Sanctions, Sovereignty & Supply Chains: 2025’s Legal Flashpoints Multinationals Must Master

Sanctions, Sovereignty & Supply Chains: 2025’s Legal Flashpoints Every Multinational Must Master

August 29, 2025 9:55 pm

In 2025, the global landscape is defined by profound geopolitical fragmentation, heightened uncertainty, and significant volatility. A persistent, coordinated challenge to the post-Cold War order by nations like China and Russia has created a more contested and less predictable international environment. This new era is driven by the rise of populist policies, a strategic push for ‘economic sovereignty,’ and unresolved conflicts in Ukraine and the Middle East, all of which strain a global economy already facing higher inflation and lower growth prospects. For multinational corporations, this translates into an unprecedentedly complex compliance environment where legal, financial, and reputational risks are magnified.

The most critical challenge emerging from this landscape is the convergence of multi-regulator sanctions and export controls. [1] [2] [3] In the first half of 2025 alone, powerhouse regulators in the US, EU, and UK issued a record 12 major sanctions or export-control packages, a 60% year-over-year increase. This regulatory arms race is not just a matter of volume; it’s a strategic shift. Regulators are increasingly using extraterritoriality as a geopolitical tool, projecting their laws across borders to enforce foreign policy, with the EU’s 18th Russia package blacklisting 11 Chinese and Turkish firms for “indirect” support. This creates a minefield for businesses, where compliance with one jurisdiction can trigger penalties in another, demanding a new level of integrated geopolitical risk management. The median Fortune 500 firm’s spending on this compliance has already more than doubled since 2022 to 0.9% of revenue, and this is expected to climb another 30-40% as regulators deploy AI-driven monitoring.

1. 2025 at a Glance — Fragmentation, inflation, and legal brinkmanship redefine global commerce

The overarching theme of 2025 is a new era of profound geopolitical fragmentation and volatility, where strategic competition has become the default state of international relations. Several key drivers shape this environment: the rise of populist policies in major economies, a strategic push for ‘economic sovereignty’ through protectionism and subsidies, the ongoing war in Ukraine, and unresolved tensions in the Middle East.

The economic impact is one of significant strain and disruption, leading to structurally higher inflation and lower growth prospects. Persistent and costly disruptions at critical maritime chokepoints, such as the Red Sea and the Panama Canal, have dramatically increased shipping costs and insurance premiums, straining global supply chains. [4]

This geopolitical friction is fueling a significant disintegration of international law norms, giving rise to what is described as ‘global lawlessness.’ Major powers are perceived to be selectively applying international law to suit their interests, which encourages further disregard for established rules by other actors. This is exemplified by direct challenges to international institutions, such as US sanctions against ICC judges and accusations of double standards in the legal responses to conflicts in Ukraine versus Gaza.

2. The Globalization of Regulation — Extraterritorial rules become the new geopolitical battleground

A unifying global theme in 2025 is the expanding extraterritorial reach of national and regional regulations, where powerful economic blocs—particularly the United States and the European Union—project their laws and standards beyond their own borders. This is not merely a legal phenomenon but a core instrument of modern geopolitical competition. By imposing their rules on foreign transactions, investments, and technology, these powers aim to enforce foreign policy objectives, protect national security, and shape global markets to their advantage. This trend forces multinational corporations to navigate a complex and often contradictory web of overlapping legal obligations, where compliance with one jurisdiction’s laws may risk violation of another’s, dramatically increasing legal uncertainty and compliance complexity.

Brussels vs. Washington vs. London: Table comparing scope, penalties, and reach of 2025 flagship laws

The key takeaway is that compliance is no longer a siloed, country-by-country exercise. A single transaction can now fall under the simultaneous jurisdiction of multiple, powerful regulators with divergent goals, creating a high-risk environment for any global business.

