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
US Increases Pressure on Iran with Significant New Designations
Last week, the US announced the largest round of designations under the Iran sanctions program since 2018. In total, the US sanctioned more than 75 individuals and entities across multiple jurisdictions for their alleged involvement in Iranian oil trading or Iran’s unmanned aerial vehicle (UAV) technology procurement network.
On July 30, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned more than 50 individuals and entities for their alleged involvement in a “vast shipping empire” (the “Shamkhani network”) purportedly controlled by Mohammad Hossein Shamkhani, the son of a top Iranian political advisor Ali Shamkhani. According to OFAC’s press release, the Shamkhani network “transports oil and petroleum products from Iran and Russia, as well as other cargo, to buyers around the word, generating tens of billions of dollars in profit.” The Department of State concurrently imposed sanctions on 20 entities for their alleged involvement in the trade of Iranian petroleum, petroleum products, or petrochemical products. These entities included terminal operators, vessel management companies, and wholesale buyers in China, India, the United Arab Emirates (UAE), Türkiye, and Indonesia.
One day later, on July 31, OFAC designated five entities and one individual based in Iran, Hong Kong, Taiwan, and China for their alleged procurement of technology in support of the OFAC-designated Iran Aircraft Manufacturing Industrial Company (HESA), a state-owned subsidiary of Iran’s Ministry of Defense and Armed Forces Logistics. OFAC stated that HESA manufactures Iranian military aircraft and UAVs, which have allegedly been employed by the Islamic Revolutionary Guard Corps (IRGC).
The sanctions were also announced against the backdrop of negotiations between Iran and the United Kingdom, Germany, and France (the “E3”) over Iran’s nuclear program and the potential “snapback” of United Nations (UN) sanctions.
Notably, the US, which has not formally resumed negotiations with Tehran since its military strikes against Iranian nuclear facilities in June, was not in attendance for the discussions with the E3. Iran has repeatedly stated that it would be willing to bring the US into negotiations, but that it would do so only if the US upheld “several key principles.” Abbas Araghchi, Iran’s foreign minister, recently told the Financial Times that these “key principles” include an explanation by the US for why they struck Iran in the middle of negotiations and a guarantee that the US will not do the same in the future talks. They also include monetary compensation for the damages incurred by Iran. For its part, the US has shown no indication that it is willing to comply with these terms, but instead, as outlined above, appears to be set on levying greater sanctions on Iran’s oil and weapons networks.
US Targets Brazilian Official and Economy with Sanctions and Tariffs
On July 30, OFAC announced that it was sanctioning Alexandre de Moraes, a Brazilian Supreme Federal Court (STF) justice, pursuant to the Global Magnitsky Act. According to the press release, OFAC sanctioned de Moraes for serious human rights abuses, including, Treasury Secretary Scott Bessent alleged, “an oppressive campaign of censorship, arbitrary detentions that violate human rights, and politicized prosecutions—including against former President Jair Bolsonaro.” The designation followed the State Department’s revocation of de Moraes’s visa on July 18, as well as a letter from President Trump to Brazilian President Luiz Inacio Lula da Silva on July 9, in which Trump voiced concerns about a variety of issues, including the trial of Bolsonaro.
Later that day, the White House announced that the President had issued a new executive order imposing a 40% additional tariff on Brazilian imports pursuant to the International Emergency Economic Powers Act (IEEPA) in order to address Brazil’s alleged “unusual and extraordinary policies and actions harming US companies, the free speech rights of US persons, US foreign policy, and the US economy.” The White House stated that the total tariff on Brazil will reach 50%as a result of the new executive order.
During an interview with the New York Times, President Lula stated that the Trump administration’s recent actions infringed on Brazil’s sovereignty. He also affirmed that Brazil would not acquiesce to the US, claiming “[a]t no point will Brazil negotiate as if it were a small country up against a big country.” As of now, the Trump administration has not shown any public indication that it is interested in negotiations with Brazil.
Trump Shortens Deadline for Deal with Russia
President Trump announced he was shortening the window for Russia to make progress on a negotiation over Ukraine, from the initial 50 days to 10 or 12 days. Trump said that he was not confident Russia would adhere to the 50-day window, and that, once the deadline expires, he would proceed with the 100% secondary tariffs he announced on July 14.
