Overview
The Sanctions Update is compiled by Steptoe’s International Trade and Regulatory Compliance team and Steptoe’s Strategic Risk team. You can subscribe to receive the Sanctions Update every week through Steptoe’s International Compliance Blog and Stepwise Risk Outlook publication home pages.
For more information or advice on any of the developments discussed below, please contact a member of our sanctions team here.
US Developments
Federal Circuit Upholds Lower Court Decision Invaliding IEEPA Tariffs
On August 30, the U.S. Court of Appeals for the Federal Circuit held that the International Emergency Economic Powers Act (IEEPA) does not authorize President Trump’s reciprocal tariffs or the “fentanyl trafficking” tariffs imposed on Canada, Mexico, and China. IEEPA is one of the key statutes underpinning many US economic sanctions programs, which until recently had never been used to impose tariffs. The Federal Circuit heard the appeal en banc and its ruling was a split 7 – 4 decision. The majority largely upheld the U.S. Court of International Trade’s (CIT) decision in May in which the CIT panel found that the president did not have “unbounded” or “unlimited” tariff authority under IEEPA.
However, the majority did not foreclose the possibility that IEEPA authorizes some tariffs. The Federal Circuit explicitly stated that its ruling does not decide “whether IEEPA authorizes any tariffs at all.” In particular, the court did not address the “secondary” tariffs that the Trump administration has imposed on India for its purchases of Russian oil or the tariffs that the US has imposed on Brazil related to the trial of former Brazilian president Jair Bolsonaro.
Although the ruling is a setback for the Trump administration’s trade and industrial policy, the Federal Circuit did not immediately block the tariffs, and it is expected that the Trump administration will quickly appeal the decision to the Supreme Court.
US Supports E3 “Snapback” of UN Sanctions on Iran
The US has expressed its support for the decision of France, Germany, and the United Kingdom (collectively, the “E3”) to initiate a “snapback” of United Nations (UN) sanctions on Iran, pursuant to the terms of UN Security Council (UNSC) resolution 2231 (2015).
In a Department of State press release, Secretary of State Marco Rubio expressed the US’s appreciation for “the leadership of [its] E3 allies.” He also noted that, over the coming weeks, the US “will work with [the E3] and other Members of the [UNSC] to successfully complete the snapback of international restrictions on Iran.” Sen. Tom Cotton (R-AK) similarly applauded the E3’s decision, stating that the “triggering of these [UN] sanctions will keep the pressure on Iran” and deprive it of the “funds it uses to finance its terror networks and build ballistic missiles.”
For its part, Iran had previously warned the E3 that triggering the “snapback” mechanism would result in “consequences,” though it has not specified those consequences.
OFAC Continues to Target Iranian Oil Smuggling Operations
The Department of the Treasury’s Office of Foreign Assets Control (OFAC) has imposed sanctions on Waleed al-Samarra’i, a United Arab Emirates-based businessman, and his shipping network for allegedly smuggling Iranian oil disguised as Iraqi oil. According to OFAC, al-Samarra’i runs a network of companies that covertly blend Iranian and Iraqi oil and then market the oil internationally as solely of Iraqi origin. OFAC alleges that al-Samarra’i’s network generates around $300 million of value to Iran and its other partners annually.
The designation follows recent sanctions on July 3 imposed on another network that allegedly smuggled blended Iraqi and Iranian oil and August 21 sanctions on a “shadow fleet” allegedly smuggling Iranian oil. Iran’s petroleum and petrochemical sectors have been primary targets for the Trump administration following President Trump’s National Security Presidential Memorandum 2 (NSPM-2), which renewed the “maximum pressure” campaign against Iran.
OFAC, BIS Take Major Steps in Sanctions Relief for Syria
OFAC and the Department of Commerce’s Bureau of Industry and Security (BIS) have taken steps to provide Syria with sanctions and export controls relief, as instructed in President Trump’s June 30, 2025, Executive Order (EO) 14312, “Providing for the Revocation of Syria Sanctions.”
