Russian use of British offshore territories for sanctions evasion

Friday 27 February 2026

Britain’s offshore territories sit in an awkward place in the political imagination. She is, in public debate, either a careful custodian of small jurisdictions whose prosperity depends upon cross-border services, or the permissive metropole of a financial archipelago built to take other people’s money, ask few questions and politely forget names. Russia’s full-scale invasion of Ukraine has turned that old ambiguity into a live strategic vulnerability. When sanctions are intended to choke off the Kremlin’s revenue, disrupt procurement and immobilise oligarch wealth, the value of a secrecy-enabled corporate vehicle is no longer merely an ethical problem. It becomes, in effect, a component in the war economy.

The evidence trail is not subtle. Reporting in late February 2026, drawing on research by Transparency International’s Russian office, described billions of dollars’ worth of Russian-linked trade routed through British-linked offshore jurisdictions since 2022, including the British Virgin Islands, Bermuda, the Cayman Islands and Gibraltar—covering everything from luxury assets to oil-sector equipment. The pattern is familiar: a sanctioned economy does not need to transact openly if it can transact indirectly; it does not need to own in its own name if it can own through an intermediary; and it does not need to move goods in a straight line if it can move paperwork in circles.

How offshore territories assist sanctions circumvention

The basic technique is corporate opacity. A company incorporated in an offshore jurisdiction can sit between buyer and seller, between owner and asset, between a ship and its cargo, between a bank account and the person whose money it truly is. Where beneficial ownership information is not publicly accessible—or is accessible only through narrow gateways—investigators, journalists, counterparties and even some compliance teams are forced into guesswork, delays and litigation. That is not a mere administrative inconvenience. Sanctions work partly through speed: the faster a designated person is identified and immobilised, the fewer opportunities there are to reorganise ownership chains and spirit assets away.

That is why registers of beneficial ownership have become the centre of the argument. Parliament has repeatedly framed them as a national security and anti-corruption requirement, not a technocratic improvement. In 2018, the United Kingdom legislated to require steps towards publicly accessible beneficial ownership registers in the Overseas Territories, with an expectation that they would be in place by the end of 2023. Yet major jurisdictions have missed deadlines and have argued for narrower ‘legitimate interest’ access models that critics say preserve too much secrecy in practice. The consequence is a lingering gap between Britain’s sanctions rhetoric and the operational reality of corporate concealment in parts of her constitutional family.

Trade-routing is the second technique—less glamorous than yachts, more important than most people admit. If a sanctioned good is hard to buy directly, it may be bought through a chain of intermediaries. If a payment is hard to make openly, it may be dressed as something else, or divided and relabelled across multiple steps. The Guardian’s summary of the Transparency International research pointed to a large volume of trade and high-value assets flowing through these jurisdictions despite the sanctions environment.  Even where local authorities insist they implement UK measures, the wider question is whether the surrounding corporate environment makes enforcement too slow, too selective and too easy to evade.

The shadow fleet and the British-linked services layer

Sanctions circumvention is not only about companies. It is also about ships, insurance, flags and ports—the service layer that lets oil move when it is not meant to. Russia’s ‘shadow fleet’ is an evolving collection of tankers used to transport oil in ways designed to avoid restrictions, scrutiny and, often, mainstream insurance. Research on shadow fleet insurance has documented the shift towards non-traditional insurers and complex arrangements that reduce the leverage of sanctions regimes built around reputable protection and indemnity clubs. 

Britain’s offshore footprint appears in this story in uncomfortable ways. In February 2026 Reuters reported that the United Kingdom sanctioned Maritime Mutual, a New Zealand-based marine insurer, alongside an affiliate in Gibraltar, after reporting that the insurer had covered a significant number of shadow fleet vessels. Whether every allegation is ultimately proved in court is not the key point for policy. The key point is structural: if a sanctions target can obtain insurance, certification or corporate management through a British-linked jurisdiction, then Britain is not merely observing a sanctions war—she is, inadvertently, hosting part of the logistics that allow it to continue.

Financing the war, indirectly and at scale

The Kremlin finances the war through oil revenue, taxation, domestic borrowing and coercive mobilisation of the economy—but sanctions aim to reduce the margin and increase the friction. Every additional intermediary that preserves revenue or facilitates procurement keeps that margin wider for longer. Offshore jurisdictions are rarely the place where the money is finally spent on artillery shells or drones; they are the place where ownership is blurred, funds are parked, payments are disguised and enforcement is slowed. In wartime, delay is not neutral. Delay is advantage.

