International trade and sanctions
November 2026 | BRIEFING ROOM | GLOBAL TRADE
Financier Worldwide Magazine
November 2026 Issue
FW discusses international trade and sanctions with Jan Dunin-Wasowicz at Bennink Dunin-Wasowicz, Patrick Murphy at Clyde & Co LLP, Adam M. Smith at Gibson, Dunn & Crutcher LLP, and Daniel Martin at Holman Fenwick Willan.
FW: How would you characterise the recent evolution of the international trade and sanctions landscape? What do you see as the most significant risks, challenges and opportunities currently facing businesses?
Smith: The most significant challenge for global business from the evolution of sanctions and the most significant risks posed by these measures to global business have two things in common: they are both marked by unprecedented speed and diversity. How does a compliance-minded global firm keep up to date with rules and regulations that change on a nearly daily basis? In 2025, there were more than 100 material changes to US sanctions, sometimes more than one in a single day. This fluidity is exacerbated by the unprecedented diversity of measures imposed – including sanctions, export controls, import controls and tariffs – the agencies and jurisdictions promulgating these measures, and the risk assessments of counterparties. Indeed, counterparties’ risk appetites increasingly impose practical limitations on deals even if regulations may otherwise permit them.
Martin: Even Matt Damon’s Odysseus only had to contend with two insurmountable challenges, when tackling Scylla and Chrybdis. Legal and compliance professionals are currently dealing with three. First, the rate of change has never been greater, with new designations and other additions virtually daily. Second, sanctions programmes are increasingly divergent, with the US, European Union (EU) and UK following very different courses on Iran and Russia. And third, courts are now being asked to interpret the sanctions, resulting in ever greater complexity as they publish decisions on issues such as ownership and control, including looking through trust structures to the settlors. No wonder sanctions compliance feels like an endless journey, with deafening volume all around. Compliance professionals need to keep their eyes open to keep up with the constant change, and not plug their ears to the danger.
Dunin-Wasowicz: From an EU perspective, the international trade and sanctions landscape has evolved from a specialised area of regulatory compliance into a central element of the EU’s security policy. EU operators must now navigate a complex framework touching on financial sanctions, trade restrictions, export controls, investment screening and anti-circumvention measures at a time when the EU is becoming more assertive and the security environment is deteriorating. EU export controls are also increasingly considered through the broader lenses of economic security and competitiveness, particularly for advanced technologies. The challenge is that there are many moving parts and it is very difficult to plan ahead. The opportunity is to integrate sanctions and export control analysis into strategic decision making rather than treating it as a standalone compliance topic.
Murphy: The current landscape is slow tectonic drift, as the US, EU and UK pursue increasingly divergent policies. Sanctions coordination was arguably at its strongest between 2010 and 2018, when the US and EU worked to ensure that their respective regimes broadly targeted the same persons and activities, thereby limiting the most acute conflicts arising from overlapping extraterritorial obligations. Since then, however, the US has withdrawn from the Joint Comprehensive Plan of Action, the EU Blocking Regulation has regained practical significance, Brexit has produced a third autonomous sanctions regime, and the three principal Western sanctions powers have increasingly diverged in their political objectives. The consequences are evident. Designation lists no longer align, trade restrictions differ, as illustrated by the contrasting UK and EU approaches to Russian liquified natural gas, and multinational businesses must navigate increasingly complex and sometimes competing compliance obligations. China’s Anti-Foreign Sanctions Law (AFSL) adds a further layer of complexity for businesses with exposure to China.
“While the imposition of sanctions means that certain enterprises can no longer engage in previously permitted transactions, they do not change the underlying economics of the commercial activity.”
FW: To what extent are sanctions now being used as active instruments of geopolitical pressure rather than traditional regulatory compliance tools?
Martin: Sanctions have always been instruments of geopolitical pressure, with commercial organisations caught in the crossfire. Three developments are worth noting. The first is that the rate of geopolitical change has increased exponentially, making it difficult for commercial organisations to anticipate and plan, given the risk that today’s policy position might be reversed tomorrow. Secondly, the impact on commercial organisations risks exceeding the impact on the individuals and regimes which are the true object of the sanctions. As the range of restrictions increases, and the balance of the targeted activities shifts from malign activities such as supplying military equipment to more ‘ordinary’ commercial activities, some argue that sanctions are not really a regulatory compliance tool. Instead, governments are threatening commercial organisations with criminal penalties and business terminating designations if they do not follow what are effectively geopolitical policy decisions. Thirdly, geopolitical instability is resulting in countersanctions being imposed, further increasing complexity.
