[co-author: Lina Jeffcock]
The EU and UK sanctions regimes on Russia continue to expand as both jurisdictions seek to increase pressure on President Putin. As with previous recent packages, Russia’s military, energy and financial sectors have again been the focus of the EU and UK’s actions. Once again, the EU has sought to target entities in third countries such as Turkey, Vietnam, the UAE and Serbia that it considers are supporting Russia’s military industrial complex, or engaged in sanctions circumvention.
In parallel, the UK has announced a broad package of reforms to its sanctions regime to make it more effective. Most importantly the UK government has committed to create a single sanctions list; deliver measures to provide further clarity on ownership and control; develop fast-track penalties; make it easier to report suspected breaches; and enhance whistleblower protections. The UK government has already taken steps to give effect to the latter. As with many recent changes to the UK’s sanctions regime, increasing the ability for the UK to enforce sanctions is an obvious focus.
EU and UK Announce Sanctions Targeting Russia’s Military, Energy and Financial Sectors
On 20 May 2025, the UK and EU announced new sanctions packages in a coordinated effort to target Russia’s military, energy and financial sectors.1
The UK’s new sanctions consist of the following key measures:
- 18 more vessels, described as being part of Russia’s “shadow fleet” of ships used to bypass sanctions and maintain Russian oil exports, were added to the sanctions list.2 This is in addition to the UK’s announcement on 9 May 2025 to sanction up to 100 vessels forming a core part of Russia’s shadow fleet operation.3
- Asset freezes were imposed on 46 financial institutions, including the St. Petersburg Currency Exchange and the Russian Deposit Insurance Agency, as well as certain Russian corporate registrars.4
- Sanctions were levied against all levels of the Social Design Agency, which the UK government has described as carrying out “Kremlin-funded information operations that are designed to undermine sovereignty, democracy, and the rule of law in Ukraine and across the world.”5 The UK had previously sanctioned several leaders of the Social Design Agency in 2024.
The UK government has also indicated that it is working with international partners to review and potentially lower the $60-per-barrel oil price cap that applies to Russian crude oil under the sanctions regimes of the G7.
Similar to the UK approach, the EU’s 17th sanctions package:
- Subjects 189 additional vessels which form part of Russia’s shadow fleet to a port access ban and a ban on provision of services. The European Commission describes the 17th package as the largest single G7 sanctions action targeting shadow fleet vessels.6
- Adds 31 new companies to the list of sanctioned entities providing direct or indirect support to Russia’s military industrial complex, or engaged in sanctions circumvention. This includes 18 companies established in Russia and 13 established in third countries (six in Turkey, three in Vietnam, two in the UAE, one in Serbia and one in Uzbekistan). These entities are subject to tighter export restrictions concerning restricted goods and technologies under Council Regulation (EU) 833/2014 (Regulation 833).
- Subjects a further 17 individuals and 58 entities to asset freezes, prohibitions to make economic resources available to them, and travel bans (in the case of individuals). The new listings affect mostly the Russian military and defence sectors.
- Adds to the list of dual use and advanced technology items subject to export restrictions and anticircumvention measures with the aim of cutting Russia off from technologies with military use. The listed technologies include chemical precursors to energetic material and spare parts and components of high-precision computer numerical control machine tools (amongst others).
On the same day, the EU also amended its Russia Destabilization Sanctions, a legal framework first set up in October 2024 to counter Russia’s hybrid activities that undermine the fundamental values and security of the EU. In a notable step, the EU imposed an asset freeze, a prohibition to provide funds or economic resources, and a travel ban against two German nationals who work as German-language bloggers from Russia.
European Commission President Ursula von der Leyen has said that an 18th package of sanctions is already being prepared by the EU and will shortly follow the EU’s newly adopted 17th package.
EU Makes Further Russia Sanctions Designations
On 20 May 2025, outside of the EU’s adoption of its seventeenth sanctions package against Russia, the EU Council made sanctions designations in relation to:
- Human rights violations: Restrictions were imposed on 28 individuals responsible for “serious violations of human rights, the repression of democratic opposition, and activities seriously undermining the rule of law in Russia”. Targeted individuals include members of the Russian judiciary and members of the Investigative Committee involved in the fabrication of cases against various activists.7
- Russian hybrid threats: 21 individuals and six entities under the Russia hybrid threats framework for Russia’s destabilising actions abroad were sanctioned. The listing includes individuals who controlled Ukrainian media outlets and used them to disseminate pro-Russian propaganda in Ukraine and beyond and, remarkably, two German nationals who work as German-language bloggers from Russia. They both were listed for using information manipulation, and interference and facilitating an armed conflict in a third country.8
- Use of chemical weapons in Ukraine: Three entities in the Russian Armed Forces involved in the development and use of chemical weapons were sanctioned.9
EU Amends Designation Criteria
The EU has introduced a new listing criterion under Council Regulation 269/2014 (Regulation 269) to impose asset freeze measures on individuals or entities that have participated in or enabled transfers of ownership, control or economic benefit of the business interests of leading businesspersons operating in Russia who are subject to asset freeze sanctions under a specific criterion in Regulation 269.10 The Council has observed that such transfers are often implemented to hide the assets of the sanctioned businesspersons or circumvent EU sanctions. This new listing criterion does not apply in cases where individuals or entities are involved in transfers that are expressly permitted pursuant to a derogation or exemption in Regulation 269 or Regulation 833.
