Sanctions Screening & Cross-Border Transactions: The Sanctioned Shipment

May 22 / Leonard Nwogu-Ikojo
In this fictional case study, a flagged €1.4 million transaction forces Ella Baines, Head of Compliance at an EU-based paytech firm, to act fast. What initially looked like a standard cross-border payment turns out to involve an entity newly added to the EU Sanctions List. This article explores how Ella responded—and what her actions reveal about the importance of proactive sanctions screening in today’s complex regulatory environment.

This article is intended for educational and informational purposes only and does not constitute legal, regulatory, or professional compliance advice. The scenario and recommendations provided are illustrative and may not capture all applicable requirements or risks in specific cases. Readers should follow their organization’s internal policies, data protection requirements, and seek professional advice tailored to their circumstances.

Sanctions are restrictive measures (economic, financial, trade) imposed by bodies like the EU or UN to achieve foreign policy and security goals. Robust sanctions compliance is essential for financial institutions to avoid severe administrative penalties from national authorities, potential criminal prosecution under EU Member State laws, asset freezes, transaction blocks and significant reputational damage.

Crucially, screening systems must be regularly updated to reflect the evolving sanctions landscape. EU firms should screen against:


  • The EU Consolidated Financial Sanctions List.
  • UN Sanctions Lists (as implemented within the EU).


Ella’s Proactive Compliance Measures:


  • Immediate Action:Halted the transaction upon initial alert of potential sanctions exposure.
  • Deep Dive:Conducted a thorough ownership and control screening to identify indirect exposure through the transaction chain.
  • Clear Escalation:Promptly reported the issue to senior management and the compliance committee.
  • Regulatory Readiness:Prepared a draft report for the relevant national competent authority.
  • Control Enhancement:Initiated a review to strengthen internal screening rules against indirect risks.


Leveraging Technology for Enhanced Sanctions Compliance:

Ella’s team employs essential compliance tools:


  • Specialized screening software
  • Automated, real-time screening of counterparties and transaction pathways.
  • Targeted and up-to-date staff training on EU sanctions risks and regulations.


Why it matters

In recent sanctions enforcement actions, the Netherlands has seen significant penalties for companies failing to adequately screen cross-border transactions. In February 2025, a Dutch company was fined €120,000 for exporting machinery to Crimea, violating EU sanctions related to Russia’s illegal annexation of the region. Similarly, in October 2024, Dutch companies and individuals faced penalties for supporting the construction of the Kerch Bridge in Crimea, a project linked to Russian military expansion. These cases highlight the importance of robust sanctions screening systems, emphasizing the risks of indirect involvement with sanctioned regions and entities. As sanctions regulations continue to evolve, companies must ensure their compliance frameworks are up-to-date to avoid severe legal, financial, and reputational consequences.

Conclusion

Sanctions compliance in the EU requires vigilance beyond direct list checks. It necessitates a careful examination of ownership, transaction routes, and intermediaries. Ella’s swift and comprehensive response highlights the importance of a proactive, risk-aware approach to upholding EU sanctions law. EU compliance professionals should regularly review their screening protocols to address potential indirect exposures.


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