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In 2026 and beyond, a structural shift in global economic governance around sanctions enforcement can be expected. Prior to late 2025, the focus was more on sanctions design and designations as a policy tool for most jurisdictions, given the geopolitical landscape, whereas 2026 could be the year when the focus moves to sanctions enforcement.
In the European Union, this shift can be identified following the entry into force of Directive (EU) 2024/1226 in May 2024, which, among other things, criminalises violations of sanctions and establishes penalties for breaching the Union's restrictive measures. The increased prevalence of cryptocurrencies and other virtual assets may also make it easier to evade sanctions as these decentralised financial tools can enable individuals, organisations and states to move funds across borders without relying on traditional banking systems that are typically subject to international sanctions. With more sanctions enforcement, compliance expectations are materially higher, especially for the financial sector.
Background
Over the past couple of years, there has been a focus on and an increase in the volume and complexity of sanctions issued globally. Jurisdictions such as the United States, the UK and the EU have increased their sanctions designations, in most part, due to geopolitical tensions. Russia has been hit with more than 19 sanctions packages from the EU and other jurisdictions since its invasion of Ukraine in 2022. Iran has also been dealt more sanctions; meanwhile, following the forced removal of its President, Venezuela has had some of its sanctions eased.
According to the LSEG Global Sanctions Index, as of March 2025, there were approximately 82,000 individuals and entities subject to economic restrictions worldwide, a 446 percent increase since the baseline measurement in January 2017. Alongside the rise in number is an increased expectation that financial services, such as banks, investment firms, payment and e-money institutions, and crypto-asset service providers, ensure they do not act in violation of these sanctions. In the EU, there is added pressure to ensure compliance due to the applicability of Directive (EU) 2024/1226, which places bigger consequences for violating sanctions.
Sanctions enforcement within the EU and the member states has been reset following the entry into force of Directive (EU) 2024/1226, which standardised criminal offences for sanctions violations among member states. To ensure the effectiveness of Union restrictive measures and sanctions packages, such as those imposed against Russia and Iran, the EU needed to establish minimum rules defining criminal offences and penalties for their violation. Under the directive, legal persons, such as banks, payment institutions and investment firms, can be held liable for criminal offences in violation of sanctions, and the penalties may include fines of at least either 5 percent of their worldwide turnover or the equivalent of €40m, depending on the criminal offences for which they have been found liable.
In Europe, to date, the largest fine for a sanctions breach was imposed by the UK’s Office of Financial Sanctions Implementation (OFSI), which imposed a €20.47m fine on Standard Chartered Bank in 2020 for issuing loans to a Turkish lender that was a majority-owned subsidiary of the sanctioned Russian state bank, Sberbank.
Member state implementation of the sanctions directive has shown divergence in transposition approaches; however, Germany and the Netherlands are emerging as the enforcement leaders. In the Netherlands, sanctions breaches have long qualified as criminal offences pursuant to the Dutch Sanctions Act and are prosecuted under the Economic Offences Act.
Meanwhile, Germany’s new criminal framework for EU economic sanctions and embargoes, which was adopted in January 2026, accelerates its reform of criminal enforcement for EU sanctions. The German reforms substantially expand criminal liability, strengthen reporting obligations and raise the compliance expectations placed on companies. Germany has opted to apply fixed fines, up to €40m, for intentional breaches of sanctions or supervisory duties related to sanctions violations. Negligent breaches of management’s supervisory duties related to intentional employee offences may now result in a corporate fine of up to €40m, an increase from €10m. Any future enforcement action under this new regime should be monitored to determine whether such substantial penalties could act as an effective deterrent to sanctions evasion, especially given the additional possibility of imprisonment.
Following the introduction of the EU directive, the enforcement of sanctions now takes centre stage. 2025 could be seen as the year that laid the groundwork, with authorities seemingly testing the waters with regard to sanctions enforcement actions. For example, Spain is shifting its approach from an almost exclusive reliance on administrative fines under smuggling and anti-money laundering regulations to criminal investigations under its draft bill to implement Directive (EU) 2024/1226. 2026 could therefore be the year in which authorities will increase their enforcement capabilities and step into their stride. The first real test of harmonised criminal sanctions enforcement within the EU is set to come.
