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
Economic Fury Continues as Rubio Testifies Before Congress
The Office of Foreign Assets Control (OFAC) has continued to increase sanctions pressure on Iran as negotiations to end the conflict stall.
- On May 29, 2026, OFAC sanctioned individuals and entities allegedly associated with an Iran-based procurement network that “impersonated and defrauded” US companies in order to procure goods for Iran’s Ministry of Defense and Armed Forces Logistics (MODAFL) and other sanctioned Iranian end users.
- On June 2, 2026, OFAC designated multiple Iranian digital asset exchanges for allegedly providing “significant support” to the Iranian regime, including by acting as a “vehicle for sanctions evasion.”
- On the same day, OFAC issued a new Iran-related FAQ (FAQ 1257), which stated that non-US persons (including foreign financial institutions) faced sanctions risk for dealing with the above-mentioned Iranian asset exchanges.
- On June 5, 2026, OFAC sanctioned a network of individuals, entities, and vessels across multiple jurisdictions for allegedly shipping Iranian-origin liquid petroleum gas (LPG) “intentionally disguised as Omani LPG” to end users in South and East Asia. OFAC also sanctioned an Iranian exchange house, Mehrdad Geramian Nik and Partners, which it said moved “hundreds of millions of dollars of foreign currency” on behalf of sanctioned Iranian banks.
The May 29, June 2, and June 5, 2026, sanctions follow multiple similar actions taken by OFAC and the Department of State over the previous two months, pursuant to the Trump administration’s “Economic Fury” campaign.
On June 2, 2026, Secretary of State Marco Rubio testified before Congress that the US is not discussing, nor has it offered, sanctions relief for Tehran in exchange for opening the Strait of Hormuz. It was previously reported that Iran counted among its conditions to end the conflict relief from US, UN, and potentially other sanctions. While Rubio’s testimony does not entirely foreclose the possibility of imminent sanctions relief, it indicates that the US will likely only entertain the request for relief after certain benchmarks are met.
State Department Sanctions Cuban Leaders and Entities
On June 4, 2026, the Department of State designated five individuals and five entities alleged to have met specified criteria under Executive Order (EO) 14404, which President Trump signed on May 1, 2026, and which we covered in greater depth in the May 4, 2026 edition of the Sanctions Update. Among those sanctioned were the Ministry of the Revolutionary Armed Forces of Cuba (“MINFAR”), which is the ministry in charge of the Cuban military; Minera la Victoria SA (“Minera”), a Cuban gold mining joint venture, and the Cuban state-owned enterprise (SOE) Geominera SA, as well as Miguel Diaz-Canel Bermudez (“Diaz-Canel”), the President of Cuba.
The Department of State’s designations represent yet another escalatory action taken by the Trump administration against the incumbent Cuban regime. They follow similar designations on May 7 and May 18, 2026, as well as rhetoric from President Trump that the US may consider a “friendly takeover” of the country after the US negotiates an end to the conflict in Iran.
OFAC Designates FDLR, M23 Commanders in DRC Conflict
On June 2, 2026, OFAC imposed sanctions on commanders of the Democratic Forces for the Liberation of Rwanda (“FDLR”) and the March 23 Movement (“M23”), which are both alleged by OFAC to have “violently occupied territory and killed civilians” in the eastern part of the Democratic Republic of the Congo (DRC).
In a statement accompanying the designations, Secretary of the Treasury Scott Bessent said that “[p]ersistent violence by armed groups is exacerbating an already dire humanitarian crisis and presents a threat to US interests in the region.”
The June 2 sanctions follow similar actions taken by OFAC on April 30 and March 2, 2026.
UK Developments
FCA Publishes Findings on Sanctions Systems and Controls
The UK Financial Conduct Authority (FCA) has published the findings of its review of sanctions systems and controls across the financial services sector, drawing on supervisory work involving more than 150 firms since February 2022. Covering both financial and trade sanctions compliance, the report identifies strengths and weaknesses across six key areas: governance and oversight, risk assessments, due diligence, screening, alert management and asset freezing. The FCA noted that assets frozen in the UK increased from £24.4 billion in 2023–24 to £37 billion in 2024–25, reflecting the growing scale of sanctions implementation and enforcement.
The report highlights screening failures and weaknesses in alert management as the most common causes of suspected sanctions breaches. Among the findings, only 75 percent of screening alerts correctly identified sanctioned parties where names appeared in alternative forms, more than a quarter of firms took between three and five days to resolve name screening alerts, and financial sanctions controls were generally more mature than trade sanctions controls. The FCA also identified examples of poor practice, including firms lacking contingency arrangements for system outages, employees bypassing escalation procedures due to performance pressures, and payments being processed after customers had been identified as subject to asset freezes. The regulator has urged firms to review sanctions controls across the customer and transaction lifecycle and is engaging directly with firms where deficiencies were identified.