Corporate Pain Points: Conflicting mandates on tech, human rights, and finance

The extraterritorial application of these regimes creates significant operational friction for multinational corporations. A US-based cloud provider, for instance, may be prohibited by US export controls from allowing a Chinese subsidiary to access certain advanced AI models, while simultaneously being required by the EU AI Act to provide transparency and documentation for that same model if its outputs are used by customers in the EU. [6] [1]

Similarly, financial institutions face a maze of conflicting obligations. A European bank may be required under the EU’s 18th sanctions package to block transactions with a Chinese bank using Russia’s SPFS financial messaging system. However, this action could expose the bank to potential countermeasures under China’s anti-foreign sanctions laws. This forces companies into a difficult position, where compliance with one set of laws could trigger penalties under another.

3. Sanctions & Export Controls Convergence — Why multi-regulator alignment is 2025’s most complex compliance threat

The landscape of international economic sanctions and export controls in 2025 is highly dynamic, complex, and high-stakes. The converging and diverging approaches of key regulators—primarily the United States (OFAC, BIS), the European Union, and the United Kingdom (OFSI)—in response to geopolitical events involving Russia, China, and Iran are creating unprecedented challenges. This environment is characterized by new enforcement tactics, expanding extraterritorial reach, and the growing challenge of secondary sanctions, with critical implications for multinational corporations across all sectors.

Record-Setting Enforcement Data: 12 packages, $7.4 bn in fines YTD

The pace and severity of enforcement have escalated dramatically. In the first half of 2025, the US, EU, and UK collectively issued 12 major sanctions or export control packages. This includes the EU’s 16th, 17th, and 18th packages against Russia, and significant new US export controls on technology. Global penalties for sanctions violations have already surpassed $7.4 billion year-to-date. OFAC has demonstrated its willingness to impose extraterritorial enforcement, issuing its largest monetary penalty of the year, $20 million, against a Thailand-based company for violating Iran-related sanctions. [12]

Secondary-Sanctions Minefield: Case studies of Chinese banks hit by EU SPFS ban

A critical development in 2025 is the EU’s expansion of secondary sanctions. The 18th sanctions package, adopted on July 18, 2025, introduced a new prohibition on transactions with entities outside Russia that use Russia’s System for Transfer of Financial Messages (SPFS), the country’s alternative to SWIFT. The regulation explicitly named two Chinese entities, Heihe Rural Commercial Bank Co., Ltd., and Heilongjiang Suifenhe Rural Commercial Bank Co., Ltd., for their role in facilitating transactions that undermine EU sanctions.

This action signals a significant strategic shift for the EU, demonstrating a new willingness to target non-EU companies in non-EU countries to enforce its foreign policy goals. For global banks and corporations, this means that dealing with any entity that uses SPFS, regardless of its location, now carries direct EU sanctions risk. This requires a fundamental reassessment of counterparty risk and due diligence processes, particularly for firms with operations in Asia and the Middle East.

Action Framework: Five-step playbook for risk mapping, screening, licensing, monitoring, and remediation

To navigate this environment, companies must adopt a proactive and integrated compliance framework. A simple checklist approach is no longer sufficient.

1. Risk Mapping: Conduct a comprehensive, enterprise-wide assessment to identify all points of exposure to US, EU, and UK sanctions regimes. This must go beyond direct operations to include supply chains, joint ventures, third-party vendors, and financial counterparties.

2. Enhanced Screening: Implement multi-tiered, AI-driven screening protocols for customers, suppliers, and partners. Screening should not only check against official sanctions lists (e.g., OFAC’s SDN List, the EU’s Consolidated List) but also look for red flags like complex ownership structures, use of shell companies, or operations in high-risk jurisdictions. [13]

3. Dynamic Licensing Management: For dual-use goods and technologies, establish a centralized system to track evolving export control classifications (e.g., US ECCNs, EU Control List numbers) and licensing requirements across jurisdictions. This system must be agile enough to adapt to frequent regulatory changes, such as the US rescission of the AI Diffusion Rule in May 2025. [14]

4. Continuous Monitoring: Deploy technology to continuously monitor transactions and supply chain activities for potential sanctions violations or circumvention attempts. This includes monitoring for deceptive shipping practices like AIS manipulation, a key focus of the Price Cap Coalition’s guidance. 15

5. Scenario Planning & Remediation: Develop and test robust response plans for various geopolitical scenarios, such as the sudden imposition of new sanctions on a key market or supplier. This includes having pre-defined protocols for contract termination, asset freezes, and voluntary self-disclosure to regulators.

