Russia in Global Affairs

For citation, please use:
Timofeev, I.N., 2025. U.S. Enforcement of Economic Sanctions. Russia in Global Affairs, 23(3), pp. 149–162. DOI: 10.31278/1810-6374-2025-23-3-149-162

The U.S., the EU, the UK, and some other Western countries have imposed numerous economic sanctions on Russia (Timofeev, 2022), but how effective are they?

Sanctions’ effectiveness can be measured by four different factors: change in the target’s policy (Hufbuer et al., 2009); the level of damage to the target (Bapat et al., 2013; Nephew, 2018; Neuenkirch and Neumeier, 2015; Kim, 2014); symbolism and signaling (Giumelli, 2016); and businesses’ compliance (Stepien et al., 2024; Arapova and Balakhonova, 2023; Crozet et al., 2021, Early and Preble, 2018, 2024; Gabbi et al., 2011; Caiazza et al., 2018; Timofeev, 2019).

The first three approaches focus on state-to-state relations, while the fourth, used in this article, focuses on state-to-business. The latter is particularly important to anti-Russian sanctions. While most countries have not joined in imposing the sanctions, many businesses have become quite cautious of working with Russia, notwithstanding their governments’ neutral or friendly stance. Conversely, some companies appear willing to bypass the sanctions regime, even when their governments support it.

This article examines why business changes its behavior under sanctions, how the U.S. forces business in its jurisdiction and in third countries to comply with its sanctions, and how effective these measures are.

The study focuses on civil penalties imposed by the Treasury in 2009-2025, enforcement of indictments for evading anti-Russian sanctions, and secondary sanctions imposed by the U.S., as it is the leading such initiator and enforcer, and U.S. companies’ (e.g., banks’ (Farrell and Newman, 2019; Drezner et al., 2021)) global importance gives U.S. sanctions additional strength.

The toolkit of economic sanctions has changed significantly over the past 20 years (Pape, 1997; Drezner, 2015, 2022). The importance of targeted financial (blocking) sanctions has increased. Secondary sanctions are restrictive measures against entities from third countries that are thought to be associated with sanctioned entities or to be bypassing sanctions (Ruys et al., 2025; Terry, 2022; Ruys and Ryngaert, 2020; Meyer, 2014; Gurule, 2017). Blocking financial sanctions are typically used. For instance, Public Law 115-44 Art.231 permits sanctions against entities in third countries for significant transactions with the Russian military-industrial complex.[1] Executive Order 14024 Sec.1[2] regulates the enforcement of blocking sanctions for the provision of goods or services to entities sanctioned under the Order. And Executive Order 14114 permits sanctions against foreign financial institutions for significant transactions with sanctioned Russian entities involving military supplies or some dual-use goods.[3]

Secondary sanctions should be distinguished from criminal and administrative punishment of sanctions evaders, both American and foreign. The latter require some grounds for U.S. jurisdiction. For example, U.S. authorities consider payments in U.S. dollars made by foreign individuals in foreign territory to fall under U.S. jurisdiction as they go through an American correspondent bank.

Secondary sanctions, however, do not require jurisdiction.

The study included an analysis of civil penalties imposed in 293 cases in 2009-2025;[4] criminal prosecution of alleged violators of anti-Russian sanctions as reflected by indictments and other Justice Department documents; and secondary sanctions imposed in 976 cases against companies for allegedly circumventing anti-Russian sanctions.[5]

The main hypothesis is that administrative punishments, criminal investigations, and secondary sanctions pose higher financial and reputational costs to large companies and are thus more effective against them than against small companies and entrepreneurs. This holds for businesses in both friendly and unfriendly-to-Russia countries.

The Treasury Department’s civil penalties

All key U.S. agencies involved in sanctions, including the State and Commerce Departments, have authority to use civil penalties. However, given the prevalence of financial sanctions, the Treasury’s policy seems most illustrative. The principles of civil penalties’ calculation are clearly stated in the Economic Sanctions Enforcement Guidelines.[6] Based on these Guidelines, U.S. authorities fine companies and individuals. The similarity of relevant records facilitates the compilation of a database of 293 cases from 2009-2025.

