DENMARK Law and Practice Contributed by: Rikke Sonne, Jakob Skov Bundgaard and Tilde Nielsen Weidinger, Accura
tions and eight years’ imprisonment under particularly aggravating circumstances. On 25 June 2026, the Danish government proposed an act requiring companies whose owners become sanctioned to safeguard against situations in which said owner or controlling party becomes subject to EU restrictive measures, with the aim of preserving business continuity and jobs while barring any sanc - tioned party from exercising control or deriving eco - nomic benefit. Dubbed the “Firewall Act”, its core mechanism obliges companies to implement neces - sary measures creating a barrier (firewall) between the sanctioned person or entity and the company, replacing the current regime under which sanctioned ownership effectively halts business operations due to the prohibition to make economic resources, includ - ing labour, available to sanctioned parties. Under the proposed act, the sanctioned party’s manage - rial, economic and voting rights are automatically suspended, with the remaining shareholders’ voting rights increased proportionately. As of now, the act has only been proposed and has still to pass through the ordinary legislative process before final adoption, which is expected this year. Furthermore, over the past year, the EU’s sanc - tions regime against Russia has matured consider - ably, and enforcement activity has intensified as the framework has now crossed the four-year mark since the full-scale invasion of Ukraine. As the regime has broadened in scope, covering an ever-wider range of sectors and goods, attention has somewhat shifted towards closing the gaps through which sanctioned goods continue to reach Russia. Under the EU’s rules, it is prohibited, whether directly or indirectly, to sell, supply, transfer or export dual-use items and other restricted goods to Russia or for use within Russia, with a comparable prohibition applying to Belarus. These provisions are designed to prevent goods from being rerouted through third countries, and jurisdic - tions situated near Russia or maintaining long-stand - ing historical ties to it are treated as carrying a par - ticularly elevated circumvention risk. The anti-circumvention focus reached a decisive moment in April 2026, when the Council of the European Union activated the EU’s dedicated “anti-
circumvention tool” for the first time, targeting Kyr - gyzstan. Originally established under the 11th sanc - tions package, the tool allows the EU to restrict the sale, supply, transfer or exportation of specified high- risk goods and technology to third countries exhibiting a continued and particularly high risk of circumven - tion. On 23 April 2026, as part of the 20th sanctions package, the tool was activated on the grounds of the Kyrgyz Republic’s “systematic and persistent failure” to prevent the sale, supply, transfer or exportation to Russia of certain machine tools and telecommunica - tions equipment imported from the EU and used in the manufacture of drones and missiles. This followed a thorough analysis of trade data showing a significant surge in the re-exportation of common high-priority items through Kyrgyzstan to Russia. In practical terms, the EU banned the exportation of computer numerical control machine tools and radios to Kyrgyzstan, as confirmed by Reuters on 24 April 2026, and Council Regulation (EU) 2026/506 gave legal effect to these measures within the broader 20th package frame - work. In parallel, the EU extended its transaction ban to banks in Kyrgyzstan, Laos and Azerbaijan for assisting the Russian war effort by frustrating sanc - tions or connecting to Russia’s SPFS financial mes - saging network. This trend broadened further in the 21st sanctions package of 23 July 2026, which added 51 new enti - ties to Annex IV, including three in Kyrgyzstan, 14 in China (four in Hong Kong), four in Turkey, two in India, two in Kazakhstan and two in the UAE, for contribut - ing to Russia’s circumvention of export restrictions on microelectronics, computer numerical control (CNC) machine tools, and semiconductor processing equip - ment. This mirrors earlier designations in the 16th and 17th packages, where Chinese, Serbian, Emirati, Turkish, Vietnamese and Uzbek entities were listed for supplying machine tools and UAV components to Russia’s military-industrial complex. For businesses, these developments signal materially heightened circumvention, including diversion as well as risk in cross-border structures involving Central Asia, the UAE and Turkey, warranting enhanced due diligence on re-export pathways and third-country counterparties.
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