Sanctions 2025

Last Updated August 14, 2025

Denmark

Law and Practice

Authors

Anders Amstrup Fournais
Sarah Bisgaard Møller

Hafnia Law Firm LLP is a boutique firm based in Copenhagen, Denmark, specialising in a few core areas: shipping and trading, offshore and energy, dispute resolution, insurance, and sanctions and export controls. It advises on compliance with EU, UK and US sanctions and provides day-to-day screenings as well as strategic training of employees and assistance with building sanctions compliance programmes. It represents clients in disputes relating to sanctions, including commercial litigation and arbitration, criminal cases and investigations by authorities in matters where allegations of sanctions breaches are levied. Given the wide reach of current sanctions, as part of M&A processes, companies are advised to exercise careful due diligence with respect to possible breach of sanctions by any target company. Hafnia Law Firm provides assistance with pre- and post-merger due diligence to clients engaged in M&A processes.

The sanctions landscape changed fundamentally after Russia’s full-scale invasion of Ukraine in February 2022. A flurry of sanctions packages have been adopted in the last three and a half years by the EU since the outbreak of war in Ukraine. Currently, a total of 17 packages have been adopted. At the time of writing, the legislation for the 18th sanctions package is awaited.

The Sanctions Market has quieted down after a tense period in 2022 and 2023, which was characterised by legislative chaos and confusion as to the scope of the many news sanctions. Sanctions packages are still being adopted in 2025.

There are very few cases of enforcement in Denmark. The authors are generally impressed by the level of due diligence undertaken by market actors, and regret that it is too easy to get away with non-compliance given the lack of enforcement in Denmark.

Businesses are beginning to grasp the extremely wide scope and implications of the sanctions adopted against Russia following the outbreak of war in Ukraine. In addition, the “Harmonisation Directive” (Directive (EU) 2024/1226) came into force in May 2025, requiring EU member states to implement laws as required by the Directive. Owing to Denmark’s reservations regarding the EU treaties governing civil and criminal matters, the Directive is not binding on Denmark and, so far, Denmark has not opted in. Denmark has acted by proposing a bill that strengthens criminal sanctions enforcement by extending time limits for the prosecution to bring criminal proceedings for sanctions violations, and by extending penalty limits – creating a legal basis for longer prison sentences.

As mentioned, lack of enforcement is an ongoing trend. As the EU publishes new sanctions packages, businesses are trying to grasp the implications. Businesses are implementing sanctions compliance programmes and amending existing compliance frameworks to control sanctions risks. Audits are being seen more frequently in 2025, although the general sentiment is that the sanctions might not be that important after all, given the lack of enforcement. There are several issues in this respect – one being the lack of resources of the authorities, and another the fact that competence in relation to sanctions is spread out between many different state authorities.

All sectors that conduct international business, such as banking and finance, insurance, shipping and trade and heavy industry, as well as any form of export or import of goods and technology, are affected by sanctions.

Denmark could in principle enact unilateral sanctions (like Canada or the USA) but does not. Sanctions and export control rules in Denmark emanate from the EU. UN sanctions are binding in Denmark by way of EU law. However, UN sanctions play a less important role in 2025 given the stalemate in the UN Security Council.

EU sanctions apply:

  • within the territory of Denmark and other EU member states;
  • on board ships and aircraft that are registered in an EU member state;
  • to any person who has a Danish passport or a passport of another EU member state, whether they are inside or outside the EU; and
  • to any legal person, entity or body that is incorporated in Denmark or carries out business in Denmark.

In practice, this means that all Danish nationals and Danish companies must comply. Foreign nationals and foreign companies must also comply assuming there is a nexus to Denmark, as described in the foregoing. Foreign subsidiaries of Danish companies need only comply with the sanctions that are applicable in the foreign subsidiary’s jurisdiction, unless the transaction is orchestrated from Denmark or is being carried out in a foreign jurisdiction in order to circumvent EU sanctions.

It remains a common error when interpreting EU sanctions to say that sanctions are breached when in fact they do not even apply in the first place. One should not start at a given article in an EU regulation. As the first step, it must be considered whether there is jurisdiction. To establish jurisdiction for EU sanctions to apply, there must be a nexus to the EU, as set out in the preceding paragraph (see the first and second bullet points in the foregoing). As such, EU sanctions are not extraterritorial. With very limited exceptions, the EU does not have sanctions akin to US secondary sanctions.

In practice, sanctions are imposed only by the EU and the UN.

The Danish Ministry of Foreign Affairs has listed all competent Danish authorities. As can be seen, competence is divided between many different public authorities. The main authorities (regulators) are the Danish Business Authority, the Danish Financial Supervisory Authority, the Danish Ministry of Foreign Affairs, the Danish Customs Authority and the Danish Maritime Authority.

The Danish Security and Intelligence Service (Politiets Efterretningstjeneste; PET) and the Special Crime Unit (National enhed for Særlig Kriminalitet; NSK) are responsible for criminal enforcement in case of sanctions violations. In practice, local police around the country may undertake investigations, and most cases involving a potential breach of sanctions start with the public authorities mentioned in 2.1 Primary Regulators.

Pursuant to Section 110 c of the Danish Criminal Code, breaching sanctions is a serious criminal offence that may result in fines or imprisonment for up to four years (this will be amended to five years, or even up to eight years, of prison if sanctions are violated under aggravating circumstances; this presupposes that the sanctions enforcement bill is passed by the Danish Parliament, which is expected in 2025). This presupposes that a prosecutor can prove beyond a reasonable doubt the intent to breach sanctions. Negligent sanctions breaches are a criminal offence that may lead to fines or imprisonment for up to two years

There are no known civil enforcement actions in respect of sanctions breaches in Denmark in the last three years.

