A Warsaw-based trading company received a payment rejection from its bank on a Monday morning. The counterparty – a long-standing supplier – had appeared overnight on the EU consolidated sanctions list. The company's contracts, open invoices, and pending shipments were suddenly frozen. No prior warning. No grace period. The consequences were immediate and, without swift legal intervention, potentially irreversible.

EU sanctions regulations apply directly in Poland without any implementing act. Polish businesses dealing with sanctioned entities face asset freezes, transaction prohibitions, and personal liability for directors who authorise prohibited payments. The Polish Financial Supervision Authority (KNF) and the General Inspector of Financial Information (GIIF) are the primary enforcement bodies. Non-compliance can result in criminal penalties and permanent reputational damage.

This case study examines how a Polish mid-market company confronted that scenario, the legal strategy deployed, and the transferable lessons for any business operating across borders. The analysis covers background, the compliance and litigation strategy, the process before Polish authorities, and practical takeaways for sanctions risk management.

What was the background of the sanctions exposure?

The client was a Mazowieckie-based distribution company with supplier relationships across several post-Soviet markets. When the EU expanded its Russia-related sanctions package, one of its key counterparties was designated. The client had outstanding receivables exceeding EUR 800,000 and three shipments in transit. Under EU sanctions law, all funds and economic resources belonging to or controlled by a designated person must be frozen immediately upon designation.

The company had no internal sanctions screening process. Its compliance programme covered anti-money laundering obligations under Polish law but did not extend to EU restrictive measures. The National Court Register (KRS) records showed the client was a wholly Polish-owned entity – but the counterparty's ownership structure concealed indirect control by a designated individual. That indirect control is enough to trigger the freeze obligation.

Three risks crystallised simultaneously. First, the bank froze the incoming payment under its own compliance obligations. Second, the goods in transit were detained at a Polish border crossing. Third, the company's directors faced potential personal liability for having authorised a payment one week before the designation – a payment that, under the retroactive analysis applied by enforcement authorities, fell within a suspicious window.

  • Immediate transaction freeze affecting EUR 800,000 in receivables
  • Goods detained at the border pending customs clearance review
  • Directors under preliminary inquiry by the GIIF
  • Counterparty contracts voided by operation of EU law

What legal strategy did the team deploy?

The immediate priority was to prevent the preliminary inquiry from escalating into a formal criminal investigation. Under Polish criminal law, knowingly circumventing sanctions carries custodial sentences. The key factual question was whether the pre-designation payment constituted a prohibited transaction. Our team's position was that it did not: the payment was authorised and executed before the designation date, and no due-diligence failure could be attributed to the directors at that point.

We submitted a detailed memorandum to the GIIF within 14 days of being instructed. The memorandum documented the payment timeline, the company's screening obligations under the then-applicable compliance framework, and the absence of any red flags visible before designation. We also applied to the Ministry of Finance for a specific authorisation – a derogation licence – permitting the release of frozen funds to cover the company's legitimate contractual claims for goods already delivered.

Simultaneously, we filed an administrative challenge to the customs detention of the goods. The detention had been based on a border agency interpretation that the goods themselves were "economic resources" of the designated person. That interpretation was incorrect: the goods had passed to the client under a delivered-duty-paid term before the designation date. Title had transferred. The goods were the client's property, not the counterparty's.

We secured a reversal of the customs detention for a distribution client in the Mazowieckie region (winter 2025). The administrative court confirmed that title transfer before designation removes goods from the scope of the freeze obligation. That ruling became the foundation for the GIIF to close the preliminary inquiry without charges.

How did the process unfold before Polish authorities?

The derogation licence application took 47 days to process. The Ministry of Finance requested two rounds of supplementary documentation: a detailed breakdown of the contractual relationship and evidence that the funds would not benefit the designated person once released. This is the standard evidentiary burden under EU sanctions regulations for derogation requests. Applicants must demonstrate that the payment serves a legitimate purpose and that no indirect benefit flows back to the listed entity.

The GIIF inquiry ran in parallel. Investigators focused on the company's Know Your Customer (KYC) and sanctions-screening practices. The absence of a formal sanctions compliance programme was noted – but it was not treated as evidence of intent. Polish enforcement practice distinguishes between systemic non-compliance (which attracts sanctions) and isolated gaps in an otherwise functioning compliance structure. The memorandum we submitted demonstrated that the company had KYC processes; it simply had not extended them to EU restrictive measures screening.

(That distinction matters enormously in practice. Companies with no compliance infrastructure at all face a far harder argument before the GIIF than companies with partial but documented processes.)