The secondary tariffs, which are speculated to be placed on countries importing Russian oil, among other items, could significantly impact the largest purchasers of Russian oil, including China and India, who together comprise about three-fourths of Russia’s current crude exports.
The shortened deadline for Russia may be a reflection of the administration’s mounting frustrations with the Kremlin. The Sanctioning Russia Act of 2025 (S. 1241/H.R. 2548)—a sweeping sanctions and tariff-related bill that was gaining momentum in Congress—has been paused by Republican leadership in order to allow the Trump administration to pursue further negotiations with Russia. If the administration is unable to make progress, the bill may reach the floor for a vote upon Congress’s return from the August recess.
State Department Targets Palestinian Authority Officials and Members of the Palestine Liberation Organization
The State Department announced that it would be denying visas to members of the Palestine Liberation Organization (PLO) and Palestinian Authority (PA), pursuant to section 604(a)(1) of the Middle East Peace Commitments Act of 2002 (MEPCA).
According to the State Department, the PLO and PA are not in compliance with their commitments under the PLO Commitments Compliance Act of 1989 and the MEPCA, as demonstrated by their alleged:
- support for actions at international organizations that “undermine and contradict prior commitments in support of Security Council Resolution[s] 242 and 338”;
- actions that “internationalize” its conflict with Israel, including those initiated through the International Criminal Court (ICC) and International Court of Justice (ICJ); and
- payments and benefits in support of terrorism to Palestinian terrorists and their families.
OFAC Targets Venezuelan Cartel
OFAC has designated the Cartel de los Soles, an alleged Venezuela-based criminal group purportedly headed by Nicolas Maduro and other high-ranking Venezuelan officials, as a Specially Designated Global Terrorist (SDGT). According to OFAC, the Cartel de los Soles has provided material support to Tren de Aragua and the Sinaloa Cartel, which are both designated SDGTs and Foreign Terrorist Organizations, thereby threatening the peace and security of the United States.
UK Developments
OFSI Issues Monetary Penalty for Breach of Russia Sanctions
OFSI has issued a £300,000 monetary penalty to Markom Management Limited (“MML”) for breaching UK sanctions imposed in response to Russia’s annexation of Crimea. The breach involved UK-registered financial services company, MML, instructing a payment directly to a UK designated person subject to an asset freeze, contrary to UK financial sanctions regulations. OFSI emphasised that this enforcement action highlights essential compliance lessons for all businesses. Specifically, firms should: (1) assess their potential exposure to sanctions-related risks and take appropriate mitigating steps; (2) implement robust internal sanctions compliance processes and ensure they are consistently followed; and (3) maintain systems capable of quickly identifying potential breaches and reporting them promptly to OFSI. The penalty serves as a reminder that even a single transaction involving a UK designated party can result in significant regulatory consequences.
Charity Commission Issues New Sanctions Guidance for Middle East Operations
The UK Charity Commission has published updated guidance for UK-registered charities operating in the Middle East, highlighting the importance of sanctions compliance and counter-terrorism obligations. The guidance emphasises that UK sanctions apply to all UK-established charities, regardless of where they operate, and reminds charities of their screening and due diligence obligations. The guidance also reminds charities of the importance of ensuring that they do not engage in conduct that could amount to an offence under the Terrorism Act 2000 such as dealing with proscribed terrorist organisations.
Supreme Court Rejects Sanctions Appeals in Landmark Shvidler and Dalston Projects Cases
On July 24, 2025, the UK Supreme Court dismissed the first-ever sanctions delisting appeal brought before it under the UK’s Russia sanctions regime. The appeals were brought by Eugene Shvidler, a UK citizen designated for his links to Roman Abramovich, and Dalston Projects Ltd, the owner of the detained yacht, Phi. The cases were treated as test cases for UK sanctions law, raising important questions about proportionality, fundamental rights, and the role of the judiciary in sanctions challenges.
The Court unanimously rejected Dalston Projects’ appeal and, by majority, dismissed Mr Shvidler’s challenge. It upheld the UK Government’s position that the sanctions served a legitimate foreign policy objective (i.e., to deter Russian aggression in Ukraine) and that the measures had a rational connection to this aim. While the Court acknowledged the severe impact of the sanctions on Mr Shvidler, it concluded that such severity may be necessary to achieve deterrence. The majority also emphasised the availability of OFSI licences as a mitigating factor.