There are no known criminal enforcement actions in respect of sanctions breaches in Denmark in the last three years. See also 3.1 Significant Court Decisions or Legal Developments.

Mitigating steps that can be taken to avoid or lessen penalties for a breach include turning oneself in voluntarily, disclosure and surrendering the fruits of the crime, and co-operation with police and prosecutors. Ensuring that compliance due diligence is implemented can help reduce the risk of sanctions being breached illegally.

Unlike US sanctions, a breach of EU sanctions in Denmark will only become a matter of criminally liability if the sanctions rule was breached intentionally or negligently.

There is no scope to deviate or derogate from EU sanctions unless there is a legal basis to do so in the relevant EU Council Regulation.

There are many specific grounds for licensing across the applicable EU Council Regulation, and it would exceed the scope of this article to list them all. For instance, a payment that has been frozen pursuant to Council Regulation (EU) No 269/2014, Article 2(1) on the grounds that the payment belongs to or benefits a designated person or entity may be released pursuant to the exemptions in Article 4(1)(a) (to satisfy the basic needs of designated persons or of dependent family members) or the exemption in Article 4(2)(b) (to pay for legal services). Other exemptions apply by virtue of Article 4(1)(c)–(e). These exemptions are duplicated across the relevant EU Council Regulations that set out sanctions rules against hostile regimes other than Russia.

Further, there are legal bases in the various EU Council Regulations (against Russia, Iran, Syria, etc) enabling the competent authorities to authorise the release of frozen funds or future transactions that are necessary for medical and pharmaceutical purposes, for humanitarian purposes, to prevent a health crisis or any event that may have detrimental effects on the environment, or to exercise precautionary measures following a natural catastrophe.

There is scope for granting the release of frozen payments to satisfy arbitral awards issued prior to the date that a person or entity was designated. The conditions are strict and include, inter alia, that the payment cannot benefit the designated person or entity.

Licences are enacted for particular policy purposes; for instance, in relation to the Russia sanctions, there is now scope for allowing trade in fertilisers and agricultural products provided the competent authority in an EU member state has approved that sufficient ring-fencing (called “fire-walling” by the EU) measures are in place to ensure that a designated person or entity does not exercise ownership or control over the fertilisers and agricultural products, or any payments made to purchase such products. This is addressed in an EU Guidance Note issued in May 2023. The underlying policy has been stated in Council Regulation (EU) No 833/2014 (see Recital 12 of Council Regulation (EU) 2022/1269: “The Union is committed to avoiding all measures which might lead to food insecurity around the globe. Consequently, none of the measures in this Regulation or any of those adopted earlier in view of Russia’s actions destabilising the situation in Ukraine target in any way the trade in agricultural and food products, including wheat and fertilisers, between third countries and Russia”). There is also authority under Article 6e of Council Regulation (EU) No 269/2014 for the competent authority in Denmark to grant the release of frozen funds after having determined that such funds or economic resources are necessary for the purchase, import or transport of agricultural and food products, including wheat and fertilisers.

It is important to be aware of such policy-driven exemptions.

The description is not exhaustive. Legal advice should be obtained by any party seeking a general licence or a concrete release of frozen funds.

There is no general licence applicable across all EU sanctions for the provision of legal services to designated persons or entities. This obviously must be weighed against the European Charter of Human Rights and the European Convention on Human Rights, which have provisions on access to justice. For this reason, there are exemptions enabling lawyers to represent Russian clients in litigation and arbitration.

There is an important ban under Council Regulation (EU) No 833/2014 prohibiting legal representation of the Government of Russia and legal entities (businesses) in Russia. This does not apply to representation of natural persons in Russia, which has been confirmed by the Danish Bar and Law Society.

In practice, the most important reporting obligation is with respect to asset freezing. This is important for banks that routinely freeze payments that benefit designated persons or entities. Such freezing must be reported to the Danish Business Authority. There are other reporting obligations across the more than 40 EU Council Regulations that contain the current EU sanctions (see, for instance, Article 8 of Council Regulation (EU) No 269/2014), and it would exceed the scope of this article to list them all.

The Dan-Bunkering/Syria case, decided by the Danish courts on 14 December 2021, is to date the only known criminal case on breach of EU sanctions heard by the Danish courts. There have been no significant court decisions in Denmark after the outbreak of war in Ukraine. Criminal investigations and proceedings are underway, but there have been no judgments as of yet.

The Dan-Bunkering/Syria case involves Dan-Bunkering, Bunker Holding and the CEO of Bunker Holding being convicted of the illegal sale of jet fuel for use in Syria. This was a breach of sanctions adopted by the EU in 2014 against Syria. A total of 172,000 tons of jet fuel was sold and used in Syria. The sale was made to two Russian companies that were procurement agents for the Russian military. The jet fuel was delivered in the Mediterranean Sea. The vessels that received the jet fuel sailed to ports in Syria. The court found that there was a clear breach of the Syria sanctions and issued fines of DKK4 million and DKK30 million. The court further confiscated DKK15.6 million, equal to the profit earned by Dan-Bunkering. The circumstances of the sanctions breach were particularly egregious given that the sales had taken place over several years and that the jet fuel was found by the Court to have been used by Russian bombers in Syria. It was US authorities that had tipped off the Danish authorities, and the sale of jet fuel continued even after the Danish authorities had questioned the legality thereof.

