International sanctions evasion: Four tactics to track

As sophisticated financial criminals continue to challenge the integrity of the global financial system by circumventing sanctions, a new Financial Action Task Force (FATF) report takes a detailed look at this complex problem, and uncovers some key evasion tactics. 

The 2025 FATF report, Complex proliferation financing and sanctions evasions schemes looks beyond general alerts and examines the sophisticated techniques employed by both state and non-state actors engaged in sanctions evasion. 

The report draws attention to methods commonly used to construct complex, multi-layered networks of illicit activity that are often highly resistant to detection and disruption. 

Four principal categories of evasion tactics include:

• Misusing corporate structures

Perpetrators frequently establish intricate networks of front and shell companies across multiple jurisdictions to obscure the path of dual-use goods and their connection to financial transactions. This tactic effectively breaks the chain of evidence.

The use of intermediaries plays a significant role in the circumvention of sanctions and export control regulations. Multiple case studies mention this tactic with one highlighting the case of a European company that attempted to export UAV-compatible motors through intermediaries in the Middle East and Central Asia. Although the declared destination was a country in Central Asia, strong indicators suggested the goods were ultimately intended for Russia. After authorities raised concerns, the company withdrew the shipment, resuming exports a year later using intermediaries in the Balkans and Asia - both of which have strong commercial ties to Russia. 

This case underscores an urgent need for robust cross-border transparency and wider collaboration. 

• Obscuring beneficial ownership

Bad actors can exploit opaque corporate structures and use nominee arrangements to mask the true identity of the individuals controlling assets. This frustrates essential Know Your Customer (KYC) and due diligence processes.

The FATF advocates for centralised, verified and easily accessible beneficial ownership registries, along with stronger penalties for non-compliance and false declarations. Without these reforms, financial institutions will remain unable to fully understand the true risk profiles of their clients.

• Exploiting virtual assets

The pseudonymity and speed of cryptocurrencies offer a compelling alternative to the traditional financial system, enabling illicit actors to transfer funds rapidly while bypassing conventional regulatory oversight.

The FATF shines a spotlight on cases where state-sponsored hacking groups and IT workers have laundered stolen cryptocurrency (amongst other crimes), for example, to generate revenue and contribute to the Democratic People's Republic of Korea’ s  weapons of mass destruction and ballistic missile programmes.

• Manipulating the maritime and trade sectors

Deceptive shipping practices – including falsifying documents, disabling vessel tracking systems, reflagging vessels to jurisdictions with weak oversight and conducting clandestine ship-to-ship transfers – can be used to move prohibited goods and circumvent trade-based controls.

Real life examples noted in the report include ship-to-ship transfers in international waters to deliver goods or oil to and from sanctioned regions. These tactics are flagged not only by the disabling of AIS (Automatic Identification System ) transponders, but also by geodata and satellite imagery. Bills of lading and cargo manifests may also be altered to hide the true nature of cargo routed through multiple ports.

The FATF’s findings are a clear call to action: a reactive compliance approach is not enough. 

The report serves as an important reminder that sanctions evasion is not a theoretical risk, it is an evolving threat. With this in mind, here are four proactive steps you can take to protect your organisation:

• Promote enhanced public-private partnerships for real-time intelligence exchange, particularly around corporate transparency and virtual assets.
• Ensure that virtual asset providers are licensed and monitored.
• Use technology and global cooperation to detect deceptive shipping practices and enhance maritime oversight.
• Deliver training and technical assistance to jurisdictions with limited resources.

Perhaps most importantly, mitigating the growing risk of sanctions evasion requires collective action – and as illicit actors become ever-more sophisticated, the international community must respond with equal resolve and innovation. The time to act is now.