On 5 June 2023, the EU amended the listing criteria under Regulation 269 to include leading businesspersons operating in Russia and their immediate family members, or other individuals, benefitting from such leading businesspersons, as well as businesspersons, legal persons, entities or bodies involved in economic sectors providing a substantial source of revenue to the government of the Russian Federation. Under the 17th sanctions package, the EU has implemented a new rule stating that leading businesspersons operating in Russia who are subject to an EU asset freeze under the leading businessperson criterion and claim to have transferred ownership, control or economic benefit of their business interests on or after 24 February 2022 shall continue to be considered as leading businesspersons and maintained on the EU asset freeze list unless sufficient, recent and reliable information demonstrates that such persons no longer meet the listing criterion. This rule sets out the burden of proof required for the Council to maintain leading businesspersons in Annex I of Regulation 269 (i.e., EU asset freeze list).
In the context of a response to the European Parliament by High Representative/Vice-President Josep Borrell Fontelles on behalf of the European Commission in 2022, the high representative confirmed that EU restrictive measures are not retroactive. The fact that a person may have transferred the ownership of an asset to a third person before being listed as subject to EU sanctions does not constitute in itself a violation of such measures. However, in the Commission’s view, if a certain scheme was created in order to assist a person to evade the effects of its possible future listing, then participation in that scheme after the listing is in force can amount to circumvention.
EU Introduces New Restrictions Under Russian Hybrid Threat Regime
The EU has introduced a new provision allowing for imposing a transaction ban on tangible assets used or involved in Russian destabilizing activities, as listed in the new Annex III of Regulation (EU) 2024/2642.11 Such assets include vessels, aircraft, real estate, ports, airports, and physical elements of digital and communication networks. According to the regulation, such assets can include both those of a movable or immovable nature. However, it must be adequately identifiable. This provision, which targets assets, instead of individuals or entities, is a new development in the EU sanctions framework.
Additionally, the EU has introduced a new provision to impose a transaction ban on non-EU financial institutions or entities providing crypto asset services involved in transactions that facilitate activities by or otherwise support individuals or entities engaged in Russia’s destabilizing activities. The EU can also impose such a transaction ban on entities providing technical or operational assistance to parties engaged in Russia’s destabilizing activities. Entities sanctioned under this provision will be listed in the new Annex IV of Regulation (EU) 2024/2642.
At the time of writing, the EU has not yet added any such sanctioned assets, financial or credit institutions, or entities to Annex III or Annex IV of Regulation (EU) 2024/2642. EU businesses should, however, monitor these annexes for sanctions compliance considerations.
Cross-Government Review of UK Sanctions Implementation and Enforcement Published
The UK government has conducted a cross-government review of its sanctions implementation and enforcement framework and has since published a report of its review on 15 May 2025. The review, led by the Foreign, Commonwealth & Development Office (FCDO) in collaboration with key departments and agencies, looked to (i) assess the effectiveness of the current sanctions regime; (ii) identify areas for improvement; and (iii) set out a series of actions to strengthen compliance, enforcement and industry engagement.12
Following its review, the UK government has committed to implementing the following key actions (amongst others) in the financial year 2025-2026:
- Create a single sanctions list: UK designations are currently detailed in two lists, the UK Sanctions List and HM Treasury’s Consolidated List of asset freeze targets. The review identifies that a single list will aid industry in screening for designated persons, especially those with nonfinancial designations.13
- Deliver measures to provide further clarity on ownership and control: The review found that companies continue to encounter difficulty in assessing ownership and control issues as part of their sanctions programmes. The UK government intends to clarify such obligations through additional guidance.14
- Develop fast-track penalties: The UK government intends to introduce a quicker process for imposing civil penalties for breaches of certain types of financial sanctions. This is intended to make more effective use of OFSI and OTSI’s resources so the agencies can focus on complex, serious and deliberate financial sanctions breaches.15
- Make it easier to report suspected breaches: The review found that multiple reporting points for different breaches could be confusing and may result in fewer reports being made. The UK government intends to clarify reporting requirements and channels, including the introduction of a single reporting point for suspected sanctions breaches.16
- Whistleblower protections: The review found that providing whistleblowing protections to workers who disclose information to government departments relating to certain sanctions breaches could increase the number of disclosures made.17 This would assist the UK government’s enforcement efforts with respect to sanctions violations. In the UK, a worker would usually need to make a disclosure to an employer, a legal adviser or a “prescribed person” under the Public Interest Disclosure (Prescribed Persons) Order 2014 to fall within the scope of the UK’s whistleblower framework.