Most cases targeted U.S. entities (191 out of 293) and U.S. subsidiaries abroad (31). The rest were foreign entities from the EU (23), the UK (13), Switzerland (6), China (5) the UAE (4), and other countries. However, the 191 U.S. companies were collectively fined only $259 million (3.5% of the total), or $314 million (4.3%) including the 31 subsidiaries, whereas the 71 foreign companies paid $6.989 billion (95.7%). In other words, foreigners pay most of the penalties. Ten cases accounted for $5.75 billion of the $7.3 billion total, of which nine involved large banks from the EU, the UK, and Switzerland. The Binance crypto exchange, registered in the Cayman Islands, paid the largest fine, $969 million, in 2023. These cases involved the alleged use of U.S. dollars for payments to sanctioned individuals. Big fines are typically enforced against banking and exchange operations due to their large number of transactions, different jurisdictions, geographical diversity, and corresponding likelihood of operating in jurisdictions under U.S. sanctions. Interestingly, Chinese companies account for just $111 million in payments, $101 million from ZTE for violating Iran sanctions, whereas EU, UK, and Swiss companies paid $5.74 billion (78.6%). Both small companies and large multinational corporations have been subjected to the Treasury’s investigations. The largest fines were paid by BNP Paribas, Standard Chartered Bank, ING Bank, UniCredit Bank, and others. The list of American violators is topped by Microsoft, Amazon, Apple, JP Morgan, ExxonMobil, HSBC Bank, and some others.

So far, few cases have been associated with violation of anti-Russian sanctions: 1, 1, 1, 3, 3, 2, 7, and 3 in the years 2017-2024, plus two in January-May 2025. Most fines were paid for alleged violation of sanctions against Iran, Syria, Cuba, North Korea, and other countries. With that said, fines are issued more than six years on average after the alleged violations.

Thus, the effect of large-scale anti-Russian sanctions, imposed after February 2022, should be expected in the coming years.

Of the 293 cases observed, 47 (16.0%) are classified by the authorities as willful violations, 67 (22.9%) are defined as ‘egregious’ (companies concealed or declined to report a violation), and 117 (39.9%) were reported by the companies themselves. In other words, administrative measures are mainly responses to reckless, accidental or unintentional violations. The overwhelming majority of penalized companies take measures to improve compliance. Following the Treasury’s May 2019 publication of “A Framework for OFAC Compliance Commitments,”[7] the number of companies that created or improved sanctions compliance procedures after paying a fine reached 92 out of 106 (86.8%). In 225 out of 293 (76.8%) cases, companies or individuals cooperated in one way or another with the authorities during the investigation. The real number may be larger, as cooperation is not always noted in the Treasury documents. Finally, 241 out of 293 cases (82.3%) involved a first violation, with only three cases explicitly classified as repeat offences. (The rest were not classified.)

In sum, the records of Treasury fines show that most companies cooperate with the authorities, avoid repeat violations, and improve compliance. Large companies often pay considerable fines. The Treasury’s requirements affect their subsequent behavior and the activities of smaller firms, compelling them to comply with sanctions. A broad interpretation of U.S. jurisdiction incentivizes compliance by U.S. and foreign entities; U.S. entities are more frequently targeted, but foreign entities are more heavily penalized.

The Justice Department’s criminal prosecution of alleged sanctions-violators

Alleged intentional violation of U.S. sanctions typically leads to criminal charges by the U.S. Department of Justice.

Many cases were initiated after February 2022 for alleged export of prohibited goods to Russia, including by Russian citizens, Russians with dual citizenship, and citizens of other countries.

For example, on 12 May 2023, Russian citizens were arrested in the U.S. for allegedly using intermediary companies in Turkey and the Maldives to supply aircraft equipment to Russia.[8] On 31 August 2023, a Russian-German national was arrested in Cyprus for allegedly supplying microelectronics from the U.S. to Russia through Cyprus.[9] On 18 September 2023, a Russian citizen was arrested for allegedly importing U.S.-made micro displays, classified as dual-use goods by the Commerce Control List.[10] On 1 November 2023, several Russians were charged with supplying U.S. electronics to Russia through the U.S. and Kazakhstan.[11] On 18 January 2024, a U.S.-Israeli national was charged with supplying electronics to Russia through Hong Kong.[12] On 11 June 2024, two Russian-born U.S. citizens were indicted for supplying snowmobiles to Russia.[13] And on 13 February 2025, three employees of Ohio-based Flight Time Enterprises were indicted for supplying aircraft equipment to Russia.[14]

This sample of criminal cases reveals a number of patterns.