Dunin-Wasowicz: Sanctions have always formed part of the EU’s Common Foreign and Security Policy, but their scale, complexity and strategic importance have increased markedly. Russia’s full-scale invasion was a turning point and added a strong security-related element to EU sanctions. Generally speaking, EU sanctions are used alongside export controls and other economic security instruments to restrict access to finance, services, technology and markets, and to constrain the capacity of targeted states and sectors. The measures against Russia illustrate this development. They extend beyond conventional asset freezes to banking, energy, transport, professional services, advanced technology and Russia’s military-industrial base. Sanctions are designed as instruments of pressure, but their effect depends on how rigorously operators implement them. Private sector compliance has, in that sense, become part of the policy mechanism itself. Businesses must therefore understand the geopolitical objectives while implementing complex rules in a challenging operational context.
Murphy: All sanctions – as distinct from generally applicable export controls – are instruments of geopolitical pressure. The UK’s Foreign, Commonwealth and Development Office states expressly that sanctions are imposed to fulfil United Nations and other international obligations, advance foreign policy and national security objectives, and maintain international peace and security. Their political purpose is also apparent from the legislation itself. From the functional title of the EU regulation concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine to the more emphatically named US legislation, the Countering America’s Adversaries Through Sanctions Act, the nomenclature makes clear that sanctions are overt tools of state policy.
Smith: Many of the world’s governments have started to deem almost any economic concern an issue of ‘national security’. Certain economic challenges, such as trade imbalances or technical issues about imports or exports, had once been handled within a traditional, technocratic regulatory framework. But now that economic security equals national security, all of these tools – sanctions, tariffs, export controls, foreign direct investment restrictions and others – have taken on an urgency, a violence and a presumed immunity from review that had once been reserved for a narrow band of issues that had imposed immediate physical security risks. A key element of this development has been the incorporation of an agile, war-fighting ethos into coercive economic actions, with the targeting of ever more economically consequential entities and jurisdictions and more creative uses of tools that aim to surgically apply pressure while calibrating on the fly as the situation on the ground changes. While this fluidity is a challenge to the private sector actors eager to comply, the speed and flexibility of the measures are so beneficial to global policymakers that it is unlikely they will give up this authority easily.
FW: How significant is the growing focus on third-country workarounds, intermediaries and indirect trading routes? What does this tell us about the changing nature of sanctions enforcement?
Dunin-Wasowicz: The focus on third-country workarounds is now central to EU sanctions policy. The EU increasingly addresses the risk that restricted goods, technology or services may reach Russia through distributors, transhipment points, newly created counterparties, or commercially unjustified ownership and payment structures. The twentieth package provides a concrete illustration: for the first time, the EU applied its anti-circumvention tool against a third country, Kyrgyzstan. This reflects a shift from formal counterparty screening toward examination of the transaction as a whole. EU operators are expected to consider the product, destination, end-user, routing, payment flow and commercial rationale, and to investigate relevant red flags. Enforcement is therefore increasingly concerned with whether the operator identified circumvention risks and responded proportionately, rather than merely whether the immediate customer appeared on a sanctions list. More generally, companies are evaluated not only on whether due diligence was performed, but also on how it was executed.
Smith: For as long as there have been sanctions, there have been attempts by targets to use third-party intermediaries and indirect trading networks to escape restrictions. The complexity of global trading networks and proliferation of technology have been a boon to those seeking ways around sanctions. For example, the idea that sanctions targets would resort to ‘ghost fleets’ or cryptocurrency was once deemed unlikely. Historically, enforcers have lacked this imagination and consequently often been ‘one step behind’ circumventors as the violators took advantage of their own creativity, early technological adoption, and regulatory gaps and inconsistencies to successfully move around restrictions. However, global enforcers have learned lessons and have begun to also quickly adopt new means to track down these violators. Data analytics powered by artificial intelligence (AI), for example, means that increasingly any third party, or even fourth or fifth party actor even tangentially involved in a circumvention, can now face meaningful risk of enforcement or even designation.
