SIFMANet Brussels Report 1

In late November 2024, RUSI’s Centre for Finance and Security (CFS) hosted two workshops in Brussels, bringing together sanctions experts to discuss challenges around implementation. The workshops involved representatives from the UK and several EU member states from national authorities, including financial intelligence units, ministries of foreign affairs and other national competent authorities, with responsibility for sanctions policy and/or enforcement. Also in attendance were private sector representatives from a range of companies in the insurance, maritime, industrial, legal and consultancy sectors. Research institutes also participated, as did civil society groups with a focus on anti-corruption and financial integrity. These workshops are part of the engagements conducted by the CFS-led Sanctions and Illicit Finance Monitoring and Analysis Network (SIFMANet), supported by the National Endowment for Democracy.

This report relates to the first workshop, which focused on complex policy issues requiring collaboration within and across governments, and between the public and private sectors. A second report will summarise the discussions at the second workshop, covering the diplomatic and coercive measures available to gain greater cooperation to counter sanctions circumvention through third countries that have chosen not to adopt sanctions against Russia.

None of the discussions from either workshop are attributable.

Strengthening the Oil Price Cap Through Further Designations and Insurance Enforcement

The first topic of discussion was the apparent failure of the oil price cap (OPC), which one participant called “dead”. This issue was said to be a strategic issue for the sanctions collaboration because the OPC was designed to limit funds flowing to support Russia’s invasion of Ukraine. One main factor participants said limits the efficacy of the OPC is that most Russian crude oil is transported on shadow fleet vessels. Private sector participants said that the public often blame private companies for complicity in trading oil with the shadow fleet, leading to a perception that the sanctions have failed. The fact that shadow-fleet vessels were visible from Northern European shorelines made the issue a “thorn in the eye of everyone”, according to one participant.

Russia has poured $10 billion into its shadow fleet which, at the time of the workshop, reportedly consisted of almost 600 vessels shipping 90% of Russian crude oil. These costs had so far paid off: Moscow had likely received an additional $14 billion in oil revenue between December 2022 and September 2024 due to sales above the OCP. However, according to participants from policy analysis and government sectors, this is not irreversible. One policy suggestion was enforcing insurance requirements for shadow-fleet vessels as the ships passed through national waters.

Another mechanism discussed was designating more Russian shadow-fleet vessels and their owners. This was supported by a wide spectrum of private sector participants. Currently, far fewer ships are formally sanctioned than have been identified or mentioned by media reporting on the shadow fleet. As a result, to bridge this gap, company representatives said they monitored news and conducted internal investigations, but this was time-consuming: one private sector representative said an investigation into a single vessel took two weeks. Such investigations also potentially go beyond companies’ duties to comply with the law, given that so few vessels have been sanctioned. One insurance company representative emphasised the value of sanctioning both vessels and ship-owning companies: “If you sanction or tell us someone is a bad operator, it is a great help, rather than running us as private detectives”. Adding as much information into the designation (not just IMO numbers but also other identifying information) would also enable banks and companies to identify the ships and cease trading with them.

Participants from manufacturing companies also supported the suggestion to sanction more vessels and their owners, saying that this would cut off the ships’ access to a wider array of port services. It would also restrict their ability to obtain parts to maintain engines and other technology, making the vessels increasingly unusable. However, policy analysts noted that lawmakers were reluctant to designate hundreds of ships at once, given that it could cause a shock to oil and gas markets if it dramatically restricted Russian oil exports.

Even if the shadow fleet were curtailed through sanctions on all shadow-fleet vessels, another obstacle discussed was that shipping companies from allied countries would still be reluctant to ship Russian oil, given perceived sanctions evasion – and reputational – risks. Private sector participants from across the maritime industry feared that they would be prosecuted if the oil they carried was traded above the OPC without their knowledge (as shipping and insurance companies may not know prices for commodities aboard their vessels, due to the falsification of attestation documentation). Participants from these companies said they needed to know “how much due diligence was enough” for them to feel able to accept these cargos.

