Quarterly Sanctions Update | Q2 2025

European Union

• Sanctions Extended: The Council of the European Union extended its existing sanctions against Russia until mid-September.
• New Sanctions in the Works: The Council is preparing its 17th sanctions package against Russia, which will again focus on curbing Russia’s so-called “shadow fleet”. The new package will impose sanctions on Russian oil tankers, target industries supporting Russia’s war effort and add to asset-freeze lists.
• A Plan B? The next sanctions package is intended to complement sanctions by the United States, but the European Union is also developing a “Plan B” to sustain pressure on Russia if the Trump administration lifts sanctions or Hungary blocks the EU’s new package.
• SWIFT Messaging Restricted: In March, the ban on SWIFT financial messaging was extended to 14 Russia-focused financial institutions: Ak Bars Bank, Uralsib Bank, Tochka Bank, National Reserve Bank, Roseximbank, Bank Sinara, Primsotsbank, BBR Bank, RNKO Platezhnyy Konstruktor, Petersburg Settlement Center, Kuznets Business Bank, MIR Business Bank and Bank Kuban Kredit.
• Delays to Criminal Penalties: In 2024, the Council adopted Directive 2024/1226 criminalizing sanctions violations, that should have become Member States’ local law by May 20, 2025. Several Member States have experienced delays in implementing this Directive, including Germany and France, whose existing legal frameworks require some further adjustments to fully comply with the Directive, and Italy and Spain, who have not yet enacted specific legislation to implement the Directive. Despite the delay, Member States can still enforce sanctions based on existing frameworks.
• Sanctions Helpdesk Launched: The European Commission introduced a Helpdesk to provide support to SMEs implementing EU sanctions worldwide. The Helpdesk will provide:
  • assistance on potential business transactions
  • explain specific prohibitions and obligations in regulations
  • advise on the design and development of compliance programs

  Straightforward requests should receive a response within five working days and complex cases (involving Russia, Belarus and Iran) within ten working days. EU companies remain responsible for making final decisions regarding business opportunities and risks.

• Enhanced Cooperation on Export Controls: In April, the EU released a Recommendation aimed at enhancing coordination of national control lists of dual-use items. Member States are encouraged to share information about their national control lists with each other and the European Commission, including sharing draft lists before they are formally adopted. The main goal is to improve the alignment of national export control lists with EU and multilateral standards, ensuring a more unified and effective approach to export controls across the European Union.
• Report Outlines Evasion Tactics: In April, the EU’s joint two year project aimed at tackling sanctions circumvention concluded with an extensive report. It maps corporate assets linked to sanctioned ‘oligarchs’, provides comprehensive analysis of recurrent sanction evasion schemes as well as transnational ‘kleptocracy’ schemes. The findings underline the need to improve asset tracing and international cooperation to enforce sanctions. This resource may serve as valuable guidance for companies developing their sanctions compliance programs. Access the full report here.
• More Clarification from Top Court Expected: The EU Court of Justice is spending much of its time on sanctions proceedings, with 117 of 573 preliminary ruling requests concerning sanctions in 2024. EU companies can expect further clarifications on sanctions from the Court this year, including greater clarity on ownership and control by a sanctioned individual via shares in a trust, and when a person is considered “associated” with a sanctioned person.
• Gradual Lifting of Syria Sanctions: In February, the EU lifted some energy, transport, and financial sanctions against Syria, and rolled back some banking restrictions to facilitate humanitarian aid. Existing sanctions, such as limits on luxury goods and certain financial institutions, remain in effect.