4. Continental Hot-Spots — Key legal developments every GC should track

The overarching themes of geopolitical fragmentation and regulatory competition are playing out differently across the globe. Corporate leaders must monitor these regional flashpoints to anticipate risks and opportunities.

North America: Tech Controls, Trade Friction, and Defense Spending

• US-China Tech Rivalry Intensifies: The US continued its campaign to limit China’s access to advanced technology. A significant interim final rule from the Bureau of Industry and Security (BIS) controlling advanced computing ICs and AI model weights (ECCN 4E091) became effective on January 13, 2025, but was dramatically rescinded on May 13, 2025, by the new administration, citing concerns it would stifle US innovation. Despite the rescission, BIS maintained a high level of regulatory risk by issuing new guidance on the dangers of using PRC-made ICs.

• US-Canada Trade Disputes Flare: In March-April 2025, the U.S. imposed a 25% duty on Canadian non-energy goods and a 10% duty on energy goods, citing the International Emergency Economic Powers Act (IEEPA). It also re-imposed 25% duties on Canadian steel and aluminum and added new 25% duties on automobiles, citing national security under Section 232. Canada has initiated a formal CUSMA dispute challenge.

• NATO Defense Spending Surge: At the Hague Summit on June 25, 2025, NATO allies, including the U.S. and Canada, committed to spending 5% of their GDP annually on defense by 2035. This signals a massive, long-term opportunity for the defense and aerospace sectors.

• USMCA Labor Enforcement: A dispute panel ruled against a Mexican call center on August 21, 2025, for denying workers’ rights, demonstrating the U.S.’s strong commitment to enforcing the USMCA’s innovative Rapid Response Labor Mechanism.

Europe: Sanctions Escalation, Digital Regulation, and Defense Industrialization

• EU’s 18th Russia Sanctions Package: Adopted on July 18, 2025, this package significantly tightened measures. It lowered the crude oil price cap to $47.60 per barrel, expanded sanctions on the ‘shadow fleet’, and, for the first time, targeted Chinese entities for aiding Russia’s military-industrial complex.

• Digital and AI Acts Take Hold: Key provisions of the EU AI Act became applicable in February and August 2025, imposing significant compliance obligations on any company using AI in the EU. Concurrently, the EU began aggressive enforcement of the Digital Markets Act (DMA), fining Apple €500 million and Meta €200 million on April 23, 2025.

• CBAM Final Transitional Year: 2025 marks the final year of the Carbon Border Adjustment Mechanism’s transitional phase. From January 1, 2025, importers must use the EU’s specific methodology for calculating embedded emissions, increasing the administrative burden ahead of the full fiscal regime in 2026.

• New European Defence Policies: In May-June 2025, the EU launched the European Defence Industry Programme (EDIP), a €1.5 billion fund, and the ‘Security Action for Europe’ (SAFE) instrument, which will provide up to €150 billion in loans for joint defense procurement, creating major opportunities for European defense firms.

Asia: Tech Controls, Maritime Tensions, and Assertive Industrial Policy

• China’s Data Security Enforcement: Beijing aggressively enforced its domestic data security regime in 2025. New security measures for facial recognition technology took effect on June 1, mandating separate consent and data localization. New rules for National Network Identity Authentication Services, effective July 15, also mandate domestic storage of important data.

• Red Sea Security Crisis: Houthi attacks on commercial shipping resumed with lethal consequences in July 2025, with attacks on the vessels ‘Magic Seas’ and ‘Eternity C’ resulting in fatalities. The UN Security Council responded with Resolution 2787, condemning the attacks and extending the mandate for reporting on the situation.