It was agreed, therefore, that addressing the shadow fleet required not only many more sanctions on the vessels, but also clarification of regulators’ expectations for G7 shipping and insurance companies, so that they were incentivised to carry Russian oil at rates below the price cap, as originally envisaged. In other words, it is not enough to sanction the shadow fleet; alternative carriers must be encouraged.

Cross-Government Communication and Cooperation are Vital to Enforcement

Several EU member states highlighted their increased cross-governmental cooperation, both on maritime issues and more widely. In relation to maritime sanctions, a Dutch government participant said that its customs and coastguard agencies convened a weekly meeting with the largest companies in its ports to discuss issues relating to Russia’s shadow fleet, as well as other issues. Their law enforcement bodies also exchanged information with supervisory authorities, speeding up asset freezes and other enforcement activity.

EU member states were also working together, at least at the regional level, to align the interpretation of sanctions. One participant from Lithuania said Baltic states were working with Finland, Poland and Croatia to apply unified measures to sanctions compliance. Expanding this would be a priority of the Lithuanian government going forward, they said.

National authorities had not presented consistent or clear sanctions interpretations, according to one private sector representative. When asked, private sector participants said many national authorities refused to clarify or interpret rules that had been adopted in Brussels. There was therefore a frustration from the private sector that often, the only actionable guidance they received was in the form of the EU’s frequently asked questions (FAQs), although these were not legally binding.

One participant from another EU member state said the reach of sanctions had been delayed because “we are building sanctions in new areas where we need to build capacity and tools”. There was a balance, they said, between acting quickly and being prepared.

One UK participant said they were working closely with the EU to “maximise the impact and effectiveness” of the sanctions in place. An EU member government participant said that cooperation on sanctions with the UK was an area where “geography speaks more than politics”, to such a degree that it was as if “Brexit has not happened”. But there was more to do, including continuing joint sanctions diplomacy efforts between the EU, the UK and the US. Some success had been achieved, they said, but this needed to be combined with other action, such as addressing Russian disinformation, hybrid warfare and other threats.

The Private Sector Seeks Exchange of Information and Clarity from Government

Public and private sector representatives then discussed the successes and limitations of public–private partnership in sanctions implementation and enforcement.

Public sector participants were first asked what aspects of their cooperation with the private sector made them proud. Few EU member states’ representatives volunteered comments, but responses from Baltic states’ government officials were positive. One Latvian participant from a law enforcement agency said Latvia’s biggest success had been establishing a “one-stop shop” to address all questions from the private sector, with the aim of acting “as a consultancy to the private sector”. Other mechanisms for sharing information with the private sector included sharing evasion trends in meetings with the country’s largest banks and publishing a study showing indicators of typologies and evasion.

Other participants from the region set an equally positive tone, with one saying their government had set a key performance indicator (KPI) to provide clear advice in response to questions from the private sector: “They may not like it that we interpret sanctions conservatively, but our answer is always clear”.

One Latvian participant also noted that the Latvian government had published information on assets that had been deemed to be owned and/or controlled by sanctioned individuals, which provided clarity on its interpretation. Private sector participants from other countries said similar publications elsewhere would be welcomed.

One representative from Lithuania said the country had adopted similar information-exchange mechanisms, creating a platform to share information between government and private sector bodies. One representative from Lithuania said the government and major Lithuanian banks established the public-private partnership organisation. This organisation coordinates the work of the “tactical cooperation group” on topics such as sanctions, fraud, and anti-money laundering, in which both public authorities and financial institutions are active. The organisation also seeks to include discussions and information sharing from other sectors, such as railway and transport companies, which has been more challenging but remains important. However, bringing on board other sectors, such as railway and transport companies, had been more difficult, although it remained vital, given that the transportation of goods by road and rail via Lithuania to Russia and Belarus remained an important issue for sanctions enforcement.

