EU tightens Russia sanctions with 16th sanctions package

published on 3 March 2025 | reading time approx. 3 minutes

With the so-called 16^th sanctions package (Regulation (EU) 2025/395), the European Union has further tightened its sanctions against Russia. The new measures relate in particular to export bans on dual-use goods, software and technology, restrictions in the financial and transport sectors and stricter regulations against the circumvention of sanctions. Companies with subsidiaries in Russia or with business that has a direct or indirect connection to Russia should urgently review and adapt their sanctions compliance processes in this regard in order to avoid the risk of sanctions violations - and the associated serious consequences.

Key relevant new regulations

The new sanctions include a significant expansion of the export bans. In particular, CNC machines, special chemicals and software for industrial design may no longer be delivered to Russia. Furthermore, transaction bans have been introduced for credit institutions and financial institutions that offer crypto-asset services that serve to circumvent sanctions. There are also restrictions for financial service providers outside the EU that support Russia with alternative payment systems.

The EU is also restricting Russian ownership in European transport companies to a maximum of 25%. In addition, construction and engineering services for Russian infrastructure projects will be prohibited in future. The energy sector will be further restricted, in particular by the ban on the temporary storage of Russian crude oil in the EU. The media sector is also particularly affected by the sanctioning of eight Russian channels.

The 16^th sanctions package also adds two new criteria for the listing of individuals and companies. These concern those who have supported the operation of unsafe oil tankers and those who are part of, support or benefit from the Russian military-industrial complex. These measures are intended to further reduce Russia's revenues, make it more difficult to circumvent the sanctions and increase economic and military pressure on Russia.

Increased due diligence requirements for foreign investments

Of particular importance for all EU companies with direct or indirect holdings in companies in other EU countries that are not directly subject to EU sanctions is the requirement that such EU companies are obliged to use their best endeavours to ensure that their business practices comply with the applicable sanctions regulations. This means that companies must not only comply with the regulations that apply directly to them, but must also be able to demonstrate that they have made all reasonable efforts to prevent sanctions violations. This includes increased scrutiny of supply chains, detailed documentation of business transactions and proactive measures to minimise risk.

Classification of previous sanction measures

Since 2014, the EU has continuously enforced sanctions against Russia, especially after the annexation of Crimea and the attack on Ukraine in 2022.

The current measures are among the most comprehensive sanctions packages that the EU has ever adopted. They are aimed at further restricting Russia's economic and military capacity to act and preventing the circumvention of existing restrictions.

Other changes

In addition to the extended restrictive measures, further changes were also introduced. These include the exclusion of a number of Russian banks from the SWIFT system. In addition, 74 ships from the so-called Russian "shadow fleet" have been sanctioned and there are restrictions for third countries that use financial services to circumvent the sanctions. A direct import ban on Russian primary aluminium will be gradually introduced until 2026.

53 new companies that support Russia's military industry or circumvent sanctions have been added to the sanctions list, including 34 from third countries such as China, India, Kazakhstan and Turkey. It is also forbidden to carry out transactions with Russian harbours and locks. A ban on construction and engineering services for Russian infrastructure projects has also been introduced."

Consequences and recommendations for action

In light of the increased due diligence requirements, companies should review their business relationships with entities in Russia and in third countries that are commonly used to circumvent sanctions.

This should include a review of supply chains and financial transactions. The company's internal compliance processes should be reviewed and updated, with external assistance if necessary, to minimise potential liability risks. Banks and financial institutions, in particular, are facing new challenges in meeting more stringent due diligence requirements.

The transport sector must be prepared for stricter regulations, particularly with regard to sanctions against third-country airlines that cooperate with Russian carriers.