• South China Sea & Taiwan Strait Tensions: Throughout 2025, both Taiwan and China conducted numerous short-notice, live-fire military exercises, disrupting shipping. Tensions also flared at the Second Thomas Shoal in August 2025, with the Philippines reporting a surge in Chinese activity, including water cannon drills.

• India’s Industrial Policies: India continued to implement policies to boost domestic manufacturing. The ‘import management system’ for IT hardware was extended until December 31, 2025, and the country is finalizing its Digital Personal Data Protection Rules, which will impose significant new compliance obligations.

Africa: Shifting Blocs, Resource Control, and Debt Restructuring

• ECOWAS Approves Sahel Withdrawal: On February 13, 2025, the Economic Community of West African States (ECOWAS) officially approved the withdrawal of Niger, Mali, and Burkina Faso, formalizing a major rift in the regional bloc.

• DRC Suspends Cobalt Exports: The Democratic Republic of Congo implemented a temporary suspension of cobalt exports on February 22, 2025, and extended it on June 21, to stabilize depressed global prices, raising questions about its legality under the DRC’s Mining Code.

• AfCFTA Implementation Advances: The African Continental Free Trade Area saw progress, with the AU Assembly approving a final extension for rules of origin negotiations to October 2025 and Ethiopia gazetting its tariff concessions on August 15, 2025.

• Sovereign Debt Crisis: In May 2025, the African Union’s first Debt Conference resulted in the Lomé Declaration, calling for reforms to the G20’s Common Framework for Debt Treatment as countries like Ghana and Zambia navigate complex restructuring negotiations.

• Mining Law Reforms: In June 2025, both South Africa and Zimbabwe advanced major overhauls of their national mining laws, reflecting a broader trend of resource nationalism.

South America: Legal Sovereignty, Deregulation, and Regional Integration

• Brazil Asserts Legal Sovereignty: On August 18, 2025, Brazil’s Supreme Court ruled to prevent the automatic application of foreign judicial decisions, prohibiting states and municipalities from initiating new lawsuits abroad on matters like mining disasters.

• Argentina Deregulates Mining: In July-August 2025, Argentina enacted decrees to simplify its Mining Investments Regime and eliminate export duties for 225 mining products, though strategically excluding lithium and silver.

• Chile Advances Lithium Strategy: On August 8, 2025, Chile’s Ministry of Mining concluded a mandatory indigenous consultation process for a new lithium project, establishing a key legal precedent for securing social license to operate.

• MERCOSUR-EFTA Free Trade Agreement: On July 2, 2025, the MERCOSUR bloc and the EFTA states concluded negotiations on a comprehensive free trade agreement, set to create a free-trade zone of nearly 300 million people.

Australia-Oceania: AUKUS, Privacy Reform, and Pacific Diplomacy

• AUKUS Implementation: New controls under Australia’s Defense Trade Controls Amendment Act 2024 were enforced from March 1, 2025, creating a streamlined, license-free defense trade environment with the UK and US. This was solidified by the bilateral ‘Geelong Treaty’ signed on July 26, 2025.

• Australia Overhauls Privacy Laws: Australia implemented the Privacy and Other Legislation Amendment Act 2024, with changes taking effect through 2025. A key change empowers the government to create a ‘white list’ of countries with similar privacy protections to facilitate cross-border data flows.

• Pacific Security Pacts: In August 2025, Australia and Vanuatu agreed to a landmark A$500 million, 10-year ‘Nakamal Agreement’ to strengthen security cooperation. This builds on the Australia-Tuvalu Falepili Union, which includes a security guarantee and a climate migration pathway.

• Bougainville Independence: On June 27, 2025, leaders of Papua New Guinea and the Autonomous Bougainville Government signed the ‘Melanesian Agreement,’ affirming their commitment to finalizing arrangements for Bougainville’s independence.

