This paper examines how sanctions compliance and controls related to advanced conventional weapons can contribute to confidence building and stabilization in the context of fragile normalization in the South Caucasus. In particular, it focuses on the backdrop of expanded international sanctions regimes following Russia’s full-scale invasion of Ukraine in 2022. While the South Caucasus comprises multiple states, this paper focuses primarily on Armenia and Azerbaijan, in line with its emphasis on post-conflict dynamics, sanctions compliance and confidence building following the start of the Armenia–Azerbaijan peace process in 2025. The paper analyses regional vulnerabilities related to transit, re-export and dual-use goods. It explores how institutional capacity, regulatory frameworks and private-sector engagement shape compliance outcomes, and it assesses the role of coordinated action by the European Union and the United States in supporting risk mitigation and responsible trade. The main argument in this paper is that sanctions compliance, when embedded in transparent and cooperative governance frameworks, can serve as an indirect but meaningful confidence-building measure in post-conflict environments.