Since the publication of the review, the government has laid before parliament the Public Interest Disclosure (Prescribed Persons) (Amendment) Order 2025, which amends the 2014 order to prescribe relevant government departments in relation to financial, transport and certain trade sanctions.18 The updated legislation will enter into force on 26 June 2025.
The review also flags the launch of the new UK sanctions alert service which brings together notifications from the FCDO, the Office of Financial Sanctions Implementation and the Office of Trade Sanctions Implementation (the key business-facing parts of the government’s sanctions system). The alerts aim to provide a practical and simple way for companies to more proactively engage with sanctions developments and better manage sanctions risks.19 Staying up to date with the latest government guidance will allow companies to proactively review and, if necessary, enhance internal compliances processes.
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1 See, Council Decision (CFSP) 2025/931 of 20 May 2025 amending Decision 2014/512/CFSP concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine and UK Government’s Policy Paper of 20 May 2025, “List of Russia sanctions targets, 20 May 2025”; See also, UK Government Press Release of 20 May 2025, “UK announces major sanctions in support of Ukraine” and European Commission Press Release of 20 May 2025, “EU adopts 17th sanctions package against Russia”.
2 See, UK Government’s Policy Paper of 20 May 2025, “List of Russia sanctions targets, 20 May 2025”.
3 See, UK Government’s Press Release of 9 May 2025, “Prime Minister to announce largest ever sanctions package targeting shadow fleet as UK ramps up pressure on Russia”.
4 See, UK Government’s Policy Paper of 20 May 2025, “List of Russia sanctions targets, 20 May 2025”.
5 See, UK Government Press Release of 20 May 2025, “UK announces major sanctions in support of Ukraine”
6 See, European Commission Press Release of 20 May 2025, “EU adopts 17th sanctions package against Russia”.
7 See, Council Decision (CFSP) 2025/957 of 20 May 2025 amending Decision (CFSP) 2024/1484 concerning restrictive measures in view of the situation in Russia; See also, Council of the EU Press Release of 20 May 2025, “Human rights violations in Russia: EU lists further 28 individuals”.
8 See, Council Decision (CFSP) 2025/966 of 20 May 2025 and Council Decision (CFSP) 2025/963 of 20 May 2025 amending Decision (CFSP) 2024/2643 concerning restrictive measures in view of Russia’s destabilising activities and Council Implementing Regulation (EU) 2025/965 of 20 May 2025 implementing Regulation (EU) 2024/2642 concerning restrictive measures in view of Russia’s destabilising activities; See also, Council of the EU Press Release of 20 May 2025, “Russian hybrid threats: EU lists further 21 individuals and 6 entities and introduces sectoral measures in response to destabilising activities against the EU, its member states and international partners”.
9 See, Council Decision (CFSP) 2025/960 of 20 May 2025 amending Decision (CFSP) 2018/1544 concerning restrictive measures against the proliferation and use of chemical weapons; See also, Council of the EU Press Release of 20 May 2025, “Chemical weapons: EU sanctions three entities in the Russian Armed Forces over use of chemical weapons in Ukraine”.
10 Such leading businesspersons are sanctioned under the criterion set forth in Article 3(g) of Regulation 269.
11 See, Council Regulation (EU) 2025/964 of 20 May 2025 amending Regulation (EU) 2024/2642 concerning restrictive measures in view of Russia’s destabilizing activities.
12 See, Cross-Government Review Policy Paper “Cross-government review of sanctions implementation and enforcement” of 15 May 2025.
13 Id, para. 20(iii).
14 Id, para. 20(iv).
15 Id, para. 20(viii).
16 Id, para. 20(ix).
17 Id, para. 20(x).
18 See, the Public Interest Disclosure (Prescribed Persons) (Amendment) Order 2025, amending the Public Interest Disclosure (Prescribed Persons) Order 2014.
19 See, Cross-Government Review Policy Paper “Cross-government review of sanctions implementation and enforcement” of 15 May 2025, para. 19.
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