In terms of significant legal developments, the sanctions enacted by the EU against Russia and Belarus following the second invasion of Ukraine on 24 February 2024 need no introduction. Currently, 17 sanctions packages have been issued by the EU, and the number is still growing – the 18th package is pending. The scale of the Russia sanctions is unprecedented and imposes risks for all business that have any dealings with Russia. Even businesses that do not have any direct nexus to Russia, such as shipping companies, exporters, banks, insurance companies, etc, need to understand and be aware of the risks involved in breaching the Russia sanctions if the business has cross-border activity.

In 2025, most sanctions against Syria were removed. All major embargoes have been lifted by way of enacting amendment regulations. There are still arms controls in place with limited asset freezes, but – broadly speaking – Syria is open for trade on the world market. This includes banking services, such as transactions with the central bank in Syria, trade in Syrian oil, etc.

It remains to be seen whether the Danish authorities will ramp up their enforcement actions. This is first and foremost a matter of resources.

So far, in practical terms, enforcement has been seen when authorities in Denmark have been tipped off – eg, by the media (such as DanWatch), by banks reporting on asset freezes or by foreign authorities (such as in the Dan-Bunkering case). Danish authorities have not been allocated the resources necessary to undertake independent investigations. One could compare this with the dawn raids that have been seen in cases involving suspected competition law breaches. Those are not (yet) reality in Denmark when it comes to sanctions violations. There are provisions that grant a legal basis to authorities to make a dawn raid, but it remains to be seen whether and when such powers will be put to use. The Danish police obviously are very well equipped to ransack property and take on criminal cases. The NSK is known for being highly ambitious and efficient, and it remains to be seen to what extent they will take on cases involving suspected breaches of EU sanctions.

Directive (EU) 2024/1226, adopted by the European Parliament and the Council on 24 April 2024, establishes comprehensive rules for defining criminal offences and penalties related to the violation of EU sanctions. The Harmonisation Directive is an important step towards more vigorous and efficient enforcement of EU sanctions in all EU member states; however, the Directive is not binding for Denmark. It remains to be seen whether the Danish legislator will opt in by adopting national rules that are rooted in the Harmonisation Directive. This appears unlikely. The deadline for implementation was May 2025, and thus has passed. Instead of turning the Harmonisation Directive into Danish law, the Danish legislator has proposed a bill that ramps up criminal enforcement for sanctions violations by extending the time limits for bringing criminal proceedings, and by extending the maximum prison sentence to five years or up to eight years in case of intentional breaches under aggravating circumstances.

Denmark does not designate persons or entities independently of the EU. Designations under EU sanctions are made by the EU’s executive body, the European Council (EC). Any requests for delisting must therefore be served within the EU.

There is a procedure for the EC to consider a request for delisting, in which it hears the member state(s) that proposed the listing, as well as all other member states. A request for de-listing can be made to the EC but proceedings must be commenced before the General Court within two months of the publication of the listing. The judgment may be appealed to the Court of Justice of the European Union (CJEU).

The CJEU has decided that a third state can also qualify as a “legal person” directly affected by EU sanctions, and can bring an action for annulment even though the EU has no reciprocal right before the courts of third States (Venezuela v Council, C-872/19 P).

In the event of a successful delisting challenge, the relevant person or entity will be removed from the sanctions list. This means the person or entity’s assets will be unfrozen – ie, bank accounts can be used again. There is no legal basis for claiming damages, but the person or entity being delisted can have its costs related to the delisting challenge paid by the EC if the delisting challenge is successful.

How long it might take to obtain delisting depends on the time it takes for the EU litigation to be completed, including any potential appeal to the CJEU. Previous cases show the delisting procedure has taken between 4 and 12 months from the application to the CJEU decision, but it may take longer depending on the circumstances of the case.

The EU has adopted import and export restrictions against Belarus, Iran, Iraq, Libya, North Korea, Russia, the Russian-controlled oblasts of Ukraine (Crimea and Sevastopol, Donetsk, Kherson, Luhansk and Zaporizjzja), Sudan, Syria and Venezuela. A non-exhaustive summary is set out in the following (written jointly for goods and services; further information is available at EUR-Lex).

Russia

For Russia, the restrictions are as follows.

  • Dual-use goods and technology (export): Check Annex I of Regulation (EU) 2021/821 of 20 May 2021.
  • Military goods and technology (export): Check Annex VII of Council Regulation (EU) No 833/2014 of 31 July 2014.
  • Firearms and ammunition (export): Check Annex I of Regulation (EU) No 258/2012 of 14 March 2012 and Annex XXXV of Council Regulation (EU) No 833/2014 of 31 July 2014.
  • Items for use in the oil and gas industry (export): Check Annex II of Council Regulation (EU) No 833/2014 of 31 July 2014. See also Annex X of Council Regulation (EU) No 833/2014 of 31 July 2014.
  • Goods and technology suited for use in aviation or the space industry (export): Check Annex XI of Council Regulation (EU) No 833/2014 of 31 July 2014.
  • Maritime navigation goods and technology (export): Check Annex XVI of Council Regulation (EU) No 833/2014 of 31 July 2014.
  • Iron and steel products (import): Check Annex XVII of Council Regulation (EU) No 833/2014 of 31 July 2014.
  • Luxury goods (export): Check Annex XVIII of Council Regulation (EU) No 833/2014 of 31 July 2014.
  • Goods generating significant revenue for Russia (import): Check Annex XXI of Council Regulation (EU) No 833/2014 of 31 July 2014.
  • Goods that could contribute in particular to the enhancement of Russian industrial capacities (export): Check Annex XXIII of Council Regulation (EU) (EU) No 833/2014 of 31 July 2014.
  • Road transport within the territory of the EU: Check Article 3l of Council Regulation (EU) No 833/2014 of 31 July 2014.
  • Crude oil and petroleum products (import): Check Annex XXV of Council Regulation (EU) No 833/2014 of 31 July 2014.
  • Credit rating services to Russia and Russian persons: Check Article 5j of Council Regulation (EU) No 833/2014 of 31 July 2014.
  • Accounting, auditing, bookkeeping, business and management consulting or public relations services provided to the government of Russia or companies in Russia: Check Article 5n of Council Regulation (EU) No 833/2014 of 31 July 2014.
  • Architectural and engineering services, legal advisory services and IT consultancy services provided to the government of Russia or companies in Russia: Check Article 5n of Council Regulation (EU) No 833/2014 of 31 July 2014.