5. Digital & AI Governance — EU sets global guardrails while China tightens domestic data screws

The global governance of AI and digital platforms is fragmenting along ideological lines. The EU is solidifying its role as the world’s de facto regulator through its comprehensive, rights-based approach, while China is doubling down on a state-centric model focused on data control and content labeling. 16

GPAI Obligations Kick-In: Transparency & FLOPs thresholds decoded

The EU AI Act’s implementation reached a critical milestone on August 2, 2025, when obligations for providers of General-Purpose AI (GPAI) models became applicable. Providers must now ensure transparency regarding their training data and comply with EU copyright law. 17 For powerful models deemed to pose “systemic risk”—defined as those trained on over 10^25 FLOPs—stricter rules on risk assessment, cybersecurity, and incident reporting now apply. 17 The newly established European AI Office is actively developing guidance, including a voluntary Code of Practice released on July 10, 2025, to help industry comply. [18]

Enforcement Shock Therapy: Apple €500 m and Meta €200 m fines reshape gatekeeper economics

2025 marked the year the EU’s Digital Markets Act (DMA) began to show its teeth. On April 22, 2025, the European Commission issued its first non-compliance decisions, fining Apple €500 million for its anti-steering rules in the App Store and Meta €200 million for its non-compliant ‘Consent or Pay’ model. These actions signal a low tolerance for violations by designated ‘gatekeepers’ and have profound implications. 19 Companies designated as gatekeepers must now fundamentally re-architect their platforms to ensure interoperability and prevent self-preferencing, facing fines of up to 10% of global annual turnover for non-compliance.

6. Maritime Security & Contract Law — Red Sea attacks rewrite war-risk clauses worldwide

The security situation in the Red Sea and Bab el-Mandeb Strait remained highly volatile throughout 2025 due to persistent Houthi attacks on commercial shipping. Key incidents in July 2025, including deadly attacks on the MV Magic Seas and MV Eternity C, severely disrupted global shipping, forcing rerouting and causing war risk insurance premiums to soar.

Insurance & Routing Economics: Table of cost differentials Suez vs. Cape of Good Hope

The commercial impact has been profound, forcing many vessels to reroute around Africa’s Cape of Good Hope. 20 This has significantly increased transit times, fuel consumption, and overall costs, leading to a surge in insurance premiums. [21]

The key takeaway is that the Red Sea crisis has fundamentally altered the risk-reward calculation for one of the world’s most critical trade arteries, with costs being passed down through the supply chain.

BIMCO 2025 Clause Deep-Dive: Owner refusal rights & premium allocation

In a major development for contract law, the shipping association BIMCO adopted revised war risk clauses on April 9, 2025 (CONWARTIME 2025 and VOYWAR 2025). These clauses directly address the risks manifested in the Red Sea:

• Expanded Definition of ‘War Risks’: The definition now explicitly includes acts of terrorism, piracy, and malicious damage, providing broader coverage. [23]

• Enhanced Owner Rights: Owners now have the right to refuse to enter an area based on their ‘reasonable judgment’ that the vessel, cargo, or crew may be exposed to War Risks. [23]

• Clear Cost Allocation: The clauses clearly allocate the cost of additional insurance premiums, including for Kidnap and Ransom (K&R), to the charterers, resolving a common point of dispute. [23]

7. International Criminal Law Flashpoints — ICC warrants and state pushback erode norm stability

A historic milestone in international criminal law occurred when Pre-Trial Chamber I of the International Criminal Court (ICC) issued arrest warrants on November 21, 2024, for senior leaders of both Hamas and the State of Israel. The warrants, applied for by Prosecutor Karim Khan on May 20, 2024, target leaders for alleged war crimes and crimes against humanity. [24]

Sanctioning the Court: EO 14203 impact analysis and allied reactions

The issuance of these warrants triggered a severe backlash, most notably from the United States. On February 6, 2025, the White House issued Executive Order 14203, imposing sanctions on the ICC itself. 25 This was followed by sanctions against four individual ICC judges on August 19, 2025. This unprecedented step of sanctioning an international judicial body was condemned by many US allies, including France, Germany, and the UK, highlighting a deep rift in the Western approach to international justice.