On August 25, OFAC announced the publication of a Final Rule to remove the Syria Sanctions Regulations (SySR) from the Code of Federal Regulations. The removal follows Trump’s revocation of the EOs that placed comprehensive sanctions on Syria. OFAC had previously removed 518 individuals and entities from the List of Specially Designated Nationals and Blocked Persons (SDN List) sanctioned under the SySR. OFAC continues to maintain sanctions on over one hundred individuals and entities affiliated with the Bashar al-Assad regime.
On August 28, BIS published a Final Rule easing license requirements for certain exports to Syria. BIS stated that, as of September 2, US-origin goods, software, and technology that are classified as EAR99 can generally be exported to Syria without a license under new License Exception Syria Peace and Prosperity (SPP), and certain other license exceptions are being expanded to permit the export to Syria without a license of certain consumer communications devices and certain items related to civil aviation, among other things. The rule also facilitates the approval of licenses for exports to Syria related to telecommunications infrastructure, sanitation, power generation, and civil aviation. All other applications for exports of dual-use items to Syria will be reviewed on a case-by-case basis.
OFAC Sanctions North Korean Revenue Network
OFAC designated North Korean, Chinese, and Russian individuals and entities for their alleged involvement in fraudulent IT worker schemes aimed at generating revenue for the North Korean regime. OFAC stated that this action builds on the designation of Chinyong Information Technology Cooperation Company from May 23, 2023, as well as on recent OFAC actions from July 8 and July 24 related to alleged North Korean revenue-generating networks.
On the same day as OFAC’s announcement, in a joint press release, the Department of State, Japan, and South Korea reaffirmed their commitment to enhancing their coordination and deepening collaboration between the public and private sector to counter malicious cyber activities and illicit revenue generation by North Korea.
FinCEN Issues Advisory and Trend Analysis on Chinese Money Laundering Networks
The Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued an Advisory and Financial Trend Analysis (FTA) related to Chinese money laundering networks (CMLNs) and their activities involving the United States.
FinCEN stated that CMLNs are professional money launderers that are “heavily utilized” by Mexico-based cartels, many of which are designated as FTOs or transnational criminal organization (TCO), to launder illicit drug proceeds into the US.
FinCEN’s Advisory urges financial institutions to be vigilant in identifying and reporting suspicious transactions potentially related to the use CMLNs by cartels, such as the Jalisco New Generation Cartel (CJNG), Sinaloa Cartel, and Gulf Cartel. It provides multiple red flags to help financial institutions identify these such transactions.
UK Developments
UK Tightens Scrutiny of Defence Exports to Israel and Blocks Delegation from Arms Fair
In response to increased parliamentary and public interest in, and scrutiny of, the UK’s control of defence and dual-use exports to Israel, the Department for Business and Trade has published details of Israel export licensing through July 31, 2025. The dataset offers high level insights into the number and nature of active export licences for military and dual-use items including Israel as a destination, as well as the number of pending licence applications and licensing decisions where Israel is included as a destination.
Separately, the UK Government reportedly has blocked an Israeli government delegation from attending the Defence and Security Equipment International (DSEI) exhibition in London. The decision followed growing political and public scrutiny of UK arms exports to Israel during the ongoing conflict in Gaza. Individual Israeli defence companies can still exhibit at the event.
EU Developments
EU Finance Ministers Discuss Measures for Upcoming Sanctions Package Against Russia
The EU is ramping up efforts to exert pressure on Russia through a combination of targeted sanctions and military support for Ukraine. On August 29–30, EU defense and foreign ministers met in Copenhagen for strategic discussions led by Denmark’s EU Council presidency. These informal meetings focused on identifying new strategies to weaken Russia’s ability to sustain its war efforts.
According to reports, a discussion paper circulated ahead of the Copenhagen meetings outlines proposed measures for the upcoming sanctions package against Russia. Among the proposals are measures targeting the financial sector, including cryptocurrencies, their operators, and infrastructure. The paper also highlights the importance of addressing Russia’s oil and gas export revenues, which remain a critical source of funding for its war efforts.