The Russia sanctions prohibit transactions with, and require the freezing of assets belonging to, parties that are subject to transactions bans under Council Regulation (EU) 833/2014 and parties that are designated pursuant to Council Regulation (EU) 269/2014 and Council Regulation (EU) 2024/2642 of 8 October 2024 concerning restrictive measures, in view of Russia’s destabilising activities.

Belarus

For Belarus, the restrictions are as follows.

  • Firearms and other arms, military goods and technology, etc (export): Check Annex XVI of Council Regulation (EC) No 765/2006 of 18 May 2006; see also Article 1b of Council Regulation (EC) No 765/2006 of 18 May 2006 and Article 1 of Council Decision 2012/642/CFSP of 15 October 2012.
  • Dual-use goods (export): Check Annex I of Council Decision 2012/642/CFSP of 15 October 2012.
  • Equipment that might be used for internal repression (export): Check Annex III of Council Regulation (EC) No 765/2006 of 18 May 2006.
  • Tobacco products (export): Check Annex VI of Council Regulation (EC) No 765/2006 of 18 May 2006.
  • Mineral products (oils, petroleum coke, etc) (import): Check Annex VII of Council Regulation (EC) No 765/2006 of 18 May 2006.
  • Potassium chloride products (potash) (import): Check Annex VIII of Council Regulation (EC) No 765/2006 of 18 May 2006.
  • Wood products (import): Check Annex X of Council Regulation (EC) No 765/2006 of 18 May 2006.
  • Cement products (import): Check Annex XI of Council Regulation (EC) No 765/2006 of 18 May 2006.
  • Iron and steel products (import): Check Annex XII of Council Regulation (EC) No 765/2006 of 18 May 2006.
  • Rubber products (import): Check Annex XIII of Council Regulation (EC) No 765/2006 of 18 May 2006.
  • Certain machinery products (export): Check Annex XIV of Council Regulation (EC) No 765/2006 of 18 May 2006.
  • Goods and technology suited for use in aviation or the space industry (export): Check Annex XVII of Council Regulation (EC) No 765/2006 of 18 May 2006.

Syria

Council Regulation (EU) No 36/2012 of 18 January 2012, concerning restrictive measures in view of the situation in Syria and repealing Regulation (EU) No 442/2011, contains very limited sanctions; they mainly relate to arms control, goods for internal repression and limited designations under asset-freeze provisions. This is the result of the sanctions relief occurring in 2025 owing to the fall of the Assad regime in December 2024.

Iran

For Iran, the restrictions are as follows.

  • Crude oil or natural gas (import): Check Article 3a of Council Decision 2010/413/CFSP of 26 July 2010.
  • Gold, diamonds, etc (import): Check Article 4c of Council Decision 2010/413/CFSP of 26 July 2010.
  • Military goods and technology (export): Check Annex II of Council Regulation (EU) 2023/1529 of 20 July 2023 and Annexes III and VIIA of Council Regulation (EU) No 267/2012 of 23 March 2012.
  • Raw materials (gold, diamonds, aluminium, steel, graphite) (export): Check Articles 4e and 26f of Council Decision 2010/413/CFSP of 26 July 2010 and Article 15 a of Council Regulation (EU) No 267/2012 of 23 March 2012.
  • Telecommunications equipment (export): Check Annex IV of Council Regulation (EU) No 359/2011 of 12 April 2011.

North Korea

For North Korea, the restrictions are as follows.

  • Military goods, technology, arms and related technology (import and export): Check Annex II of Council Regulation (EU) 2017/1509 of 30 August 2017.
  • Aviation fuel (export): Check Annex III of Council Regulation (EU) 2017/1509 of 30 August 2017.
  • Gold, titanium ore, vanadium ore and rare-earth minerals (import): Check Annex IV of Council Regulation (EU) 2017/1509 of 30 August 2017.
  • Coal, iron and iron ore (import): Check Annex V of Council Regulation (EU) 2017/1509 of 30 August 2017.
  • Petroleum products (import): Check Annex VI of Council Regulation (EU) 2017/1509 of 30 August 2017.
  • Copper, nickel, silver and zinc (import): Check Annex VII of Council Regulation (EU) 2017/1509 of 30 August 2017.

Sudan

For Sudan, restrictions apply to military goods and technology (export): check Article 1 of Council Decision 2014/450/CFSP of 10 July 2014.

Libya

For Libya, the restrictions are as follows.

