SHADOW Fleet Sanctions Act Hits Russia's Illicit Shipping Network, Authorizes $30M for Enforcement

The aptly named Sanctioning Harborers And Dodgers Of Western Sanctions Act of 2025—or the SHADOW Fleet Sanctions Act of 2025—is a serious piece of legislation aimed squarely at dismantling Russia’s ability to use foreign ships to bypass international sanctions. This bill doesn't just target Russian entities; it establishes a massive framework of secondary sanctions to punish any foreign person or vessel—from captains to insurers to port operators—who knowingly helps move Russian oil, arms, or other goods in violation of price caps or safety standards. The President is mandated to start imposing these sanctions within 90 days of enactment, targeting anyone who acts unsafely or ignores the price cap on Russian crude oil (Sec. 111).

The 'Should Have Known' Standard for Global Shipping

This bill introduces a powerful enforcement mechanism by defining "knowingly" to include situations where a person really should have known about the sanctionable activity based on the facts (Sec. 101). For anyone working in global logistics, shipping, or finance, this raises the compliance bar significantly. If you are an insurer or a port operator, you can no longer plead ignorance if the vessel you are dealing with is clearly engaging in shady behavior. The bill lists twelve signs of "unsafe behavior" that can trigger sanctions, including refusing to take on a pilot, turning off the Automatic Identification System (AIS) without good reason, or having a history of frequent ownership changes (Sec. 111). If a foreign vessel exhibits three or more of these signs while moving Russian oil, it’s fair game for U.S. sanctions.

Secondary Sanctions Hit Ports and Refiners

One of the most consequential parts of this bill is the expansion of secondary sanctions. If you own or operate a foreign port in China or India, and you accept oil from a vessel that is either sanctioned or selling Russian oil above the price cap, your port could face penalties (Sec. 113). Similarly, foreign refiners who knowingly process Russian petroleum products transported on one of these sanctioned "shadow fleet" vessels also face penalties (Sec. 112). This is the U.S. government cutting off the entire supply chain—from the ship itself to the destination port and the refiner—making it much harder for Russia to find willing partners for illicit trade. For businesses in Asia, this means a major increase in due diligence, as the cost of getting caught is now severe: frozen assets and visa bans (Sec. 181).

A New Focus on Enforcement and Funding

The bill also addresses the reality that sanctions are only as good as the resources used to enforce them. It authorizes a total of $30 million for fiscal years 2026 and 2027—$15 million each for the State Department’s Office of Sanctions Coordination and the Treasury Department’s Office of Foreign Assets Control (OFAC)—to beef up staffing and technology needed to track and designate these entities (Sec. 202). This commitment of funding signals that the U.S. is serious about moving beyond just announcing sanctions and actually dedicating the staff necessary to investigate complex global evasion schemes. Furthermore, the State Department must create a public database to track ships involved in sabotage and illicit activities, increasing transparency for everyone else in the maritime world (Sec. 123).

Targeting the Defense Industry and Energy Projects

Beyond the shadow fleet, the bill tightens the screws on Russia’s military supply chain. It mandates sanctions on any foreign person who sells, leases, or provides critical goods—like CNC tools, semiconductors, or specialized software—to the Russian defense industrial base (Sec. 171). This is a direct shot at the companies providing the parts Russia needs to keep its war machine running. The consequences for being named in this report are immediate: visa bans and asset freezes. The bill also targets specific Russian energy projects, mandating sanctions on officials involved in the Yamal and Arctic LNG projects (Sec. 161).

The Fine Print: Waivers and Military Cooperation

While the bill increases enforcement, it also includes important safety valves and one notable change to existing law. The President retains the power to issue 180-day waivers for sanctions if it’s in the U.S. national security interest, provided Congress is notified (Sec. 182). Crucially, the bill also removes previous statutory limitations on U.S. military cooperation with the Russian Federation (Sec. 203). While this may seem counterintuitive given the sanctions focus, it’s a technical change that clears out old, superseded language, allowing the Executive Branch more flexibility in its dealings, though the sanctions themselves remain firmly in place. Finally, the bill authorizes $200 million in emergency funding for the Countering Russian Influence Fund to support Ukraine and U.S. allies in Central and Eastern Europe (Sec. 204), directly linking the enforcement effort to broader support for Ukraine’s security.