The Sanctions Tightrope
Until relatively recently, US sanctions were considered the most complex and comprehensive. Compliance with US sanctions therefore meant compliance with those of other jurisdictions too.
In 2025, global sanctions compliance feels more like a tightrope walk between three regulators holding three different rulebooks: the US, the UK, and the EU. Welcome to the era of the sanctions whipsaw, where doing the "right" thing in one jurisdiction may land you in hot water with another.
US, UK, and EU sanctions programs have always had their nuances, but the divergence in recent years has become sharper. Companies operating globally now face a real dilemma: comply with US extraterritorial sanctions and risk penalties in Europe or follow the EU's directives and run afoul of OFAC. There is no easy way out of the morass, but there are smarter ways to navigate through it.
Real-World Collision Zones
Iran: Sanctions vs. Blocking Statutes
The US continues to enforce secondary sanctions on Iranian entities, targeting not just US persons but also non-US businesses. Meanwhile, the EU's blocking statute prohibits European companies from complying with those same US sanctions and threatens penalties for doing so. That means a European company could be fined either way.
Russia: Diverging Designations and Timelines
The US, UK, and EU have all sanctioned Russian entities in response to the conflict in Ukraine, but they have not always moved in lockstep. The US often acts faster and with broader designations, while the EU has favored phased rollouts. That leaves companies in an awkward position when an entity appears on one list but not another.
China: The Gray Zone
The US has imposed targeted sanctions and export controls on certain Chinese companies tied to surveillance, military, or technology. The EU and UK, however, have been more cautious, sometimes declining to follow the US lead. Multinationals are left with a difficult choice: align with their home regulator, their bank's compliance policy, or their largest trading partner.
Why This Matters Beyond the Legal Text
These challenges are not theoretical; they have real-world consequences:
- Whipsaw liability: Complying with one regime may mean violating another.
- Reputational exposure: Headlines rarely mention that you were trying to follow someone else's rules.
- Operational impact: Global banks and insurers often apply the strictest standards across all clients.
- Executive confusion: Boards and leadership expect simple answers in a landscape that offers none.
Unfortunately, "wait and see" does not count as a successful risk mitigation strategy.
Staying Sane (and Compliant) in a Split-Screen World
Practical strategies that help companies manage overlapping or conflicting regimes include:
- Building a consolidated restricted-party list that covers OFAC, UK OFSI, and EU designations.
- Anchoring decisions to your primary regulator but documenting why you did not follow a competing regime.
- Maintaining internal memos or legal opinions when choosing between conflicting laws.
- Testing your screening tools and supplementing with manual review where needed.
- Watching for retaliatory measures from China, Russia, or others aimed at companies that comply with Western sanctions.
The Future Isn't Getting Simpler
The trend is not toward harmonization; it is toward fragmentation. More regulators, more lists, more politics, and more companies caught in the middle.
If you are waiting for clarity, you may be waiting a long time. What companies need now are flexible compliance frameworks, coordination between legal and commercial teams, and the ability to defend tough judgment calls.
Final Thought: Pick Your Regulator, Keep Your Receipts
In today's environment, you may not be able to keep every regulator happy. You can, however, be consistent, transparent, and prepared. When compliance with one regime creates exposure under another, the goal is not perfection; it is defensibility backed by a clear record.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