Enforcement from the regulator’s perspective
Enforcement action in 2026 is likely to become more strategic, coordinated and reputationally consequential for firms found to be in violation. In November 2025, the UK published its latest sanctions enforcement update, which brought together recent monetary penalties, disclosure notices and case studies from the OFSI, HM Revenue & Customs and the National Crime Agency. It can be inferred from the update and the types of sanctions that enforcement is intensifying, and the risks of inadvertent breaches are rising, with the OFSI’s expectations that financial institutions self-disclose suspected breaches immediately. The update also indicates that enforcement is targeting financial institutions directly, as the OSFI’s actions include significant fines and public disclosure notices against banks and financial services firms.
The Office of Foreign Assets Control (OFAC) in the US brought an increasing number of enforcement actions in 2025 across financial sectors such as banking, crypto and insurance, when compared with 2024, up by 66 percent. The enforcement actions imposed by OFAC in 2025 also increased in fiscal terms, with fines totalling $243.1m compared with $11.3m in 2024, indicating a massive rise in the severity of financial penalties.
Cross-border regulatory coordination is also expected to increase in 2026, particularly between the US’s OFAC, the UK’s OFSI and the EU and its member state authorities, as enforcement cases span multiple jurisdictions. This will involve coordinated designations and joint enforcement actions to reduce the opportunity for regulatory arbitrage. With the prospect of increased cross-border collaboration in enforcement actions from 2026 onwards, financial institutions operating in multiple jurisdictions will need to ensure that all aspects of their operations are sanctions-compliant, as failure to do so could result in widespread reputational damage and increased scrutiny.
Crypto and sanctions evasion
With the emergence of alternative currency options such as crypto and virtual assets, sanctions authorities will be required to ensure that any loopholes are plugged. Russia’s digital ruble is set to be implemented on a large scale from September 2026. Considering the position that Russia currently holds on the international stage in relation to the war in Ukraine and the imposition of multiple economic sanctions, which have significantly affected Russia’s international settlements and payment infrastructure, the launch of the digital ruble could provide the country with a way to circumvent the sanctions that have been placed on it.
Venezuela has been a country hit with debilitating sanctions on its economy in the last couple of years from multiple jurisdictions, including the United States and the EU, which cut it off from traditional financial channels. Due to this, the government increasingly turned to stablecoins to sell oil, made possible through government-authorised crypto exchanges. The use of cryptocurrency has been seen to have helped the country evade its economic sanctions, with one crypto exchange recently coming under fire for reportedly helping Venezuelans avoid sanctions. Kontigo, a US-based crypto exchange, is facing service cutoffs by banks and payment networks after being reported to have been used as a conduit for moving money in and out of the heavily sanctioned Venezuela. Although sanctions enforcement measures have not yet been imposed on the firm, its reputation has already been severely damaged by its involvement in sanctions evasion. Other financial entities should take note of this situation as it signals what may happen to entities that could be found to be aiding in the evasion of sanctions.
As regulatory oversight of crypto-asset service providers increases with regimes being implemented in the EU and upcoming in the UK, and with cases of crypto and virtual assets being used to help evade sanctions, it is likely that there will be an increased focus on crypto and digital finance in sanctions enforcement in 2026 and beyond to close any loopholes.
Key trends to watch throughout 2026 and beyond
- Increase in criminal prosecutions in the EU under the new harmonised EU framework.
- Larger monetary penalties, especially in the EU.
- Increased targeting of complex ownership structures used to obscure sanctioned parties.
- Tightening sanctions enforcement in the digital asset space, with increased enforcement against crypto exchanges facilitating sanctioned transactions.
- Increased monitoring of virtual currency and stablecoin-based cross-border settlements.
- Sanctions will become more dynamic due to rapid policy shifts in response to geopolitical shifts, as seen in Venezuela.
All financial institutions, including banks, investment firms, payment institutions, e-money institutions and crypto-asset service providers, must assess and improve their sanctions screening capabilities to ensure compliance with sanctions legislation. They must also maintain flexible compliance systems that can implement regulatory changes rapidly to keep up with ever-evolving sanctions packages.
Institutions can also protect themselves by moving beyond surface-level ultimate beneficial owner checks and applying enhanced scrutiny in high-risk jurisdictions, as sanctions are increasingly having cross-border implications. Given what seems like an increase in the focus on enforcement actions targeting financial institutions, the consequences of violating sanctions may be greater than ever.
2026 will be the year where we will continue to see an expansion of the scope, sophistication and personal accountability of sanctions enforcement. This will lead to a stronger global compliance culture and improve financial transparency by reinforcing the credibility of sanctions regimes. However, for financial institutions, it may encourage more cautious risk management practices. They may take more stock of their risk appetite and possibly withdraw from high-risk markets in order to avoid sanctions violations if the consequences are more severe.