Additional measures under review include the application of the anti-circumvention tool introduced in the 11th sanctions package, the imposition of new import restrictions on Russian goods, and the potential integration of conditionality into the enforcement of the 19th sanctions package.
E3 Moves to Reactivate UN Sanctions on Iran
The European countries known as the E3—France, Germany, and the UK—are preparing to reactivate UN sanctions on Iran using the snapback mechanism outlined in the Joint Comprehensive Plan of Action (JCPoA), an agreement concluded in July 2015 to ensure the peaceful nature of Iran’s nuclear program in exchange for sanctions relief. In a formal letter of notification directed to the UN Security Council, the E3 stated that Iran has significantly violated its commitments under the JCPoA by amassing 60% highly enriched uranium without any credible civilian justification, restarting prohibited uranium enrichment activities, and failing to cooperate with the International Atomic Energy Agency (IAEA), which is tasked with monitoring Iran’s nuclear program.
With October 18 marking the deadline for the E3 to trigger the snapback of UN sanctions, the notification opens a 30-day window for Iran to address the concerns raised. During this period, a new resolution may be proposed to continue sanctions relief. If no resolution is adopted, six previously implemented UN Security Council resolutions will automatically be reinstated, restoring restrictive measures such as arms embargoes, restrictions on ballistic missile development, asset freezes, travel bans, and bans on nuclear-related technology.
Iran has rejected the E3's move to revive the snapback mechanism, with Foreign Ministry spokesperson Esmaeil Baghaei warning of severe consequences. Baghaei further stated that during a recent meeting in Geneva, Iran clearly expressed its position that the E3 does not have the right to trigger the mechanism.
EU Plans Stricter Measures to End Russian Energy Dependencies
The EU is reportedly advancing plans to implement stricter requirements for companies to verify the origin of imported gas. This initiative is part of ongoing discussions within the EU Council to reach a negotiating position regarding the European Commission’s legislative proposal to completely phase out dependencies on Russian oil and gas by January 1, 2028.
A confidential document outlining the latest negotiating proposal includes new requirements for gas importers to verify and provide documentation on the source of imported fuel. Additionally, companies importing liquefied natural gas (LNG) from Russia would be required to disclose the proportion of Russian gas contained in mixed cargoes.
EU ministers are scheduled to meet this week to discuss the proposal, which aims to increase transparency and support the enforcement of the planned phase-out.
Asia-Pacific Developments
China Accepts Sanctioned Russian LNG, Signaling Strategic Shift
China has received its first shipment of liquefied natural gas (LNG) from Russia’s sanctioned Arctic LNG 2 project, as the Arctic Mulan docked at the Beihai terminal in Guangxi province on August 28. This delivery, carried by a vessel from Russia’s “shadow fleet,” marks a turning point for the $21 billion Novatek-led venture, which has struggled to export cargoes since US sanctions were imposed in late 2023. Despite producing multiple shipments since August 2024, none had been accepted abroad until now, with tankers left idling offshore. The timing of the delivery, shortly after the Alaska summit between Putin and Trump, suggests a possible shift in China’s energy policy and its confidence in shielding domestic firms from US penalties. While the delivery could reshape global LNG flows and deepen Russia-China energy ties, it’s still unclear if this marks the start of ongoing imports, as nearly a million tons of sanctioned Russian LNG remain undelivered.
Sanctions on Yangshan Port Trigger Price Fluctuations in China’s Energy Markets
Concerns over US sanctions targeting two Chinese oil storage terminals—Yangshan Shengang in Zhejiang and Qingdao Port Haiye in Shandong—have caused instability in China’s crude and fuel oil futures markets. These facilities are key delivery points for futures contracts on the Shanghai Futures Exchange (SHFE) and the Shanghai International Energy Exchange (INE), and the sanctions have raised fears about disruptions in physical deliveries and reduced storage capacity. Following the announcement, trading volumes surged and prices fluctuated sharply, with investors adjusting positions amid uncertainty. Meanwhile, bunker fuel premiums at Shanghai and Zhoushan ports have nearly doubled, reflecting heightened market tension despite limited direct supply impact.
