OTSI Publishes Guidance for UK Freight and Shipping Sector on Countering Russian Sanctions Evasion

On November 3, 2025, the UK Government’s Department for Business and Trade’s Office of Trade Sanctions Implementation (“OTSI”) published new guidance on countering Russian sanctions evasion for the freight and shipping sectors (the “Guidance”).  The Guidance, which supplements OTSI’s general guidance on countering Russian sanctions evasion and has been developed in conjunction with industry, is intended to assist businesses operating in the freight and shipping sectors to understand current Russian sanctions circumvention practices and reduce their risk of being targeted by those engaged in sanctions evasion.  Freight forwarders, carriers, hauliers, customs intermediaries, postal and express operators, and other companies facilitating the movement of goods should familiarize themselves with the Guidance and consider whether any enhancements to their sanctions risk assessment or compliance controls are required in light of its insights.

The Evolving Threat of Russian Sanctions Evasion

Russia’s efforts to evade sanctions have become more complex in response to the unprecedented expansion of sanctions by the UK and its international partners in response to Russia’s invasion of Ukraine in February 2022.  The Guidance describes a systematic and adaptive network of actors working to conceal trade with Russia, including through the use of front companies, intermediaries, and opaque shipping practices to disguise the origin and destination of goods subject to UK trade sanctions.

The Guidance identifies several key elements of Russia’s sanctions evasion strategy, including complex supply chains involving intermediaries in third countries with weak export controls that allow Russia to continue acquiring dual-use and other sensitive goods and technology, as well as the use of financial intermediaries and informal value transfer systems to disguise payments linked to restricted trade, particularly in the energy and high-tech sectors.

The Guidance highlights that, while much of this activity occurs outside the UK and its territorial waters, the UK’s global maritime and financial footprint means domestic entities, including freight forwarders, shipping agents and insurers, face significant exposure to Russia-related sanctions evasion risk.

Key Circumvention Red Flags

The Guidance provides a series of detailed indicators that UK businesses involved in the movement of goods, cargo financing, and trade facilitation should consider as part of their sanctions risk assessments and use to tailor heightened due diligence on customers and transactions, including:

1. unusual customers:  This may include unsolicited approaches from overseas companies to ship goods from the UK, use of shell companies, the involvement of multiple parties in third countries without a clear rationale, or last minute changes to transaction parties such as replacing a party established in Russia or Belarus with a party established in another country.
2. shipping and routing anomalies:  This often includes sudden or unexplained changes to shipping routes, particularly those that avoid established ports or inspection hubs, as well as the use of circuitous or inefficient shipping paths that appear designed to conceal the true origin or destination of cargo.
3. documentation irregularities:  For example, the use of incomplete or inconsistent bills of lading, manifests, or customs declarations, end-user certificates that appear falsified or inconsistent with the nature of the goods shipped, and/or mismatches between cargo descriptions and commodity codes potentially suggesting misclassification of sanctioned items.
4. corporate and financial inconsistencies:  This may include payments routed through unfamiliar intermediaries or offshore entities, sudden changes in beneficial ownership of trading partners, and/or counterparties located in jurisdictions known to act as intermediaries for Russian trade.

The Guidance makes clear that, while the presence of one or more red flags does not necessarily indicate wrongdoing, it should trigger enhanced due diligence, further verification, and escalation of transactions for further consideration to the company’s compliance department.

Compliance Expectations 

The Guidance sets out clear expectations for businesses operating in the freight and shipping sectors.  Businesses are expected to adopt a proactive and risk-based approach to compliance, grounded in comprehensive due diligence, robust internal controls, and transparent reporting.

Key expectations include:

• enhanced due diligence: Businesses should conduct in-depth checks on consignments, customers, other counterparties and end-users, particularly when transactions involve high-risk goods or jurisdictions.  This includes conducting sanctions screening and background checks on trading partners and their key personnel, verifying beneficial ownership, screening (and in certain circumstances inspecting) consignment contents, analyzing trade routes, and reviewing shipping and payment documentation to identify deviations from usual business practice or indicators that documents have been falsified;
• supply chain traceability: Businesses should map their supply chains and understand the role of intermediaries, brokers, and third-party logistics providers, ensuring that all participants are not involved in prohibited activities;
• tailored approach to risk mitigation:  The Guidance identified a number of specific areas of risk.  For example, the risk posed by goods sanctioned for import into the UK, blind shipment and switch bill requests, as well as the risk of false declaration for postal and express operators.  Where these risks are applicable, businesses should consider adopting the tailored risk mitigation strategies outlined in the Guidance;   
• contractual risk mitigation measures:  Businesses should consider including sanctions compliance clauses in their contracts with trading partners;
• comprehensive record-keeping: Businesses must maintain clear audit trails for all transactions, including contracts, shipping documents, and due diligence findings;  
• ongoing monitoring: The dynamic and evolving nature of the package of sanctions against Russia requires regular monitoring of designations and changes to the scope of trade sanctions.  Businesses are encouraged to subscribe to the UK Sanctions List and other official updates to ensure that their compliance systems remain current; and
• training and escalation procedures: Staff involved in trade operations, finance, and logistics should receive regular training to equip them to recognize red flags and understand internal reporting mechanisms for suspected breaches.

Implications for the Freight and Shipping Sector

The legal, commercial, and reputational risks associated with sanctions non-compliance continue to rise.  The Guidance sends a clear message that businesses in the freight and shipping sectors are seen as critical partners in protecting the UK’s economic and national security interests.  Accordingly, businesses operating in these sectors are expected to be aware of their compliance obligations and to adopt a proactive approach to sanctions compliance that enables them to identify sanctions risks in real time.  Affected businesses should consider whether any enhancements to their sanctions risk assessment or compliance controls are required in light of the best practice suggestions outlined in the Guidance.  For more information on these developments and their impact, please contact the authors of this post, Alexandra Melia or Elliot Letts, in Steptoe’s Economic Sanctions team in London.