Expertise · Sanctions & embargoes
Sanctions: the risk is almost never the customer you can see
The failures we investigate almost never involve a counterparty listed in plain sight. They involve indirect ownership, the real end recipient, the third-country distributor, and the goods that continue their journey after delivery.
Since 2022 sanctions have moved from a peripheral legal topic to a daily operational constraint for every exporting industrial company. The pace of adoption, the extension to third countries and the shift of the burden of proof onto operators have changed the nature of the work: it is no longer about checking a list, but about maintaining a due diligence framework you can account for.
Our approach starts from a simple observation: in almost every problem case we have handled, the information that would have prevented the incident was already inside the company. It simply had no owner.
Party screening, and what it cannot see
Screening against designated party lists is the base layer. It is necessary, it is now well tooled, and on its own it is insufficient. Three blind spots recur.
Indirect ownership. An entity that is not listed but is owned, directly or indirectly, more than 50% by one or more designated persons is treated as if it were, for the purposes of asset freezing and the prohibition on making economic resources available. The distinct criterion of control can produce the same effect. No screening tool resolves this alone: it requires walking up the ownership chain and dating the information.
The real end recipient. Screening covers the known parties to the transaction. It does not see your customer's customer, nor the forwarder who redirects a shipment after delivery.
Data quality. Screening incomplete or badly captured data produces a false sense of security. We systematically test the existing framework with constructed test sets — transliteration variants, renamed entities, partial addresses — before concluding anything about its reliability.
Sectoral restrictions and the no-re-export clause
Beyond designated persons, current regimes hit whole categories of goods bound for certain countries, and require EU exporters to insert a contractual prohibition on re-export to Russia and Belarus for the most sensitive items, with adequate remedies if the partner breaches it.
In practice, compliance no longer stops at your warehouse door. It extends into your distribution contracts, into monitoring volumes delivered to markets that have no reason to absorb them, and into your ability to react when a signal appears.
| Signal observed | What it usually indicates | Expected reaction |
|---|---|---|
| Sudden order growth from a country neighbouring an embargoed zone | Probable re-export via a third country | Freeze the relationship, end-use questionnaire, documentary check |
| Orders unrelated to the customer's stated business | Circumvention intermediary | Refuse until coherence is established in writing |
| Payment by a third party not party to the contract | Opaque financial chain | Block the payment, escalate to compliance |
| Refusal to provide an end-use certificate | Strong risk signal | Stop the transaction and retain the record |
| Delivery address different from the registered office, in a risk country | Potential diversion | Verify the recipient physically before shipping |
| Recently created customer, opaque capital structure | Possible front for a designated entity | Analyse ownership through to beneficial owners |
What authorities now expect
The obligation to use best efforts to ensure that non-EU entities under your control do not undermine restrictive measures shifts compliance from the entity perimeter to the group perimeter. A third-country subsidiary continuing prohibited flows now places the parent in a conversation it cannot win without written evidence of its diligence.
The framework we install
A usable sanctions framework comes down to four control points and one escalation rule. The rest is documentation.
- At onboarding. Screen the counterparty and its beneficial owners, analyse the ownership chain beyond the threshold, retain dated evidence.
- At order entry. Check the goods against sectoral restrictions, the destination country and the stated use.
- Before shipment. Re-screen — lists change between order and delivery — and verify the actual delivery address and carrier.
- Continuously. Periodic re-screening of the portfolio on every list update, plus review of volume anomalies by market.
- Escalation. One written rule everyone knows: who can stop a shipment, within what time, without needing sales' permission.
When something has already happened
We also act after the fact: a suspicious shipment identified, a customer revealed to be owned by a designated entity, a bank blocking a payment, or a question from an authority. The work is then to establish the facts, size the exposure, preserve evidence of diligence and determine, with your legal counsel, whether a reporting obligation exists.
We are not a law firm and do not provide litigation representation. We produce the factual and technical analysis your counsel needs, and we routinely work alongside specialist law firms.
Deliverables
What you get
Exposure map
Your flows, markets and counterparties ranked by sanctions risk — with the list of uncontrolled areas.
Screening procedure
When to screen, against which lists, at what match threshold, and how to handle an alert.
Ownership methodology
How to establish ownership and control beyond the threshold, including where public information is missing.
Contract clauses
No-re-export, end-use declaration, audit right and remedies, drafted to be accepted by your customers.
Red flag grid
Tailored to your markets and products, usable by a salesperson in thirty seconds.
Dry run
We push your real data through the proposed framework and show you what it catches — and what it misses.
Method
Engagement sequence
Measure real exposure
Twelve months of flows: destinations, counterparties, sensitive products, indirect channels. The output is a number, not an impression.
Test what exists
We stress the current framework with constructed cases. It is the only way to know whether it works.
Close the gaps
Screening, ownership analysis, contract clauses, pre-shipment control — in that order of priority.
Embed
Training for exposed functions, a written escalation rule, a re-screening calendar and an annual review.
Frequently asked questions
What is the 50% rule in sanctions?
It is the principle that an entity which is not itself designated is nonetheless treated as designated when it is owned, directly or indirectly, more than 50% by one or more designated persons or entities, with holdings by several designated persons aggregating. A separate criterion — control — can produce the same effect below the threshold: the right to appoint management, de facto decision-making power, decisive influence. This is the point on which automated screening cannot conclude alone, since it requires walking an ownership chain often located in low-transparency jurisdictions.
Is a Swiss company subject to EU sanctions?
Not directly: Switzerland has its own framework, based on the Embargo Act and implemented through Federal Council ordinances applied by SECO. In practice Switzerland adopts the substance of the European measures against Russia, with differences of timing and scope that must be checked case by case. A Swiss company may separately fall under EU law through its European subsidiaries, under US rules through its products or financing, and under its customers' contractual requirements — the last channel often being the most binding in practice.
Is screening software enough?
No, and presenting a tool as a compliance framework is the most common error. Software compares strings against lists. It does not determine indirect ownership, assess whether an order is consistent with the customer's stated business, spot an abnormal delivery address, or decide to stop a shipment. Those decisions, and their traceability, are what an authority examines. The tool is useful; the framework is what counts.
What does a company actually risk?
Depending on the regime and jurisdiction, consequences range from administrative and criminal penalties — fines, director liability — to commercial effects that usually arrive sooner: banks blocking payments, customers terminating contracts under their own obligations, loss of credit insurance and freight access. In the cases we handle, operational and banking disruption almost always precedes any public enforcement, and is enough on its own to halt an export business.
How often should the portfolio be re-screened?
On every significant update of the applicable lists, and systematically before shipment for sensitive flows. Designations take effect on publication with no grace period: a counterparty that was perfectly eligible at order entry may be designated before delivery. Annual re-screening has no evidential value; re-screening triggered by list updates, with a timestamped record, does.