Participants then discussed the importance of publishing information on sanctions enforcement, which supplies the private sector with information on government sanctions’ priorities and interpretations. One participant from the Netherlands said the country’s prosecutions were published thematically “so each sector gets a wake-up call”, and the government was trying to carry out enforcement in all sectors, including small and medium enterprises (SMEs).

But one participant from the legal sector said that while communication about enforcement had increased, enforcement notices in many member states remained too general. This was, they said, a missed opportunity, as examples of enforcement provide both “teaching and learning moments” and the best information on how governments were interpreting sanctions. Another participant from an industry body agreed, saying that court rulings and disclosures of prosecutions help to “set precedent and give clear answers on whether companies have complied with the sanctions”. In response to this, another participant from the legal sector reiterated the importance of receiving clear guidance from governments, as the courts were an expensive and inefficient way of obtaining guidance about what transactions were permitted.

Finally, one participant from an industry group noted there were limits to the amount of collaboration between the public and private sectors, particularly given the growing emphasis on enforcement in member states. One insurance company representative said companies need a “safe harbour”; companies that were “trying to do the right thing” should be able to be open with national authorities about their questions, without facing legal or regulatory repercussions. Participants recognised, however, that governments would not be able to provide a blanket assurance, even if cooperation increased.

Under-Compliant Companies and Bad Actors Leverage Differences Between Sanctions Interpretations

Private sector participants noted that companies seeking to evade or circumvent sanctions, or those unwilling to implement compliance systems, continued to exploit differences between EU member states’ interpretations of EU sanctions. For example, a participant from one of the Baltic states noted that their country’s banks required all clients from high-risk industries to implement compliance controls. Although many responded by adopting these controls (which was an improvement), others relocated their operations to nearby countries with less restrictive interpretation. This highlights the potential vulnerability of enforcement occurring at the national level, and the need for intelligence-sharing and oversight across the EU (and more broadly among the G7).

Similarly, one participant from a large corporate business in the maritime sector said the lack of compliance by SMEs was harming the maritime sector overall. They said larger companies with international shareholders were shouldering more of the burden to undertake due diligence and prevent sanctions circumvention, compared with SMEs. Because these smaller firms did not implement similar procedures, significant gaps in compliance remained. Other larger industrial companies agreed, emphasising that they had devoted significant resources to vetting suppliers and customers in light of recent sanctions.

Participants from national governments said they were considering how to harmonise EU compliance rules for high-risk sectors, saying that the need for harmonised supervision was a lesson from other financial crime areas, such as anti-money laundering.

Conclusion

Overall, participants from all sectors said they appreciated the open and constructive conversation in the workshop, which highlighted the importance of providing platforms for discussion and cooperation. This need to iteratively discuss new sanctions legislation, implementation and enforcement measures has been a theme of RUSI’s SIFMANet country workshops and roundtables: sanctions policy is constantly evolving, and the dialogue too must remain ongoing.

Participants were particularly positive about the engagement between the public and private sectors in support of the OPC (its implementation issues notwithstanding). EU and UK participants from the private sector said their comments and views had been heard in the design phase of the OPC. Following this workshop, we observed that the private and policy analysis sectors’ suggestions were also being considered: in mid-December 2024, 12 EU member states announced they would be boarding vessels to check their insurance documentation, and further sanctions on vessels were expected.

Wider cooperation between the public and private sectors remains a challenge, but as CFS outlines in the recently published SIFMANet recommendations for 2025, further intelligence-sharing with the private sector is critical to improving compliance and enforcement. This should include intelligence gathered across the EU. The recommendations include setting up an EU intelligence hub cooperating with private sector entities across the region. Ultimately, the success of sanctions against Russia will rely heavily on effective collaboration, a goal that both public and private sectors should continue to develop domestically and across borders between different sanctions regimes.

Olivia Allison is an Associate Fellow at RUSI and an independent consultant. She has more than 15 years’ experience carrying out complex international investigations and supporting the development of integrity and governance for state-owned companies, international companies and international financial institutions. She has a wide range of financial crime and asset-tracing experience from leadership roles held in London, Moscow, Kyiv and Kazakhstan.