Compliance Risks for Global Businesses

Geopolitical Tensions With Iran Raise Compliance Risks for Global Businesses

Escalating tensions between the United States and Iran are creating a more complex compliance environment for multinational companies, even for firms with no direct commercial ties to the country. Legal experts say heightened geopolitical pressure is increasingly translating into enforcement scrutiny, supply-chain risk and exposure through third-party intermediaries. Iran has long been subject to one of the most restrictive sanctions regimes in the world. Yet sanctions lawyers say that tightening geopolitical pressure can still significantly alter the compliance landscape, particularly as regulators shift their focus toward indirect transactions and diversion pathways.

“Iran has been subject to what we would consider one of the handful of countries that are subject to comprehensive sanctions and export controls—pretty much as tight as the belt can go—but that still leaves quite a bit of room for evolving geopolitical risk beyond the black-letter law written in the regulations,” said Trevor Schmitt, an attorney at Arnold & Porter who focuses on export controls and economic sanctions. He added that rising tensions often push sanctioned actors to seek alternative procurement channels for restricted technologies.

For companies operating in sectors such as energy, advanced manufacturing and technology, the most immediate risk lies in supply-chain exposure. Transactions routed through third countries, intermediaries or commodity traders can inadvertently create sanctions violations if Iranian-origin goods or financing become embedded in commercial activity. “For companies operating in sensitive technology sectors, raised tensions mean Iran and Iran-allied countries are going to look to get that sensitive technology and get more creative about that, so private actors need to be more vigilant and really up their compliance game to identify diversion locations and supply-chain risks,” Schmitt said. Legal practitioners also warn that enforcement intensity often rises during geopolitical crises, even if underlying regulations remain unchanged. U.S. Authorities may scrutinize transactions more closely and use enforcement actions as deterrents.

“Enforcement in the national security law space is highly discretionary, and in times of high tension officials may look at companies that have violations involving Iran with particular scrutiny and use those cases as examples of why sensitive technologies must not reach Iran, directly or indirectly,” Schmitt said. For policymakers, the issue sits within a broader strategic framework that blends economic pressure with diplomacy and military deterrence.

“Statecraft is the orchestration of military force, economic pressure, legal authority and diplomacy toward political ends,” said Jason Wright, a partner at Steptoe LLP who practices in the national security sector and served more than 20 years in the U.S. Army. He noted that sanctions and export controls remain among Washington’s most flexible tools, but their effectiveness depends on enforcement credibility and global cooperation. Wright added that legal constraints and attribution challenges complicate responses to indirect activity linked to Iran, especially when proxy actors or deniable operations are involved.

The result is a compliance landscape that extends far beyond direct trade with Iran. Companies must now assess risks across entire supply chains, including distributors, logistics providers and commodity origin points. As geopolitical tensions fluctuate, sanctions specialists say the biggest vulnerability for companies may not be intentional misconduct but rather the complexity of global commerce itself—where a transaction that appears routine can suddenly fall within the crosshairs of national security enforcement.