Australia sanctions thousands of people and companies. But are they effective?

Australia should identify and locate all Russian and Iranian Islamic Revolutionary Guard Corps-linked assets in this country, which are currently subject to sanctions, an inquiry has found.

The federal parliamentary committee also recommended the government work with global partners to boost its focus on enforcing sanctions and closing loopholes that allow Iran and Russia to evade the financial impact of Australian sanctions.

“The committee also received evidence suggesting that listed individuals and entities linked to Iran’s Islamic Revolutionary Guard Corps (IRGC), an organisation involved in multiple, serious human rights violations and linked to international terrorist activity, might have developed methods to circumvent sanctions undetected,” its report said.

It cited examples that included using front companies and complex networks to hide the origins and destination of funds, smuggling and illicit trade, using cryptocurrencies that were difficult to trace, and bartering to sidestep international financial systems monitored by the US and its allies.

From travel bans and the freezing of bank accounts to bans on trading and importing goods, the use of sanctions by countries as a foreign policy tool has seen significant growth in recent years.

From 2021-2023, more sanctions were laid down internationally than the previous 10 years combined.

The United States, the United Kingdom and the EU have led the world in sanctions, with the US accounting for 58 of the 121 sanctions laid down globally last year.

Australia has also followed the global trend of increased sanctions.

A Department of Foreign Affairs and Trade list shows that as of February 2025, more than 8,000 people or entities have been sanctioned by the Australian government.

From Russian cyber-gangs and Congolese military leaders to North Korean arms dealers and extremist militants, the scope of the sanctions is broad and far-reaching.

But a Senate inquiry into Australia’s sanction regime has shed light on its shortcomings, which experts say could be improved.

Loopholes and legislative gaps

The Senate inquiry highlighted how sanctioned countries were able to circumvent the sanctions, using oil and coal as examples.

Australia has banned the import of fossil fuels such as oil from Russia since 2022, after President Vladimir Putin’s regime invaded Ukraine.

However, there is nothing stopping the import of Russian oil that has simply been refined in a third-party country such as India or China.

It means a system has developed in which refined petroleum — Australia’s biggest import — is purchased indirectly from Russia regardless of sanctions.

Citing data from Finland’s Centre for Research on Energy and Clean Air, the Senate report said:

“In the first six months of 2024, Australia reportedly imported more than 1.4 million tonnes of refined oil products from at least four refineries sourcing Russian crude,”.

Anton Moiseienko is a senior lecturer in law at Australia National University and made a submission to the Senate inquiry.

He said the word “loophole” did not seem appropriate, as the trade was not occurring in secret.

“It’s not something that is happening clandestinely and it’s not a result of some sort of clever sanctions evasion activity,” he said.

“It’s almost like a political and policy choice.”

Strengthening our sanctions

The Senate committee made eight recommendations to the government aimed at strengthening Australia’s sanction regime.

One issue the committee identified was that Australia had been behind the curve with its sanctions, often following in the wake of major powers such as the UK and EU.

Lara Khider from the Australian Centre for International Justice said Australia lagged behind like-minded countries on sanctions.

“In some instances, while the US, UK, EU and Canada have credibly sanctioned individuals for human rights abuses, Australia has not taken similar action, creating the risk of it becoming a potential safe haven for these undesirable individuals,” Ms Khider said.

It is a position the Senate committee agrees with.

“The committee notes that Australia has at times lagged many months behind its allies in imposing sanctions,” the committee said.

“The reasons for this are not clear from evidence provided by government agencies.”

The inquiry also looked into the reusing of financial assets such as bank accounts and property that have been frozen by the government.

While the US, UK and Canada have funded Ukrainian war efforts through the reappropriation of frozen Russian assets, Australia does not currently have any legal avenues to do so.

The Department of Foreign Affairs and Trade told the committee that Russian assets had been frozen in Australia but it was “well less than $100 million”, not the $9 billion reported in the media.

The Senate committee has recommended the government look into what legislative changes would be necessary to enable Australia to seize the assets.

Ms Khider said any legislative changes should be balanced with strong safeguards to prevent misuse, but would be crucial in the fight against bad actors internationally.

“Strengthening these legal avenues would not only enhance Australia’s ability to combat illicit financial flows but also reinforce its commitment to global human rights and anti-corruption efforts,” she said.

While seizing and utilising frozen assets may be on the table legislatively, a larger issue still looms: how to find the people that we’ve sanctioned.

Finding the sanctioned

The senate committee identified locating “all Russian and Iranian Islamic Revolutionary Guard Corps-associated assets in Australia” as an issue to be considered.

Recent sanctions have resulted in some high-profile freezing and seizures of assets, such as the forced selling of Premier League football team Chelsea over owner Roman Abramovich’s ties to Vladimir Putin.

When the Commonwealth decides to sanction a person or entity, their name will be given to organisations such as banks with instructions to freeze their assets and report it to the government.

But more commonly, people who are the targets of sanctions are unlikely to hold assets in their name, opting instead to use shell companies, trusts and other corporate arrangements.

Such is the magnitude of the problem that government agency AUSTRAC established a dedicated intelligence team in 2022 just to track Russian sanctions evasion.

But Dr Moiseienko says the solution to finding someone who may be hiding their wealth behind several proxies or corporate layers is still unknown.

“To be honest, there’s no good answer to this. It seems to be an area of dramatic uncertainty,” he said.

“The reality is that if not much is happening by way of looking beyond the surface and trying to find those hidden assets, then the regime is not going to be very effective.”

In response to the Senate inquiry, the government said it was considering the recommendations.

“The Albanese government has also taken action to hold Russia to account for its illegal and immoral invasion of Ukraine with more than 1,200 targeted financial sanctions and travel bans,” a spokesperson for Foreign Affairs Minister Penny Wong said.

“We are considering the recommendations from the Liberal-led committee, however, it is longstanding practice for Australian governments not to publicly comment on potential sanctions as doing so may render them ineffective.”