On the anniversary of Russia’s full-scale invasion of Ukraine, the UK has introduced its largest-ever sanctions package, targeting nearly 300 entities linked to Russia’s energy and military supply chains. The government has described the new measures as the most extensive since the war began, aimed at choking off Russia’s key revenue sources and degrading its military capabilities. These sanctions are designed to disrupt vital sectors, including major oil pipeline operators, the “shadow fleet” of tankers used to evade sanctions, and suppliers of drone technology crucial to Russia’s ongoing military operations.
The UK government’s decision to escalate sanctions reflects a clear strategy to isolate Russia economically, while strategically targeting infrastructure that sustains the war effort. The new sanctions package includes measures such as:
- PJSC Transneft, one of the world’s largest oil pipeline operators, responsible for transporting over 80% of Russian crude exports
- 175 companies tied to the “shadow fleet” of tankers that help Russia bypass sanctions, including those involved in the 2Rivers oil network, one of the largest global operators of this fleet and a major trader of Russian crude oil.
- 48 oil tankers identified as part of the network facilitating evasion efforts
- 49 entities involved in supplying critical military technology, including equipment for Russia’s drone operations
- Targets within the liquefied natural gas sector, civil nuclear energy, and Russian financial institutions involved in cross-border payments
Alongside these economic restrictions, the UK has pledged further financial support to Ukraine, focusing on energy resilience and reconstruction. This approach balances direct sanctions with tangible aid to Ukraine, reinforcing the UK’s long-term commitment to both weakening Russia’s capacity to fight and aiding Ukraine’s recovery efforts. These measures form part of the UK’s broader strategy to maintain maximum pressure on Russia’s economy and military infrastructure, and they reflect an ongoing escalation of efforts since the start of the invasion.
Tighter enforcement: A call for transparency and corporate responsibility
Recent analysis by Transparency International shows that over 29,000 transactions, valued at $8bn, have occurred between companies in the UK’s Overseas Territories and Russian counterparts since 2022. This increasing volume of activity is putting greater pressure on businesses to act responsibly and ensure their operations are compliant. These findings reveal how offshore jurisdictions have historically enabled Russia to circumvent sanctions. However, with the UK now stepping up enforcement efforts through agencies like the Office of Financial Sanctions Implementation (OFSI), this activity is expected to face greater scrutiny.
At the same time, other allied countries are joining the push. On the anniversary of the invasion, Australia and Canada also announced significant sanctions packages, aligning with the UK and adding to the international effort to hold Russia accountable. This multilateral approach further isolates Russia and amplifies the effect of these sanctions.
Moreover, the European Union is exploring additional measures, such as a full ban on maritime services supporting Russian seaborne oil exports, which would further squeeze Russia’s ability to generate revenue from its energy sector. These coordinated international actions highlight that sanctions are not just expanding in scope but in complexity.
This presents an opportunity for businesses to lead by example. Consumers, investors, and regulators are all demanding more transparency and ethical conduct from the companies they engage with, particularly when it comes to financial transactions and corporate governance.
What does this mean for businesses?
With the introduction of this expanded sanctions package, businesses must remain vigilant and prepared to meet increasingly stringent compliance requirements. As the UK applies more pressure on Russia, the focus is also shifting towards tighter enforcement of sanctions. Organisations must ensure their compliance frameworks are fit for purpose as regulations become more stringent.
Businesses should focus on the following actions:
- Review business relationships regularly: Ensure none of your partners or suppliers are linked to sanctioned entities, either directly or indirectly.
- Enhance due diligence processes: Take extra caution with transactions involving high-risk jurisdictions, ensuring no violations of the latest sanctions.
- Update compliance training: Make sure staff are informed about the new sanctions, their impact, and how to manage related risks within their day-to-day operations.
