What Are Sanctions and Embargoes?
Sanctions and embargoes are often used interchangeably and are not clearly distinguished. However, there are indeed a few key differences. Sanctions often involve the imposition of economic or political restrictions, while embargoes, more often than not, involve a complete prohibition on trade or other economic activity. In this post, we will cover both of these topics in detail.
Types of Sanctions:
- Economic Sanctions: These sanctions restrict economic interaction with a state, an organization, or an individual. For example, trade bans, export/import restrictions, asset freezes, and blocking funds.
- Trade and Sectoral Sanctions: It is easy to mix this up with economic sanctions. However, the target of these sanctions is particular trade or economic sectors such as restrictions on imports, energy, or technological goods.
- Travel Bans: These concern the restrictions on the physical movement of specified individuals or groups in order to prevent entry or transit through certain areas.
- Diplomatic Sanctions: These often reduce diplomatic relations such as recalling officials, suspending diplomatic processes, banning diplomatic visits, etc.
- Military Sanctions: As the name suggests, these include measures such as training bans and restrictions on military cooperation.
- Sport Sanctions: These sanctions prevent one country’s people and teams from participating in international competitions. These are often not binding under UN and EU law and are imposed by international sports bodies.
Global Regulatory Bodies:
When it comes to financial matters, AML (Anti-Money Laundering), and CTF (Counter-Terrorism Financing), some of the key authorities are FATF (Financial Action Task Force), Egmont Group, IMF (International Monetary Fund), and UN Security Council.
For markets and securities, the bodies such as IOSCO (International Organization of Securities Commissions), BIS (Bank for International Settlements), Basel Committee on Banking Supervision, and FSB (Financial Stability Board) develop global standards that indirectly support sanctions enforcement.
For trade, customs, and export controls, WTO (World Trade Organization), WCO (World Customs Organization), OECD (Organization for Economic Cooperation and Development) develop and standardize global trade rules.
Often, these bodies cooperate with regulators of relatively different scope such as OFAC (Office of Foreign Assets Control), and OFSI (Office of Financial Sanctions Implementation) in order to maintain global sanctions integrity.
What Is an Embargo?
In simple terms, an embargo refers to a restriction placed on the importation or exportation of goods, currency, or services to another state by a government.
Types of Embargoes:
Total (Comprehensive) Embargo: As the name suggests, this type of embargo bans all imports and exports between one country and the other.
Arms/Military Embargo: These embargoes prohibit the supply, delivery, export, or transfer of all items related to military-related items.
Sector-Specific Embargo: These are focused on a particular sector such as financial services, commodities, or dual-use items. Recently, embargoes on high-tech goods have been on the rise.
Trade Embargoes: Trade embargoes restrict or ban the import and export of specific goods such as oil and luxury goods.
Which Countries Are Currently Sanctioned or Under Embargo?
Russia: Particularly the EU and the US have imposed several sanctions and embargo measures on Russia following the invasion of Ukraine. Recently, the EU adopted its 19th package of sanctions against Russia on 23 October 2025, which includes bans on natural gas imports, transaction bans on key energy firms such as Gazprom and Rosneft, and extensions of export restrictions to Russia’s complexes. Similarly, the United States Department of the Treasury announced sanctions on Russia’s two largest oil companies on 22 October 2025. There had already been a lot of sanctions prior to this, such as the OFAC’s “Ukraine/Russia-related Sanctions” and “Russian Harmful Foreign Activities Sanctions”.
Iran: The European Union’s sanctions regime has been introduced in 2011 as a response to country’s adversarial activities. The sanctions regime is renewed annually and, as of now, will continue until 13 April 2026. In parallel, there are also numerous active sanctions programmes of the US against Iran, some of which even date back to the 1990s.
North Korea: Since 2006, UN Security Council has imposed several sanctions on North Korea such as arms embargo, asset freezes, luxury goods ban, export bans, cap on refined petroleum, banned overseas labor, and more. Furthermore, the EU applies all of these measures and also adds further restrictions such as arms embargo, travel bans, financial sanctions, and sectoral bans.
Of course, these are not the only countries that are under heavy sanctions. There are also countries such as Cuba, South Sudan, Syria, and Venezuela who face strict measures.
What Is the Difference Between a Sanction and an Embargo?
