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
Waltz Removed as National Security Adviser, Nominated for UN Ambassador
On May 1, President Trump removed Mike Waltz as National Security Adviser, and announced that he would nominate Waltz as US Ambassador to the United Nations. President Trump also announced that Secretary of State Marco Rubio will serve as interim National Security Adviser.
This marks only the second time in US history that a Secretary of State has simultaneously performed the duties and assumed the title of National Security Adviser, with the other being Henry Kissinger. As such, Rubio is positioned to wield considerable influence over the trajectory of US foreign policy at a time when the US is negotiating a peace deal in Ukraine and a nuclear deal with Iran. Rubio is typically seen as having relatively hawkish foreign policy views, particularly with respect to China and certain regimes in Latin America. But he has also shown an ability to moderate some of his prior stances to better align with the views of President Trump.
There are a number of individuals that the Trump administration is reportedly considering to permanently replace Waltz. These include Stephen Miller, the White House Deputy Chief of Staff, and Sebastian Gorka, the Deputy Assistant to the President and Senior Director for Counterterrorism.
Waltz now faces Senate confirmation for his nomination, where concerns about his role in “Signalgate,” the inadvertent leak of information regarding strikes on Houthi targets in Yemen to the editor-in-chief of The Atlantic, Jeffrey Goldberg, is likely to feature prominently. It is unclear to what degree that controversy impacted President Trump’s decision to remove Waltz as national security adviser, but Waltz has been under heavy scrutiny since the Signal matter first came to light.
Trump Administration Increases Pressure on Iran as Negotiations Continue
The US has continued to exert sanctions pressure on Iran amid negotiations over Iran’s nuclear program. Despite the Trump administration acknowledging that “further progress” was made in the third round of talks, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) imposed new sanctions on six individuals and six entities based in Iran and China for their alleged roles in an Iranian missile procurement network. The Department of State subsequently designated seven entities for their alleged involvement in Iranian petroleum and petrochemical products trade, and identified two related vessels as blocked property.
US pressure on Iran was compounded by France, whose foreign minister told the United Nations Security Council (UNSC) on April 28, that France “will not hesitate for a single second to reapply all the sanctions that were lifted ten years ago” if Europe’s security interests were not also guaranteed before the expiration of the Joint Comprehensive Plan of Action (JCPOA). If France were to “snapback” these sanctions, Germany and the United Kingdom (together with France, the “E3”) may also follow suit.
For its part, Iran has remained “extremely cautious” about the trajectory of its negotiations with the US, with Iran’s foreign minister, Abbas Araqchi, maintaining that the aim has thus far been to “build confidence about the peaceful nature of Iran’s nuclear program in exchange for sanctions relief.” Iran has also scheduled a meeting with the E3, before the next round of US negotiations, which have been reportedly postponed for “logistical and technical” reasons.
OFAC Designates Shipping Companies Delivering Oil Derivatives to the Houthis
OFAC designated three shipping companies for allegedly providing support to Ansarallah, more commonly referred to as the Houthis. According to OFAC, the companies facilitated the delivery of liquid petroleum gas (LPG) or related items to Houthi-controlled ports in Yemen after the expiration of Counter Terrorism General License (GL) 25A, which authorized certain transactions related to the offloading of refined petroleum products to Yemen. The designated companies were registered in the Marshall Islands and Mauritius. In addition to the designations, OFAC also identified three vessels as property of designated companies. This action continues the trend of sanctions targeting the Houthis and their networks.
US Targets Mexican Cartel, Issues Alert on Oil Smuggling Across Southern Border
OFAC has sanctioned three Mexican nationals and two Mexico-based entities allegedly involved in a drug trafficking and fuel theft network connected to the Cartel Jalisco Nueva Generacion (CJNG), a designated Foreign Terrorist Organization (FTO) and Specially Designated Global Terrorist (SDGT). OFAC’s sanctions further the Trump administration’s policy set forth in Executive Order (EO) 14157, which calls for, among other things, the “total elimination” of cartels and transnational criminal organizations (TCOs).
Concurrently, the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued an Alert urging financial institutions (FIs) to be vigilant in detecting, identifying, and reporting suspicious activity related to the smuggling of stolen crude oil from Mexico across the US Southern Border by Mexico-based TCOs, including CJNG, the Sinaloa Cartel, and the Gulf Cartel. FinCEN alleges that the smuggling of stolen crude oil is made possible by the importation of the oil by “complicit, small U.S.-based oil and natural gas companies.” The Alert provides FIs with “red flag” indicators of cartel oil smuggling, as well as instructions on how to report suspicious activity if discovered. FinCEN’s Alert follows a similar recent notice regarding bulk cash smuggling and repatriation by Mexico-based TCOs.