OTSI and FCA Formalise Sanctions Enforcement Cooperation Under New Memorandum of Understanding
The Office of Trade Sanctions Implementation (OTSI) and the Financial Conduct Authority (FCA) have signed a new Memorandum of Understanding (MoU), formalising cooperation and information sharing between the two authorities on trade sanctions enforcement. The agreement reflects the increasing interaction between OTSI’s role in enforcing UK trade sanctions and the FCA’s supervision of firms’ financial crime and sanctions controls. Under the MoU, both authorities will be able to share intelligence, compliance information and details of suspected sanctions breaches where relevant to their respective functions.
The MoU establishes a framework for both proactive and request-based information sharing, including information relating to suspected sanctions violations, weaknesses in firms’ sanctions controls, and broader intelligence relevant to either authority’s remit. The agreement also contemplates cooperation on investigations and enforcement activity where trade sanctions issues intersect with FCA-regulated firms. The development is a further indication of the UK Government’s increasingly coordinated approach to sanctions enforcement, with greater collaboration between regulators, licensing authorities and enforcement bodies intended to strengthen compliance oversight and improve detection of sanctions breaches.
EU Developments
EU To Discuss Possible Sanctions Against “Extremist” Israeli Ministers
The EU is reportedly exploring possible restrictive measures against “extremist” Israeli ministers, according to draft EU Council conclusions seen by the press. The proposal is to be discussed by Member States at the upcoming Foreign Affairs Council meeting on June 15, with discussions likely to continue at the European Council summit on June 18 to 19. EU foreign ministers are expected to consider, for the first time, whether to target senior members of Israel’s government in connection with the mistreatment of activists detained following the interception of the Global Sumud Flotilla in international waters in May.
According to reports, the sanctions proposal was driven by reactions from several Member States after Israeli National Security Minister Itamar Ben-Gvir circulated footage showing detainees being mistreated. Several governments, including Italy, then pushed to place the matter on the EU sanctions agenda.
Discussions remain at an early stage, with EU foreign ministers working towards building a common position among all 27 Member States. Reportedly, the Czech Republic and Bulgaria have already signaled their opposition to sanctions against Israeli ministers.
Advocate General Opinion on “Violent Demonstrations” Criterion in EU Sanctions Against Moldova
Advocate General Dean Spielmann of the European Court of Justice Union has issued a non-binding opinion in Case C 179/25 P concerning the EU sanctions regime against persons destabilizing the Republic of Moldova. The Opinion follows an appeal brought by Moldovan politician Marina Tauber against a 2024 judgment of the General Court, which upheld her inclusion on the EU sanctions list for allegedly organizing violent anti-government protests.
Advocate General Spielmann takes the view that the General Court did not correctly apply the listing criterion in Article 1(1)(a)(ii) of Council Decision 2023/891, which provides for asset freezes and prohibits access to funds or economic resources for persons “planning, directing, engaging in, supporting or facilitating violent demonstrations or other acts of violence.” In particular, the General Court treated evidence of “violent intentions” as sufficient to satisfy that criterion. According to AG Spielmann, the listing criterion requires a “material element”, consisting in the person’s involvement, through planning, directing, engaging in, supporting or facilitating, in demonstrations that are violent or constitute acts of violence. Consequently, Advocate General Spielmann proposes that the Court of Justice set aside the judgment and refer the case back to the General Court.
Asia-Pacific Developments
Australia Targets West Bank Settler Farms in New Sanctions
On June 2, 2026, Australia announced a new round of “Magnitsky‑style human rights sanctions” targeting three Israeli individuals and four entities linked to “escalating settler violence against Palestinians in the West Bank.” The measures impose financial restrictions and travel bans, marking the first inclusion of “farming outposts that serve as hubs for settler violence.” The sanctions were coordinated with partners including New Zealand and build on joint actions previously taken with Canada, New Zealand, Norway and the United Kingdom, which targeted Israeli ministers Itamar Ben‑Gvir and Bezalel Smotrich.
China Opposes US Sanctions on Cuban Leaders
On June 5, 2026, China voiced firm opposition to the United States’ decision to impose new sanctions on Cuban President Miguel Díaz‑Canel, several senior officials, and state-linked entities, following the US Treasury Department’s latest expansion of its Specially Designated Nationals List. Beijing’s Foreign Ministry criticized the move as another example of Washington’s “hegemonic and domineering behavior and bullying practices,” urging the US to end what it described as a decades‑long blockade that violates Cuba’s right to development and stability.
North Korea Continues UN Sanction Violation, Coal Exports Reach 1.5 Million Tons in 2025
On June 7, 2026, North Korea reportedly exported about 1.5 million tons of coal in 2025, defying United Nations sanctions that prohibit such trade to curb funding for Pyongyang’s nuclear and missile programs. Citing assessments from South Korea’s National Intelligence Service, Rep. Yu Yong‑weon said the North imported “refined oil from China and Russia in 2025 also exceeded seven times the 500,000-barrel cap set by the UN.” North Korean and foreign‑flagged vessels were used to smuggle coal and other minerals, often disguised as Russian cargo to evade tracking. Despite mounting evidence of sanctions violations, Seoul has imposed no new unilateral measures since mid‑2025, raising concerns about enforcement gaps and the growing resilience of North Korea’s illicit trade networks.