  • Military goods, arms and related equipment used for internal repression (export): Check Article 1 of Council Decision (CFSP) 2015/1333 of 31 July 2015.
  • Goods that could be used for the smuggling of migrants and trafficking in human beings (export): Check Annex VII of Council Regulation No 36 of 18 January 2012.
  • Military goods, arms and related equipment used for internal repression (import): Check Article 3 of Council Decision (CFSP) 2015/1333 of 31 July 2015 and Annex IA of Council Regulation No 36 of 18 January 2012.
  • Crude oil and petroleum products (import): Check Article 6 of Council Regulation (EU) No 36 of 18 January 2012.

Venezuela

For Venezuela, restrictions apply to military goods, arms, equipment used for internal repression and related goods (export): check Articles 1 and 3 of Council Decision (CFSP) 2017/2074 of 13 November 2017.

Iraq

All proceeds from export sales of petroleum, petroleum products and natural gas from Iraq, as listed in Annex I of Council Regulation (EC) No 1210/2003, shall – as of 22 May 2003 – be deposited into the Development Fund for Iraq under the conditions set out in United Nations Security Council (UNSC) Resolution 1483 (2003), particularly paragraphs 20 and 21 thereof.

Any export from Iraq or dealings in Iraqi cultural property – and other items of archaeological, historical, cultural, rare scientific and religious importance – shall be prohibited: Check Annex II of Council Regulation (EC) No 1210/2003 of 7 July 2003.

Specifically relating to the import of timber, EU companies also need to be aware of the EU Timber Regulation (Regulation (EU) No 995/2010 of 20 October 2010), which sets out due diligence procedures to be undertaken by companies involved in the trading of timber in the EU.

Concerning goods, see 5.1 Services.

There are no publicly available Danish court decisions that confirm that sanctions are a bar to the performance of contractual obligations, but it is the authors’ opinion that sanctions may well constitute force majeure, subject to the circumstances of the case and the provisions of the contract.

Pursuant to Article 11 of Council Regulation (EU) No 269/2014 and Council Regulation (EU) No 833/2014, no claims in connection with any contract or transaction whose performance has been affected by the Russia sanctions shall be satisfied, if such claims are made by any Russian person, entity or body – or by another person, entity or body acting on their behalf. Similar provisions apply across EU sanctions; see, for instance, the Belarus sanctions pursuant to Council Regulation (EC) No 765/2006, Article 8d.

These provisions mean that, if a contract or transaction is contrary to sanctions, a party in Russia or Belarus (or any party acting on their behalf) may not sue the non-Russian/non-Belarusian party for performance.

Even beyond the scope of these provisions (eg, if the transaction does not involve parties in countries subject to sanctions), issues of force majeure could arise if a contract or transaction is affected by the imposition of sanctions.

Enforcement issues have not been dealt with by the Danish courts.

There are no competent bodies for making designation decisions in Denmark. Sanctions designation takes place within the EU.

The development of sanctions regimes within the EU is a complex process involving different actors. All decisions to adopt, amend, lift or renew sanctions are taken by the EC following examination in the relevant EC working groups. EU member states are responsible for the implementation of all sanctions within their respective jurisdictions.

The High Representative of the Union for Foreign Affairs and Security Policy contributes through his/her proposals to the development of the Common Foreign and Security Policy (CFSP). Together with the EC, the High Representative ensures the unity, consistency and effectiveness of action by the EU in the area of CFSP.

The European External Action Service (EEAS) assists the High Representative/Vice President in fulfilling his/her mandate and has a key role in the preparation, maintenance and review of sanctions, as well as in the associated communication and outreach activities, in close co-operation with member states, relevant EU delegations and the European Commission.

Concerning the legislative process of the EC regarding sanctions, the EEAS has a particular role to play. This includes preparing, on behalf of the High Representative, proposals for a decision and, jointly with the Commission, proposals for regulations that are subsequently reviewed and adopted by the EC. Decisions are binding on the member states themselves. Regulations are directly applicable within the EU and are binding on individuals and entities, including economic operators.

For its part, the Commission presents proposals, jointly with the High Representative, for regulations. Once regulations are adopted, the Commission works to facilitate their implementation in the EU and addresses questions of interpretation by economic operators.

The Commission is responsible for ensuring the uniform application of sanctions.

There are no provisions in Danish law specifying the indirect designation of persons or entities as a result of their being “owned or controlled” by a directly designated person.

The sanctions regimes – eg, against Russia, Iran and Belarus – contain provisions requiring the freezing of assets that are owned or controlled by designated persons or entities.

Entities that are “owned or controlled” by designated persons or entities may themselves become designated. However, any such designation will only be made as a matter of policy, and to make it clear to the market that the person or entity in question is sanctioned. The point is that, even without any express designation, any person or entity that is owned or controlled by a sanctioned person or entity will already be subject to sanctions.

The criteria for “ownership”, to be taken into account when assessing whether a legal person or entity is owned by another person or entity, are as follows:

  • the “owning” person or entity possesses more than 50% of the proprietary rights of the other person or entity; or
  • the “owning” person or entity has a majority interest in the other person or entity (see the definition provided for in EC Regulation 2580/2001, Article 1). If this criterion is satisfied, it is considered that the legal person or entity is owned by another person or entity.