United Kingdom

• New Trade Sanctions Against Russia: The UK amended its existing Russian sanctions legislation in April, introducing restrictions on:
  • Software and Technology: The transfer or provision of business or oil and gas-related software and technology to Russian entities is now prohibited, including providing software or technology via download, cloud services or as a service. Exemptions for existing contracts apply. OFSI (Office of Financial Sanctions Implementation) amended its guidance to reflect the changes. OTSI (Office of Trade Sanctions Implementation) published guidance on software sanctions and technology transfer sanctions, reiterating that most technology-related sanctions apply to information, which may include intellectual property and trade secrets, and can take many forms, including blueprints, plants, diagrams, models, formulae, tables, engineering designs and specializations, as well as manuals and instructions.
  • Export/Import: Chemicals, plastics, metals, machinery and electronics that are critical to Russian industries (particularly the gas and chemical sectors) are now subject to export restrictions. While importing Russian synthetic diamonds processed in third countries, as well as Helium and Helium-3, is now prohibited.
• New Guidance from Office of Financial Sanctions Implementation (OFSI)
  • Insolvency Practitioners: OFSI published new guidance on obligations for insolvency practitioners, who are now required to promptly inform OFSI if they know or suspect they are dealing with a sanctioned individual or someone breaching UK sanctions.
  • Art market: OFSI also issued guidance for high-value dealers and art market participants, focusing on evasion techniques, due diligence and reporting requirements. Evasion schemes include frequently moving assets, using digital assets and regular payments from hidden sources. Effective compliance requires a robust program with training and resources. Participants must also regularly check UK sanctions lists when starting new client relationships and as transactions proceed.
• Exemption Licenses: OFSI granted the following general licenses to allow companies to engage in otherwise prohibited activities:
  • Credit Suisse and UBS: authorising transfers of assets and liabilities as part of their merger.
  • Legal Services: a license authorising payments for legal fees from persons sanctioned under the Russia and Belarus regimes.
  • Arbitration Costs: a license authorising payments for arbitration fees and expenses from sanctioned persons.
  • Petrol Station Payments: a license authorising UK nationals to purchase petrol for personal vehicles from Gazprom Neft or its subsidiaries at petrol stations in Kyrgyzstan and Tajikistan.
• Updates to Export Control List: The Export Control Joint Unit updated the UK Strategic Export Control List in May, amending the Export Control Order 2008 and the UK’s military and dual-use lists. These changes incorporate routine technical updates from international export control regimes, such as the Wassenaar Arrangement, and amend the fines which may be imposed for certain offences set out in Part 6 of the 2008 Order.
• New Reports from OFSI
  • Annual Review Insights: OFSI published a review of its activities providing insight into its workload and strategy in the last financial year. Decisions were issued in 1,401 licensing cases during 2023-24, up from 503 the previous financial year. OFSI also closed three times as many investigations compared to the previous year, after introducing an intelligence led approach to enforcement.
  • Legal Services Threat Assessments: OFSI released a threat assessment identifying vulnerabilities in the legal sector’s sanctions compliance in April. It noted that legal services accounted for 16% of reported suspected sanctions breaches, mostly involving trusts and offshore structures.
  • Property and Related Services Threat Assessments: OFSI also published a threat assessment revealing that UK property firms are routinely used to maintain residential and commercial properties in breach of financial sanctions. These include unauthorized payments for property maintenance, household staff salaries, utility bills, and concierge services. OFSI highlighted the role of both professional and non-professional enablers (such as family members and associates) in helping to hide the beneficial ownership of sanctioned persons.
• UK Support to Ukraine Factsheet: The UK Government published a summary of actions in support of Ukraine since Russia’s invasion. The factsheet offers insights into future UK policy direction, including building a “Coalition of the Willing” to support Ukraine’s long-term security.
• Syria: The UK Government also lifted asset-freeze restrictions on 12 Syrian entities, including the Syrian Ministries of Defense and Interior, as well as several state-run media outlets in April. The aim is to boost investment in Syria’s financial and energy sectors and support the country’s reconstruction. Companies should carefully assess their Syria operations as other sanctions remain in force.

Further Insights

• McDermott Expands Regulatory Capabilities: We welcomed Darshak Dholakia as a partner in our trade practice in Washington, DC in April. Darshak advises on matters involving economic sanctions, anti-money laundering, anti-corruption laws, and export controls.
• Learning with McDermott
  • Compliance Leadership Summit: In April, we hosted a conference in Paris organized by the French Compliance Society, discussing M&A compliance from early due diligence to post-closing audits. Read a summary of the event here. It followed an event we hosted in January, where Partners Raminta Dereskeviciute, Sabine Naugès and Nicolette Kost de Sèvres discussed sanctions and anti-corruption issues following an internal audit. See more details here.
  • Pro Bono Roundtable on Sanctions and Art Market Integrity: In March, we partnered with the NGO Museum of Contemporary Art of Ukraine (MOCA) to host a roundtable in London focused on the enforcement of UK sanctions in the art market – a critical issue amid the ongoing conflict in Ukraine. Read more about MOCA here.
• Regulatory and International Trade Blog
  • Quarterly Sanctions Update | Q4 2024 / Q1 2025. Available here.

  Navigating EU Sanctions: How Investment Funds and Corporates Can Meet the ‘Best Efforts’ Standard. Available here.
  Relaxation of Long-Standing Restrictions on Foreign Investment in the Healthcare Sector in China. Available here.