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- Sanctions compliance & due diligence
Always keep in mind the four ‘Keys to Compliance’: Who, What, Where, and Why
When we think about sanctions compliance, we often focus on who we are dealing with. But for many small and medium-sized enterprises (SMEs), the bigger risk comes from what is being supplied. Whether you trade machinery, spare parts, software, chemicals, or you provide services, you must check whether the item or service itself is restricted under EU sanctions.
In this second article in our series – covering 1) Who (see that article here), 2) What, 3) Where, and 4) Why – we explain the “What” in sanctions due diligence through clear, practical steps.
Why the “What” matters
A transaction can be prohibited even when the counterparty is not sanctioned. Many EU sanctions include export and import bans, sectoral restrictions, and controls linked to specific goods, technologies, or services.
For SMEs, this means:
- Knowing exactly what you are trading
- Checking if it appears on an EU sanctions list
- Confirming whether the destination or end use is prohibited
How can SMEs resolve potential sanctions issues for their products?
Understanding if your product or service has any potential sanctions concerns does not have to be tricky. To get sanctions compliance peace of mind, follow our 6-step guide to check key resources and have a clear view of the situation.
1. Start with a clear description of your product or service
To check restrictions, start with a precise description of your supply, including:
- Commercial descriptions
- Technical specifications, model numbers or drawings
- The exact scope of (technical) services
2. Confirm goods‑related restrictions in TARIC
If you know the correct EU Combined Nomenclature (CN) code for the goods you are buying or selling, you can consult the TARIC database.
Use TARIC to confirm whether your EU CN code is directly affected by EU sanctions or is linked (“correlated”) to those measures. If TARIC shows that your CN code is correlated to a restrictive measure, this does not automatically mean your product is prohibited. It simply indicates a possible match at CN‑code level, and you must verify whether the restriction applies to your specific product characteristics and intended use.
TARIC is a reliable way to verify product related sanctions measures. However, it covers goods, not broader restrictions on services, software or technical assistance, and it may show a correlation rather than a definitive restriction, so you should always cross‑check findings against the underlying sanctions regulation.
3. Screen against sanctions and control lists
This step helps you spot likely restrictions before you spend time preparing a shipment or quote. You should check:
- Sanctions product lists, such as the Economically Critical Goods and Common High Priority Items (CHPI) lists, which include many industrial and high-tech items.
- The EU Dual-Use Regulation and the Common Military List. If your item is controlled, you may need a licence, even for non‑sanctioned destinations. These controls can also apply to related services or technical support.
You can find other helpful lists and tools here.
4. Don’t forget services and technical assistance related to your products
Sanctions can also restrict:
- Installation, maintenance, or repair
- Technical assistance (advice, support, training)
- Software updates or remote access
- Engineering or design services
If a product is covered by a prohibition, the services related to it will often be prohibited as well. Always check the applicable regulation for your sector and destination.
5. Watch for red flags
Be cautious if you encounter:
- Requests to change technical descriptions
- Attempts to reclassify a product under a different CN code
- Sudden interest in high-spec items without a clear end-use
- Intermediaries who provide incomplete or vague information
Unclear information is a signal to pause and ask more questions.
6. When in doubt, ask
Sanctions compliance should never rely on guesswork. If something is unclear:
- Ask your customer or supplier for more details
- Contact your national authority
- Use the EU Sanctions Helpdesk for personalised support
A quick clarification early on can prevent serious problems later.
Final message
Understanding what you are trading is just as important as knowing who you are dealing with. With a clear product description, proper classification, and simple checks using TARIC and relevant sanctions lists, SMEs can manage sanctions risks confidently – without expensive tools.
Get sanctions support
European SMEs may not always have the time or resources to conduct full sanctions due diligence independently. To support them, the EU has established the EU Sanctions Helpdesk, a free service to help EU SMEs comply with EU Sanctions.
The Helpdesk can:
- Answer your questions on the applicability of EU sanctions
- Offer you guidance on performing sanctions due diligence
- Undertake sanctions due diligence for you, free of charge, if you encounter red flags or you simply need the support
If you have a question on a transaction, find out how to get support here.