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 Sanctions Mexico-Based Human Smuggling Organization
On October 30, OFAC sanctioned the Bhardwaj Human Smuggling Organization (HSO) (“Bhardwaj HSO”), a Mexico-based transnational criminal organization (TCO), as well as its leader Vikrant Bhardwaj, three other individuals, and 16 companies that allegedly facilitated and profited from the HSO’s activities. According to OFAC, Bhardwaj HSO smuggles individuals from Europe, the Middle East, South America, and Asia through Mexico and across the US-Mexico border, often in collaboration with other TCOs, such as the Hernandez Salas TCO, and foreign terrorist organizations (FTO), such as the Sinaloa Cartel.
OFAC’s sanctions against the Bhardwaj HSO follow a similar designation on March 18, which targeted a leader of the Guatemala-based Lopez HSO for allegedly smuggling migrants into the United States. Both designations were made under Executive Order (EO) 13581, as amended by EO 13863, which targets TCOs and their support structures.
OFAC Provides License to Rosneft Affiliates in Germany
OFAC has issued a new general license (“GL”) (GL 129) authorizing certain transactions with two of Open Joint Stock Company Rosneft Oil Company’s (“Rosneft”) affiliates in Germany, Rosneft Deutschland GmbH and RN Refining & Marketing GmbH.
GL 129 follows OFAC’s October 22 designations of Rosneft, Lukoil OAO (“Lukoil”), and certain of their Russia-based subsidiaries and affiliates. Under OFAC’s “50 Percent Rule,” certain other entities, including those not based in Russia, in which Rosneft, Lukoil, or their designated subsidiaries and affiliates own, individually or in the aggregate, directly or indirectly, 50 percent or more, are also considered “blocked.”
The term of GL 129 is set to expire at 12:01 a.m. EST on April 29, 2026.
US Lifts Sanctions on Former Repubilka Srpska President Dodik
On October 29, OFAC removed sanctions on multiple persons and entities connected to the Western Balkans, including former Republika Srpska (“RS”) President Milorad Dodik and many of his supporters and companies. OFAC did not specify why the sanctions were lifted. OFAC recently removed sanctions on other RS officials on October 17.
Trump, Xi Agree to Suspend New Export Controls for One Year
During a highly-anticipated meeting on the sidelines of the Asia-Pacific Economic Cooperation (“APEC”), President Trump, President Xi, and their respective teams agreed to a new trade framework, including the temporary suspension of Chinese export controls on rare earths and the US Bureau of Industry and Security’s (BIS) recently announced Affiliates Rule.
The Affiliates Rule expanded the scope of controls under the Export Administration Regulations (“EAR”) to foreign entities that are owned 50 percent or more, indirectly or directly, individually or in the aggregate, by entities on the Entity List, Military End-User (“MEU”) List, or that are otherwise subject to certain OFAC-administered sanctions programs identified pursuant to 15 C.F.R. § 744.8(a)(1). The Affiliates Rule marked a significant expansion of end-user controls that presented significant compliance challenges and risks for exporters, with a particular impact on Chinese entities. Notably, the Affiliates Rule remains in effect until BIS formally rescinds it.
China’s export controls were similarly expansive. According to China’s Ministry of Commerce (“MOFCOM”), the controls would have applied extraterritorially to foreign entities that sought to export items which contained even trace amounts of Chinese-origin rare earths, or that were otherwise produced using certain Chinese technology. The measures were similar to BIS’s foreign direct product rule (“FDPR”) in scope, and would have, if implemented, significantly disrupted supply chains for items which rely on rare earths.
Much like the overall trade framework, the longevity of the reciprocal suspension of the Affiliates Rule and China’s export controls on rare earths remains uncertain. Businesses will need to remain watchful for continual changes in the US-China economic relationship.
UK Developments
UK Lifts Arms Embargo on Armenia and Azerbaijan
The UK government has announced the full removal of its arms embargo on Armenia and Azerbaijan, bringing to an end restrictions that had been in place under the Organisation for Security and Co-operation in Europe (OSCE) framework since 1992. The change was confirmed in a Written Ministerial Statement laid before Parliament on October 13, 2025. The UK will no longer apply the OSCE arms embargo to either country, and the previous interpretation of the embargo issued in July 2025, which restricted exports of weapons, ammunition, and munitions for potential use by military, police, or security forces along the Armenia-Azerbaijan land border, is now void. Exporters are advised that all licence applications for controlled goods to Armenia and Azerbaijan will continue to be reviewed individually against the UK’s Strategic Export Licensing Criteria (SELC). Schedule 4 of the Export Control Order 2008 will be amended in due course to reflect this policy change.