Corporate Exposure: CSDDD & UN blacklists escalate supply-chain due diligence stakes

The situation has also elevated corporate risk. Companies operating in the region now face heightened scrutiny over their potential complicity in human rights abuses. There are active proposals in the EU to block companies named in a related June 2025 UN report from accessing EU funding. This episode amplifies the importance of robust human rights due diligence obligations for corporations under frameworks like the EU’s Corporate Sustainability Due Diligence Directive (CSDDD), as the line between geopolitical conflict and corporate liability becomes increasingly blurred.

8. Critical Minerals & Resource Nationalism — Governments weaponize mining codes and export bans

A clear trend in 2025 is the rise of resource nationalism, as countries with significant deposits of critical minerals move to exert greater control over their assets, secure more favorable economic terms, and build domestic processing capacity.

Spotlight Table: DRC, South Africa, Zimbabwe, Argentina, Chile policy shifts

This trend creates both risks (supply disruption, contract instability) and opportunities (partnerships in local processing) for companies in the mining, energy, and automotive sectors.

Strategic Moves: Vertical integration and pre-pay contracts as hedges

In response to this volatility, downstream users of critical minerals, particularly in the EV and battery sectors, are shifting their procurement strategies. Leading companies are moving away from reliance on spot markets and towards long-term off-take agreements. There is also a growing trend towards vertical integration, with manufacturers investing directly in mining and refining operations to secure their supply chains. Pre-payment for future production and equity stakes in junior miners are becoming common hedging strategies against price volatility and export restrictions.

9. Defense & Security Alliances — From NATO 5 % GDP pledge to license-free AUKUS pipeline

The geopolitical fragmentation of 2025 is forcing a realignment of security alliances, with a renewed focus on industrial capacity and technological superiority. At the NATO summit in The Hague on June 25, 2025, member states committed to a significant increase in defense investment, setting a target for allies to spend 5% of their GDP annually on defense by 2035. This includes at least 3.5% for core defense and up to 1.5% for related security investments like critical infrastructure.

In the Indo-Pacific, the AUKUS pact between Australia, the UK, and the US is being rapidly operationalized. New controls under Australia’s Defence Trade Controls Amendment Act 2024 were enforced from March 1, 2025, creating a streamlined, license-free defense trade environment between the three nations. This removes the need for approximately 900 export permits from Australia to the US and UK, and enables license-free trade for over 70% of defense exports subject to US ITAR. [26] The partnership was further solidified on July 26, 2025, with the signing of the bilateral ‘Geelong Treaty,’ a 50-year agreement formalizing cooperation on SSN-AUKUS submarines.

10. Risk & Opportunity Matrix — Integrated dashboard ranking 2025 threats/opportunities by sector

The complex interplay of these geopolitical and legal shifts creates a varied landscape of risks and opportunities across key industrial sectors.

Heat-Map Table: Finance, Tech, Energy, Logistics, Manufacturing

This matrix highlights the need for sector-specific geopolitical risk strategies, as the challenges and opportunities are not uniform across the global economy.

11. Action Toolkit for GCs & Boards — Translating geopolitics into resilient governance

In this volatile environment, boards and general counsels must move beyond a reactive compliance posture and embed geopolitical risk management into the core of corporate strategy.

Board-Level Questions: 10-item checklist drawn from sanctions, AI, maritime, and minerals insights

1. Strategic Integration: Is geopolitical risk formally embedded in our strategic planning and enterprise risk management (ERM) framework, with clear lines of reporting to the board?

2. Resource Allocation: Are our compliance, legal, and government affairs functions adequately resourced and empowered to meet the expanding expectations of 2025’s multi-jurisdictional regulatory environment?

3. Supply Chain Visibility: Have we conducted comprehensive, multi-tier due diligence on our supply chains to identify hidden exposures to sanctioned entities, regions, or technologies?

4. Digital Vulnerability: Have we mapped our digital supply chain, including IaaS providers and software vendors, to understand risks related to data sovereignty and technology export controls? 11

5. Scenario Planning: Do we have robust, tested scenario plans to manage potential disruptions from geopolitical events, such as the imposition of new sanctions on a key market or the closure of a critical shipping lane?

