Sanctions and export control issues not only continue to have an increasing impact on business life but has also become key components in the geopolitical turbulence that shakes the world order at the moment.
We also refer to our previous sanctions updates which can be found here.
Pursuant to a multi-agency report over sanctions compliance in Sweden, the Swedish police has established that there is most likely significant re-routing of Swedish products to Russia in breach of EU sanctions. Despite this observation, there has only been a handful Swedish investigations regarding potential sanctions breaches. This should be contrasted to the situation in Finland where the Finnish customs reported already in February 2024 that it had initiated 740 investigations. Be that as it may, the Swedish security police has identified the following three modus operandi for sanctions evasion:
The report also notes the importance of so-called enablers, such as transport intermediaries, lawyers and auditors, that are being used, knowingly or unknowingly, by sanctions evaders to make transactions look legitimate. One further area which is highlighted in the report is M&A. It has been reported that sanction evaders acquire exporting or manufacturing companies in order to secure a certain supply and/or to move assets.
The report is fruitful reading for any company that wants to eliminate the risk to become inadvertently used as a vehicle for sanctions evasion. In this context, it may be noted that The US-China Economic and Security Review Commission (USCC) has issued a report on China’s facilitation of sanctions and export control evasion. Key finds in the report are:
Regarding financial institutions, the Swedish Financial Supervisory Authority has issued a report over the effectiveness of the sanctions screening procedures of 19 Swedish banks. It transpired that the Swedish banks’ screenings on average were less precise and efficient than the global average.
Pursuant to the asset freeze provisions in Council Regulation 269/2014, it is estimated that Western countries have frozen between $290 and $330 billion in Russian state-owned assets. Most of these assets are held in European banks and financial clearinghouses including Euroclear. For some time, it has been debated whether these assets should be used to support Ukraine. After the preceding week having agreed to immobilize the Russian assets over the long term, on 19th December 2025 EU leaders failed to agree to use those assets. Instead, an EUR 90 billion loan was agreed, meaning that EU Member States (excluding Hungary, Slovakia and Czechia) will borrow EUR 90 billion on the capital markets, backed by the EU budget, and provide this sum to Ukraine over a period of two years. Ukraine will only need to repay the loan once it receives reparations from Russia. Until then, the Russian assets will remain immobilized and the Union reserves its right to make use of the cash balances (essentially consisting of immobilised coupon or dividend and redemption payments and maturing deposits related to the frozen Russian assets) to finance the loan.
The number of substandard, aged, and under-insured vessels used by Russia, Venezuela and Iran to move and store oil products over the world outside the scope of western sanctions, is growing. According to Tanker Tracker, there are now more than 1,470 tankers classed as being part of the shadow fleet. This is estimated to constitute between 10% - 20% of all tankers currently transporting oil products.
About 90 of these vessels are estimated to leave Russian ports in the Baltic Sea every month laden with Russian oil, transiting the Gulf of Finland, the Danish Straits, and the English Channel and then often passing the entire EU coastline. Reportedly, 70% of Russia’s seaborne oil is shipped by vessels in this fleet and Russia’s revenues from oil sales amounts to about USD 15 billion per month.
In addition to the increased risk that these vessels will cause marine casualties and, if a casualty occurs, that it will not be properly attended to due to the lack of proper insurance, shadow fleet vessels have been linked to hybrid warfare activities. It has also been reported that the FSB, the Russian federal security service, control some vessels (which are not considered shadow fleet) critical for Russia’s LNG export. Shadow fleet activities have moreover resulted in direct confrontations (see below). Actors within the shipping industry are recommended to be observant of the various risks that this development entails.
On 18 December 2025, EU sanctioned 41 vessels as being part of Russia’s shadow fleet. The total number of vessels sanctioned by the EU is now close to 600. In addition, a few days earlier the EU sanctioned nine shadow fleet enablers comprising of shipping companies based in the United Arab Emirates, Vietnam and Russia. Also on 18 December, the US sanctioned vessels having shipped Iranian petroleum products.
The US has recently taken two further enforcement actions (December 4 and December 9) in relation to (fairly old) breaches of US sanctions against Russia. Enforcement actions are generally an indication of what the US administration deems important as a matter of US policy.
On 7 January 2026, US special forces seized the Russian flagged BELLA (IMO 9230880) in the North Atlantic 200 km south of Iceland. It is reported that the vessel was seized pursuant to a warrant issued by a US federal court for breaches of US sanctions. The BELLA was sanctioned by the US in 2024. Before being seized, the vessel had been sailing from Iran to Venezuela.
Considering also the recent sanctioning of Lukoil, it would seem that sanctions as well as the seizure play a central role in the ongoing geopolitical power struggle and not least the peace deal discussions, adding pressure on Russia. In this context it may be noted that the US has issued a General License allows transactions related to contract negotiations with Lukoil, its German subsidiary Lukoil International, and companies where Lukoil International owns 50% or more of the shares until 17 January 2026.
In addition to the BELLA, at least four other vessels have been seized for sanctions breaches by the US: the OLINA was seized in the Caribbean Sea on 9 January, the SOPHIA was sized by the US in the Caribbean Sea on 7 January 2026, the CENTURIES and the SKIPPER were sized by the US off the coast of Venezuela in December 2025.
The Regional Court of Riga, Latvia, has requested a preliminary ruling from the EU Court of Justice (CJEU) on whether recognizing and enforcing a GAFTA arbitration in favour of a Russian-owned company is permitted under EU sanctions law. The ruling should shed light on how sanctions and in particular the asset freeze provisions should be applied in relation to arbitration awards and court judgements. Two of the questions before the CJEU are: (1) Can a breach of sanctions be considered a breach of ‘public policy’ such that EU Member States can refuse to recognise and enforce an arbitral award under the New York Convention, and (2) to what extent can judgements and awards provide for payments to sanctioned parties?
On 1 November 2025, Sweden introduced a national control list over products that, in addition to the common EU list laid down in Annex 1 of EU Council Regulation 2021/821, are deemed to have both a military and civilian use and therefore subject to export restrictions. The Swedish list essentially consists of so-called new technologies:
The national list included in the relevant Swedish export control legislation can be found here.
It should be noted that on 15th November, also Annex 1 of EU Council Regulation 2021/821 was updated, essentially mirroring the items in the Swedish control list.
The growth of new technologies, including the need for raw materials required to develop these, combined with the present geopolitical situation appear to have resulted in the concept of “dual use” being expanded. In particular, the perception of “national security” has widened, at least from an EU perspective, and now appear to encompass technological advantage within a broader range of areas.
