New Zealand's Russia sanctions regime has undergone its most significant reform since its enactment in 2022. The Russia Sanctions Amendment Regulations (No 3) 2026, which take effect on 3 September 2026, deliver targeted changes that respond directly to concerns raised by stakeholders during last year’s statutory review.
The reforms will be welcomed by much of the business community. Since 2022, the regime’s broad automatic capture of sanctioned persons’ associates and relatives has increased due diligence costs and compliance complexity for banks and other regulated businesses. The Amendment Regulations directly address those concerns by narrowing the regime’s reach to expressly designated persons, while strengthening the enforcement toolkit through a new prohibition on sanctions evasion and circumvention.
Who needs to read it and why?
This alert is relevant to banks and other financial institutions, traders, investors, insurers, freight and logistics companies, exporters, and any business or individual that may have dealings, directly or indirectly, with persons connected to Russia. It will also interest compliance and risk professionals, and directors of companies with sanctions exposure.
Key takeaways
The reforms seek to strike a balance between reducing compliance burden and strengthening enforcement against sanctions evasion. Under the Amendment Regulations:
- Sanctioned persons’ relatives and associates will no longer be automatically captured, unless separately listed;
- Entities owned or controlled by sanctioned persons remain a key due diligence risk;
- A new express prohibition targets sanctions evasion and circumvention;
- Banks will have a new exception for ordinary service charges on certain frozen assets; and
- Some medical and hospital-related items have been removed from the prohibited exports schedule, but screening obligations remain.
New Zealand’s Russia sanctions regime
New Zealand historically implemented United Nations (UN) Security Council sanctions but lacked a framework for autonomous sanctions until the enactment of the Russia Sanctions Act 2022 (RSA) in March 2022.
As required by Parliament when enacting the RSA, the Ministry of Foreign Affairs and Trade (MFAT) launched the first Statutory Review in late 2024, examining the regime’s effectiveness, the balance between evasion risk and compliance costs, and whether the RSA was achieving its purposes.1
The Minister of Foreign Affairs tabled MFAT’s final Report to Parliament in November 2025. The Amendment Regulations have now been enacted by Order in Council.
Removal of automatic capture of relatives and associates
MFAT has removed the regime’s automatic capture of relatives and associates of sanctioned persons - one of the features most frequently criticised by stakeholders during the statutory review. Previously, broad definitions of associate, senior manager, and relative meant individuals could be subject to sanctions without being expressly listed on the Russia Sanctions Register (Register). In practice, this forced duty holders to conduct forensic due diligence, including analysing corporate structures, trust documents and publicly available information, to determine whether a counterparty fell within the definitions. That information was often incomplete or unavailable, leaving businesses exposed to residual risk regardless of the effort invested.
Under the Amendment Regulations, the definitions of associate, senior manager and relative will be removed. Individuals who are relatives or associates of a sanctioned person will only be subject to sanctions if they are separately named on the Register.
However, the regime will continue to capture associated entities, that is, entities owned or controlled by a sanctioned person, even if those entities are not separately listed. Businesses should continue to undertake appropriate ownership and control due diligence in relation to counterparties connected to sanctioned persons.
This is a sensible reform. The move to a list-based model gives businesses far greater certainty. In most cases, if an individual is not listed on the Register, they will no longer be subject to Russia sanctions solely because they are related to or associated with a sanctioned person. That is a materially simpler compliance proposition, and brings New Zealand broadly into line with regimes in Australia, the United Kingdom (UK) and the European Union (EU), where individuals are generally sanctioned through express designation rather than automatic capture through family relationships.
Businesses should remember that:
- An entity that is owned or controlled by a sanctioned person may still be treated as sanctioned, even if the entity is not separately listed on the Register;
- Appropriate due diligence should continue to be undertaken to ascertain ownership and control; and
- Dealings with entities that are owned or controlled by sanctioned persons may still be prohibited.
New prohibition on sanctions evasion and circumvention
The Amendment Regulations introduce a new, express prohibition on dealing with assets, securities or services for the purpose of evading or circumventing a sanction. This is a logical counterpart to the removal of automatic capture: while the regime becomes more targeted in who it captures, it becomes more robust in addressing deliberate attempts to undermine it.