What legal options does the United Kingdom actually have?

The United Kingdom’s legal position is stronger than her political posture often suggests. There are three broad levers—constitutional authority, sanctions extension and domestic transparency measures—each with different costs.

1. Orders in Council and constitutional compulsion

   
   

   Parliament has already contemplated the use of Orders in Council to compel implementation of beneficial ownership transparency. Section 51 of the Sanctions and Anti-Money Laundering Act 2018 created a framework aimed at publicly accessible registers in the Overseas Territories. In political terms this is often described as a ‘nuclear option’ because it strains local autonomy. In legal terms it is a recognised instrument of governance for territories whose external affairs and ultimate constitutional settlement remain with the United Kingdom.

   
   

2. Extending and tightening sanctions enforcement across the territories

   
   

   In practical enforcement the question is not only whether the UK’s Russia sanctions apply in the territories, but how vigorously they are implemented and policed. British Overseas Territory sanctions orders exist to extend UK sanctions regimes into territorial law, and local regulators describe their obligation to implement UK sanctions measures through these orders. That provides a basis for firmer UK demands: common enforcement standards, minimum resourcing for sanctions units, mandatory reporting and auditing, and consequences for institutions that repeatedly fail.

   
   

3. Beneficial ownership access that is meaningful, not performative

   
   

   The argument is no longer about whether a register exists, but whether it is usable. A register that requires notification of the beneficial owner, grants broad exemptions, or allows disclosure to be obstructed through procedural tactics can preserve secrecy while claiming transparency. Recent Parliamentary and civil society commentary has focused precisely on that risk. Britain can, if she chooses, set minimum criteria for ‘accessible’ registers—tight timelines for disclosure, narrow exemptions, strong penalties for false filings and genuine public or robust ‘legitimate interest’ access that cannot be gamed.

   
   

4. Targeting professional enablers and service providers

   
   

   Offshore finance does not run on paper alone. It runs on lawyers, corporate service providers, accountants, ship managers and insurance intermediaries. Britain’s domestic economic crime reforms were partly designed to reduce anonymous ownership and strengthen the state’s ability to pursue illicit finance. Enforcement has however been uneven, as Reuters reporting on the UK property transparency regime has illustrated—fines exist, but collection and follow-through have lagged. A coherent approach would treat offshore service providers as part of the sanctions perimeter: if a provider repeatedly forms, manages or insures structures used for evasion, there should be escalating consequences—licensing action, disqualification, asset freezes, or criminal investigation where appropriate.

   
   

5. Maritime measures against the shadow fleet

   
   

   The United Kingdom can also apply pressure through shipping controls—sanctioning insurers and intermediaries, tightening port entry conditions, and, where lawful, detaining vessels that fall within sanctions and enforcement powers. The Reuters report on sanctions against an insurer linked to shadow fleet activity is a live example of using the financial choke-points around shipping rather than chasing individual tankers one by one. The aim is to raise the operating cost and legal risk of the shadow fleet until it is no longer commercially viable.

The strategic choice Britain keeps postponing

Britain cannot credibly claim that sanctions are a central instrument of her Ukraine policy while tolerating a parallel system—within her own constitutional orbit—that helps a sanctioned state to keep trading, keep insuring and keep hiding. The hard truth is that overseas financial centres are not merely an inherited historical oddity. In wartime they can function as strategic infrastructure.

There is of course a price to acting. Compelling reforms by Order in Council will inflame territorial politics. Tightening disclosure rules will reduce the attractiveness of incorporation business. Aggressive enforcement will produce litigation and diplomatic friction. Yet the alternative is also a choice—one in which Britain accepts that her offshore network will continue to be used by Russia and by any other state willing to exploit opacity as a tool of economic warfare.

Ukraine’s allies have tried to construct a sanctions regime that makes aggression expensive. If Britain wishes that regime to be more than theatre, she will have to decide—openly, and soon—whether her offshore territories are to remain commercial sanctuaries first and strategic liabilities second, or whether they are to be treated as part of the sanctions battlefield, with rules and enforcement to match.