6. Contractual Resilience: Are our key commercial contracts (e.g., supply agreements, charter parties) updated with the latest clauses (e.g., BIMCO CONWARTIME 2025) to properly allocate risk for geopolitical disruptions?

7. AI Governance: Do we have a centralized governance framework for the development and deployment of AI that aligns with the EU AI Act’s risk-based approach, regardless of our primary location?

8. Human Rights Due Diligence: How are we assessing and mitigating human rights risks in our operations and supply chains, particularly in conflict-affected regions, in light of frameworks like the CSDDD and the actions of the ICC?

9. Critical Minerals Strategy: What is our strategy for securing the supply of critical minerals in an era of increasing resource nationalism? Are we exploring long-term contracts or direct investments?

10. Public Affairs & Stakeholder Management: How are we managing stakeholder expectations in a polarized environment where governments are sanctioning international institutions and allies are divided on key issues?

Implementation Roadmap: Embed horizon-scanning, scenario drills, and supplier tiering

A resilient governance model requires a continuous, dynamic process:

• Formalize Geopolitical Risk Assessment: Implement a formalized, regular review of geopolitical risks to operations, markets, and supply chains, ensuring the findings are integrated into board-level strategic planning and decision-making.

• Establish a Cross-Functional Team: Create a dedicated team comprising legal, compliance, finance, supply chain, and government affairs to conduct horizon-scanning and provide integrated analysis to leadership.

• Conduct Regular Scenario Drills: Move beyond theoretical plans by conducting regular, realistic simulation exercises based on plausible geopolitical shocks (e.g., a new round of US-China tariffs, a blockade of the Taiwan Strait).

• Implement Supplier Tiering: Segment suppliers based on their geopolitical risk exposure. High-risk suppliers (e.g., those in or near conflict zones, or those with ties to state-owned enterprises in rival nations) should be subject to enhanced due diligence and have pre-approved alternative sources.

12. Conclusion & Call to Action — Geopolitical compliance is now a core strategic competency

The era of stable, predictable globalization is over. In 2025, navigating the cross-currents of great power competition, regulatory fragmentation, and weaponized interdependence is no longer a niche compliance task; it is a core strategic competency. Companies that fail to integrate geopolitical risk into their governance, strategy, and operations will face escalating legal, financial, and reputational peril. Those that build resilience, however, will be better positioned to not only mitigate threats but also to seize the opportunities that emerge in this new, contested global landscape.

We invite you to contact our firm’s Sanctions & Export Controls team for a tailored risk assessment of your global operations. You can also join our upcoming webinar, ‘2025 Geopolitical Outlook: What Every Board Needs to Know,’ or email us for our comprehensive guide, ‘Building a Resilient Supply Chain in a Geo-politically Charged World,’ from our website.

References

[1] US BIS and EU Export Controls in 2025 and Related Developments

https://datamatters.sidley.com/2025/01/21/new-u-s-export-controls-on-advanced-computing-items-and-artificial-intelligence-model-weights-seven-key-takeaways/

[2] Global Trade Law Blog – A Roadmap for Export Controls: Project 2025 and the Future of U.S. Exports (Part III)

https://www.globaltradelawblog.com/2025/04/25/a-roadmap-for-export-controls-project-2025-and-the-future-of-u-s-exports-part-iii/

[3] US-EU sanctions divergence would spell trouble for …

https://www.atlanticcouncil.org/blogs/econographics/us-eu-sanctions-divergence-would-spell-trouble-for-multinational-companies/

[4] Suez and Panama Canal disruptions threaten global trade …

https://unctad.org/news/suez-and-panama-canal-disruptions-threaten-global-trade-and-development

[5] Russia sanctions: guidance

https://www.gov.uk/government/publications/russia-sanctions-guidance/russia-sanctions-guidance

