EU Adopts 20th Sanctions Package Against Russia, Expands Anti-Circumvention Efforts

The European Council (the Council) recently adopted the 20th economic sanctions package against Russia in response to the conflict in Ukraine (the 20th Package). The 20th Package introduces a broad set of new restrictive measures combining individual designations and sectoral and trade restrictions. These measures target key sectors of the Russian economy, including energy, financial services, trade, and Russia’s military-industrial complex, and are designed to curb Russia’s military activities, counter sanctions circumvention, and protect EU operators from the risk of lawsuits and countermeasures when complying with EU sanctions.

The 20th Package includes amendments to Regulation (EU) No 833/2014 and Regulation (EU) No 269/2014, reflecting a coordinated expansion of EU restrictive measures. It also follows several months of negotiations among EU member states.

In parallel, the Council adopted additional restrictive measures against Belarus that largely mirror key Russia-related restrictions in areas such as tourism, trade, finance and crypto-assets, cybersecurity services, and legal protections for EU operators and extended the Belarus sanctions regime until February 28, 2027. On the same day, the EU approved a €90 billion loan facility to Ukraine following the withdrawal of vetoes by certain member states.

KEY POINTS

• The EU’s 20th sanctions package imposes significant new restrictions on Russia’s energy, financial, trade, and military sectors, including expanded listings and sectoral bans.
• One of the most significant parts of the 20th sanctions package is the ecosystem-based platform ban on crypto asset service providers (CASPs).
• The 20th sanctions package marks the first activation of the EU’s anti-circumvention mechanism, here against Kyrgyzstan.
• With 120 new persons listed (37 individuals and 83 entities, including 17 entities located in third countries) under Regulation (EU) 269/2014 and Regulation (EC) 765/2006, it is the biggest round of designations in the last two years. Of note is the delisting of five Chinese entities and 11 vessels following their commitment to cease their illegal activities, underscoring the importance of verifiable remediation for delisting by the EU.
• Additional protections are introduced for EU operators facing abusive legal actions and countermeasures related to sanctions compliance.
• The package reflects both internal EU compromise and geopolitical complexities, including diverging approaches among member states and with allies.

FINANCIAL AND CRYPTO ASSET SECTORS

The 20th Package provides for measures affecting both traditional financial institutions and the digital finance ecosystem, including sovereign digital currencies. Recognizing that individual listings have proven ineffective in the crypto sector, the EU has shifted its focus from targeting specific platforms or tokens to a blanked prohibition on transactions with an crypto-asset service providers or platforms established in Russia and Belarus, thereby moving to jurisdictional ecosystem‑wide controls (i.e., “any CASP established in Russia/Belarus”).

Key measures include the following:

• A transaction ban extended to 20 Russian banks, as well as four financial institutions located in third countries (Kyrgyzstan, Laos, and Azerbaijan) that are involved in circumvention activities, bringing the total of listed banks to 70 (from May 14, 2026)
• A transaction ban targeting payment agents in Russia and in third countries for facilitating cross-border payments from Russia, thereby frustrating EU restrictive measures (from May 14, 2026)
• Inclusion of the central banks’ digital currencies (i.e., RUBx—a ruble-backed stablecoin, along with the Russian and Belarusian Digital Ruble under development) within the scope of the transactions ban against crypto-assets (from May 24, 2026)
• A sectoral ban on transactions with Russian and Belarusian crypto-asset service providers and decentralized crypto platforms (from May 24, 2026) although its application to decentralized crypto platforms raises a material interpretive issue that the 20th Package does not resolve, insofar as these decentralized crypto platforms operate through self-executing smart contracts deployed on a blockchain, thereby rendering the territorial “establishment” criterion conceptually difficult to apply.

The adoption of new measures targeting non-traditional actors of the financial sector, including through the sector-wide ban on Russian and Belarusian crypto-asset service providers and decentralized platforms, represents a novel approach to curbing sanctions circumvention via digital currencies. This, however, will significantly increase compliance risks for EU traditional and non-traditional financial actors when engaging in transactions involving crypto-assets, digital wallets, or related financial intermediaries (including through third countries’ platforms and service providers). The EU’s targeting of sovereign digital currencies, similar to the position of the US Office of Foreign Assets Control on April 24, 2026, is another notable innovation of the 20th Package, as digital currencies and wallets are increasingly used by sanctioned countries to carry out cross-border transactions or constitute alternative sovereign vaults for their cash reserves.

MILITARY RESTRICTIONS

The new round of sanctions imposes restrictions on Russia’s military-industrial production chains.

• 58 entities and individuals have been listed based on their involvement in the development and production of military goods. These include 16 entities in third countries (e.g., China, the UAE, Uzbekistan, Kazakhstan, or Belarus) found to have supplied manufacturing equipment, dual-use items, and technologies critical to sustaining Russia’s military production chains, including drones.
• 60 entities (32 in Russia and 28 in third countries such as China, Türkiye, and the UAE) have been added to the list of persons providing direct or indirect support to Russia’s military capabilities (the so-called EU Entity List) and are now subject to enhanced export restrictions on dual-use and advanced technologies.

