26 November 2025
4 min read
#Dispute Resolution & Litigation
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The Centre for Research on Energy and Clean Air, a non-profit group based in Finland, has released an estimate that Australians bought $3.8 billion worth of petrol and diesel produced from Russian crude and refined in India between February 2023 and June 2025, as cited in the Sydney Morning Herald. This has been described as a ‘loophole’ in Australia’s compliance with trade sanctions imposed on Russia, as it allows the purchasing of oil processed in third party countries and then sold in Australia.
In an increasingly complex geo-political environment, the Australian Government appears to have demonstrated greater commitment to the enforcement of sanctions under Australian law.
The 2024-25 Federal Budget saw an allocation of more than $25 million to the Australian Sanctions Office, bolstering the authority’s ability to enforce private sector compliance with sanctions.
For businesses operating within Australia and across foreign borders, the results of non-compliance with Australian sanctions laws can be reputationally and financially extreme. It is therefore essential for businesses to comply with the Australian sanctions framework.
Sanctions cover a broad range of economic restrictions and travel bans imposed on foreign nations, entities and individuals by the Australian Government. Sanctions are punitive in nature and are employed as a non-forceful means of responding to global crises.
In Australia, sanctions fall within two categories:
The former category covers sanctions which are imposed by the United Nations Security Council. The latter category includes all other sanctions which respond to the national interest.
Both categories of sanctions are monitored and enforced by the Australian Sanctions Office (ASO).
Australian sanctions broadly apply to:
As a result, companies that are incorporated in Australia and trade overseas, or incorporated overseas and trade in Australia must comply with Australian sanctions law.
A distinct framework of sanctions applies to each situation of international concern. Sanctions may apply to a particular nation, theme, group or individual.
Currently, the ASO monitors and enforces more than 20 sanction frameworks.
By way of example, the Russian sanctions framework applies restrictions on trade with Russia in response to the invasion of Ukraine. Among other things, the framework makes it an offence to:
It is a serious criminal offence to contravene a sanctions law or to breach a condition of a sanction permit. For companies, sanctions offences are strict liability offences. This means that a company may be found guilty of an offence without the need to establish any fault, knowledge or intent.
The penalties for sanctions offences are significant. Businesses that commit a sanctions offence may receive a fine of up to $3.3 million or three times the value of the impugned transaction.
Given the breadth of sanctions imposed by Australian law, businesses need to take a proactive approach to compliance.
Businesses should begin by reviewing each sanction framework and familiarising themselves with the ‘Consolidated List’ of sanctioned individuals and entities published by the ASO on their website.
Businesses should then identify whether they trade with any nation, entity or individual currently sanctioned under Australian law. As part of this process, businesses should consider whether their trading partners may be owned or controlled by sanctioned nations, entities or individuals.
It is also prudent for businesses to assess whether the goods, assets or services that they trade are frequently sanctioned under Australian law. Such goods include arms, crude oil, and luxury goods.
Following this assessment, businesses should conduct a risk assessment and draft a compliance policy.
Finally, businesses who propose to trade with a sanctioned nation, entity, or individual must apply to the Minister for Foreign Affairs for a sanctions permit – noting that the Minister cannot grant a sanctions permit unless it is in the ‘national interest’ to do so.
If you have questions about how Australian sanctions laws impact your business or you need support with developing a compliance program, please contact us here.
Disclaimer
The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate.
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