Murphy: Measures such as the EU’s ‘no re-export to Russia’ clauses for restricted goods and common high-priority items, the ‘best efforts’ obligations relating to subsidiaries, and general anti-circumvention prohibitions are the logical next steps in closing gaps that inevitably emerge after sanctions are imposed and third parties seek to navigate around their contours. These measures are significant in their own right, but their full impact will depend on meaningful enforcement. To date, enforcement action in the EU and UK remains relatively limited.
Martin: While the imposition of sanctions means that certain enterprises can no longer engage in previously permitted transactions, they do not change the underlying economics of the commercial activity. If it remains profitable, then another entity will simply step in, when the complaint market participant exits the activity. Broadly speaking, there are then two possible scenarios. The first scenario involves an entity which is not subject to the same legal rules. This is sometimes termed ‘parallel trading’ and involves a shift away from traditional EU, UK and US jurisdictions to other jurisdictions which do not impose such onerous, or any, sanctions. The second scenario involves an entity which is prepared to operate in a non-compliant way. That may involve deceptive practices, including use of complex structures, intermediaries and indirect trade. In either case, regulators will continue to enforce against organisations which are subject to their jurisdiction and those organisations therefore need to ensure that they are not inadvertently involved in sanctionable activities.
“No matter the drivers, it is now imperative for companies to dig into their supply chains. Regulators have often asked for information going back to the third-, fourth-or even fifth-level supplier.”
FW: How important is the increasing use of secondary sanctions? What challenges does this create for financial institutions, intermediaries and companies operating across multiple jurisdictions?
Murphy: US secondary sanctions remain highly significant, as the recent Graham Bill illustrates. Less widely appreciated is the extent to which the expanded designation criteria under the UK and EU Russia sanctions regimes function as their own forms of secondary sanctions. The UK criteria, for example, extend to persons supporting the Russian energy sector – an approach analogous to the US energy-sector determination – and the UK has designated a number of non-Russian entities, principally in China, the United Arab Emirates and India, for trading in Russian energy products or even for dealing with UK-specified ships. Similarly, EU criteria encompasses persons operating vessels that transport Russian crude while engaging in deceptive shipping practices – a number of non-Russian entities and vessels have been designated on that basis in connection with purchases of Russian energy products. This remains some distance from the US position, under which significant or material support for specially designated nationals may itself provide a basis for designation. Nevertheless, the breadth of the UK and EU criteria, and their functional similarity to US secondary sanctions, are often underestimated.
Martin: What we mean by secondary sanctions has changed over time. At their heart, secondary sanctions are extraterritorial measures which the sanctioning country – for example the US – uses to change the behaviour of individuals and entities which are not actually subject to their legal jurisdiction. The original secondary sanctions, for example under the US Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010, achieved their objectives through so-called menu sanctions, by which non-US persons were denied access to US government contracts and other US commercial opportunities. Now we see sanctioning countries using the threat of designation – that is, being added to a sanctions list – as a form of secondary sanction. Such a designation will usually be fatal to a commercial organisation, so businesses need to understand fully the extent of these extraterritorial measures and ensure compliance.
Smith: While secondary sanctions truly came on the scene in 2010 with the implementation of creative and highly material extraterritorial measures in the US/Iran sanctions regime, for at least a decade before then many states had expressed disquiet at the ‘long-arm’ impact of US measures. Despite these concerns, the power of the US dollar and the US market has allowed American policymakers to use secondary sanctions as a very effective tool. These tools ask foreign entities to choose between continuing to work with parties disfavoured by the US or maintain access to the US market. Historically, given the importance of the US system and its regulators’ aggressive enforcement, it was rarely a difficult decision for businesses to choose US compliance. Today, however, the legal pushback from other countries – which now include criminally enforceable anti-US sanctions measures in China and Russia – has made this a much more challenging proposition for global businesses. It increasingly places private sector actors in the midst of great power rivalry – with the only clarity being that the ‘with us or against us’ choice posed is as consequential as it has become vexing.
