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
Senators Introduce Legislation Strengthening Iran Sanctions Regime
Sens. Dan Sullivan (R-AK) and Pete Ricketts (R-NE) recently introduced separate legislation reinforcing the Trump administration’s “maximum pressure” campaign against Iran, which was reinstated on February 2, 2025 via a National Security Presidential Memorandum (NSPM-2).
Sullivan’s bill, the Enhanced Iran Sanctions Act of 2025, requires the imposition of sanctions on persons involved in the export of Iranian oil and petrochemicals. Specifically, the legislation requires the President to impose blocking sanctions and visa restrictions on any foreign person (specifically including any bank or foreign financial institutions (FFI), insurance provider, flagging registry, pipeline construction, or operation facility) that the President determines has knowingly engaged in a transaction involved in, relating to or incident to the processing, export, or sale of oil or other petrochemical products, in whole or in part, from Iran. Sullivan introduced this bill alongside two other pieces of legislation aimed at strengthening the US-Israeli relationship, including the Stop ICC Act, which builds on President Trump’s executive order (EO) sanctioning the International Criminal Court (ICC) by prohibiting cooperation with or funding for the ICC.
Ricketts introduced a non-binding resolution calling on the UK, Germany, and France (collectively, the “E3 countries”) to initiate the “snapback” of sanctions on Iran under United Nations Security Council (UNSC) Resolution 2231 (2015) before the option expires on October 18, 2025. Reps. Claudia Tenney (R-NY) and Josh Gottheimer (D-NJ) introduced bipartisan companion legislation in the House.
Last week, the US designated 16 persons for allegedly participating in an international network that facilitates the shipment of millions of barrels of Iranian crude oil to China. At the same time, Trump has called for a “verified nuclear peace agreement” with Iran and asserted that reports the US and Israel will attack Iran are exaggerated, despite reports that Israel is considering significant strikes on Iranian nuclear sites in the next year.
More Calls for Syria Sanctions Relief
The Tahrir Institute for Middle East Policy (TIMEP), along with 161 American, Syrian, and other international groups, recently sent a letter to the Trump administration urging immediate sanctions relief for Syria in light of the fall of the Bashar al-Assad regime. In particular, the letter requests that the Trump administration:
- Expand existing general licenses (GLs) related to investments and commercial transactions in certain sectors of or with certain actors within Syria’s economy;
- Issue a broader export license exception for certain items to be exported to Syria;
- Clarify the distinction between Hay’at Tahrir al-Sham (HTS) and the Syrian government and consider removing HTS’ Foreign Terrorist Organization (FTO) designation; and
- Temporarily suspend the Caesar Syria Civilian Protection Act of 2019 (the “Caesar Act”), which requires the President to impose blocking sanctions and visa restrictions on persons determined to have knowingly provided significant financial, material, or technological support to, or who have otherwise engaged in a significant transaction with, the Government of Syria or entities it controls.
President Trump has previously stated that the US “is not getting involved in Syria.” In furtherance of this point, the Department of Defense was recently reported to be drafting plans to withdraw all US troops from the country. It remains to be seen how, if at all, the Trump administration will adjust its sanctions policies toward Syria.
Trump Administration Talks With Russia and Ukraine as Negotiations Shape Up
President Trump recently spoke separately with Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskyy concerning a resolution to the Russia-Ukraine war. This marks the Trump administration’s first tangible attempt at engaging with the parties after Trump campaigned, in part, on ending the war shortly after entering office.
The administration’s specific stance on desired outcomes of these negotiations remains unclear. Earlier this week, Defense Secretary Pete Hegseth stated that a return to Ukraine’s pre-2014 borders is an “unrealistic objective,” as is Ukraine’s ascension to the North Atlantic Treaty Organization (NATO). Following notable pushback from European allies and the Chair of the Senate Armed Services Committee, Sen. Roger Wicker (R-MS), Hegseth later reined in these comments, stating instead that “everything is on the table.” Vice President JD Vance also sought to clarify the Trump administration’s stance, stating in a recent interview that the US wants to “preserve Ukraine’s territorial integrity” by preventing it from becoming a “vassal state of either Russia or NATO.”
Most recently, the US and Russia concluded a brief high-level dialogue in Saudi Arabia. The meeting was attended by senior Trump administration officials, including National Security Adviser Mike Waltz and Secretary of State Marco Rubio. After the talks, administration officials suggested that the meeting would be the first step in ending the war in Ukraine and normalizing relations between the US and Russia. Although the US did not publicly commit to any sanctions relief, Secretary Rubio said that there must be “concessions made by all sides” in order to end the war in Ukraine in response to questions about the future of US sanctions on Russia. Zelenskyy, who was not invited to the talks, insisted that the US-Russia negotiations should not occur without Ukraine and the outcome of any US-Russia agreement “cannot be imposed” upon Ukraine.
Trump Pauses Some FCPA Enforcement
President Trump signed an executive order (EO) ordering the Attorney General to, within 180 days, review Department of Justice (DOJ) guidelines and policies governing investigations and enforcement under the Foreign Corrupt Practices Act (FCPA), which generally prohibits US persons from providing payments, gifts, or other value to foreign officials to influence those officials or otherwise obtain an improper advantage in obtaining or retaining business. The EO also requires the Attorney General to cease initiating any new FCPA investigations or enforcement actions while the review period is in effect, unless the Attorney General decides that an individual exception should be made. The EO permits the Attorney General to extend the review period for another 180 days if necessary.
