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Economic operators play a key role in the enforcement of sanctions and in preventing circumvention of sanctions. In cooperation with each other, five Frontier States – Estonia, Latvia, Lithuania, Finland and Poland – have developed common practical expert guidance to economic operators on how to detect and prevent circumvention of sanctions.

The guidance provides practical advice on carrying out risk assessments and sanctions compliance. It also includes a list of red flags that the economic operator can use when assessing concrete cases of foreign trade and links to the lists published by the Commission of products of particular relevance for the enforcement of sanctions.

In response to Russia's military aggression against Ukraine, the EU has adopted unprecedented packages of restrictive measures over the last 15 months. For the first time, the EU has imposed sanctions of this scale and scope, which effective enforcement belongs to everyone – citizens, businesses, municipalities, cities and authorities.

Sanctions enforcement is hampered not only by the extent and complexity of sanctions, but also by the numerous attempts to circumvent sanctions. In the case of individual sanctions, the biggest challenge is the complex corporate structures and arrangements – ownership is covered by offshore structures. In sectoral sanctions, there are attempts to circumvent the export or import prohibitions, for example, by concealing the origin of the product by delivering them via third countries. In addition, the sectoral sanctions are being circumvented by using delivery chains, lowering the value of the product (e.g., luxury products) or changing the customs code.

The role of economic operators in the enforcement of sanctions cannot be overemphasized

Economic operators play a key role in the enforcement of sanctions and in preventing the circumvention of sanctions in foreign trade. The economic operator is instructed to carry out an adequate risk assessment and to identify its customers in order to ensure that the economic operator does not engage in prohibited trade with sanctioned entities or entities representing them. With regard to imports, it is also necessary to ensure that the country of origin of the product has not been changed and that the product is not indirectly imported from Russia.

According to the European Commission, businesses should pay particular attention to the products used by Russia in the war of aggression and to products promoting Russia's industrial capacity. The Commission has published lists[1][2] of these products, whose prevention of export and re-export is a priority. Manufacturing and resale businesses should, at the time of sale, carefully determine the end user and country of destination of the products. Businesses can make use of the above-mentioned Commission lists in their own risk assessments.

Economic operators should identify cases of circumvention of sanctions and report them to the authorities

Circumvention of sanctions is a prohibited activity under the Sanctions Regulations and legislation of Lithuania and may be subject to administrative and (or) criminal liability.

The guidance is not binding in nature. This is a memorandum drawn up at expert level, in the preparation of which the instructions and findings on the circumvention of sanctions of the various EU and Member States authorities have been used. When necessary, the guidance will be updated.

Link to the Guidance: 2023_07_17 Practical Guidance Sanctions Circumvention Detection and Prevention in Foreign Trade.pdf (urm.lt)