The inquiry was closed within 90 days. The derogation licence was granted. The frozen receivables – EUR 800,000 – were released to the client's account. The goods, already released following the administrative court ruling, had been resold to a domestic buyer. Total financial loss was limited to storage and legal costs. Without intervention, the loss would have been total and the directors would have faced criminal exposure.

For context on how cross-border enforcement interacts with Polish judicial processes, see our step-by-step guide to enforcing a United States judgment in Poland. For parallel matters involving internal compliance reviews triggered by regulatory inquiries, our internal investigations methodology sets out the structured approach we apply.

What are the transferable lessons for Polish businesses?

The single most important lesson is speed. EU sanctions designations take effect at the moment of publication in the Official Journal of the European Union. There is no notification to affected counterparties. A company that acts within 48 hours of learning of a designation preserves far more options than one that waits. The 14-day window for GIIF submissions is not a deadline – it is a strategic target. Earlier is better.

The second lesson concerns compliance architecture. Sanctions screening is not a banking obligation alone. Any Polish company with non-EU counterparties, or with counterparties that have non-EU ownership chains, faces direct exposure. The EU consolidated list is publicly available and can be integrated into standard KYC workflows at minimal cost. The cost of integration is a fraction of the cost of a single freeze event.

We obtained interim relief protecting assets worth over EUR 1.5m for a logistics client in Lower Silesia (spring 2026), where pre-emptive sanctions screening had identified a risk before designation occurred. Early identification gave the client 30 days to restructure the commercial relationship before the freeze would have applied.

The third lesson is jurisdictional. EU sanctions apply across all 27 member states, but enforcement practice varies. Polish enforcement bodies – the GIIF, the KNF, and customs authorities – apply the regulations in ways that reflect domestic administrative law traditions. Understanding that local enforcement texture is what makes the difference between a successful derogation application and a rejection. For matters involving Italian counterparties, our guide to enforcing an Italian judgment in Poland addresses the cross-border procedural dimension.

What to prepare before a sanctions risk materialises:

  • Maintain a current sanctions screening log for all non-EU counterparties
  • Document ownership chain analysis for counterparties above EUR 50,000 annual value
  • Establish a 48-hour escalation protocol for designation alerts
  • Identify the relevant Ministry of Finance contact point for derogation applications
  • Retain external sanctions counsel before – not after – a freeze event

Sanctions compliance intersects with broader dispute resolution exposure. A freeze event can trigger force majeure claims, contract termination disputes, and KIO appeal proceedings in public procurement contexts. The sanctions framework, litigation Warsaw practitioners know, does not operate in isolation from commercial law obligations.

Specific situations facing your business require tailored analysis. A freeze that appears manageable on day one can become irreversible if the derogation window closes or if criminal proceedings are opened – forfeiting the company's ability to recover frozen assets entirely.

If your company has counterparties in sanctioned jurisdictions, open receivables above EUR 100,000, or directors under inquiry by Polish enforcement authorities – we will review your exposure, prepare the derogation application, and coordinate the GIIF response: info@kordeckipartners.com.

Frequently asked questions

Q: How quickly does a sanctions designation take effect in Poland?

A: EU sanctions regulations take effect at the moment of publication in the Official Journal of the European Union. Polish banks and payment processors are required to freeze funds immediately. There is no transition period and no advance notice to affected companies. Any transaction executed after that moment – even if already in the banking system – may be treated as a prohibited transfer by enforcement authorities.

Q: Can a Polish company apply for a derogation licence to release frozen funds?

A: Yes. EU sanctions regulations provide for specific authorisations – commonly called derogation licences – that permit certain transactions with sanctioned entities. In Poland, applications are submitted to the Ministry of Finance. The process typically takes 30 to 60 days. The applicant must demonstrate a legitimate purpose and show that no indirect benefit flows to the designated person. Legal representation significantly improves the quality and speed of the application.

Q: Is a common misconception that only banks need to comply with EU sanctions?

A: This is one of the most frequent misunderstandings we encounter. EU sanctions apply to all natural and legal persons within the EU, not only financial institutions. Any Polish company that makes a payment to, receives goods from, or provides services to a designated entity is directly exposed – regardless of whether its bank flags the transaction. The obligation to screen counterparties rests with the company itself, not with its bank.

KORDECKI & Partners is a law firm based in Warsaw and Krakow, advising business clients across 30 jurisdictions. Our team combines expertise in Polish and international law with a practical approach to sanctions compliance, commercial litigation, and cross-border dispute resolution. We work with Polish entrepreneurs, foreign investors, and in-house legal teams. To discuss your situation, contact info@kordeckipartners.com.

Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. KORDECKI & Partners assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@kordeckipartners.com.