Dunin-Wasowicz: For EU businesses, it is important to distinguish US-style secondary sanctions from the EU’s approach. EU sanctions generally require an EU jurisdictional nexus, and the EU does not ordinarily describe its measures as secondary sanctions. However, the EU now has an extensive range of tools to target third country individuals and entities that materially support sanctioned parties, facilitate circumvention or contribute to Russia’s war effort and military-industrial base. Recent measures have targeted third country banks, cryptoasset service providers, technology suppliers, ports and actors in Russia’s shadow fleet. This demonstrates a clear appetite, perhaps also a practical necessity, to extend the effective reach of EU sanctions and incentivise compliance in third countries. The legal distinction remains important, but may be less pronounced in its compliance effects. Cross-border issues are increasingly complex. Beyond divergences between G7 jurisdictions, operators face counter-sanctions, new export control regimes such as China’s and significant third-country litigation over sanctions compliance.
“Increasing divergence among sanctioning states, coupled with the wider use of blocking laws such as China’s AFSL, is likely to shape the next phase of sanctions policy.”
FW: Are we seeing a shift from broad, volume-driven compliance approaches toward more targeted screening and risk-based monitoring? What is driving that change?
Martin: Due to the rapid expansion of sanctions programmes, with very large numbers of individuals and entities being included on sanctions lists, many commercial organisations are finding that their screening programmes are generating ever-increasing volumes of possible matches. Technology is making it easier to resolve some of these matches, but many still need to be reviewed by skilled and experienced individuals. In addition, we are seeing both increasing sophistication from the bad actors who engage in deceptive practices to circumvent sanctions and evade sanctions controls, as well as increased expectations from regulators regarding the level of due diligence which is carried out, meaning that it takes more time than ever to pick apart sham transactions, fraudulent documents and complex structures. Taken together, this is causing organisations to assess more carefully the specific risks for their organisation and then focus resources on targeted screening and the highest-risk areas.
Smith: Most companies that have a large number of international counterparties engaging in a significant number of transactions have not moved from a broad volume-driven approach for compliance. However, they are increasingly adding to this old model with more targeted, AI-aided screening and risk assessments. It is not ‘either or’ but ‘both’. The principal driver behind this more complex compliance architecture comes from increasing demands of regulators and the risk aversion of companies’ own counterparties. The expectations of global enforcers have developed, and now increasingly expect companies to augment the longstanding volume-driving approach with more in-depth due diligence on identified high-risk counterparties and often, especially in the context of supply chains, the counterparties own counterparties. As technology proliferates, and once again AI is leading the charge, those expectations will continue to develop and the understanding of what a ‘high-risk counterparty’ is will inevitably expand. For a company’s counterparties who are fearful of even the perception of wrongdoing, many have taken it upon themselves to demand even more stringent compliance standards before engaging, or continuing to engage, with companies.
Dunin-Wasowicz: The days when EU sanctions compliance was essentially a screening exercise are long gone. It now follows a more targeted, sophisticated and risk-based model. Screening remains indispensable, but it cannot by itself identify product diversion, concealed end-users or a commercially abnormal transaction structure. Recent EU measures illustrate why a differentiated approach is necessary. Controls increasingly distinguish between particular technologies, financial channels, vessels, ports, service providers and entities associated with Russia’s military-industrial base. The resulting risks differ materially according to sector, product, geography, distribution model and corporate structure. EU operators therefore need to map their exposure and direct enhanced due diligence toward higher-risk relationships and transactions. The strongest programmes combine automated screening with product classification, transaction analysis, supply chain information, escalation procedures, training and periodic review. Technology supports that process, but it does not replace informed judgement about the transaction’s economic reality.
Murphy: A volume-driven compliance model is effective only where the task is largely confined to bulk screening names against designation lists. Compliance with UK and EU trade sanctions, by contrast, requires an understanding of the origin of goods, their precise harmonised system or combined nomenclature classification, their immediate export destination and their ultimate end use. As the range of goods subject to UK and EU Russia sanctions continues to expand, more targeted screening and risk-based monitoring become essential. The restrictions also extend beyond the goods themselves to related services, including ‘technical assistance’ – a broad concept encompassing matters such as design, manufacture, maintenance and training – as well as financial assistance. Effective compliance therefore requires a clear understanding of the underlying transaction, not merely screening of the parties involved.