Small intermediary companies in third countries are used to bypass sanctions.

In all the cases described, U.S. officials exploited e-mails and instant messages. Violators are charged for several offenses at once, as sanctions are usually bypassed through document forgery, money laundering, fraud, smuggling, etc.

Yet the purchasers in Russia often escape charges, so sanctions evaders act at their own risk. In 2019, а Russian citizen and his partners were detained in the U.S. for trying to supply a turbine to Russia for Arctic oil projects.[15] The Russian was sentenced to 28 months in prison, but no charges were brought against his client in Russia. U.S. citizens Douglas Robertson and Cyril Buyanovsky were charged with supplying avionics from the U.S. to Russia through third countries, but again no charges were brought against the Russian customers.[16]

In addition to export control violations, charges are also brought for circumventing financial sanctions, including operations in favor of sanctioned Russian individuals or attempts to withdraw their assets. Such charges are brought against both Russians and Americans. One example is the case of Charles McGonigal and Sergey Shestakov, who allegedly carried out operations on behalf of Russian businessman Oleg Deripaska.[17] Another case involved charges against Deripaska himself as well as his associates Olga Shriki and Natalya Bardakova[18] in connection with the use of blocked assets. Similar charges were initiated against American lawyer Robert Wise and Russian citizen Vladimir Voronchenko for using sanctioned businessman Viktor Vekselberg’s assets.[19]^, [20] Recently, Dimitri Simes, a Russian-born U.S. citizen and former adviser to Donald Trump’s 2016 presidential campaign, has been charged with working for a sanctioned Russian state television network.[21]

Russia-connected cases tend to focus on export control and blocked funds; they target immediate dealmakers; they charge for several offenses at once; and they are investigated in cooperation with EU allies.

However, U.S. criminal charges are raised not only in connection with Russia. In 2018, Huawei’s Chief Financial Officer Meng Wanzhou[22] was detained and then charged with making “false representations” to U.S. banks about Huawei’s business in Iran, though the case was subsequently dropped. The Chinese telecommunications company ZTE was criminally charged for supplying equipment with U.S. components to Iran,[23] and ultimately paid a large fine. Unlike with Russia, both cases involved large companies, which also faced other measures by the U.S. Many criminal cases have been opened against alleged evasion of anti-Iranian sanctions: for instance, ten Iranians were charged with procuring two tankers,[24] and U.S.-Israeli national Gal Luft was arrested for brokering the illicit sale of Iranian oil to China.[25]

Secondary sanctions

The U.S. used secondary sanctions long before February 2022. On 10 May 2017, the U.S. Senate held hearings to discuss the effectiveness and feasibility of secondary sanctions against entities from third countries cooperating with the DPRK.[26] In the same year, the Treasury sanctioned several Chinese and Russian entities suspected of involvement in deliveries to the DPRK.[27] In 2018, two Vladivostok-based Russian shipping companies and five ships were sanctioned.[28] And in 2019, the U.S. imposed blocking sanctions on companies and ships involved in the supply of fuel to the Russian military in Syria.[29] Similar measures were taken against Rosneft’s subsidiaries (Rosneft Trading[30] and TNK Trading International[31]) for their alleged participation in operations with Venezuelan oil.

Since the start of the Russian Special Military Operation (SMO) in Ukraine, secondary sanctions have been actively imposed for interaction with sanctioned Russian companies or for attempts to circumvent sanctions. The author’s database of secondary U.S. sanctions shows that in the period from February 2022 to January 2025, secondary sanctions were imposed on 976 companies and are used increasingly often: there were 97 such cases in 2022, 264 in 2023, and 475 in 2024. In January 2025, the outgoing Biden administration announced secondary financial sanctions against another 140 persons. During the entire period under consideration, secondary sanctions were lifted only on 18 organizations.