The criteria to be taken into account when assessing whether a legal person or entity is controlled by another person or entity, alone or pursuant to an agreement with another shareholder or other third party, could include, inter alia:

  • having the right or exercising the power to appoint or remove a majority of the members of the administrative, management or supervisory body of such legal person or entity;
  • having appointed, solely as a result of the exercise of one’s voting rights, a majority of the members of the administrative, management or supervisory bodies of a legal person or entity who have held office during the present and previous financial year;
  • controlling alone, pursuant to an agreement with other shareholders in or members of a legal person or entity, a majority of shareholders’ or members’ voting rights in that legal person or entity;
  • having the right to exercise a dominant influence over a legal person or entity, pursuant to an agreement entered into with that legal person or entity, or to a provision in its Memorandum or Articles of Association, where the law governing that legal person or entity permits it being subject to such agreement or provision;
  • having the power to exercise the right to exert a dominant influence, as referred to in the previous bullet point, without being the holder of that right;
  • having the right to use all or part of the assets of a legal person or entity;
  • managing the business of a legal person or entity on a unified basis while publishing consolidated accounts; or
  • sharing jointly and severally the financial liabilities of a legal person or entity, or guaranteeing them.

If any of these criteria are satisfied, it is considered that the legal person or entity is controlled by another person or entity, unless the contrary can be established on a case-by-case basis.

The fulfilment of the foregoing criteria of ownership or control may be refuted on a case-by-case basis.

If ownership or control is established in accordance with the foregoing criteria, making funds or economic resources available to non-listed legal persons or entities that are owned or controlled by a listed person or entity will, in principle, be considered analogous to making them indirectly available to the latter, unless it can be reasonably determined – on a case-by-case basis using a risk-based approach, and taking into account all of the relevant circumstances, including the criteria further outlined in the Council’s Best Practice Guidelines – that the funds or economic resources concerned will not be used by or be for the benefit of that listed person or entity.

The latest guidance on asset freezes and designations can be found in the Council Publication titled “EU Best Practices for the effective implementation of restrictive measures”, dated 3 July 2024.

The EU Council Regulations that set out the EU’s sanctions contain the following provision: “It shall be prohibited to participate, knowingly and intentionally, in activities the object or effect of which is to circumvent”.

This provision has been addressed in guidelines such as the European Commission’s FAQs; see Chapter A.2 on “Circumvention and due diligence”.

Several other notes or guidelines have been issued, such as the European Commission’s “Guidance for EU operators: Implementing enhanced due diligence to shield against Russia sanctions circumvention”.

In practice, businesses will need to understand the rules in order to be able to make a general risk assessment. Once this is done, businesses can implement due diligence procedures that take into consideration any signs of sanctions circumvention.

Circumventing sanctions is a breach of sanctions, and any breach of EU sanctions is a criminal offence under Danish law that can lead to fines, imprisonment and confiscation.

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Trends and Developments


Authors

Anders Amstrup Fournais
Sarah Bisgaard Møller

Hafnia Law Firm LLP is a boutique firm based in Copenhagen, Denmark, specialising in a few core areas: shipping and trading, offshore and energy, dispute resolution, insurance, and sanctions and export controls. It advises on compliance with EU, UK and US sanctions and provides day-to-day screenings as well as strategic training of employees and assistance with building sanctions compliance programmes. It represents clients in disputes relating to sanctions, including commercial litigation and arbitration, criminal cases and investigations by authorities in matters where allegations of sanctions breaches are levied. Given the wide reach of current sanctions, as part of M&A processes, companies are advised to exercise careful due diligence with respect to compliance by any target company’s possible breach of sanctions. Hafnia Law Firm provides assistance with pre- and post-merger due diligence to clients engaged in M&A processes.

Denmark is a coastal state. In fact, Denmark is a nation of many islands. Being a member of the United Nations Convention on the Law of the Sea, Denmark has certain obligations regarding ships flying the flag of other convention states. This includes the right of innocent passage, which is a cornerstone in public international law and the law of the seas.

The right of ships to enjoy immunity from confiscation and be granted safe passage when sailing through the waters of a coastal state is not an unlimited right. In 2024 and 2025, the most highly debated issue in Denmark within the area of sanctions compliance has been how Denmark and the EU shall control and mitigate the risks posed by the growing number of shadow fleet vessels that are being utilised by Russia to carry crude oil and refined oil products from Russia to states such as India and China.

There are several risks inherent to the operation of the shadow fleet of tankers when in Danish waters. It is a clear trend in recent sanctions packages (especially the 15th, 16th and 17th packages adopted by the EU in December 2024, February 2025 and May 2025, respectively) that tanker vessels are increasingly being listed. Listings are done pursuant to Article 3s of EU Council Regulation 833/2014. The listing criteria were crafted in light of concerns expressed by the International Maritime Organization (IMO) in Resolution A.1192(33), which states the following in paragraph 1:

“...for the purpose of this resolution, ‘dark fleet’ or ‘shadow fleet’ mean ships that are engaged in illegal operations for the purposes of circumventing sanctions, evading compliance with safety or environmental regulations, avoiding insurance costs or engaging in other illegal activities, which may include:

  • carrying out unsafe operations which do not adhere to international regulations and well-established and strict industry standards and best practices;
  • intentionally avoiding flag State and port State control inspections;
  • not maintaining adequate liability insurance or other financial security;
  • intentionally avoiding commercial screenings or inspections;
  • not operating under a transparent corporate governance policy that assures the welfare and safety of those on board and the protection of the marine environment; or
  • intentionally taking measures to avoid ship detection such as switching off their AIS or LRIT transmissions or concealing the ship’s actual identity when there is no legitimate safety or security concern sufficient to justify such action...”

Ships that are used deliberately to breach and circumvent sanctions are not permitted to conduct any business having nexus with the EU and are thus eligible for listing. This also applies to businesses within the EU that materially aid said tankers’ illegal operations.

