Russia began the invasion of Ukraine on February 24, 2022, and the conflict has recently passed its two-year milestone. Additionally, anti-corruption advocate Aleksey Navalny recently died, triggering a new wave of human rights concerns. 

World governments have responded to these events with a new round of sanctions. The United States and the European Union have imposed sanctions targeting military manufacturing, financial services, and entities believed to be involved with human rights violations. 

We’ll be breaking down this latest round of sections, examining how sanctions have evolved and what businesses need to be aware of as the conflict continues. 

Key Takeaways:  

  • Aleksey Navalny’s death has catalyzed a new round of sanctions from the U.S. and EU. 
  • The conflict recently passed another anniversary, which also motivated a new round of sanctions targeting Russia’s military-industrial capabilities. 
  • Combined, the U.S. and EU imposed approximately 700 new sanctions.  
  • These new sanctions will significantly impact many industries — organizations will need to develop or refine effective strategies to remain compliant. 

How Russia Sanctions Have Evolved 

Altogether, world governments have imposed 16,587 Russia sanctions targeting state-owned organizations, third parties that enable sanction evasion, and specific individuals. 

While there were some sanctions in effect before the Russia-Ukraine conflict, the majority of these sanctions are in direct response to Russia’s ongoing aggression. Over the past two years, the U.S., EU, and UK have been at the forefront of these sanctions. However, they aren’t alone, as Taiwan, the Czech Republic, Canada, and Australia have also sanctioned Russian entities. 

Maintaining compliance with international sanctions has become exceedingly complex for organizations in several industries. Failing to comply can result in penalties, fines, and reputation damage — organizations must understand their responsibilities and implement strategies to meet them. 

New Sanctions and Export Controls Against Russia by the U.S. 

The United States has rolled out approximately 500 new sanctions in response to Navalny’s death and the ongoing invasion. The Department of Treasury, Department of Commerce, and Department of State have imposed new sanctions that organizations must be aware of. 

Sanctions aim to further disrupt Russia’s ability to finance and manufacture goods to continue its invasion. Several financial organizations have become sanctioned, including:  

  • National Payment Card System Joint Stock Company (NSPK), a state-run company crucial for domestic and international financial transactions. 
  • Nine financial institutions that operate regionally across Russia. 
  • Five venture capital and investment funds 
  • Six fintech companies. 

Additionally, sanctions target a wide range of industries related to the military and defense sectors, which include: 

  • CNC machining and metalworking 
  • Robotics and semiconductors 
  • Industrial automation software and equipment 
  • Weapons production 
  • Lubricants and coolants 

Some organizations outside  Russia within these industries must ensure they do not inadvertently violate these new sanctions. The annexes of the press release provide specific details about sanctioned organizations and individuals. 

The Bureau of Industry and Security (BIS) within the U.S. Department of Commerce also took action by adding 93 entities to its Entity List for their involvement in supporting Russia's war efforts. Additionally, BIS updated its high-priority items list to include the HS codes of 50 commonly sought-after items by Russia for its weapons programs. 

The Department of State has also imposed new sanctions targeting those involved in Aleksey Navalny’s death. Three individuals are targeted who are associated with the Arctic prison and Navalny’s treatment. These sanctions also aim to undermine Russia’s energy production and exports by targeting additional entities involved in liquid natural gas operations. 

The EU’s 13th Package of Russian Sanctions 

The European Union Council rolled out new export controls and sanctions on over 200 entities, bringing Russian sanctions to over 2,000. The 13th package aims to achieve several goals, including: 

  • Disrupt Russia’s defense and military sectors by targeting over 140 companies and individuals. 
  • Target individuals and entities believed to play a role in the forced relocation of Ukrainian children. 
  • Prevent sanction evasion by targeting logistics firms, and those  directly believed to help denied parties import goods to Russia. 
  • Sanction Belarusian and Democratic People’s Republic of Korea companies facilitating shipments to support Russia. 
  • Target Judges and officials in temporarily annexed regions of Ukraine have been sanctioned. 

These measures aim to disrupt Russia’s ability to continually fund the conflict, evade sanctions, and manufacture military equipment.  

The Implications of These Global Sanctions on Businesses 

In this era of far reaching sanctions,  businesses around the world must comply with the trade regulations of countries they do business in and currencies they transact with, or they may incur fines and penalties. The most recent sanctions have introduced entirely new industries throughout the military-industrial supply chain, further complicating denied party screening for many industries. 

Some of these new sanctions specifically target sanction evasion. The Department of Treasury has provided guidance about sanctions evasion tactics that organizations should know:  

  • Falsifying details to allow third-party jurisdictions to make shipments to Russia. 
  • Using complicated ownership structures to evade detection. 
  • Using family members as proxies while the sanctioned entities remain in control. 

Organizations must be equipped to identify sanctioned and denied parties throughout their supply chain and partnerships. Non-compliance can impose civil and possibly criminal charges — it’s critical to have processes and technologies in place to identify any sanctioned parties before it's too late. 

Strategies to Mitigate Sanction Risks and How Descartes Helps 

Sanctions against Russia have skyrocketed since the conflict began, resulting in a dire need for organizations to stay fully compliant. Some organizations may be affected by the new sanctions that have taken a more holistic approach to disrupting Russia’s military manufacturing capabilities.  

Achieving and maintaining OFAC compliance is critical, but how can organizations create or refine their processes? You can start taking steps to avoid non-compliance with the below high-level strategy: 

  • Implement processes for continuously screening partners, suppliers, clients, and any other third parties, including when new third parties should be screened. 
  • Adopt the right technologies capable of effectively screening against the latest denied party lists. 
  • Develop strategies to stay informed of any new sanctions that may be imposed in the future to adjust your compliance processes as needed. 

Descartes aims to help organizations stay aware of the latest news with our Russia-Ukraine resource center as a freely available resource. Our leading-edge solutions allow you to screen against denied parties to give you confidence in your entire supply chain, partners, and customers. 

Are you ready to create or update your strategies to mitigate sanction risks? Book a demo today and speak with a sanctions screening expert to learn more about how our platform keeps you compliant. 

Also read what our customers are saying about us on G2 and see why we are ranked as the top denied party screening software solution.