knowledge 29 August 2025 |

EU Sanctions against Russia and Belarus – New “Best Efforts” Obligation

In June 2024, the EU introduced a new legal obligation requiring EU companies, individuals, and entities (“EU Operators”) that own or control entities outside the EU to use their “best efforts” to ensure those entities do not undermine the Russia and Belarus sanctions regime (the “Best Efforts Rule”).¹ In November 2024, the European Commission (the “Commission”) issued FAQs to clarify how the Best Efforts Rule applies in practice,² and in August 2025, the EU Sanctions Helpdesk provided helpful further clarification.³

The Best Efforts Rule is significant for EU Operators with non-EU subsidiaries. EU parent companies are responsible for preventing any non-EU subsidiaries, not themselves directly subject to EU law, from engaging in activities that would weaken the effect of the EU sanctions against Russia and Belarus.

What Does “Undermining” Mean?

A “breach” is a direct or indirect violation of EU sanctions and includes, for example, exporting banned goods to Russia. “Circumvention” is, broadly speaking, participating in, or facilitating directly or indirectly, a transaction with the purpose or effect of circumventing sanctions, for example, by routing goods under sanction through a third county. By contrast, “undermining” is a broader concept and includes actions that weaken the impact of sanctions, such as a non-EU subsidiary selling restricted goods into Russia.

What are “Best Efforts”?

“Best efforts” go beyond the contractual concept of “reasonable efforts” and differ on a case-by-case basis. The Commission in its FAQs has clarified that “best efforts” comprise of “all actions that are suitable and necessary to achieve the result of preventing the undermining of restrictive measures” but include only those that “are feasible for each EU operator in view of (i) its nature, (ii) its size and (iii) the relevant factual circumstances”. These factors are not standalone but are to be considered together.

“Nature” and “size” includes factors such as market sector, risk profile, turnover, and headcount.

“Relevant factual circumstances” include, inter alia:

• the degree of effective control over the non-EU entity bearing in mind that there are situations where control can be limited (such as local counter laws, as in Russia);
• the risk of prosecution by the third-party country of the non-EU entity’s personnel; and
• the compliance resources available to the EU Operator.

The Commission expects EU Operators to carry out adequate due diligence such that they are aware of the activities of any non-EU entities that they own or control and to ensure that those entities understand the types of activities that risk undermining EU sanctions.

The FAQs set out several examples of “best efforts” that EU Operators should consider taking in order to comply with the Best Efforts Rule, including:

• implementing appropriate policies, controls, and procedures to manage sanctions risks effectively;
• establishing internal compliance programmes;
• sharing and enforcing compliance standards systematically across entities;
• sending newsletters and sanctions advisories to raise awareness;
• setting up mandatory reporting obligations and providing mandatory sanctions training to staff;
• creating rapid-response procedures to deal with sanctions violations, including reporting back to the EU Operator; and
• having any non-EU entity publicly state its commitment to not engaging in sanction-undermining activities and to comply with the EU Operator’s governance policies.

Comment

EU Operators should actively monitor and influence the behaviour of their non-EU subsidiaries to avoid undermining EU sanctions. While only the Russia and Belarus sanctions regime currently include the Best Efforts Rule, the Commission encourages EU Operators to treat it as good practice globally.

EU Operators should look to review their governance, contracts, compliance programmes, and training to ensure they can demonstrate full adherence to the new “best efforts” obligation. Any actions or “best efforts” undertaken by an EU Operator in pursuance of compliance should be documented and proportionate to the risk and the specific characteristics of the EU Operator and the surrounding circumstances.

Also contributed to by Kelsey Ahern