Interestingly, the listing criteria are much broader, and include not only ships that are operated in breach of sanctions but also ships that pose a threat to the environment of EU coastal states. The authors have therefore seen ships be sanctioned not because they are seen to carry Russian oil in breach of the price cap, but because they are engaged in other illegal operations such as not maintaining adequate liability insurance or evading compliance with environmental regulations.

Once a ship is sanctioned, it cannot interact in any way with Danish and European service providers, except pilots granting safe pilotage through narrow straits – eg, Oresund which is a strait between Denmark and Sweden that many tankers transit through when travelling from Russia to third countries.

Nonetheless, even sanctioned ships enjoy innocent passage and continue to steam through Danish and European waters en route to a consignee in, for example, China or India.

One might consider that the fact that the ship cannot be bunkered, or receive fresh water or other services such as a crew change, when travelling from Russia to Suez is a tremendous “stress factor” for the crew and her operations department, pushing the tolerable limits and thus amplifying the risk of a serious casualty that could result in a catastrophic oil spill.

Thankfully, such casualties have not been seen, but there have been cases where shadow fleet vessels have run aground, such as the tanker Andromeda Star, which was later sanctioned by the EU.

The Andromeda Star Case

Andromeda Star is an Aframax crude oil tanker flying the flag of Panama. This tanker is part of the Russian “ghost fleet”, or shadow fleet, transporting Russian crude oil and violating international sanctions.

For a long time, Andromeda Star was reported as having been sold to undisclosed interests. At one point, the vessel was listed as being owned by a Seychelles incorporated entity managed by a one-man company in Goa, India.

Until November 2022, Andromeda Star was covered by standard insurance and undergoing regular port-control inspections in Western ports. In 2023, the ship was sold to Margao Marine Solutions as operator, and Algae Marine as owner, after which she underwent no further port-control inspections until her later accident with Peace.

Andromeda Star and the smaller multipurpose freighter Peace (IMO 9553983) collided on 2 March 2024 in Oresund, which, as already mentioned, is a strait between Denmark and Sweden. The collision caused only minor damage, but Andromeda Star had to stay in a Danish shipyard for around a week. The incident caused a stir in both Denmark and the EU. Andromeda Star was en route to the port of Primorsk, Russia, to load Russian crude oil. The ship was not carrying the cargo of oil she would have been carrying had she been travelling in the other direction. In other words, she was in a ballast. Had the collision occurred when she was in a laden condition, it is highly likely – according to experts – that there would have been a leak causing considerable environmental harm in Danish waters.

The Danish Maritime Authority inspected the vessel and requested copies of the vessel’s insurance certificates. In maritime law, there are rules on the prevention of oil spills. Ship-owners assume strict liability (ie, no-fault based liability) for oil spills. The tanker and her owner must prove to the coastal state that they have taken out valid liability insurance. This is evidenced by the vessel’s insurers issuing so-called blue cards, which are kept onboard and with the flag state.

Panama, as flag state, responded to the Danish Maritime Authority by providing copies of blue cards issued by the Russian insurance company Ingosstrakh. Thus, on paper, Andromeda Star was insured for pollution liability. The question is: were those blue cards really worth the paper they were written on?

Industry experts state that 90% of Russian oil exports are sold in violation of the price cap, meaning the products are sold at higher prices than those permitted under the price cap.

There are standard sanctions compliance clauses in most insurance contracts. However, maritime law rules on pollution liability prohibit the ship-owner and the liability insurers from agreeing on any clauses that limit or exclude the insurer’s liability towards the coastal state. In other words, Ingosstrakh was not permitted to limit its liability in the event of an oil spill by virtue of specific exclusion clauses in the insurance contract. The blue card serves as evidence of valid and binding insurance, and liability cannot be limited vis-à-vis the coastal state.

That did not stop Ingosstrakh from making disturbing statements to the public about the lack of valid insurance cover. In an article published by The Financial Times, Ingosstrakh stated that, in the event of an oil spill – if the oil is of Russian origin and sold in violation of the price cap – Ingosstrakh would not provide cover or pay restitution for a massive clean-up bill. Specifically, Ingosstrakh stated the following: “...we have sanctions clauses in our insurance policy, and if it turns out there is a sanctions breach, we will not be providing cover”. It is interesting to see a Russian-sanctioned insurer invoking a breach of Western sanctions as justification for evading insurance coverage.

The Problem With Russian Insurers

As mentioned, limitation clauses in an insurance contract cannot be invoked vis-à-vis the coastal state in case of an oil spill. The relevant maritime laws allow the coastal state to sue the ship-owner and the insurers in the courts of the coastal state. Judgments affirming liability can be obtained, and the ship may be arrested and sold at judicial auction; however, its value will be de minimis compared to the size of the clean-up bill. This is where the blue cards come into play. But what will the state of Denmark do to enforce a Danish judgment against a sanctioned Russian insurance company? Such company will surely not have assets outside of Russia, and in practice, it will be impossible to enforce the judgment in Russia. There is, therefore, a real risk that Ingosstrakh and other Russian insurers could effectively evade liability – even if that outcome was not intended under the maritime laws on pollution liability in case of oil spills.

