Noerr | 18th EU sanctions package tightens restrictions on banks and also targets third countries

A. Background

On 18 July 2025, following intensive negotiations, the Council of the European Union adopted the 18th sanctions package against Russia and Belarus. The package aims to further restrict the Russian state’s capacity for action and to increase the pressure on its regime. Once again, the focus lies on the banking, energy and defence sectors. In addition, the EU adopted new restrictive measures against Belarus.

B. Content of the 18th sanctions package

The new EU sanctions package* extends the existing restrictive measures against Russia and Belarus.

I. Comprehensive measures in the financial sector

The most significant new measure is a comprehensive ban on transactions with certain financial institutions: The ban in Article 5h of Regulation (EU) No 833/2014 – known as the SWIFT exclusion and previously limited to specialised financial messaging services – has now been converted into a comprehensive transaction ban.

The ban covers both direct and indirect transactions with entities listed in Annex XIV and their Russian subsidiaries. Limited exceptions and licensing options are available. These include inter alia transactions that are strictly necessary for divestment from Russia or the winddown of business activities there, and transactions with Bank Zenit for the payment for specific goods or the performance of contracts until the beginning of 2028. The banks previously excluded from the SWIFT system are affected, as well as additionally listed financial institutions. In total, 45 banks are covered by the new restriction, including 22 institutions listed for the first time. Notably, many of the banks listed in Annex XIV were not previously subject to financial sanctions under Regulation (EU) No 269/2014 (e.g. Uralsib Bank PJSC, Bank Sinara JSC and, of the newly added banks, Bank Zenit PJSC). This is another reason why the transaction ban represents a significant tightening of sanctions with regard to the financial market.

In addition, the EU introduced a comprehensive ban on all transactions with the Russian Direct Investment Fund (RDIF) and its sub-funds and certain companies financed by them, extending the existing prohibition on investing in or participating in projects co-financed by the RDIF.

The EU thus continues on its trajectory of introducing broad transactions prohibitions: The transaction ban introduced in the 14th sanctions package on credit and financial institutions as well as crypto-asset service providers contributing to the circumvention of sanctions (Article 5ad in conjunction with Annex XLV of Regulation (EU) No 833/2014) has now been extended to entities not related to crypto-asset services (Article 5ad (1) (c)). In addition, for the first time, two entities have been designated in Annex XLV. Notably, these are two Chinese financial institutions, which are said to have contributed significantly to the circumvention of sanctions. This is a clear signal towards third countries.

On the other hand, this extension makes company-related sanctions more complex: In addition to the established provisions of asset freezes and the prohibition to make funds and economic resources available pursuant to Annex I of Regulation (EU) No 269/2014, and the transaction ban pursuant to Article 5aa in conjunction with Annex XIX of Regulation (EU) No 833/2014, an additional level of sanctions is being created, the scope and relationship of which to existing prohibitions must be carefully examined. Companies are therefore increasingly required to determine the sanctions classification of their contractual partners and to assess the relevant authorisation requirements, for example under Article 5h of Regulation (EU) No 833/2014.

In parallel, the Council has introduced a new export ban on certain software management systems used in banking and finance. This includes software for online banking, loan processing, automated teller machines and point-of-sale (POS) systems.

II. Further measures in the energy sector

In the energy sector, the EU continues to pursue the goal of substantially reducing Russia’s energy revenues.

A central element of the 18th sanctions is the reduction of the oil price cap from USD 60 to USD 47.60 per barrel. This is accompanied by a dynamic adjustment mechanism under which the cap will be reviewed every six months to ensure that the price of Russian crude oil remains at least 15 % below the global average market price.

Moreover, sanctions may be imposed on companies that transport, insure, finance, or otherwise facilitate the movement of Russian oil sold above the price cap. This applies in particular to shipping companies, insurers and providers of technical and financial services. In addition, the EU introduces a ban on transactions with third-country companies involved in circumventing the oil-related sanctions.

Furthermore, the new sanctions package once again targets Russia’s shadow fleet and adds another 105 ships to the sanctions list. Also in the spotlight is an Indian refinery whose main shareholder is the Russian state-owned company Rosneft.

III. Measures to restrict Russia’s military capacities

To further limit Russia’s military capacities, the Council extended the export restrictions on dual-use goods and technologies. 26 new entities are now subject to further export restrictions, including eleven entities based in third countries such as China, Hong Kong and Turkey. In addition, the EU introduced export bans on military-related technologies, including CNC machines and chemical components used in fuel production. The existing transit ban through Russian territory for economically critical goods has likewise been extended.

Furthermore, the export bans under Article 3k of Regulation (EU) No 833/2014 have been extended. For example, the export of all goods falling under HS Chapter 76 (aluminium and products thereof) is now generally prohibited. Transitional arrangements have been put in place for newly listed goods.

IV. Additional listings of persons and entities

The EU has also listed 14 additional persons and 41 entities posing a threat to the territorial integrity, sovereignty and independence of Ukraine in Annex I of Regulation (EU) No 269/2014. This brings the total number of listed entities to over 2,500.

V. Measures against Belarus

The measures against Belarus have also been tightened. Eight additional entities from the Belarusian military-industrial complex have been listed. In addition, the EU introduced an import ban on military goods and a comprehensive ban on transactions with Belarusian financial institutions. The aim is to align the Belarusian sanctions framework with the regime applicable to Russia.

C. Outlook

The 18th sanctions package marks a further step towards the economic isolation of Russia. While Kremlin representatives continue to project a stance of composure, the new sanctions architecture is likely to have significant long-term effects on Russia’s financial and energy infrastructure . At the same time, the EU sends a clear signal of unwavering support for Ukraine.

For companies with international business relationships, the entry into force of the 18th sanctions package substantially increases the compliance requirements. In particular, the complex structure and differentiated system of prohibitions in the financial and banking sector necessitate careful legal assessment.

* With regard to Russia, Regulation (EU) 2025/1494 amending Regulation (EU) No. 833/2014 and Implementing Regulation (EU) 2025/1476 amending Regulation (EU) No. 269/2014 were adopted. With regard to Belarus, the sanctions package includes Regulation (EU) 2025/1472 and Implementing Regulation (EU) 2025/1469 amending and implementing Regulation (EC) No. 765/2006.

Compliments of Noerr – a Platinum Member of the EACCNY