While embargoes are generally more comprehensive such as broad bans on trade, sanctions are more targeted on entities, people, or sectors without affecting the entire country. Furthermore, embargoes are often issued by governments or global bodies and sanctions are often issued by authorities such as UN, EU, or OFAC. However, it should be noted that many authorities can issue both sanctions and embargoes, depending on their mandate.
Why Do the Differences Between Sanctions and Embargoes Matter for Businesses?
Principally, knowing the difference between sanctions and embargoes can allow business to operate in a country if they follow the rules properly. Similarly, operating in a country facing strict embargoes may lead to violations, regulatory penalties, or loss of licenses.
How Should Businesses Comply With Sanctions and Embargoes?
Management Commitment: The compliance with sanctions and embargoes definitely starts from the top. Senior management must show that they view compliance as a top priority. According to OFAC, leadership must allocate resources, appoint qualified personnel (especially a Sanctions Compliance Officer), and cultivate a culture of compliance.
Risk Assessments: Organizations must identify, assess, and understand the sanctions risk. However this should be done based on factors like its business, size, geographic reach, and complexity. This way, an organization can see its vulnerabilities. Furthermore the European Commission also expects these businesses to classify products, assess end-users, and determine whether export licenses are needed.
Name Screening and List Monitoring: One of the best measures a business can take is to screen all customers, suppliers, beneficial owners, and intermediaries against official sanctions lists (UN, EU, OFAC, UK OFSI). It should also be noted that this is a continuous process. Therefore, businesses must conduct screening processes both at onboarding and continuously.
Transaction Screening: In addition to name screening and list monitoring, companies should not neglect screening payments, trade flows, shipments, and financial instruments. This allows them to identify red flags such as suspicious shipping routes, third-country shipments, or sanctioned banks as intermediaries.
Export Control Compliance: Export controls help organizations to determine whether a product or service is allowed to be transferred across borders and this may require them to apply for licences. However, this is not its only advantage. It also proves useful when checking end-users and end-uses. This is very important because it allows organizations to be sure that items do not reach sanctioned military, cyber, or nuclear programs indirectly.
Training and Internal Policies: Since this is a subject that is open to change anytime, employees must continuously receive training that is compatible with the business’ risk exposure and regulatory environment. This is especially important for staff working in sales, logistics, finance or procurement. Businesses should also have written and up-to-date internal policies for new sanctions regimes, embargo announcements, and emerging evasion techniques.
What Are Examples of Businesses Affected by Sanctions or Embargoes?
According to Financial Times, Aiotec GmbH, a German company, was penalized $14.5 million for shipping an Australian petrochemical to Iran. This case shows how any industry could get involved in sanctions/embargo enforcement.
Let’s give another example from the legal sector. According to The Guardian, the Office of Financial Sanctions Implementation (OFSI) fined the law firm Herbert Smith Freehills £465,000. This penalty was a result of its former Moscow office making millions of pounds in payments to sanctioned Russian banks.
How Sanction Scanner Helps with Sanction & Embargo Compliance
Real-Time Screening and Monitoring: As we have mentioned in the previous sections, real-time screening and monitoring makes up a crucial part of sanctions and embargo compliance. Sanction Scanner allows you to conduct name screening against more than 180 countries and 3000 global sanctions lists, PEPs (Politically Exposed Persons) lists, and adverse media sources in real-time. Moreover, you can minimize the false positives and false negatives thanks to our algorithms that detect aliases, misspellings, and fuzzy matches.
Transaction Screening: Sanction Scanner can also monitor transactions that your customers make in real-time to detect suspicious transactions. If such a transaction comes up, it stops it and records the transaction for further investigation. It also allows you to set rules and create scenarios with the rule-writing feature, which reduces the false positives up to 96.99%.
Know Your Business (KYB) Module: Sanction Scanner’s KYB module allows you to see a comprehensive company detail page. This includes directors, executives, other key roles, incorporation status, registration numbers, address, and more. It scans the businesses in a database including more than 76,000,000 KYB data points just in 150 ms. In this way, you can monitor the sanctions, PEPs, and adverse media in real time. Also, it tracks changes continuously. Therefore, you will not miss any changes in ownership, legal status, and potential risk exposure.
This is only a part of what we offer. If you are interested to learn more, do not hesitate to contact us.
