Overview
On April 22, 2026, the UK laid secondary legislation creating sanctions end-use controls (“SEUC”) to curb the diversion of certain trade-sanctioned products through non-sanctioned third countries for use in a number of sanctioned jurisdictions or by end users connected with those jurisdictions. The SEUC form part of the UK Government’s continuing efforts to tackle the circumvention of trade sanctions. In coordination with the introduction of SEUC, the Office of Trade Sanctions Implementation (“OTSI”) has issued guidance for businesses that may be affected by the new restrictions. The SEUC will come into effect on May 13, 2026. For companies subject to the new controls and for businesses that export goods and technology subject to trade sanctions to non-sanctioned jurisdictions identified as posing an elevated diversion risk, the new controls are significant not simply because failure to comply with the new licensing pathway constitutes a violation of UK sanctions that may give rise to enforcement action, but because the SEUC are broader in scope than the “catch all” provisions introduced under the EU’s Russia sanctions regime and apply to a broader range of items across 11 UK sanctions regimes.
What the SEUC Do
The SEUC impose a new licensing requirement on exports of certain goods and technology to a non-sanctioned third country when the exporter has been informed by the UK Government that there is a risk of the item’s onward diversion to a sanctioned destination or person connected with the sanctioned destination. The SEUC allow the UK Government to assess and, where necessary, prevent exports where there is a credible risk of diversion of an item subject to trade sanctions. The purpose of the SEUC is to counteract ongoing efforts to circumvent UK trade sanctions through the use of intermediaries and indirect supply chains.
Covered Goods and Technology and Expansion Beyond Existing UK and EU “Catch All” Controls
The SEUC will apply to goods and related technology that are not otherwise subject to UK export controls (i.e., items that are not specified as military items under Schedule 2 to the Export Control Order 2008 or dual-use items under Annex 1 of the Assimilated Dual-Use Regulation). Consequently, the SEUC expands the circumstances in which controls are applied to exports of other goods and related technologies sanctioned under all UK sanctions regimes, which are currently the regimes for: (1) Republic of Belarus; (2) Democratic People’s Republic of Korea; (3) Iran; (4) Iran (Nuclear); (5) Libya; (6) Myanmar; (7) Russia and non-government-controlled territories of Ukraine; (8) Somalia; (9) Syria; (10) Venezuela; and (11) Zimbabwe. As such, the SEUC go beyond the “catch all” controls on high-risk items introduced by the EU under its Russia sanctions regime because they apply to a broader range of items and sanctions regimes. They also are wider in scope than the UK’s existing end-use export controls, which apply when there are specific risks that an item might be used for the production of weapons of mass destruction or for a military end use in a country subject to a full or partial arms embargo.
It should be borne in mind, however, that the SEUC does not establish a universal licensing requirement for in-scope goods and related technologies. The requirement to obtain a licence under the SEUC only applies following an exporter being “informed” by the UK Government that its goods or related technologies may be at risk of diversion to a sanctioned jurisdiction or person connected with such a jurisdiction.
When Will the SEUC Be Used
The newly published guidance for business on the SEUC indicates that these controls will generally be applied to exports that have first been identified and publicised to exporters as of potential concern. In the near term, items posing a circumvention risk in relation to the UK’s Russia sanctions regime are likely to be a key target for use of the SEUC. For example, the UK Government already has published the Russia Common High Priority List of items, as well as guidance identifying other categories of goods at heightened risk diversion to Russia and export destinations posing a potential Russian re-export risk.
When deciding whether to make use of SEUC, diversion risk will be assessed by the UK Government on a case-by-case basis with reference to a range of source material. While OTSI does not currently intend to impose universal licensing requirements for particular types of items being exported to specific destinations, it reserves the right to do so should the need arise in the future.
What to Do if You Have Been “Informed”
You may be informed that the UK Government has identified a specific sanctions diversion or circumvention risk linked to a proposed export through either the HM Revenue and Customs (“HMRC”) national clearance hub or direct contact from OTSI. A written notice will be provided that identifies the affected shipment or transaction, states that an export licence is required before the goods or technology can be exported and contains information about applying for a SEUC licence and providing evidence in support of your licence application.
Once you have been informed of a SEUC licensing requirement, you are prohibited from proceeding with the export of the goods or technology identified in the written notice until and unless a licence for the export is granted. Continuing with an unlicensed export in these circumstances would breach UK sanctions and may result in enforcement action. OTSI is not currently accepting advanced SEUC licence applications to mitigate the risk of the licensing process being used as a replacement for substantive, risk-based due diligence. However, OTSI plans to keep its approach to SEUC licensing under consideration as the new controls bed in. Additionally, if the goods in the notice have been intercepted at the UK border, HMRC may elect to detain the goods or return them to the exporter until a licensing decision is made.
What to Do if You Are Not “Informed” But Believe a Risk of Product Diversion Exists
If you believe your goods are at risk of diversion to a sanctioned destination, you should consider conducting further due diligence before proceeding with an export. Exporters should monitor a range of data sources when assessing the diversion and sanctions circumvention risks associated with the export of trade-sanctioned products to particular end users, including UK Government guidance identifying and publicising items or destinations of potential concern. If you go ahead with the export of a sanctioned item and have reason to believe the goods are ultimately intended for a sanctioned jurisdiction or person, you may be at risk of violating applicable sanctions restrictions.
How To Apply for a SEUC Licence
SEUC licence applications should be submitted to OTSI. While the complexity of individual cases likely will impact the time required to reach individual licensing decisions, exporters should submit detailed, complete and accurate licence applications as soon as possible after receiving a notice informing them of the need for a SEUC licence to minimise potential export disruption and delays. In assessing licence applications, OTSI is likely to give consideration to factors such as:
- the nature of the item and its potential uses;
- the diversion risks associated with the customer, route or end user;
- the exporter’s compliance history;
- a documented due diligence process that evidences that the item is not ultimately destined for a sanctioned destination or end user ; and
- any other intelligence available to the UK Government.
Penalties for Non-Compliance
Failure to comply with the licensing requirement pursuant to a SEUC notice is a breach of trade sanctions and may result in a range of enforcement action, including detention or seizure of goods by HMRC at the UK border, revocation or refusal of existing and future export licences, public naming and shaming under OTSI’s enforcement disclosure powers, the imposition of a civil monetary penalty by OTSI, or criminal investigation and potential prosecution.
Conclusion
The introduction of the SEUC is a novel and consequential development in the UK’s efforts to curb the diversion of sanctioned items in circumvention of UK trade sanctions. While the frequency and breadth with which these new powers will be used remains to be seen, the new framework increases pressure on companies exporting products subject to trade sanctions to conduct robust, risk-based due diligence on their exports, respond promptly and thoroughly to notification of a SEUC licensing requirement and assess the ability of existing contractual terms and conditions to appropriately address non- or delayed- performance when a SEUC licensing requirement is triggered by the UK Government.
For more information on these developments and assistance in complying with the new requirements, contact the author of this post, Alexandra Melia, in Steptoe’s Economic Sanctions team in London.
