There is little doubt that the issue of sanctions has come to increasing prominence in the wake of Russia’s 2022 invasion of Ukraine. As a result, the sanctions landscape has undergone change, with increased enforcement activity. As sanctions can have legal, commercial and reputational implications for financial institutions, corporates and other entities and individuals, anyone that is affected by sanctions has to make sure they devise and undertake the most appropriate response.

Since the outbreak of the war in Ukraine, many Russian oligarchs have been targeted by European and U.S. sanctions. Both regimes create similar obligations, but do not have the same reach. For historical reasons, European asset freeze measures extend to assets or entities that are controlled by designated persons.  U.S. authorities have taken a pragmatic stance with a clear-cut 50%-ownership rule to extend asset freeze. The responsibility of identifying concealed assets is therefore shared: authorities gather intelligence on potential control and operators may rely on registered ownership. It avoids the burden of assessing the control. The latter notion, subjective by nature, creates a real challenge for European operators to identify such assets within complex structures over numerous jurisdictions – oligarchs have mastered the science of concealing their assets over the recent years. Luckily, some tools and data are available to help compliance officers with these tasks.

Companies in the European Union ("EU”) stand at the forefront of implementing EU restrictive measures (broadly speaking, sanctions) and are the first line of defence against those trying to evade or circumvent them. Although entities subject to EU law (EU operators) have borne that responsibility ever since the EU began to adopt sanctions, the measures introduced following Russia’s full-scale invasion of Ukraine and the complexities of today’s tumultuous world have significantly increased that burden. Today, EU operators must navigate a dynamic sanctions environment fraught with heightened legal and reputational risks. However, until recently, they have largely been left on their own to accomplish this challenging task. Nearly twenty years after the publication of the first guidance on EU sanctions implementation, the EU has yet to articulate a common holistic view on sanctions compliance expectations for the private sector.