Commerce & marketsen
Economic sanctions
A set of restrictive measures (asset freezes, trade prohibitions, financial restrictions) imposed on a country, entities, or individuals to achieve foreign policy objectives.
Definition and scope
Economic sanctions are restrictive measures adopted by international organisations or states to compel a country, entities, or individuals to change their behaviour. They encompass a broader spectrum than a simple trade embargo and may include:
- Asset freezes
- Travel bans
- Sectoral trade restrictions
- Financing and services prohibitions
- Restrictions on access to financial markets
The EU sanctions regime
The EU has a comprehensive restrictive measures framework adopted under CFSP. Since 2022, this has expanded significantly with sanctions against Russia (over 14 packages adopted). The legal basis rests on:
- CFSP Decisions of the Council (Article 29 TEU)
- Council Regulations (Article 215 TFEU), directly applicable
Obligations for operators
Companies have a proactive compliance obligation:
- Implement systematic screening of clients, suppliers, and partners against sanctions lists
- Train employees on compliance procedures
- Document due diligence measures taken
- Report any suspected violations to competent authorities
Key watch points
- Sanctions evolve rapidly: subscribe to updates from the Official Journal of the EU and the EU Sanctions Map
- Beware of circumvention clauses: indirect attempts at circumvention are also penalised
- Criminal liability of directors may be engaged in cases of non-compliance
- Consider the interaction between EU sanctions and US OFAC sanctions, which may have extraterritorial reach