EU-Russia Sanctions: From the 14th to the 18th Sanctions Package

Since 2022, the EU has progressively intensified its Russia sanctions – with increasing intensity and growing legal complexity. No later than the 14th sanctions package, a new phase began: The requirements for sanctions compliance, export control, risk management, and contract drafting were substantially expanded.

The sanctions packages 14 to 17 not only introduced new listings and trade restrictions. Much more significant: New compliance requirements, extensive due diligence and risk management instructions, and extraterritorial effects – particularly for export-oriented companies with non-European subsidiaries and actors related to CHP Goods (Common High Priority Goods). At the same time, the risk of fines and criminal proceedings for sanctions circumvention is becoming more tangible.

The 18th sanctions package has already been announced. Companies are well advised to now set up their processes and structures to be resilient and legally secure.

Below we provide you with a compact overview of the most important developments – and specific recommendations for action on sanctions compliance for your company:

14th Sanctions Package: New Compliance Requirements

With the 14th sanctions package, on 24 June 2024, the EU Regulations VO (EU) No. 833/2014 ("Russia Embargo Regulation") and VO (EU) No. 269/2014 were further tightened.

Particularly relevant:

1. "Best Effort" Obligation to Prevent Sanctions Evasion by Non-EU Subsidiaries

   According to Art. 8a of the Russia Embargo Regulation, EU companies are obliged to ensure "to the best of their ability" (best effort) that their non-EU subsidiaries do not circumvent EU-Russia sanctions. This applies only to subsidiaries that are at least 50% owned or under the legal/factual control of an EU company.

   Implementing this Best Effort Obligation is a challenge: Companies, especially those with sales and production structures outside the EU, should expand their compliance management systems with appropriate control mechanisms and awareness measures, for example by

   • company-/group-wide (export control) guidelines,

   • compliance clauses in internal guidelines and intercompany agreements,

   • training for subsidiaries,

   • contractual safeguards against joint venture partners/shareholders,

   • auditable and verifiable control systems.

   
   

2. Enhanced Due Diligence for "Common High Priority" Goods ("CHP Goods")

   The CHP Goods according to Annex XL of the Russia Embargo Regulation, including, among others, electronically integrated circuits, semiconductor devices, and ball bearings, are particularly in focus.

   Since 26 December 2024, EU companies dealing with such goods or indirectly coming into contact with them must, according to Art. 12gb of the Russia Regulation, comply with specific due diligence obligations.

   EU companies must subsequently take appropriate measures to

   1. identify, assess, and document the risks of any diversion of these goods to Russia or their use in Russia (risk analysis),

   2. mitigate identified risks and establish effective risk mitigation strategies (risk management).

   These obligations apply even if EU companies do not export the affected goods themselves but cooperate with suppliers or subsidiaries outside the EU. Even without a direct connection to Russia, scenarios where these goods could reach Russia through third parties and indirect routes must be considered.

   EU companies must ensure that these requirements are also met by their subsidiaries located outside the EU.

   
   

3. "No-Russia" Clause – Clarification and Expansion

   Already with the 12th sanctions package, the obligation for EU companies was introduced in Art. 12g of the Russia Embargo Regulation to include a so-called No-Russia clause in contracts for the distribution or export of CHP Goods (see our Insight from 27 April 2024). The 14th package contained a clarification and an extension of this provision:

   1. Clarification
      In contracts concerning CNC machining centers, lathes, and milling machines, and corresponding spare parts, there is no obligation to include a No-Russia clause (Art. 12g paragraph 2 letter a of the Russia Embargo Regulation).
      
      

   2. Extension
      New: The obligation to include a "No-Russia" clause has also been extended to intellectual property, know-how, or trade secrets, as long as they relate to CHP Goods of Annex XL intended directly or indirectly for the Russian market:
      In the sale, licensing, or transfer of such rights to contract partners from non-EU countries, EU companies must

      • contractually prohibit the use of these rights in connection with CHP Goods of Annex XL intended directly or indirectly for the Russian market,

      • oblige their partners to pass on corresponding use restrictions to sub-licensees and report any violations, and

      • provide for contractual remedies in the event of violations.

   
   

4. Prohibition of Using the Russian Financial Message System ("SPFS")

   Since 25 June 2024, EU companies have been prohibited from connecting to the financial transaction system SPFS operated by the Russian Central Bank or similar services. Transactions with users of such systems are also prohibited. The aim is to prevent the circumvention of financial sanctions.

15th to 17th Sanctions Packages: Focus on Sanctions Evasion, Shadow Fleet, and Global Supply and Procurement Networks

With sanctions packages 15 to 17, the EU has significantly expanded its focus on combating sanctions evasion. At the center are third countries, global supply networks, and the so-called "shadow fleet" to circumvent the oil price cap.

Core measures:

• Targeted sanctions against third-country actors
  Companies, individuals, and organizations, among others in China, the UAE, Turkey, Serbia, Vietnam, and Hong Kong have been listed on the EU sanctions list – especially regarding connections to CHP Goods, dual-use goods, or military technology.
  
  

• Massive expansion of sanctions lists
  Over 260 additional ships of the "shadow fleet" have been listed – linked to port access bans and service prohibitions.
  
  

• New export and import bans, including:

  • comprehensive import bans on Russian aluminum (with transition period and quota mechanism);

  • export bans for CNC software, components, and spare parts for CNC machines, special chemicals, chemical precursors, glass;

  • software for oil and gas exploration and construction services for Russian energy infrastructure are now prohibited;

  • IP rights and trade secrets may no longer be licensed or transferred to Russian recipients.

Companies should urgently review, update, and optimize their global logistics and supply chains and their procedures for sanctions list screening, business partner due diligence (KYC processes) – beyond classic export control.

Outlook: 18th Sanctions Package – Further Russia Sanctions in Preparation

The EU Commission presented its proposals for the upcoming 18th EU sanctions package on 10 June 2025. It contains numerous new measures to further tighten Russia sanctions and curtail sanctions circumvention. Key contents:

• Energy & Oil Price Cap

  • Transaction ban for the Nord Stream 1 and 2 pipelines

  • Reduction of the oil price cap to US$ 45 per barrel
    
    

• Shadow Fleet
  Listing of about 77 more ships of the shadow fleet, along with service and transaction bans related to these ships
  
  

• Banking Sector
  Complete transaction ban with over 22 Russian banks
  
  

• Further Export Restrictions

  • Sanctioning of the Russian Direct Investment Fund (RDIF) and associated entities

  • New export bans for technology, machinery, metals, plastics, and chemicals amounting to approximately EUR 2.5 billion.

Recommendations for Sanctions Compliance and Export Control

• Review and Adjust Compliance Management System: Check, reassess, and document export control, subsidiaries, and third-country relations.

• Strengthen Risk Management: Identify CHP Goods, review supply chains, conduct risk analyses, strategically embed risk mitigation and monitoring.

• Update Sanctions List Screening and KYC Processes

• Revise Contractual Frameworks/Terms and Conditions: Systematically integrate No Russia clauses, protection rights regulations, and sanctions clauses.

• Involve Subsidiaries: Implement instructions, training, responsibilities, and controls.

• Communication & Training: Introduce guidance notes and training for affected company areas (procurement, sales, legal, and compliance).

• Monitor Upcoming Sanctions Packages: Follow developments, identify the need for adjustments early.