Sanctions Enforcement Expands: A Latvian Case Underscores That EU Restrictions Target Services, Not Just Goods

A recent case in Latvia serves as an important reminder for compliance, AML/CTF, sanctions and risk-management professionals: EU sanctions against Russia extend far beyond traditional trade controls. They increasingly focus on services, expertise, and managerial involvement — areas where exposure is often underestimated.

On 8 December, Latvia’s State Security Service (VDD) announced that it has asked the Prosecution Office to initiate criminal prosecution against a Latvian national for providing prohibited consultancy services to Russian companies.

According to the VDD, the individual had signed employment agreements with several Russia-registered entities and served as General Director / Director, offering advice on corporate management, economic activity and taxation — all of which fall squarely within the service prohibitions under EU Council Regulation 833/2014.

Key Compliance Takeaways

1. EU sanctions restrict services — not only goods.

Regulation 833/2014 prohibits EU persons from providing management consulting, business advisory, accounting, auditing, IT consulting, tax advisory and multiple related services to Russian entities.

2. Employment does not create an exemption.

Even when acting as an employee, contractor, or director, an EU person is not allowed to offer prohibited services to Russian companies.

3. Individual criminal liability is real.

The Latvian case was launched under the national Criminal Law for violating EU sanctions — a direct reminder that authorities can pursue individuals, not only legal entities.

4. EU Member States are increasingly proactive.

Security and intelligence services such as VDD are actively investigating service-sector breaches, not solely traditional export-control violations.

5. Governance and management roles are high-risk.

Acting as a director, board member, or strategic advisor to a Russia-registered entity is highly likely to fall under prohibited activity.

The Bigger Trend: Sanctions Now Target Expertise

This case signals a wider regulatory shift: compliance exposure now extends into professional services, consultancy, remote employment, and cross-border corporate governance.

For multinational groups, this reinforces the need for:

• robust sanctions-screening for service relationships, secondments and employment links;
• clear internal guidance on what employees may not do for Russian clients or affiliates;
• controls and monitoring of side activities that may unintentionally expose both individuals and employers to sanctions liability.

As we move, it is evident that EU sanctions policy targets not only the flow of goods, but increasingly the flow of skills, knowledge and strategic influence.

Source: https://vdd.gov.lv/en/news/press-releases/vdd-seeks-prosecution-against-latvian-citizen-for-work-on-behalf-of-companies-in-russia

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