Over 40 local companies and individuals in Baltic States are directly or indirectly subject to sanctions - Citadele

RIGA - Over 40 local companies and individuals in the Baltic States are directly or indirectly subject to sanctions imposed by the European Union (EU) and the United States, Saiva Krastina, Head of Sanctions Compliance at Citadele Bank, told LETA.

Several hundred criminal proceedings have also been initiated for sanctions violations, thousands of violations have been detected at the border, and the first penalties, including imprisonment and fines, have already been imposed. Additionally, new administrative punishments for smaller violations of the Western sanctions are also expected soon, Krastina said.

She added that international sanctions related issues have become increasingly complex in recent years, as various organizations, including the EU and the US Treasury's Office of Foreign Assets Control (OFAC), regularly introduce new types of restrictive measures and impose sanctions against more and more legal and natural persons, goods and services, as well as ships and aircraft. Most of the new sanctions are imposed in connection with Russia's aggression in Ukraine.

According to Krastina, companies are sometimes unwittingly involved in sanctions circumvention schemes, in particular in the context of so-called sectoral sanctions, which target specific goods and services. Therefore, insufficient sanctions inspections in companies can lead to sanctions violations.

The most significant sanctions risks in the Baltic States are in the transport and logistics sectors, as well as in relation to natural resources and technologies that can also be used for military purposes, Krastina said.

On February 24, the EU adopted the 16th package of sanctions against Russia. Among other things, a complete ban was imposed on transactions with certain Russian infrastructure facilities - two Moscow airports (Vnukovo and Zhukovsky), four regional airports and several seaports, including the ports of Ust-Luga and Primorsk on the Baltic Sea and Novorossiysk on the Black Sea.

Although the U.S. has not adopted any significant new sanctions against Russia since President Donald Trump took office, previous sanctions remain in place, including broad sanctions against a number of Russian financial institutions adopted in January this year and OFAC's previously expanded mandate to impose sanctions against foreign financial institutions that would be directly or indirectly involved in circumventing sanctions against Russia, in particular in relation to Russia's military-industrial sector.

In early 2025, secondary sanctions were imposed on one of the largest banks in Kyrgyzstan, which subsequently had to significantly restrict its services, including by suspending the Visa payment cards issued by the bank and effectively suspending international and, to some extent, domestic payments. Krastina indicated that banks in Latvia should also take this risk into account. The EU also has the right to impose sanctions against those involved in sanctions circumvention.

Krastina noted that sanctions violators often continue to develop schemes to circumvent sanctions, making them increasingly sophisticated and difficult to detect. Moreover, quite often local companies are involved in these schemes.

For example, a typical sanctions violation is when a local business sells sanctioned goods to countries and territories at risk of sanctions circumvention, such as the United Arab Emirates, Turkey, Kazakhstan, Hong Kong, Serbia, Armenia and others. Unscrupulous local business partners then supply these goods to their Russian clients, potentially supporting Russia's aggression against Ukraine. Often, more intermediaries, including EU-based companies, are involved to cover their tracks.

Another typical sanctions violation mentioned by Krastina is the provision of services by local businesses, especially in the fields of information technology (IT), marketing and advertising, to recipients that are shell companies registered in third countries and directly or indirectly owned by companies in Russia, which can entail liability for sanctions violation.

The Citadele representatives noted that during the past year, a number of new requirements have come into force for companies engaged in international trade, provision of services or with subsidiaries in third countries. These may include the obligation to set up internal control systems to prevent the risk of re-exports to Russia in certain cases, as well as the obligation for subsidiaries established in third countries to comply with EU sanctions.

Private individuals should take into consideration that sanctions violations can occur when working remotely from EU territory if the final recipient of the services is registered in Russia or Belarus and is subject to sanctions in fields like audit, accounting and tax consultancy, construction, architectural and engineering services, IT consultancy and legal advice, advertising, market research and opinion polls. These restrictions also apply to employment relationships, the sanctions expert said.