Overview
US Developments
US Announces New Sanctions Under “Operation Economic Outcast” Targeting Iran and Expanding Secondary Sanctions Risks
Following President Donald Trump’s announcement that the US will conduct the “most crushing economic operation ever taken against any country” against Iran, the Department of the Treasury launched “Operation Economic Outcast,” a broad economic pressure campaign targeting Iran and its supporters. According to the Treasury Department, “[e]very country will be given a defined timeline to shut down the Iran-related activity” that Treasury has identified and “[i]f they fail to act, Treasury will act.” The Treasury Department’s announcement comes amid ongoing negotiations between Iran and Oman on the joint management of the Strait of Hormuz.
As part of the operation, the Treasury Department’s Office of Foreign Assets Control (“OFAC”) authorized secondary sanctions targeting the Iranian digital assets, technology, gold, aviation, and shipping sectors, by issuing new determinations pursuant to Executive Order (“E.O.”) 13902. E.O. 13902 targets specified sectors of the Iranian economy and those conducting significant transactions involving those sectors. The determinations authorize the imposition of sanctions pursuant to E.O. 13902 on any person, regardless of location, that operates in these sectors or knowingly engages in a significant transaction involving significant goods or services used in these sectors. The measures expand sanctions exposure for non-US persons and strengthen OFAC’s authority to address third-country support for Iran’s economy.
OFAC also announced the indefinite suspension of five Iran-related general licenses (“GLs”) that had previously authorized certain cross-cultural, educational, and personal activities involving Iran. These include the sending of personal remittances to or from Iran, services related to conferences in the United States or third countries involving Iranian participants, and academic exchanges, educational services, and certain research activities involving US and Iranian educational institutions. We discuss the suspension in more detail in our recent blog post. Notably, OFAC issued new Iran GL BB, which authorizes transactions ordinarily incident and necessary to the wind down of any transaction previously authorized under the five suspended GLs through 12:01 am EDT on September 8, 2026.
Additionally, OFAC designated nearly 60 entities, individuals, and vessels allegedly involved in supporting Iran's defense activities, military procurement efforts, cyber operations, and petroleum and petrochemical revenue generation. OFAC also issued Iran GL AA, which authorizes transactions ordinarily incident and necessary to the wind down of any transaction or the maintenance of operations, contracts, and other agreements in effect as of August 24, 2026 involving La Nivernaise De Raffinage SAS (“LNR”), a newly designated France-based cooking oil refinery, and any entity in which it owns, directly or indirectly, a 50 percent or greater interest, through 12:01 am EDT on October 23, 2026.
OFAC issued an updated alert warning that US and non-US persons face significant sanctions risks if they make payments to, receive services from, or otherwise engage with the Iranian government or designated entities seeking to control passage through the Strait of Hormuz. The alert specifically identifies the Persian Gulf Strait Authority, Persian Gulf Marine Insurance Company, and HormuzSafe Marine Services Authority, which OFAC designated for supporting the IRGC or operating in Iran’s financial sector. OFAC also warned of secondary sanctions risks for foreign parties and urged maritime service providers to conduct enhanced due diligence on vessels transiting the Strait.
The August 24 measures come just weeks after the United States and Iran agreed to a June 2026 Memorandum of Understanding that contemplated a potential pathway toward broader sanctions relief, and a week after the MOU formally lapsed. While the long-term direction of US policy toward Iran remains uncertain, Operation Economic Outcast underscores that US and non-US companies should continue to treat Iran sanctions compliance as a rapidly evolving risk area.
US Revokes Egyptian Bank’s UAE Branches Access to Correspondent Banking
On August 28, under “Operation Economic Outcast,” the Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) proposed a rule that would revoke Banque Misr UAE’s correspondent banking access to US financial institutions. Banque Misr UAE reportedly consists of the Emirati branches of Banque Misr, Egypt’s second-largest state-owned bank. According to FinCEN, Banque Misr UAE serves as a “critical access node” through which the Iranian government accesses US dollars. The Central Bank of Egypt told reporters that the US measures only affected Banque Misr’s UAE branches and did not apply to any other Egyptian branches.
On the same day, OFAC designated a Hong Kong-based entity that allegedly facilitated sanctioned Iranian persons’ access to the international financial system, along with an Iranian national.
US Grants Additional Sanctions and Export Controls Relief to Syria
On August 24, the Department of State rescinded Syria’s designation as a State Sponsor of Terrorism and removed Hay’at Tahrir al-Sham (“HTS”), a political and paramilitary group currently in control of Syria’s government, from the list of Specially Designated Global Terrorists (“SDGT”), and from the List of Specially Designated Nationals and Blocked Persons (“SDN List”). The changes build on previous US actions, including the July 2025 removal of HTS from the Foreign Terrorist Organization (“FTO”) list. The State, Treasury, and Commerce Departments issued an updated Tri-Seal Advisory reflecting these developments.
