Sanctions and the HNWI reputation risk: understanding the new landscape

The global sanctions environment has introduced new complexities for high-net-worth individuals (HNWIs), even for those not directly subject to sanctions themselves. In this article, our team explores how geopolitical volatility, media scrutiny and financial de-risking converge to create a new environment where simply being ‘legally clean’ is no longer enough – associations, past business ties or even nationality alone can trigger negative attention.

The result? Legal, financial, media and stakeholder pressures intersect, drawing intense global scrutiny.

In this environment, reputation management operates alongside legal and compliance realities. PR agencies must ensure that any engagement is fully aligned with sanctions laws while advising clients on the reputational risks that come with geopolitical volatility. For family offices and advisors managing cross-border holdings, it is essential to understand how quickly public narratives can shift when sanctions are announced, potentially affecting personal reputation even without legal wrongdoing.

Importantly, transparency, proactive narrative management and scenario planning are vital, but so is clarity on what a communications team can and cannot do under the law. Our advice to non-sanctioned clients operating in high-risk markets is to prepare for potential scrutiny with clear, evidence-backed narratives and to build relationships with trusted stakeholders before crises emerge.

While this is a challenging environment, responsible, compliance-first communications planning ensures that reputation management efforts do not compromise legal standing, and that clients can manage their businesses with clarity and credibility.

The broadening reach of sanctions

Sanctions are intended primarily to constrain financial and political influence, yet their ripple effects extend far beyond legitimate targets. Even individuals not explicitly listed on any sanctions registry may fall victim to de-risking, a phenomenon where financial institutions, wary of reputational fallout, close or restrict accounts to avoid potential regulatory risks (Ashtons). This trend has accelerated post 2022 as banks enhance due diligence on politically exposed persons (PEPs) and anyone connected to high-risk jurisdictions (Lexology).  Even without press leaks, account closures can spark rumours, but proactive disclosure to banking networks can reduce panic and prevent shutdowns.

Take, for example, a philanthropist with Middle Eastern heritage or a tech entrepreneur with Russian roots. When sanctions hit regions connected to their backgrounds, their banks might pre-emptively close accounts or restrict services, even without any evidence of wrongdoing. What follows is a chain reaction impacting their reputation across partners, regulators, clients, and media narratives.

Case Study: Roman Abramovich

One of the most emblematic cases of this phenomenon involves Roman Abramovich, the former Chelsea FC owner. In March 2022, the UK and EU imposed sanctions on him following Russia’s actions in Ukraine. His assets were frozen, and Chelsea required a government license to operate (The Guardian). Public and media criticism intensified, with scrutiny over his ties to Putin’s regime.

The story did not end there. In late 2023, the Cyprus Confidential leaks revealed that Abramovich had transferred beneficial ownership of offshore trusts to his children in February 2022, just weeks before sanctions were imposed (TBIJ). Critics argued this was an attempt to shield assets, illustrating how sudden public scrutiny can alter the narrative, even if actions are legally compliant. Abramovich challenged the EU sanctions in court but lost his case in December 2023 (Reuters).

Overnight, Abramovich’s reputation shifted from billionaire benefactor to emblematic ‘Russian oligarch.’ The intensity of the media backlash, combined with regulatory and legal scrutiny, illustrates the high reputational stakes involved.

Case Study: Mikhail Fridman and Alfa Group

Similarly, Mikhail Fridman, one of the co-founders of Alfa Group, was added to the EU and UK sanctions lists in early 2022 (Spotlight Corruption). Limited public statements and a lack of sustained narrative control, combined with Fridman stepping down from boards, left a void that was quickly filled with speculation.

Fridman’s legal team, however, mounted a vigorous response, initiating challenges in the EU General Court in Luxembourg. In April 2024, the court found insufficient evidence to justify his inclusion on sanctions lists during 2022–2023 (Politico).  This decision helped shift the narrative, positioning Fridman less as a violator and more as a victim of flawed sanctions policy.

Fridman’s case provides clear takeaways: quick legal action, coupled with coordinated PR and compliance alignment, can help reverse reputational damage even under intense political pressure.

Conclusion

The sanctions era has created a new reputational reality for HNWIs, where past associations, nationality and market exposure can trigger intense attention overnight. Scrutiny is swift, expectations are high and banks act pre-emptively. Reputation management is now inseparable from legal and compliance readiness.

By understanding how sanctions ripple beyond their intended targets, and learning from high-profile cases like Abramovich and Fridman, HNWIs can better anticipate the risks, prepare for narrative shifts and protect their standing in a volatile geopolitical reality.

Reach out to us to discuss how we can support your legal, compliance and communications planning, while protecting your interests in this environment of heightened scrutiny, sanctions risks and global volatility: [email protected].