OFSI Amends Humanitarian General Licence Covering Israel, Palestine and Lebanon
OFSI has amended General Licence INT/2023/3749168, which facilitates humanitarian activity in Israel, Palestine and Lebanon. The amendment extends the licence for an additional two years and updates several key definitions and reporting provisions. New reporting deadlines have been added for activity undertaken in 2026 and 2027. References to “The Occupied Palestinian Territories” also have been replaced with “Palestine”, and the definition of “Relevant Person” has been broadened. The term “UK Funded Person” now includes anyone who has received UK government funding within the past five years. OFSI has also removed references to “the conflict” to ensure the licence is geographically defined rather than event-specific. Those intending to rely on this General Licence should review the updated text carefully to ensure compliance with its terms and reporting requirements.
UK Government Targets IRGC Enabler in Latest Iran Sanctions
The UK Government has designated Iranian banker and businessman, Aliakbar Ansari, under the Iran sanctions regime (here), following the decision to take action against him for his role in financially enabling the work of the Islamic Revolutionary Guard Corps (IRGC). According to a UK Government press release, Aliakbar Ansari has played a role in financially supporting the activities of the IRGC, which include its use of repression and targeted threats to carry out hostile acts, including in the UK. Aliakbar Ansari is now subject to a UK asset freeze, director disqualification, and a UK travel ban.
OFSI Updates FAQs Guidance
OFSI has updated its financial sanctions FAQ guidance. FAQ 172 has been added and addresses the question of whether an OFSI licence would be required for a UK financial institution to deal with or receive (or use once received) funds allocated to it by an International Central Securities Depository (ICSD) where corresponding ICSD funds held by the National Settlement Depository (NSD) have been seized and dealt with by the NSD. FAQ 53 was amended to reflect the expanded list of sanctions regimes covered by the new Legal Services General Licence. Two FAQs also were withdrawn. Specifically, FAQ 7 (accepting wire transfers from non-UK designated Russian residents with an account with a sanctioned bank) and 49 (amendments made to General Licence INT/2024/5334756).
EU Developments
EU Council Renews Sanctions Regime Against ISIL (Da'esh) and Al-Qaeda
The EU Council has renewed the sanctions regime targeting ISIL (Da’esh) and Al-Qaeda until October 31, 2026. Established under Council Decision (CFSP) 2016/1693, the framework sets out autonomous restrictive measures directed at ISIL (Da’esh), Al-Qaeda, and individuals, groups, and entities associated with them. At present, 15 individuals and 7 groups are designated under the sanctions regime. The restrictive measures include asset freezes, a prohibition on the provision of funds or economic resources, and a travel ban within the European Union.
European Commission Updates FAQs Following 19th Sanctions Package Against Russia
The European Commission recently issued an updated version of its FAQs on sanctions against Russia and Belarus, following the 19th sanctions against Russia. The revisions incorporate changes introduced by the 19th sanctions package and provide further clarification on the scope and application of Council Regulation 833/2014, particularly in relation to oil imports and the import ban on refined petroleum products derived from Russian crude oil. Among the changes, the FAQs clarify that no evidence of crude oil origin is required when importing refined products from designated partner countries listed in Annex LI, which has been expanded to include Australia, Japan and New Zealand.
EU Council Extends Sanctions Regime Targeting Moldova Until October 2026
The EU Council has extended the sanctions regime targeting the leadership of the Transnistrian region of the Republic of Moldova, for another year, until October 31, 2026. The sanctions regime, set out in Council Decision 2010/573/CFSP, imposes restrictive measures, including a travel ban, on individuals who obstruct efforts to achieve a political settlement of the Transnistrian conflict.
Asia-Pacific Developments
China Urges US to End Cuba Sanctions Following UN Resolution
China has urged the United States to respond to widespread international demands by ending its decades-long embargo and sanctions against Cuba and removing the country from its list of state sponsors of terrorism, according to Guo Jiakun, spokesperson for China’s Ministry of Commerce (MOFOCOM). This appeal came after the UN General Assembly overwhelmingly approved a resolution calling for the termination of US economic restrictions on Cuba, with 165 countries voting in favor, seven against, and 12 abstaining. China, which has backed similar UN resolutions for 33 consecutive years, reaffirmed its continued support for Cuba’s right to pursue a development path tailored to its national circumstances.
