strategy integrating both EU and US requirements. This entails internal sanctions programmes that map core EU regulations, such as Regulation (EU) No 833/2014 and anticipated amendments, alongside key OFAC directives under Executive Orders 14024, 13662, and IEEPA. Clear escalation processes for risk-based decision-making are critical to ensure legal certainty in high-stakes transactions.

A clear due diligence framework is equally essential. Businesses must carefully vet counterparties, intermediaries, and supply chain nodes, with particular attention to third-country parties that may present heightened sanctions evasion risks. Transactions involving ambiguous regulatory classifications should be approached with licences or authorisations from the relevant EU member state authorities or OFAC to ensure compliance.

Comprehensive documentation practices underpin all compliance activities, maintaining transaction-level records that substantiate regulatory adherence and provide a defensible position in the event of enforcement action. Dynamic monitoring systems are necessary to track emerging regulatory developments, including the forthcoming nineteenth EU sanctions package and potential new US legislative or executive measures.

Scenario planning should form part of an enterprise-wide sanctions compliance strategy, enabling organisations to adjust rapidly through supply chain rerouting, divestment strategies, and protective measures for at-risk assets. Embedding these elements into a unified compliance framework allows businesses to navigate dual sanctions regimes while mitigating enforcement exposure and preserving operational integrity.

Conclusion

The convergence of EU and OFAC sanctions on Russia creates a complex regulatory environment with significant legal implications for international businesses. If the US imposes additional, more restrictive measures, the compliance burden will intensify further. Companies in energy, banking, finance, logistics, and technology sectors must adopt rigorous legal frameworks to mitigate exposure, avoid enforcement actions, and manage the evolving interplay of transatlantic sanctions law.

New Balkans Law Office advises international businesses and financial institutions on all aspects of sanctions compliance, including transactional due diligence, licensing applications, and risk assessments. For further assistance, please contact: AML@newbalkanslawoffice.com.