Sanctions evasion: when can an export transaction become a criminal case?

In the spring of 2026, EU sanctions enforcement reached a new level. The EU activated its so-called anti-circumvention tool against a third country for the first time, while member states are now required to handle the violation and circumvention of EU restrictive measures within a more unified criminal law framework. Concurrently, OLAF uncovered a suspected cross-border sanctions circumvention scheme involving more than 760 vehicles across several member states.

These developments are particularly important for companies that do not export directly to Russia or Belarus, but to third countries such as those in the Caucasus, Central Asia, or Turkey. In today's sanctions environment, it is no longer sufficient to simply check the destination country listed on the invoice, contract, or customs document. Authorities are increasingly examining whether the exporter could have recognized the risk of resale or sanctions circumvention based on the circumstances.

Therefore, for Hungarian companies exporting to third countries, sanctions risk assessment is no longer merely an administrative compliance task. In certain cases, it can become a matter of contractual, regulatory, reputational, executive, and even criminal liability.

What do we mean by sanctions circumvention?

EU sanctions regulations against Russia and Belarus do not only restrict direct exports. In many cases, it is also prohibited for a company to indirectly supply prohibited products, technologies, or services to a sanctioned destination through a third country, an intermediary, or a seemingly neutral trade chain.

Consequently, a Hungarian exporter may face liability risks even if the transaction is formally destined for, for example, Georgia, Kazakhstan, Kyrgyzstan, Turkey, or the United Arab Emirates, but the product ultimately ends up in Russia or Belarus.

In practice, the question is not solely whether the exporter explicitly intended to ship to Russia. It is at least as important whether there were circumstances that should have reasonably alerted them to the risk of resale or sanctions circumvention, and what documented compliance steps were taken in response.

Warning signs may include, for example, if the buyer is a newly established company with no significant industry history, the order volume does not align with their local market, the payment or logistics route is unusual, the end-user cannot be identified, or the product category is known to be involved in re-exports to Russia.

For most companies, the problem is not a conscious desire to violate sanctions. The real risk often stems from a lack of integration between sales, logistics, financial, and legal decision-making, leaving the company unable to retrospectively demonstrate the information upon which the transaction was approved.

What changed in 2026?

Three parallel developments have transformed the sanctions compliance landscape.

The first is the activation of the EU's anti-circumvention tool. The EU's 20th sanctions package applied this tool for the first time: it prohibited the export of certain high-risk products, particularly CNC machines and radios, to Kyrgyzstan, given that trade data showed a significant increase in their re-export to Russia.

The message is clear: if a third country consistently acts as a channel for sanctions circumvention, the EU can now move beyond targeting specific individuals or companies and can instead specifically restrict the export of certain products to that country.

The second development is the harmonization of the criminal law framework. EU Directive 2024/1226 establishes minimum rules for the criminal prosecution of violations and circumvention of EU restrictive measures. Member states were required to transpose these rules by May 2025, and the Commission has launched infringement procedures against several member states for delayed or incomplete transposition.

In Hungary, the criminal relevance of sanctions violations was not previously unknown, as the violation of international economic prohibitions has long been a distinct offense in the Criminal Code. The significance of the EU directive and the related national amendments lies in the fact that sanctions violations and circumvention behaviors are now being placed within a more unified, stricter framework that also better addresses the liability of legal entities.

The third development is the dramatic strengthening of enforcement. In January 2026, OLAF coordinated an international investigation involving several member states, which uncovered the suspected sanctions-circumventing export of over 760 vehicles. The practical lesson from this case is that authorities do not necessarily stop at the declared destination country. Using customs data, logistics documents, trade information, and cross-border cooperation, they are able to reconstruct the actual supply chain.

Why is this important for Hungarian exporters?

For a long time, sanctions compliance seemed primarily to be an issue for banks, financial institutions, or large multinational corporations. This approach is no longer tenable.

Sanctions risk does not only affect classic military or dual-use products. For vehicles, spare parts, machinery, industrial equipment, electronic devices, software, technology services, and certain luxury goods, re-export risks can also arise that the exporter must address in advance.

Exporting to a third country is, of course, not illegal in itself. The goal is not for businesses to stop legitimate foreign trade. The risk arises when, based on the circumstances of the transaction, it is reasonable to suspect that the final destination of the product is actually a sanctioned country, yet the exporter fails to conduct proper due diligence or document their decision.

What can a business do to mitigate this risk?

The goal is not to increase the amount of paperwork, but to demonstrate actual and documented due diligence.

The most important steps:

- obtaining an end-user statement or end-user certificate, in which the buyer declares the intended use of the product and confirms that it will not be resold to a sanctioned country;

- implementing a contractual re-export ban that explicitly prohibits resale, brokering, or making the product available in violation of sanctions regulations;

- screening customers, partners, and end-users based on sanctions lists, ownership structures, affiliated companies, and publicly available information;

- conducting logistics and payment checks, especially if the shipping route, the payer, the delivery address, or the place of receipt deviates from a commercially reasonable model;

- establishing an internal decision-making process based on red flags, which defines when legal or compliance approval is required to proceed with a transaction;

- implementing internal policies and training so that sales, logistics, and finance staff can recognize typical signs of sanctions evasion.

It is important to note, however, that an end-user certificate or a contractual re-export ban does not provide immunity on its own. These are only effective if the exporter also conducts a genuine risk assessment based on the buyer, the product, the route, the payment terms, and the economic rationale of the transaction.

In practice, it is equally important that the company's decision can be reconstructed after the fact. In the event of a future investigation by authorities, banks, a parent company, or criminal investigators, the main question will not be whether the company took sanctions seriously in general, but what information was available at the time of the specific transaction, who made the decision, what risk factors were identified, and what actions were taken in response.

When can it become a criminal case?

An export transaction enters the zone of criminal risk when it is not merely a matter of administrative oversight, but involves circumstances suggesting that the exporter knowingly participated in sanctions evasion or failed to take meaningful action despite obvious red flags.

Such a situation may arise, for example, if a business sells goods in a prohibited category to a high-risk third country, the buyer cannot verify the actual end-use, the logistics chain is implausible, the goods are moved toward Russia within a short period, or internal company correspondence shows that the risk was perceived but ignored for business reasons.

The criminal classification naturally depends on the specific facts of the case, the nature of the product, the applicable EU regulations, the relevant Hungarian criminal law provisions, and the provable intent.

Our experts can help with risk analysis

Exporting to a third country can no longer be automatically considered a low-risk transaction simply because the buyer is not a Russian or Belarusian company. The EU and member state authorities are paying increasing attention to re-export and sanctions evasion risks.

For businesses, the decisive question is therefore not whether they have eliminated every risk, but whether they have identified the warning signs, performed the necessary checks, and properly documented their decisions.

Those who do this will be in a significantly better position to handle any future regulatory or criminal investigation. Conversely, those who export to higher-risk markets without a meaningful sanctions risk assessment will find it increasingly difficult to claim that they could not have foreseen the risk of resale.