FW: What does the heightened focus on circumvention risk, supply chain visibility and indirect exposure mean in practice for transaction structuring, market-access decisions and compliance escalation?
Murphy: The requirement to look beyond immediate counterparties and assess the entire transaction chain – including intermediaries, payment flows, the origin and destination of goods, and their ultimate end use – means that transaction structures involving opaque corporate vehicles, unusual transit jurisdictions or unclear end users become far less attractive. This makes market-access decisions more difficult for compliance teams.
Dunin-Wasowicz: The EU’s focus on preventing circumvention stems from an effectiveness problem: evaders and facilitators use third country entities and jurisdictions beyond the direct reach of EU law. The response is twofold. EU persons are subject to enhanced preventive and compliance obligations that extend to activities in third countries, and the EU can designate the actors involved. As a result, EU compliance and enforcement risks now arise in fact patterns that may at first seem far removed from the EU. In practice, operators need to look beyond the contractual counterparty to suppliers, distributors, end-users, ownership and control, product classification, payment flows and transport routes. The objective is not to eliminate every theoretical risk. It is to demonstrate that credible diversion risks were identified, investigated and addressed, and that unresolved red flags could be escalated to personnel authorised to pause, restructure or decline the transaction.
Smith: Supply chain enforcement is the new frontline of regulatory interest and engagement. This enforcement has several policy drivers, including the promotion of human rights – which can be seen in supply chain forced labour restrictions – to concerns about circumvention of sanctions. No matter the drivers, it is now imperative for companies to dig into their supply chains. Regulators have often asked for information going back to the third-, fourth- or even fifth-level supplier. This has added risk, expense and uncertainty to private sector actors, many of whom have been working with the same suppliers and sub-tier suppliers for years – though have had limited information about suppliers further upstream. Many companies have responded to the new reality by contractually demanding that suppliers, and their suppliers’ suppliers, and so on, adopt rigorous supply chain visibility standards, and agree to audit demands, indemnification procedures and exit rights. However, some regulators assess such ‘outsourced’ compliance as, at best, only a partial solution. Where possible, some companies have opted to completely alter supply chains so as to eliminate parties or jurisdictions of concern. Meanwhile, non-governmental organisation (NGO) reporting has come to play a critical role in governments’ launching investigations. This brings with it ambiguity given the lack of clarity about NGO methods or standards but can also serve as an important warning. The reporting can provide compliance-minded companies a basis to launch their own supply chain reviews before regulators engage.
Martin: Sanctions compliance was never about box-ticking, but the heightened compliance burden which has been placed on commercial organisations, as well as the increased risks if they get it wrong, mean that sanctions compliance is now a board-level concern. The board is concerned not only with direct sanctions risks, but also indirect risks due to the actions of its counterparties, whether that is a bank’s customer, an insurer’s assured or a trading company’s supplier or distributor. That means that businesses need to choose their counterparties with care, and also collect and review information about any direct or indirect transactions which give rise to sanctions risks. That requires increased transparency and dialogue between commercial organisations. We also see questions about sanctions compliance being raised at an earlier stage in discussions, so that decisions can be made about whether particular opportunities are worth pursuing given the high cost of compliance.
“EU operators are expected to consider the product, destination, end-user, routing, payment flow and commercial rationale, and to investigate relevant red flags.”
FW: Looking ahead, which developments are most likely to shape the future direction of international trade sanctions and corporate compliance strategies over the next few years?
Dunin-Wasowicz: Because the sanctions field is driven by geopolitical developments, firm predictions would be imprudent given the current volatility. It is fair to say, however, that these tools will continue to grow in importance. From the EU perspective, much depends on internal dynamics and what the unanimity principle allows. The range of outcomes is wide: from more designations and new sanctions programmes addressing different issues, to slower and more limited action. On 22 September 2026, the European Council extended one element of the Russia sanctions for three years, until 22 September 2029, but only after complex and tense negotiations. Globally, I expect more conflicts between legal regimes, making transnational issues even harder to navigate. The new normal is sustained uncertainty. The key will be finding the right balance and allocating resources so as to remain agile in defining, updating and implementing compliance measures.