As a result of the latest actions, HTS is no longer subject to US terrorism sanctions under E.O. 13224, and US persons generally no longer need OFAC authorization to engage in transactions involving HTS, provided those activities do not involve other sanctioned parties or prohibited conduct. Following HTS’s delisting, OFAC revoked Syria GL 25, which had authorized certain transactions involving the Syrian government, and updated related guidance and FAQs.
The rescission of Syria’s designation has important export-control implications because State Sponsor of Terrorism status has served as a basis for certain export restrictions affecting Syria. However, significant US export controls remain in place until the Export Administration Regulations and International Traffic in Arms Regulations are amended. A license or applicable exception is still required for exports or reexports of items subject to US jurisdiction to Syria, except for food and medicine designated EAR99. Thus, Syria remains a jurisdiction requiring an elevated export controls compliance posture. We discuss the implications of the August 24 actions, including export controls, anti-boycott, and sovereign immunity considerations related to Syria’s delisting in more detail in our recent blog post.
Finally, OFAC also designated two former HTS affiliates who it alleges continue to support al-Qa’ida-linked entities through financial and logistical support. The US government stated that these targeted sanctions demonstrate its continued focus on holding terrorist actors accountable while easing restrictions designed to support Syria’s broader political and economic stabilization.
US Sanctions Target Alleged Terrorist Support Networks
On August 26, OFAC designated three organizations and two individuals for allegedly supporting terrorist activity and extremist networks. The action targeted Autistici Inventati, an Italy-based entity, for allegedly providing digital infrastructure, hosting services, encrypted communications, and other technological support to violent far-left extremist groups, including the Kurdistan Workers’ Party, which is designated as an FTO. Simultaneously, OFAC issued Counter Terrorism GL 36, which authorizes transactions ordinarily incident and necessary to the wind down of dealings involving Autistici Inventati and any entity in which it owns, directly or indirectly, a 50% or greater interest through 12:01 am EDT on September 25, 2026.
Additionally, OFAC sanctioned Palestine Action, a United Kingdom (“UK”)-based organization proscribed as a terrorist group by the UK government in July 2025. OFAC designated Palestine Action alleging that the organization supported acts of terrorism, including acts that have physically injured UK law enforcement personnel, as well as acts intended to intimidate lawful commercial enterprises and coerce the UK Government.
OFAC also sanctioned Masar Badil, a transnational organization that OFAC alleges operates as a front for the Samidoun Palestinian Prisoner Solidarity Network. Samidoun was jointly sanctioned by the United States and Canada on October 15, 2024 for being a front organization that is owned, controlled, or directed by the Popular Front for the Liberation of Palestine, itself a designated FTO since 1997. Alongside this action, OFAC also sanctioned two members of Masar Badil for their alleged involvement in supporting the organization.
OFAC Amends Multiple Venezuela-related GLs
On August 27, OFAC issued eight amended Venezuela-related GLs:
- GL 46D, “Authorizing Certain Activities Involving Venezuelan-Origin Oil or Petrochemical Products;”
- GL 47B, “Authorizing the Sale of US-Origin Diluents to Venezuela;”
- GL 48C, “Authorizing the Supply of Certain Items and Services to Venezuela;”
- GL 50C, “Authorizing Transactions Related to Oil or Gas Sector Operations in Venezuela of Certain Entities;”
- GL 51C, “Authorizing Certain Activities Involving Venezuelan-Origin Minerals, Including Gold;”
- GL 52B, “Authorizing Certain Transactions Involving Petróleos de Venezuela, S.A.;”
- GL 54B, “Authorizing the Supply of Certain Items and Services for Minerals Operations in Venezuela;”
- GL 61A, “Authorizing the Supply of Certain Items and Services to Venezuela Related to Telecommunications.”
A party seeking to enter into a contract authorized by these Venezuela GLs with the Government of Venezuela (GOV) or certain other blocked persons (e.g., Petróleos de Venezuela, S.A. in GL 52B or CVG Compañía General de Minería de Venezuela CA in GL 51C) is no longer required to include a choice of law provision in the contract. OFAC amended these GLs to remove the requirement that the terms of such contracts be “construed and interpreted in accordance with the laws of a state or other jurisdiction within the United States.” OFAC stated that it had amended these GLs in response to investment-related reforms made by the GOV since January 2026. These GLs still require dispute resolution proceedings to occur in the United States, United Kingdom, France, or Singapore.
OFAC Extends Authorization for Certain Diamond Imports
On August 26, OFAC issued Russia-related GL 104B, “Authorizing Transactions Related to Imports of Certain Diamonds Prohibited by Executive Order 14068.” GL 104B extends authorization for the import of non-industrial diamonds that were substantially transformed outside Russia. GL 104B replaces GL 104A, which was scheduled to expire September 1, 2026, and extends the authorization through 12:01 am EDT on September 1, 2027.
EU Developments
European Commission Publishes Updates to its FAQs on Sanctions Against Russia
On August 24, the European Commission published a series of updates to its FAQs on sanctions against Russia. The revised FAQs include guidance on the import ban on liquefied natural gas (LNG) under Article 3ra of Council Regulation (EU) 833/2014, clarifying the temporary exemption established under the 21st sanctions package against Russia.