Iranian Oil Discounts to China Deepen Amid Sanctions and Import Quota Constraints
Amid escalating Western sanctions on Russian and Iranian oil producers, Chinese refiners are receiving Iranian crude at the steepest discounts seen in over a year. The US, UK, and EU have recently intensified trade restrictions targeting major Russian energy firms and entities linked to Iran’s oil trade, including several Chinese refiners and shipping infrastructure. These measures have disrupted logistics and heightened caution among buyers, leading to a standoff in the market. With independent Chinese refiners facing a shortage of government-issued import quotas, demand has weakened, pushing Iranian Light crude offers to over $8 below Brent benchmarks for December delivery—down from $6 in September and $3 in March. Some bids have dropped to $10 below Brent, as buyers seek compensation for sanctions-related risks and potential port complications. Iranian oil imports to China fell to 1.2 million barrels per day in September, the lowest since May, and refiners are now awaiting possible new quotas from Beijing, which has historically issued them in November.
Iran Rebuilds Missile Stockpile with Chinese Shipments Despite UN Sanctions
Despite renewed United Nations sanctions prohibiting ballistic missile development and arms-related exports to Iran, intelligence findings reveal that Iran is actively replenishing its missile stockpile with material sourced from China. Since late September, approximately 2,000 tons of sodium perchlorate—a chemical essential for solid missile fuel—have been shipped from Chinese ports to Iran, following Iran’s military engagement with Israel. These shipments involve vessels and companies already under US sanctions, raising concerns about the effectiveness of enforcement mechanisms. While sodium perchlorate is not explicitly listed among banned substances, its role in missile production places it within the scope of prohibited items under the broader UN framework. China, which opposes the reactivation of sanctions, maintains that its export practices comply with domestic regulations and international obligations.
India’s Largest State-Owned Refiner Resumes Russian Oil Purchases Despite US Pressure
Indian Oil Corporation (IOC), the country’s largest state-owned refiner, has restarted imports of Russian crude oil, acquiring five shipments for December delivery from non-sanctioned suppliers. This includes 3.5 million barrels of ESPO crude, a premium grade typically exported from Russia’s Pacific coast. The decision follows a brief suspension of Russian oil purchases by Indian refiners after the US imposed new sanctions on major Russian producers Rosneft and Lukoil, giving global buyers until November 21 to wind down transactions with them. IOC had previously canceled several shipments linked to newly sanctioned entities but has now resumed buying, citing compliance with international sanctions as a guiding principle. Other Indian refiners, such as Reliance Industries and Mangalore Refinery, have paused purchases pending legal review.
India Partners with Sanctioned Russian Firm to Produce Domestic Civil Aircraft
India’s Hindustan Aeronautics Ltd (HAL), a state-owned aerospace manufacturer, has signed a preliminary agreement with Russia’s United Aircraft Corporation (UAC), currently under sanctions from the US, EU, and UK due to its ties to Russia’s defense sector. HAL and UAC agreed to jointly produce civil commuter aircraft, marking a significant step toward domestic passenger jet manufacturing. While the partnership supports India’s push for self-reliance in aviation and aims to meet growing demand for regional and short-haul international connectivity, it risks straining relations with Western nations. India, however, has rejected unilateral sanctions and criticized Western pressure on its ties with Moscow, pointing out continued Western trade with Russia.
US Grants India Temporary Waiver to Operate Iran’s Chabahar Port
India has received a six-month exemption from US sanctions to continue operating Iran’s Chabahar port, a move that reverses Washington’s earlier decision to revoke the waiver as part of its broader pressure campaign against Iran’s nuclear and missile programs. The waiver follows India’s 10-year agreement with Iran to manage the port and coincides with its recent diplomatic outreach to Afghanistan, including the reopening of its embassy in Kabul. The waiver comes amid signs of improving US-India relations, including discussions on a potential trade deal, after tensions escalated over Indian purchases of Russian oil and increased US tariffs on Indian goods.
Japan Resists US Call to Halt Russian LNG Imports Over Energy Security Concerns
During a recent summit in Tokyo, Japanese Prime Minister Sanae Takaichi reportedly told Trump that halting imports of Russian liquefied natural gas (LNG) would be unfeasible for Japan, citing the country’s energy needs. The US had urged Japan and other buyers to stop purchasing Russian energy and impose sanctions on major Russian oil producers to increase pressure on Moscow over the war in Ukraine. Takaichi, Japan’s first female prime minister, argued that cutting off Russian energy would benefit China and Russia, as they remain major buyers. Russian LNG currently makes up nearly 9% of Japan’s total imports, with Japanese firms Mitsui and Mitsubishi holding stakes in the Sakhalin-2 project in Russia’s Far East. Japan has been increasing its LNG imports from the US in recent years to diversify its energy sources and prepare for the expiration of Russian supply contracts.