Smith: Given the national security overlay of trade sanctions and related measures, the principal driver will remain the fluid goals of policymakers in world capitals. The attractiveness of trade tools – which stems from a combination of the speed with which they can be deployed and the ease of their deployment, given that private sector actors are the ones doing the heavy lifting – means that policymakers will continue to reach for these tools to address an array of issues. The impact of this policy reflex for compliance-minded businesses has already been significant. Exacerbating this use, and arguable overuse of economic measures, is the increasing splintering of the global trading system, even among erstwhile allies and trading partners. Effective trade sanctions compliance will thus require not just technical sophistication and in-depth knowledge of all counterparties, but also a nuanced understanding of geopolitics and national domestic demands, and, if possible, a degree of clairvoyance.
Martin: Fundamentally, sanctions are a reaction to geopolitical tension, which is what makes them so fascinating. If current levels of geopolitical instability continue, then we can expect the extent and complexity of sanctions programmes to increase, and for sanctions compliance to remain at the heart of companies’ compliance strategies. Unfortunately, it seems likely that the current level of divergence between sanctioning authorities such as the US, EU and UK will continue, or increase, as will the use of counter-sanctions by other countries, meaning that the long journey toward sanctions compliance will continue. With sanctions impacting such a huge range of commercial transactions, we expect courts to increasingly be involved in resolving sanctions-related disputes. Therefore, commercial organisations will need to ensure not only that their sanctions compliance programmes keep pace with the evolving expectations of regulators, but they also reflect the latest court decisions.
Murphy: Increasing divergence among sanctioning states, coupled with the wider use of blocking laws such as China’s AFSL, is likely to shape the next phase of sanctions policy. Corporate compliance strategies will need to address the resulting conflicts of law and competing regulatory demands. In a recent landmark case, a sanctioned Chinese engineering company relied on the AFSL to obtain the arrest of a ship from the Nanjing Maritime Court after a foreign company withheld payment under a vessel-module construction contract on sanctions grounds, notwithstanding a foreign governing law and jurisdiction clause. The AFSL also prohibits the use of contractual sanctions clauses that give effect to foreign discriminatory restrictive measures or foreign supply chain investigations. Cases of this kind, together with the difficulty of relying on standard sanctions clauses in contracts with a Chinese nexus, are likely to create increasingly acute compliance dilemmas.
Jan Dunin-Wasowicz is co-founder of Bennink Dunin-Wasowicz. A recognised thought leader in European Union sanctions, he advises leading companies in critical sectors on compliance, focusing on targeted risk assessments, enhanced due diligence, circumvention prevention and crisis management. He teaches at Sciences Po and the EUI and is a RUSI associate fellow. He can be contacted on +33 (0)6 8246 8406 or by email: jdw@benninkdunin.com.
Patrick Murphy is a partner in the London office of Clyde & Co and a member of Clyde & Co’s white-collar crime and sanctions group. He has advised a range of shipowners, ship managers, charterers, commodity traders, oil majors, bunker suppliers, offshore oil and gas services providers, port and terminal operators, and financial institutions on the challenges of complying with fast evolving and jurisdictionally overlapping sanctions. He can be contacted on +44 (0)20 7876 4301 or by email: patrick.murphy@clydeco.com.
Adam M. Smith is a partner in the Washington, DC office of Gibson Dunn and serves as co-chair of the firm’s international trade advisory and enforcement, as well as the sanctions and export enforcement practice groups. A former US Treasury and White House official, he is an experienced international lawyer with a focus on international trade compliance and white-collar investigations, including federal and state economic sanctions enforcement, tariffs, CFIUS, embargoes, export and import controls, and anti-bribery and anti-corruption regulations. He can be contacted on +1 (202) 887 3547 or by email: asmith@gibsondunn.com.
Daniel Martin is a recognised expert in his field and leads HFW’s sanctions team, advising clients on all aspects of international financial and trade sanctions. Mr Martin provides commercially-focused advice on UK and EU sanctions, as well as the application of US sanctions to non-US persons, to leading international clients in shipping, commodities, energy and insurance sectors, and also to private equity firms, financial institutions and media organisations. He can be contacted on +44 (0)20 7264 8189 or by email: daniel.martin@hfw.com.
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