It seems that any shadow fleet tanker vessel with Russian insurance should be banned from entering Danish waters – even for safe passage – if such tanker is insured by Ingosstrakh or other Russian insurers. Regrettably, that is not the case: no real action is being taken. The shadow fleet poses a constant threat to Denmark’s maritime and coastal environment and continues to be insured by predominantly Russian insurance carriers, such as Alfa Strakhovanie PLC (Moscow), SOGLASIE Insurance Company Ltd, JSC Balance Insurance (Russia), Ingosstrakh Insurance Company (Russia), Insurance Company Arsenal (Kyrgystan), IJSC VSK (Russia), Insurance Company Sberbank Insurance LLC, JSC SOGAZ (Russia) and Rosgostrakh Insurance Company (Russia). Even though it will likely be impossible to make these insurers pay in case of an oil-spill, to the best of the authors’ knowledge, Denmark, as a coastal state, has not banned any vessels from entering Danish waters if they have insurance coverage from these Russian insurers.

Non-Russian Insurers

Many shadow fleet vessels are covered by Maritime Mutual Insurance Association (NZ) Limited. While this may not be a Russian insurer, and despite claiming to operate from a green and friendly country (New Zealand), Maritime Mutual Insurance Association (NZ) Limited is not trusted by any reputable party in the global insurance market. The leading maritime insurers across the world do not trust Maritime Mutual Insurance Association (NZ) Limited and will not accept sureties therefrom. Nevertheless, the coastal state of Denmark does not take issue with vessels that hold blue cards issued by Maritime Mutual Insurance Association (NZ) Limited.

In 2025, it was revealed how the Norwegian-based insurer, Ro Marine AS Norwegian Shipowners Association BLD, had deceived the entire market, including public maritime authorities. On the face of it, Ro Marine AS Norwegian Shipowners Association BL appeared to be a legitimate Norwegian marine insurance company issuing statutory certificates and operating from offices in Oslo. In reality, however, the blue cards and other insurance documents issued by the company were fake; there were no employees, no insurance cover and no financial backing – nothing, in fact. Questionable flag states such as Sierra Leone, Gabon, Djibouti, Palau, Cook Islands Guinea-Bissau, Gambia, São Tomé and Príncipe allowed vessels to operate under Ro Marine AS Norwegian Shipowners Association BLD’s insurance cover. It remains a mystery as to why Denmark, as a coastal state, has not objected to vessels sailing under Ro Marine insurance. Although Danish media reported in March 2025 that Ro Marine was fraudulent, vessels continued to transit through Danish and Scandinavian waters during March, April and May without any objections from the authorities, to the best of the authors’ knowledge.

Postscript

The largest bank in Denmark, Danske Bank, was quick to adopt a policy – following the invasion of Ukraine in February 2022 – of not allowing wire transfers in or out of Russia, even if the transactions were not prohibited by sanctions.

Businesses have wound down their operations in Russia and sold off production facilities, among other things, at great losses, arguing that it was the “right thing to do”.

As can be seen from the foregoing, aside from the legal ambit of sanctions, self-sanctioning is a “big thing”. How can it be that, in so many areas of business and economic life, Russian interaction is banned as either illegal or unethical, whereas Denmark, as a coastal state, continues to allow rusty old ghost tankers to steam through Danish waters with phony, fraudulent or even sanctioned Russian insurance cover? It is common knowledge that, in the event of a major casualty, it will be impossible to make these insurers pay, yet as a coastal state Denmark continues to tolerate this situation. The question is why?

The answer is obviously political. The EU has made it very clear that standing with Ukraine is only one of many interests; there are multiple competing interests that cannot be fully aligned, so compromise must be reached.

Taking sanctions action that hampers the financing of the Russian war machine will always have side-effects. There has been no political appetite to enact full-scale embargoes against Russian liquefied natural gas and oil products, because such measures would cause prices to skyrocket and lead to shortages in oil markets, affecting every household and business across the EU.

Still, Danish authorities should step up and vigorously enforce sanctions, and safeguard its marine environment, by not allowing tankers laden with Russian oil to steam through Danish waters if such vessels are insured by a Russian provider.

Hafnia Law Firm LLP

Nyhavn 69
1051 Copenhagen
Denmark

+45 20 62 38 62

aaf@hafnialaw.com www.hafnialaw.com
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Law and Practice

Authors

Anders Amstrup Fournais
Sarah Bisgaard Møller

Hafnia Law Firm LLP is a boutique firm based in Copenhagen, Denmark, specialising in a few core areas: shipping and trading, offshore and energy, dispute resolution, insurance, and sanctions and export controls. It advises on compliance with EU, UK and US sanctions and provides day-to-day screenings as well as strategic training of employees and assistance with building sanctions compliance programmes. It represents clients in disputes relating to sanctions, including commercial litigation and arbitration, criminal cases and investigations by authorities in matters where allegations of sanctions breaches are levied. Given the wide reach of current sanctions, as part of M&A processes, companies are advised to exercise careful due diligence with respect to possible breach of sanctions by any target company. Hafnia Law Firm provides assistance with pre- and post-merger due diligence to clients engaged in M&A processes.

Trends and Developments

Authors

Anders Amstrup Fournais
Sarah Bisgaard Møller

Hafnia Law Firm LLP is a boutique firm based in Copenhagen, Denmark, specialising in a few core areas: shipping and trading, offshore and energy, dispute resolution, insurance, and sanctions and export controls. It advises on compliance with EU, UK and US sanctions and provides day-to-day screenings as well as strategic training of employees and assistance with building sanctions compliance programmes. It represents clients in disputes relating to sanctions, including commercial litigation and arbitration, criminal cases and investigations by authorities in matters where allegations of sanctions breaches are levied. Given the wide reach of current sanctions, as part of M&A processes, companies are advised to exercise careful due diligence with respect to compliance by any target company’s possible breach of sanctions. Hafnia Law Firm provides assistance with pre- and post-merger due diligence to clients engaged in M&A processes.

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