Syria Responds to US Demands for Sanctions Relief
Syrian officials have reportedly sent a letter to the Trump administration responding to the administration’s “list of conditions” which, if met, would trigger partial sanctions relief by the US. Syria reportedly pledged to set up a liaison office to find a missing US journalist, Austin Tice, and submitted details of its plans to dismantle its chemical weapons stockpiles. However, it did not agree to other demands by the Trump administration, such as removing foreign fighters and permitting US coordination on counterterrorism matters (including airstrikes).
As we previously covered, the news of the letter comes as Congressional support for sanctions relief grows. The Trump administration has not publicly responded to the Syrian government’s letter.
Senator Pushes for Increased Myanmar Sanctions
According to Export Compliance Daily, during an event hosted by the Burma Research Institute on April 28, Sen. Chris Van Hollen (D-MD) and former Sen. Sam Brownback (R-KS) urged the Trump administration to fully implement the Burma Unified Through Rigorous Military Accountability (or “BURMA”) Act, which was enacted in 2022 and includes multiple sanctions-related provisions. Relatedly, Rep. Bill Huizenga (R-MI) is expected to reintroduce the Bringing Real Accountability Via Enforcement in Burma Act (or the “BRAVE Burma Act”) to Congress in the coming days or weeks. A previous version of the BRAVE Burma Act would have extended the sunset term of the BURMA Act by two years, and required the President to determine whether certain Burmese state-owned enterprises and foreign persons met the criteria for designation pursuant to EO 14014.
EU Developments
EU Council Amends Sanctions Against Libya
The EU Council has amended several restrictive measures against Libya following a series of updates at the UN level. Changes to Regulation 2016/44 include prohibitions on technical assistance, brokering services, and financial or funding support connected to equipment that may be used for internal repression, with exceptions for cases of humanitarian or protective purposes. New restrictions prohibit the import, purchase, or transfer of Common Military List items, firearms, and ammunition from Libya. In addition, the limited use of frozen assets held by the Libyan Investment Authority is now permitted for low-risk time deposits, subject to specific conditions.
EU Renews Sanctions Against Moldova
On April 25, the EU Council has renewed the sanctions targeting specific individuals and entities in Moldova. This renewal comes amid heightened destabilization efforts connected to Russia’s aggressions against Ukraine. The sanctions have been extended for another year, until April 29, 2026. Currently, the measures apply to 16 individuals and 2 entities, involving restrictions such as asset freezes, prohibitions on the provision of funds, and travel bans within the EU.
EU Commission Updates FAQs Clarifying Sanctions on Russia
The European Commission recently published updated FAQs to provide greater clarity on specific aspects on the EU's sanctions against Russia. The recent updates address topics such as exemptions to the storage ban on Russian oil, restrictions on Russian LNG within the EU, and clarifications on the prohibition of services, including the ban on construction services that was introduced by the 16th sanctions package.
Asia-Pacific Developments
Despite Trump’s Hints at Trade Deals with Asia, There’s No One “in the Catbird Seat”
During a town hall on April 30, marking the first 100 days of his second term, Trump underscored a significant focus on Asia as a centerpiece of his trade strategy. When pressed by journalist Bill O’Reilly about rumors of completed deals with Japan, South Korea, and India, Trump clarified, “We have potential deals. But I’ll tell you this, I’m in less of a hurry than you are. We are sitting on the catbird seat. They want us. We don’t need them.” While Japan is restarting talks with hopes of a deal by June, and South Korea faces obstacles to reaching an agreement before July, there is little clarity on when these deals will materialize.
On the same day, China’s Ministry of Foreign Affairs (“MOFA”) contradicted Trump’s assertion, stating that “China and the United States are not engaged in any consultation or negotiation on tariffs” in the past 24 hours. Days later, on May 2, MOFA acknowledged receiving US overtures for negotiations but noted that China was still assessing the situation. The message from Beijing was firm: “If we fight, we will fight to the end; if we talk, the door is open.”
Meanwhile, discussions surrounding a Korea-Japan-China Free Trade Agreement (FTA) have resurfaced, with China actively pushing for progress. Experts remain skeptical about its near-term feasibility but note Beijing’s intent to strengthen ties with US allies amidst ongoing trade tensions.
China Decides to Lift EU Sanctions, But the EU Holds Its Ground
On April 30, the European Parliament’s president, Roberta Metsola, said that China has decided to lift sanctions on members of the European Parliament and its subcommittee on human rights. These sanctions were imposed on March 22, 2021, when China blacklisted ten EU individuals and four entities in response to EU measures targeting Chinese entities and individuals accused of human rights violations in Xinjiang.
Despite China’s decision, the European Union indicated no plans to reciprocate because the “EU has not observed changes in the human rights situation in China/Xinjiang.” Anitta Hipper, spokeswoman for the EU’s diplomatic arm, confirmed the EU’s stance.
At the same time, MOFA described the current state of relations as positive, stating, “This year marks the 50th anniversary of diplomatic ties between China and the EU, which offers important opportunities for the development of bilateral ties.” MOFA also expressed hope for deeper exchanges, adding, “Members of the European Parliament are welcome to visit China.”