ENERGY AND MARITIME SECTORS

The 20th Package introduces extensive measures targeting Russia’s energy and maritime sectors, with a particular focus on maritime transport, LNG-related activities, and the shadow fleet. It signals a clear shift from “compliance‑based safe harbours” (e.g., price cap) to hard bans and structural constraints on Russian energy trade. The key restrictions for the energy sector are the following:

• Introduction of a mandatory due diligence requirement and inclusion of a “no Russia” clause in tanker sale contracts involving third countries and the introduction of a new scrapping clause to facilitate vessel decommissioning and exit from the shadow fleet
• 46 new vessel listings (total: 632) and transaction bans on three ports (Murmansk and Tuapse in Russia, and Karimun in Indonesia—from April 24, 2026)
• Prohibition of technical, financial, and brokerage services for Russian LNG carriers and icebreakers (from April 24, 2026), extended to foreign-owned vessels operating in Russia (from January 1, 2027)
• Prohibition on the provision of LNG terminal services to Russian entities, including EU entities that they own or control by more than 50% (from January 1, 2027)
• 36 new energy-related designations across the oil value chain and establishment of the legal basis for a future maritime services ban on Russian crude oil and petroleum products to replace the Oil Price Cap (in coordination with the G7)

TRADE MEASURES AND SERVICE BANS

• Export prohibitions now cover an expanded list of certain metals, chemicals, energetic materials, rubber and industrial equipment (including tractors), explosives, lubricants, and laboratory equipment
• Import prohibitions extend to certain metals, chemicals, raw materials, and minerals, along with the introduction of a quota mechanism on ammonia
• Introduction of a stricter diamonds traceability evidence rule requiring the submission of due diligence statements confirming no mining, processing, or producing in Russia
• Inclusion of the provision of cybersecurity services to the governments of Russia, Belarus, and to entities established in these countries in the Article 5n list of restricted professional services

INTENSIFIED ANTI-CIRCUMVENTION EFFORTS

For the first time since its adoption, the EU activated its anti-circumvention mechanism against a third country—Kyrgyzstan—responding to abnormal spikes in imports and suspected re-exports to Russia. Introduced as part of the 11th Package, the anti-circumvention mechanism allows the EU to address systemic and persistent evasion of sanctions by a third country by imposing, as a last resort, targeted export restrictions on that country.

Kyrgyzstan is now subject to export restrictions for certain sensitive goods (i.e., CNC machines and telecommunications equipment, including radios). More broadly, the 20th Package reflects a shift toward operational anti-circumvention measures and a greater focus on supply chain and trade anomalies.

ASSET FREEZE MEASURES AGAINST INDIVIDUALS AND ENTITIES

• 37 individuals and 83 entities have been listed as subject to asset freezes and prohibitions on making funds or economic resources available to them under both Russia and Belarus sanctions frameworks. The EU has relied on a variety of bases for these designations, ranging from involvement in Russia’s energy sector, shadow fleet, or military-industrial complex, the supply of sensitive goods, but also in Russia’s propaganda, the looting of Ukrainian cultural heritage, or the deportation, forcible transfer, indoctrination, or military re-education of Ukrainian children.
• Delisting of five financial entities established in China, as well as 11 vessels, following receipt of formal assurances that they would cease the illegal activities that had led to their designation in the first place, thereby highlighting that credible, documented, and verifiable remediation may be considered by the EU in future delisting decisions.

PROTECTION OF EU OPERATORS

In response to the rising number of abusive legal actions against and countermeasures targeting EU operators, the 20th Package has introduced additional measures seeking to protect EU operators from unintended consequences of restrictive measures adopted by the EU, including through mechanisms designed to

• allow EU operators to bring claims before EU courts to recover damages resulting from the enforcement of abusive judgments in third countries other than Russia;
• retaliate, through the introduction of EU transaction bans, against individuals and entities that are (1) cooperating in the enforcement of abusive legal actions prejudicing EU operators, (2) using their IP rights and trade secrets against their consent, or (3) taking advantage of illegal expropriation decisions;
• prevent non-EU operators from bringing actions in the EU relating to contracts affected by restrictive measures by extending the scope of “no claims” clauses; and enable the courts of member states to fine parties bringing abusive claims against EU operators before Russian courts.

HOW TO NAVIGATE YOUR BUSINESS’ EXPOSURE

To address the threat of exposure to EU sanctions, businesses should implement systematic and global screenings, taking into account the growing scope of the restrictive measures. As far as EU operators are concerned, they need to first ensure full adherence to the applicable regulations, which include asset freezes, sectoral bans, and increased due diligence requirements along the supply chain, financial transactions, and services delivery lines. In this regard, the most recent developments in sanctions policy clearly indicate that EU operators should transition from a fixed screening process to continuous monitoring, in particular with respect to high-risk industries like energy, finance, and dual-use goods.

Exposure for non-EU operators is usually secondary and occurs because of EU nexus, which may include EU operations or the involvement of EU citizens. Growing concern over evasion and the use of third countries and non-EU entities to facilitate circumvention makes it important for non-EU operators to consider whether there are any secondary effects related to their actions, which might cause loss of market access and contract termination. At the same time, recent measures expanding protections for EU operators (such as limiting claims by non-EU entities and enabling recovery of damages) shift litigation and enforcement risks in ways that non-EU operators must factor into their strategy.

HOW WE CAN HELP

Morgan Lewis advises EU and non-EU companies on assessing sanctions exposure and navigating compliance with EU restrictive measures, including recent developments affecting financial transactions, supply chains, and third-country risks.

CONCLUSION

The 20th Package represents a substantial escalation of restrictive measures against Russia, Belarus, and implicated third countries, with far-reaching legal, operational, and compliance implications for affected businesses. The 20th Package’s focus on anti-circumvention, jurisdiction/ecosystem-based bans in the crypto sector, hard prohibitions, and structural constraints in the energy field, as well as an alignment between Russia and Belarus sanctions, expanded listings, and enhanced protections for EU operators, signals a shift toward more targeted and sophisticated enforcement. Companies should proactively assess their risk exposure and update compliance frameworks to align with the new regulatory environment.

Law clerk Octavie Jacquet contributed to this LawFlash.