Background
Article 8a of Council Regulation (EU) 833/2014 (the “EU Russia Regulations”) imposes obligations on EU parents to undertake “best efforts” to ensure that activities conducted by their non-EU subsidiaries do not undermine EU sanctions targeting Russia and Belarus. This requirement, which was introduced in June 2024, raises complex questions about the scope of EU sanctions and their applicability to the activities of non-EU entities.
The Commission previously issued guidance in November 2024 in relation to this “best efforts” obligation (which you can read about in our blog post here). Now, in August 2025, the Commission has published additional guidance which provides further insight into the obligation.
Scope of the obligation
The August 2025 guidance (accessible here) clarifies that while the “best efforts” obligation legally only applies to EU sanctions on Russia and Belarus, the Commission encourages EU operators, as a matter of good practice, to ensure that all entities they own or control do not undermine EU sanctions anywhere in the world.
“Undermining” sanctions explained
The guidance provides an explanation of what “undermining” sanctions means, and how the Commission views this as being different to “breaching” or “circumventing” sanctions:
- Breaching sanctions involves directly or indirectly violating sanctions, such as an EU exporter selling prohibited goods to Russia.
- Circumventing (also referred to as “evading”) sanctions occurs when a party structures transactions to appear compliant while still violating sanctions. For example, a third-country buyer of EU machine tools declares itself the end-user but secretly transfers the goods to Russia.
- Undermining sanctions refers to actions that weaken the effectiveness of sanctions without directly violating them. For example, if an EU exporter has a foreign subsidiary outside the EU that sells prohibited goods to Russia, the EU-based parent company must use its “best efforts” to ensure that its non-EU affiliates do not undermine EU sanctions.
Meaning of “best efforts”
The guidance states that “best efforts” require a higher degree of effort than “reasonable efforts”. The Commission clarifies that this means taking all necessary and feasible actions to prevent the undermining of sanctions. The required level of effort is situation-specific, considering the size, sector, and activities of the business and its affiliates. For example, the Commission acknowledges that where an EU operator cannot control its affiliate (for reasons that it did not cause itself), then it might not be feasible for the EU operator to exercise control over the foreign business.
Suggested compliance steps
The guidance recommends EU businesses to follow a 3-step approach to ensure compliance:
- Risk Assessment: Evaluate your business and any entities you own or control. This involves identifying potential risks and vulnerabilities in operations and supply chains.
- Sanctions Compliance Programme: Implement measures to address identified risks. This includes establishing robust internal controls, conducting regular employee training, and setting up reporting obligations to ensure compliance.
- Plan Ahead: Prepare for potential future sanctions requirements by integrating compliance best practices early. This proactive approach helps mitigate risks and ensures readiness for any changes in the regulatory landscape.