Attorney General Pam Bondi recently sent a memorandum to DOJ employees indicating that the FCPA Unit will prioritize investigations related to cartels and transnational criminal organizations (TCOs), including those related to the facilitation of human smuggling and trafficking of narcotics and firearms.
Steptoe’s Government Affairs and Public Policy group and its Investigations & White-Collar Defense practice will host a panel on the FCPA EO on February 20, 2025.
AUKUS Members Sanction Infrastructure Enabling Ransomware Attacks
In a coordinated effort with Australia and the UK, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Zservers, a Russia-based bulletproof hosting (BPH) services provider, as well as two Russian nationals, for their respective roles in supporting the LockBit ransomware attacks. OFAC alleges that Zservers provided access to specialized servers and other computer infrastructure for the LockBit ransomware group. OFAC noted that the recent designations build on previous trilateral action taken by AUKUS against Evil Corp and certain of its members, and demonstrate their collective resolve to combat cybercrime.
UK Developments
OFSI Publishes First Financial Sanctions Threat Assessment
HM Treasury’s Office of Financial Sanctions Implementation (OFSI) has published the first in a series of Financial Sanctions Threat Assessments, which uses intelligence gleaned from suspected sanctions breach reports made to OFSI since 2022 to survey trends in the UK’s financial sanctions landscape and identify threats to compliance. By providing information about typologies currently evident in suspected UK financial sanctions breaches and warning flags that OFSI expects businesses to be alert to and address, the threat assessment aims to help financial services businesses identify and prioritize sanctions risks as part of their risk-based sanctions compliance efforts. The report’s Key Judgements include assessments that OFSI has seen “significantly increased” activity by professional and non-professional enablers of sanctions evasion by Russian designated persons, including the use of non-bank payment service providers and crypto assets. While the guidance is primarily targeted at UK financial institutions, much of the information has broader applicability to businesses whose activities expose them to sanctions risk.
UK High Court Considers Jurisdiction of the ECHR in Belarus Delisting Case
The English High Court has dismissed a challenge to UK sanctions designation brought by Dana Astra, the Belarusian construction company. The ruling reinforces the UK government’s broad discretion to designate individuals and companies and clarifies the legal boundaries for foreign companies challenging UK designations. It also represents the first judicial consideration of the extraterritorial reach of the European Convention on Human Rights (ECHR) in UK sanctions cases post-Brexit, with the High Court ruling that the designation decision was not an exercise of UK jurisdiction over Dana Astra for the purpose of Article 1 of the ECHR because it does not have UK assets.
Foreign Affairs Committee to Scrutinize UK Sanctions Strategy
The Foreign Affairs Committee (FAC) has issued a call for evidence on the UK’s sanctions strategy, with a particular focus on parliament’s level of scrutiny and oversight of UK sanctions policy. The deadline for submission of written evidence is March 17, 2025. The outcome of the review could result in changes to how UK sanctions are introduced, reviewed, and enforced. A key change following Brexit is that parliament no longer receives information from the UK government on new autonomous sanctions before they are made public. Most UK sanctions regulations are also subject to only limited post-publication parliamentary scrutiny. The FAC seeks input on whether parliament should have a greater role in reviewing UK sanctions policy, how increased scrutiny could be balanced with the need for swift action, and whether sanctions are effectively aligned with broader UK foreign policy objectives.
EU Developments
Estonia Accuses China of Aiding Russian Drone Production Through Smuggled Western Parts
Estonia's foreign intelligence agency has issued a report which claims that China is helping Russia produce military drones by smuggling critical Western components, evading Western sanctions. The report states that 80% of these parts now come from China, while previous Ukrainian reports have suggested that some 60% of foreign parts in Russian weaponry have origins in China. China's involvement is seen as an effort to prevent a Russian defeat in Ukraine, in opposition to American and European efforts to support Ukraine’s defense. Despite China's denial of these claims, the covert transfer of dual-use components continues to bolster Russia’s capabilities. The report also notes Russia's significant investments in expanding its drone production and military personnel.
EU Reportedly Plans to Sanction 25 Chinese Entities for Allegedly Evading Russia Sanctions
It is being reported that the EU is considering sanctioning 25 Chinese entities, including those based in mainland China and Hong Kong, for allegedly “circumventing sanctions on Russia” by allegedly funneling European-made goods to buyers linked to the Russian military. This initiative, which would be part of the EU's 16th sanctions package, would prevent the listed companies (reportedly a mix of Hong Kong- and mainland-registered companies) from sourcing goods from the EU. Chinese officials and experts have criticized the move, suggesting it is politically motivated and aligned with the previous US administration's approach. They argue that China has not provided military supplies to Russia and opposes unilateral sanctions lacking UN authorization.
EU Considers Easing Sanctions on Syria's Energy Sector
The EU is reportedly exploring the partial lifting of sanctions on Syria's energy industry, potentially allowing crude oil imports and the export of oil and gas technologies. This initiative seeks to engage Syria's new leadership, which has pledged its interest in engaging with the global economy, and limit Russian influence. Proposed measures include easing restrictions on oil exploration financing, removing some Syrian banks from the sanctions list, and partially lifting restrictions on the Central Bank of Syria. The easing of sanctions would be contingent on reforms and could be reversed if conditions are not met. The potential easing of sanctions represents one element of the Western conundrum on Syria’s post-Assad leadership: while the EU and the US seek to give oxygen to the country’s fledgling democracy in the form of economic engagement, as well as not cede ground to Russia or Iran, they are also wary of empowering the Hayat Tahrir al-Sham-led government, which has shown a marked lack of inclusion in its non-transparent transition planning.