However, Lord Leggatt delivered a dissenting opinion. He argued that the courts had a constitutional duty to scrutinise executive action and should not simply defer to government assertions. He criticised the rationale for sanctioning Mr Shvidler as speculative and lacking evidence, calling it “Orwellian” and suggesting that penalising an individual to influence others undermines the rule of law. Lord Leggatt concluded that the designation unlawfully curtailed Mr Shvidler’s basic freedoms as a British citizen.
The judgments underscore the wide discretion available to the UK Government in implementing sanctions, while highlighting an emerging judicial debate over the limits of that discretion in protecting individual rights.
EU Developments
EU Council Renews EU Terrorist List
The EU Council has renewed the EU Terrorist List, a counter-terrorism sanctions regime established under Council Regulation 2580/2001. The EU Terrorist List operates independently of the EU framework implementing UN Security Council Resolutions targeting Al-Qaida and ISIL/Da'esh. As specified in Council Implementing Regulation 2025/1578, one deceased individual involved in terrorist acts was removed from the list of individuals, groups, and entities subject to restrictive measures, while the remaining entries were retained. This update brings the total to 13 individuals and 22 groups or entities. The EU Terrorist List regime enforces restrictive measures, including asset freezes and prohibitions on the provision of funds or economic resources.
EU Council Updates Sanctions Listing Against Libya
The EU Council has revised several pieces of sanctions legislation targeting Libya, resulting in an update to the list of individuals subject to restrictive measures. Specifically, Council Decision 2015/1333 was amended to remove Mohamad Ali Houej from the sanctions list of those subject to restrictive measures, including asset freezes and travel bans. The Council determined that Houej's inclusion on the sanctions list was no longer warranted, while sanctions against all other listed individuals and entities remain unchanged. Additionally, Council Regulation 2016/44 was updated through Council Implementing Regulation 2025/1583, ensuring the enforcement of these changes across EU Member States.
Third Countries Align with EU Sanctions Targeting Haiti and Syria
The High Representative of the EU has announced that Albania, Armenia, Bosnia and Herzegovina, Iceland, the Republic of Moldova, Montenegro, North Macedonia, Norway, Serbia and Ukraine have aligned themselves with Council Decision 2025/1439, which extended restrictive measures concerning the situation in Haiti until July 29, 2026. This extension was adopted in response to the ongoing political, economic, humanitarian, and security crisis in Haiti. The restrictive measures, established under Council Decision 2022/2319, include asset freezes, travel bans, and prohibitions on the provision of funds or economic resources.
On July 30, the High Representative of the EU announced that the same group of countries, along with Lichenstein, aligned themselves with Council Decision 2025/1110, which targets serious human rights violations in Syria. Under this decision, the EU Council added two individuals and three entities to the list set out in the Annex to Council Decision 2020/1999. These individuals and entities have been linked to serious human rights abuses, including torture and the arbitrary killing of civilians. Those listed are now subject to travel bans and asset freezes, and restrictions on the provision of funds or economic resources.
Asia-Pacific Developments
China’s Criticism of US Sanctions on Palestine
On August 1, 2025, China strongly criticized the United States for imposing sanctions on officials from the Palestinian Authority (PA) and members of the Palestine Liberation Organization (PLO). China’s Ministry of Foreign Affairs (MOFA) called the move “appalling,” accusing the US of ignoring international peace efforts and undermining justice. Emphasizing the urgency of the Palestinian issue, China urged the US to implement UN resolutions and contribute toward a proper settlement rather than hindering peace efforts.
Legal Battle Between Nayara Energy and Microsoft Over Service Suspension
On July 28, 2025, Indian refiner Nayara Energy, majority owned by Russian entities, reportedly initiated legal proceedings against Microsoft for abruptly suspending critical services, citing alleged compliance with European Union sanctions against Russia. Nayara accused Microsoft of restricting access to essential tools and data despite having fully paid licenses, branding the move “unilateral and unjustified” under Indian and US law. Nayara also emphasized its role in India’s energy supply and criticized the suspension as setting a dangerous precedent of corporate overreach.
Two days later, shortly before the Delhi High Court was set to hear Nayara’s petition, Microsoft restored all services, including email and Teams, resolving Nayara’s immediate concerns. The court then disposed of the petition in favor of the refiner, allowing Nayara to return if issues recur.
