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How to Ensure That Your Company Is Russian Sanctions Compliant

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What Are Russian Sanctions?

Russian sanctions are penalties, economic or otherwise, placed on Russia by other countries. There is a long timeline that tracks the United States and European Union (EU) sanctions on Russia. They were originally introduced due to Russia’s conflict with Ukraine over its annexation of Crimea. Since early 2014, the sanctions and countries involved have changed:

  • Early 2014: As Russia began to annex Crimea, the United States, Canada, and the EU introduced sanctions. U.S. sanctions on Russia included travel bans and asset freezing. Japan and Australia imposed sanctions as well. Ultimately, Russia’s vote was eliminated from the Council of Europe (a human rights organization).
  • Late 2014: Later in the year, many of the same countries escalated their sanctions due to the continued war. The United States led this initiative and severed dealings with major Russian banks. Additional sanctions included export controls over goods traveling to Russia.
  • 2015: Australia, Canada, and the EU sanctions continued to escalate throughout 2015. The western world collectively increased the number of sanctioned people and organizations. Ukraine began to impose sanctions and officially recognized Russia as an enemy of the state.
  • 2022: Due to Russia’s invasion of Ukraine in early 2022, many states around the world placed further sanctions on the country. Alongside many of the world’s Prime Ministers, President Biden imposed asset freezes on Russian President Vladimir Putin and his foreign minister, Sergei Lavrov. 

Russia’s central bank, other financial institutions, the aerospace industry, and the Russian energy sector were targets of sanctions across the world. Many Russian banks were removed from SWIFT (a messaging app that allows international money transfers). 

In addition to financial sanctions, many countries put export controls on dual-use goods. These designations prevent items that may be used by the Russian military from entering the Russian state. Together, these sanctions crippled the Russian economy. Several countries also expanded sanctions to Belarus, a country that has aided Russia during this time of war.

In this article, we will review best practices to ensure you are compliant with current Russian sanctions and how to protect your business from risk.  

Russia’s Invasion of Ukraine

Russia and Ukraine have a long-standing conflict. Much of this tension can be traced to 2014. In 2014, after Ukraine overthrew its president, the Russian Federation seized Crimea. This seizure ignited a war in the Donbas region of Ukraine that would last for many years. While two groups in Ukraine are pro-Russia, the Luhansk People’s Republic and the Donetsk People’s Republic, the remainder of the country has fought occupation.

In the mid-2010s, the United Kingdom, France, and the United States (among others) imposed sanctions on Russia. These sanctions froze operations with many businesses in Russia and stopped some exports to the region. This impacted businesses that work with Russian organizations and increased the need for a close supply chain and risk management.

Under the direction of President Vladimir Putin, Russian forces invaded Ukraine in early 2022. Initial signs of war crimes included the mass killings in Bucha, a city close to Kyiv. This caused outrage around the world and a resurgence of sanctions against Moscow. These sanctions target Russia’s financial services, exports to the country, and Russian businesses. More countries have imposed sanctions than ever before, including Taiwan and Singapore. The sanctions have caused outrage among the Russian government and have damaged Russia’s economy. This resurgence of sanctions has required companies to redouble their supply chain risk management efforts.

Need more transparency in your supply chain? Consider Exiger’s supply chain risk management software that can help surface all risks that might be hiding deep within your supply chain.

Ensuring Your Russia Sanctions Compliance

As the Russian and Ukrainian conflicts continue, it’s important to ensure your company or government agency is compliant with Russian sanctions. If you are part of the RCBI industry, you’ll need to take special care. Review these steps to ensure your team is set up to operate efficiently. 

1. Screen Your Business Relationships

To ensure your organization is compliant with sanctions against Russia, you need to understand if your business partners have Russian ties. While your vendors or customers may not be located in Russia or Ukraine, they may have ownership of Russian businesses. Performing due diligence on your partners will help you assess whether there is any risk in doing business with them. As a first step, use the United States Department of the Treasury tool to search for sanctioned Russian companies. 

2. Regularly Check for New Sanctions

The conflict in Ukraine is ever-evolving, and so are every country’s sanctions against Russia.

Make your team aware that they need to check for new or updated sanctions regularly. Updates are found on the US Treasury website. Checking consistently will ensure that your team remains compliant with the latest regulations.

3. Ensure Your Technologies Aren’t Violating Sanctions

Many sanctioned Russian organizations have ties to other companies that you may not be aware of, specifically in the technology industry.  Become familiar with the list of sanctioned businesses and people to ensure you aren’t using technology or working with a sanctioned company without realizing it.  

On the flip side, make sure no one is gaining access to your technology if they shouldn’t be. While it is more difficult to trace, this is an important step in managing your company’s risk, especially if you have vendors, employees, or customers in Russia. 

The best way to accomplish this is to analyze your supply chain. Get a thorough understanding of who is participating in your supply chain’s environment and where they are located. Using a supply chain risk management solution can simplify this process.

How Russian Sanctions Affect Business in Europe

Russia supplies many goods to countries across the world, particularly in Europe. Russia is responsible for providing much of Europe’s oil, gas, and wheat. Germany, in particular, is one of the largest importers of Russian gas.

Increased prices for these items exacerbated already climbing inflation rates. All of which impact businesses in Europe. As operation costs increase and the sanctions remain, European companies must increase their prices and look for suppliers and customers elsewhere. This leaves room for businesses in other regions to increase their business with the EU.

Looking to empower your company or government agency to protect your supply chains from lurking risk? Look no further than Exiger’s world’s first real-time Supply Chain Explorer.

Manage Your Russian Sanctions Risk with Exiger

Complying with Russian sanctions requires your team to regularly perform risk management analyses on customers and suppliers.

Easily manage your company or government agency’s risk with Exiger. Our third-party risk management solution helps your team identify potential violations of Russian sanctions and rank your risk levels.

Exiger’s layered approach to risk-ranking takes a more sophisticated look at risk than other platforms. From getting you more transparency in your supply chain to helping you organize your due diligence, we understand that just because your third party is in a risky region, it doesn’t necessarily mean they are risky. 

Contact us today to get set up with a demo.

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For more on Exiger’s Sanctions Response:

Never the Same: 5 Ways Russia’s Invasion of Ukraine Will Impact Business Forever

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Financial Sanctions Evasion Typologies: Russian Elites and Enablers

Never the Same: Business After the War in Ukraine

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