Although New Zealand’s geographic distance from Russia may reduce the likelihood of direct local sanctions evasion, it does not insulate our financial, corporate or trade systems from being used by bad actors to circumvent overseas regimes. The express prohibition brings New Zealand broadly into line with jurisdictions such as the EU and the UK, where circumvention has been recognised as a key enforcement priority.
The prohibition applies broadly, including to dealings conducted through intermediaries or other third parties, and does not depend on a sanctioned person being a direct party to the relevant transaction or arrangement. Examples of conduct that may amount to evasion or circumvention could include transferring assets to conceal a sanctioned person's ownership or control, restructuring a transaction to disguise a sanctioned person's involvement, providing services to a non-sanctioned person acting as an agent for a sanctioned person, or exporting prohibited goods via an intermediary bound for Russia.
MFAT has published updated guidance on common sanctions evasion red flags to assist businesses in identifying higher-risk conduct, including in relation to trade, financial transactions and maritime transport.2 When assessing a transaction, businesses should consider all parties involved. The fact that a sanctioned person is not named as a party will not, by itself, mean the transaction is permissible.
New exception for bank service charges on frozen assets
The Amendment Regulations introduce a new exception under Regulation 12(6A) allowing banks to charge normal service fees on restricted assets (such as account maintenance and administrative charges), provided the sanctioned person held the asset immediately before the relevant date. This is a practical and welcome change - one the banking sector specifically advocated for during the statutory review. Previously, the regulations permitted dealing with restricted assets to preserve their value, but did not explicitly permit charging for those services, creating uncertainty about whether ordinary fees could lawfully be recovered.
Importantly, the exception does not permit funds to be released to, or made available for the benefit of, the sanctioned person. Banks should ensure any charges are consistent with their standard fee structures for comparable accounts or assets.
Removal of items from prohibited exports
Seven categories of items have been removed from Schedule 3 (the schedule of prohibited exports). The removed categories correspond to HS headings 3005, 4016.93, 7320.20, 9018, 9019.20, 9022 and 9402, covering a range of medical consumables, devices, respiratory equipment, radiology equipment and hospital furniture.
This does not permit the export of these items for military use or to sanctioned persons, and other prohibitions and screening obligations continue to apply. Exporters should still screen end users, end uses, ownership/control links and destination routes before relying on the removal of these categories from Schedule 3.
Other technical amendments
The Amendment Regulations also include technical amendments clarifying that existing dealing prohibitions apply to designated vessels and other restricted assets.
Updated Sanctions Unit guidance
MFAT’s New Zealand Sanctions Unit has published nine updated guidance documents covering topics including associate designations, sanctions evasion, common evasion red flags, financial transactions, trade measures, exemptions, due diligence and reporting obligations.
Businesses should review the updated guidance relevant to their operations ahead of the 3 September 2026 commencement date.
The New Zealand Sanctions Unit is hosting a webinar to help stakeholders understand their obligations under the Amendment Regulations, on Tuesday, 25 August at 11.00am NZST.
How we can help
We advise clients on all aspects of sanctions compliance, enforcement, contracting and risk management. Our expertise covers:
- New Zealand sanctions laws and enforcement;
- The extraterritorial impact of foreign sanctions laws including those of the United States (US), EU and UK on NZ businesses and transactions; and
- Corporate and commercial compliance, including navigating the requirements of financial institutions and supply chain partners.
We assist clients to:
- Implement changes to existing sanctions policies reflective of legislative changes;
- Map and manage legal obligations across jurisdictions;
- Conduct customer, counterparty, and transaction due diligence and screening;
- Assess and structure transactions to mitigate sanctions risk;
- Respond to regulatory investigations and enforcement action; and
- Navigate complex disputes involving sanctions issues, including litigation and alternative resolution processes.
Our team regularly advises on New Zealand sanctions compliance, export controls, cross-border regulatory issues and sanctions-related disputes, including matters involving New Zealand, UK and US authorities. Our key cases include Targa Capital Ltd v Westpac NZ Ltd [2023] NZHC 230 and NZ Customs Service v Pacific Aerospace Ltd [2018] NZDC 5034.
For more detailed advice on how these developments may affect your business, please contact us.
This article was co-authored by Sian Vaughan-Jones and Isabelle Pou, Solicitors in our Corporate team.
Footnotes
1 We summarised MFAT’s key findings from the Statutory Review here.