Most targets are from China (283 companies), the UAE (125), Turkey (118), Cyprus (66), and India (36). Companies in post-Soviet countries, on the contrary, fall under U.S. sanctions much less often: 17 in Belarus, 16 in Kyrgyzstan, 13 in Kazakhstan, 9 in Uzbekistan, 8 in Moldova, 3 in Armenia, 2 in Azerbaijan, 2 in Tajikistan, and 1 in Georgia. U.S. secondary sanctions also target companies in countries that themselves are sanctioning Russia: Cyprus (66), Switzerland (21), Great Britain (18), Singapore (17), Estonia (11), France (9), and Germany (7). However, Western companies more often avoid secondary sanctions by severing ties with their Russian partners. Secondary sanctions have been imposed against five companies in Switzerland, four in Germany, and one in France, versus none in China, one in Turkey, and one in the UAE.

Secondary sanctions are most frequently imposed for alleged supply to Russia of dual-use goods from the “high priority list”[32] (535 companies of the 976 total, or 54.8%); connection to sanctioned Russian entities or operations in their interests (272, 27.9%); provision of logistics services, including the transportation of Russian oil or LNG (128, 13.1%); financial services (23, 2.4%); sale of Russian goods (including gold) bypassing import restrictions (18 cases, 1.8%). Export control violations were the main allegation in all leading countries except Cyprus, where 50 of 66 companies (mostly trusts, funds, or consulting firms) were penalized for alleged relationships with sanctioned Russian entities.

No large transnational companies have come under secondary sanctions so far, suggesting that they are probably being deterred from sanctions-evasion by the threat of secondary sanctions.

But secondary sanctions do not stop evasion by small companies willing to take the risk.

Such companies appear mainly in industrialized countries that trade with Russia (China, Turkey, India) or have convenient infrastructure for creating companies and doing business (UAE and Hong Kong). They also spring up in Western and post-Soviet countries. The potential of small firms to circumvent sanctions should not be underestimated—some of them get sanctioned after the first delivery, but others manage to carry out hundreds of transactions. Recent examples include India’s KDG Engineering Private and Emsytech. The former made more than 1,500 deliveries of dual-use goods to Russia, and the latter, more than 800.[33] As such companies get sanctioned, new ones take their place. 586 out of 976 targeted firms (60.0%) have no website, suggesting that they were probably created solely for the purpose of bypassing sanctions. Thus, secondary sanctions do not stop the supply of high-tech and industrial goods to Russia but probably do increase their cost.

*  *  *

This analysis has revealed several features of U.S. policy to make sanctions work. The key instruments used are civil penalties, criminal prosecution, and secondary sanctions. These measures appear to be more effective for large companies, which tend to violate sanctions through negligence and be punished by administrative measures. Often, companies report their own violations, cooperate with the U.S., improve their compliance measures, and avoid new violations. By interpreting U.S. jurisdiction quite broadly, the U.S. authorities discipline not only large U.S. companies but also foreign ones.

The rarity of large companies’ criminal prosecution suggests that the threat of coercive measures is effective against them. Even if things go as far as criminal investigation (as in the case of ZTE), large companies prefer to cooperate with the U.S. authorities. A similar effect can be observed in relation to small firms—once they face administrative proceedings, they avoid new violations and cooperate with the authorities.

Criminal proceedings, however, do not prevent the emergence of new small ventures willing to take the risk of working with sanctioned jurisdictions.

As for secondary sanctions, they are often imposed on small companies that seem to specialize in sanctions evasion. Regulators constantly improve their methods of monitoring violations, including by identifying typical indicators of sanctions’ evasion, but the number of violators remains notable. U.S. regulators are currently focused on violations in priority areas (e.g., electronics, military goods). The near-absence of secondary sanctions in other areas (e.g., luxury goods) should not be interpreted as suggesting the absence of violations there. Secondary sanctions may eventually get to those sectors, too, as mechanisms for monitoring commodity flows and financial transactions improve.

Business itself plays a significant role in this process through its measures to ensure compliance. The large fines paid by banks may turn them into the main instrument for enforcing sanctions: fearing fines, banks eagerly halt suspicious transactions. Big business is becoming the U.S. government’s main partner for monitoring sanctions compliance.

However, the available data are insufficient to support broader conclusions. In particular, we do not know what proportion of actual violations are reflected in the data. Understanding businesses’ motivation to comply with or evade sanctions would require a finer methodology and in-depth interviews, observation, and other qualitative methods. But the documents and statistics examined here indicate that future research should proceed on the basis of not only state-to-state logic but also state-to-business.