The Commission also updated its guidance on the transaction ban concerning infrastructure in Russia under Article 5ae of Council Regulation (EU) 833/2014. The update includes a new question on the application of the transaction ban to listed refineries in Russia and third countries that process or refine Russian crude oil, process or blend petroleum products from Russia, or facilitate the circumvention of EU sanctions. According to the Commission, the transaction ban will apply to Georgia’s Kulevi Oil Refinery from January 25, 2027, allowing the refinery time to diversify away from Russian crude oil.
Lastly, the Commission amended its guidance on the oil price cap under Article 3n of Council Regulation (EU) 833/2014 to reflect of the suspension price cap adjustment introduced by the 21st sanctions package. The updated guidance also provides clarification on the projects that are exempt from the maritime services and transportation ban, including the transport by vessel of crude oil originating from the Sakhalin‑2 project in Russia to Japan, as well as related technical assistance, brokering services, financing, and financial assistance.
EU Council Updates Sanctions Listings Targeting ISIL (Da’esh) and Al-Qaeda
The EU Council updated the entries of 13 individuals and eight entities under the autonomous restrictive measures regime targeting ISIL (Da’esh) and Al-Qaeda, following an update at the UN level. Changes to Council Regulation (EC) 881/2002 follow the August 18 decision of the UN Security Council Sanctions Committee to update the identifying data for 21 entries on the sanctions list.
Individuals and entities listed under the sanctions framework are subject to an asset freeze and a prohibition on making funds or economic resources available to them.
Asia Developments
Beijing Warns of Retaliation as US Expands Iran Sanctions
On August 25, 2026, China rejected Washington’s renewed pressure campaign against Iran, arguing that its commercial engagement with Tehran is lawful and should not be obstructed. In a regular press conference, Foreign Ministry spokesman Lin Jian denounced unilateral sanctions lacking UN Security Council approval, saying that “economic warfare” and maximum-pressure policies “only serve to fuel tensions and lead to risk spillover, which will disrupt the global economic and financial order, and harm the legitimate rights and interests of other countries.” He urged “deescalation” and a “return to dialogue and negotiation” rather than further coercive measures. Asked whether Beijing would alter its dealings with Iran or comply with any US timetable for winding down such activity, Lin said China was monitoring developments and would take all necessary steps to “firmly safeguard our rights and interests.”
Seoul Assesses Exposure as Iran Pressure Campaign Raises Wider Economic Risks
On August 25, 2026, South Korea reportedly said it was reviewing the implications for domestic companies and financial institutions of Washington’s latest Iran-related sanctions initiative, particularly its potential secondary effects across technology, shipping, aviation, gold and digital-asset activity. Foreign Ministry spokesman Park Doo-soon said Seoul was consulting relevant agencies, although officials expect limited immediate exposure. Most Korean firms and banks have already exited Iran and bilateral trade has fallen to about USD 150 million from USD 17.4 billion in 2011. Analysts nevertheless cautioned that heightened pressure on Iran could generate broader disruption, especially if it prompts confrontation with China or affects energy markets and regional supply chains. Former Ambassador Yun Kang-hyeon said the effectiveness of the campaign would depend largely on whether major Iranian trading partners, including China, Russia, India, and Turkey, alter their conduct, while another expert warned that an extended conflict could result in indirect political and security pressures on Seoul.
Japan Faces Pressure to Defend ICC After US Sanctions Its Japanese President
On August 30, 2026, Prime Minister Sanae Takaichi reportedly faced mounting criticism over Japan’s response to US sanctions imposed on International Criminal Court President Tomoko Akane, the first Japanese national to head the tribunal. After initially describing the measures as “very regrettable,” Takaichi said they conflicted with Japan’s position and pledged to protect both Akane and the ICC, of which Japan is the largest financial contributor. Akane called the sanctions a threat to the rule of law and urged Tokyo to “make ‘maximum efforts,’ including by engaging with the United States.” Foreign Minister Toshimitsu Motegi has discussed the matter with Akane, but Japan has not publicly demanded that the sanctions be withdrawn.
China Bars Compliance with EU’s JD.com Foreign Subsidies Investigation
China’s Ministry of Justice announced that the European Commission’s cross-border information requests in its Foreign Subsidies Regulation (FSR) investigation of JD.com’s reported EUR 2.2 billion acquisition of German retailer CECONOMY amount to “improper extraterritorial jurisdiction.” Under China’s Regulation on Counteracting Unjustified Extraterritorial Application of Foreign Laws and Measures, which took effect in April 2026, organizations and individuals may not comply with or assist in implementing the identified EU measures. The ministry said the EU had sought broad and unnecessary information from Chinese entities, harming their legitimate interests. It called on the EU to stop what it described as misuse of the FSR investigation tool and warned that China would take countermeasures in accordance with law if the EU continues its approach.
