Russia’s invasion of Ukraine triggered extensive sanctions and tighter export controls across many jurisdictions. Australia enforces two types of sanctions: United Nations Security Council (UNSC) sanctions which are imposed by the UNSC and Australia is obligated to implement them as a matter of international law; and those imposed and implemented autonomously by the Australian Government as a matter of Australian foreign policy. Australia imposes autonomous sanctions in relation to Russia in response to the Russian threat to the sovereignty and territorial integrity of Ukraine. 

Australia’s Sanctions Framework

Indirect Russia Exposure

For Australian businesses, Russia-related sanctions risk is not limited to direct trade or other commercial activities with Russia. In practice, compliance challenges often arise through indirect exposure, particularly where a counterparty, service provider, or key asset is Russian-owned or Russian-controlled and targeted financial sanctions operate to freeze such assets. This can create significant practical challenges across supply chains, even when goods are not entering or leaving Russia.

A business doesn’t need to be exporting to Russia for Russia-related sanctions risk to arise. Instead, the risk often comes from who owns or controls the companies or assets involved in the transaction. So even if an Australian or New Zealand company is doing business entirely in, say, Singapore, Dubai, Germany, or Australia, sanctions issues can still appear because a party in the chain is Russian-linked.

Operational Impacts for Trade and Logistics

These indirect connections can create a range of operational problems for businesses, even where the underlying trade is legitimate. Transactions may be flagged through sanctions screening processes, particularly where ownership or control links exist to designated Russian persons, entities, or assets. This includes entities owned or controlled by designated persons, not just those named directly. This can trigger escalation to compliance teams, legal review, and in some cases the need to pause or restructure the transaction. 

Payments are also frequently affected, as banks and financial institutions may adopt “de-risking” approaches by restricting or terminating relationships connected to parties or regions perceived as high-risk, rather than managing the exposure on a case-by-case basis. As a result, routine trade finance, insurance arrangements, or settlement of freight costs can be delayed or blocked. 

Beyond these practical impacts, organisations must also manage reputational and governance risk. Boards, regulators, and commercial partners increasingly expect strong due diligence and transparency to ensure supply chains are not inadvertently supporting sanctioned actors, meaning even indirect Russia exposure can attract heightened scrutiny.

Tightening of circumvention controls

Australia, New Zealand, and key international partners including the EU, UK, and United States have increasingly tightened their focus on sanctions circumvention risks. Regulators are paying closer attention to indirect supply routes, the use of third-country transhipment hubs, and attempts to obscure the true origin, destination, or ownership of goods and assets. This includes heightened scrutiny of so-called “shadow fleet” shipping arrangements, where vessel ownership structures and registration practices may be used to conceal Russian-linked involvement. As a result, businesses engaged in international trade and logistics are expected to apply stronger due diligence across the full supply chain, not only on direct counterparties but also on intermediaries and transport arrangements.

Regulators have highlighted that Russia-related sanctions circumvention is not limited to energy exports. Published enforcement actions and advisories show a broader range of diversion and intermediary risks.

In 2025, the US Department of Commerce’s Bureau of Industry and Security added multiple intermediary firms to the Entity List after determining they had diverted or attempted to divert controlled US-origin electronics and semiconductor-related items to Russia through third-country supply routes, highlighting how high-tech components can be re-exported or relabelled to disguise the ultimate destination.

Sanctions imposed by the EU, United States and other partners prohibit the sale, supply or transfer of aircraft, aircraft parts, engines, maintenance and related technical support to Russian airlines or for use in Russia. The European Commission’s measures, for example, explicitly ban the export of all aircraft equipment and prohibit related repair, maintenance and financial services where these benefit Russian carriers or aircraft being used in Russia. Under these measures, Western manufacturers have suspended parts shipments, technical support and maintenance services to Russian operators. Regulators have also emphasised contractual safeguards such as “no re-export to Russia” clauses, to prevent parts or maintenance support being routed indirectly through third countries or leasing structures to evade sanctions. Despite these prohibitions, customs and investigative reporting indicate that sanctioned aviation components continue to reach Russian operators through intermediary markets and re-shippers, underscoring the importance of robust due diligence across supply and leasing chains.

How Sanctions and Export Controls Intersect

This type of indirect Russia exposure also highlights the close relationship between sanctions and export controls. Even where a shipment is not destined for Russia, Australian exporters must still consider whether the goods, software, or technical data fall within the Defence and Strategic Goods List (DSGL), requiring permit assessment and controls on onward supply. Compliance becomes more complicated when US-origin defence articles or technical data are involved, as the International Traffic in Arms Regulations (ITAR) treat Russia as a proscribed destination under Part 126.1, with a strong policy of denial. A “policy of denial” means that if someone applies for a licence to send ITAR-controlled items or technical data involving Russia, the US government will almost always refuse approval.

In practice, a freight movement involving a Russia-linked vessel owner, terminal operator, or cargo financier may trigger both sanctions screening and export control escalation, particularly where sensitive technology or dual-use items are present. This reinforces the need for integrated end-to-end supply chain compliance.

Importantly, sanctions may block a transaction even where export controls would permit it, while export controls may still impose licensing requirements even in the absence of sanctions.

New Zealand: dedicated Russia sanctions regime

New Zealand’s Russia Sanctions Act and associated Regulations impose prohibitions and restrictions on a range of specified activities connected to Russia and Belarus, including restrictions on exporting certain classes of goods, services, and assets to, or for the benefit of, sanctioned parties. These measures operate alongside New Zealand’s wider trade and foreign policy controls and reflect the growing international alignment on Russia-related restrictions. For businesses operating across both Australia and New Zealand, the compliance challenge is not simply a matter of “choosing” one sanctions regime over another. Firms must maintain a single, integrated workflow that can demonstrate appropriate screening, escalation, decision-making, and approvals across both jurisdictions. 

This is increasingly important given the broader global sanctions environment, where exposure may also arise under US, UK, EU, or UN regimes through ownership structures, financial channels, or supply chain touchpoints. A consistent and well-documented approach helps ensure businesses manage sanctions risk effectively across borders. Strong screening, beneficial ownership checks, and integrated sanctions/export control processes are now essential for routine cross-border trade.

Embedding Sanctions and Export Controls into Operations

In the Russian context, sanctions and export controls have become an everyday operational issue for internationally connected businesses, particularly in trade, logistics, aviation, and technology supply chains. The key risk is often not a direct shipment to Russia, but indirect exposure through ownership structures, intermediaries, financing arrangements, or third-country routing. Regulators across Australia, New Zealand, and partner jurisdictions are increasingly focused on circumvention pathways, meaning businesses must look beyond the immediate customer to the broader ecosystem of vessels, terminals, insurers, repair networks, and end-users involved. Where controlled goods or US-origin technology are present, the compliance threshold rises further, with Russia treated as a hard-stop jurisdiction under regimes such as ITAR. A defensible approach therefore requires integrated screening, beneficial ownership diligence, export classification awareness, and clear escalation processes embedded into routine trade workflows, not applied only at the final point of export.