[6] EU AI Act unpacked #3: Personal and territorial scope

https://technologyquotient.freshfields.com/post/102j7cj/eu-ai-act-unpacked-3-personal-and-territorial-scope

[7] Article 2: Scope | EU Artificial Intelligence Act

https://artificialintelligenceact.eu/article/2/

[8] Tougher UK Sanctions Penalties on the Horizon as …

https://www.regulatoryandcompliance.com/2025/07/tougher-uk-sanctions-penalties-on-the-horizon-as-consultation-is-launched/

[9] Long-awaited EU AI Act becomes law after publication in …

https://www.whitecase.com/insight-alert/long-awaited-eu-ai-act-becomes-law-after-publication-eus-official-journal

[10] Penalties of the EU AI Act: The High Cost of Non-Compliance

https://www.holisticai.com/blog/penalties-of-the-eu-ai-act

[11] BIS Policy Statement on Controls that May Apply to Advanced Computing Integrated Circuits and AI Training (May 13, 2025)

https://www.bis.gov/media/documents/ai-policy-statement-training-ai-models-may-13-2025

[12] 2025 Trade Compliance Trends: Insights Shaped by 2024

https://www.descartes.com/resources/knowledge-center/2025-trade-compliance-trends-insights-shaped-2024

[13] Steptoe Weekly Sanctions Update August 11, 2025

https://www.steptoe.com/en/news-publications/international-compliance-blog/weekly-sanctions-update-august-11-2025.html

[14] BIS Rescission of the Biden Administration’s AI Diffusion …

https://www.kirkland.com/publications/kirkland-alert/2025/05/bis-rescission-of-the-biden-administration

[15] Price Cap Coalition Advisory for the Maritime Oil Industry …

https://home.treasury.gov/news/press-releases/jy1797

[16] Artificial Intelligence 2025 – China – Global Practice Guides

https://practiceguides.chambers.com/practice-guides/artificial-intelligence-2025/china

[17] EU rules on general-purpose AI models start to apply, bringing …

https://digital-strategy.ec.europa.eu/en/news/eu-rules-general-purpose-ai-models-start-apply-bringing-more-transparency-safety-and-accountability

[18] General-Purpose AI Code of Practice now available

https://digital-strategy.ec.europa.eu/en/news/general-purpose-ai-code-practice-now-available

[19] Commission finds Apple and Meta in breach of the Digital …

https://ec.europa.eu/commission/presscorner/api/files/document/print/en/ip_25_1085/IP_25_1085_EN.pdf

[20] The Red Sea crisis – managing the impact on contractual performance

https://www.ashurst.com/en/insights/the-red-sea-crisis-managing-the-impact-on-contractual-performance/

[21] Red Sea insurance soars after deadly Houthi ship attacks

https://www.reuters.com/business/autos-transportation/red-sea-insurance-soars-after-deadly-houthi-ship-attacks-2025-07-10/

[22] War Risk Premiums Surge Amid Renewed Red Sea Attacks

https://gcaptain.com/war-risk-premiums-surge-amid-renewed-red-sea-attacks/

[23] BIMCO War Risks Clause 2025 (CONWARTIME 2025) and related 2025 market positions

https://www.bimco.org/contractual-affairs/bimco-clauses/current-clauses/war_risks_clause_for_time_charters_2025/

[24] Applications for arrest warrants in the situation in the State …

https://reliefweb.int/report/occupied-palestinian-territory/statement-icc-prosecutor-karim-aa-khan-kc-applications-arrest-warrants-situation-state-palestine-enarhe

[25] Issuance of Executive Order Imposing Sanctions on the …

https://ofac.treasury.gov/recent-actions/20250213

[26] AUKUS countries’ export licence-free environment takes flight

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Stabit Advocates

Website: www.stabitadvocates.com

Email: info@stabitadvocates.com

Phone: +250 789 366 274

For more information or to discuss your case, please contact us at www.stabitadvocates.com.

This guide is intended to provide general information and does not constitute legal advice. For specific legal advice tailored to your situation, please consult with a qualified attorney at Stabit Advocates.