Overview
US Developments
US and China Extend Trade Truce by Two Months
On September 23, Treasury Secretary Scott Bessent announced the US and China agreed to extend their trade truce by two months. Originally set to expire on November 10, Secretary Bessent said the US-China economic détente will be extended to January 10, 2027. The agreement followed a meeting between Secretary Bessent and his Chinese counterpart, Vice Premier He Lifeng, and coincided with the start of President Xi Jinping’s three-day state visit to Washington, DC.
The extension is a continuation of the Busan Agreement between the US and China, which was agreed upon in October 2025. The Busan Agreement suspended Chinese export controls on rare earths, and the implementation of the US Bureau of Industry and Security’s (“BIS”) Affiliates Rule, which extends the application of the Entity List restrictions to affiliates owned 50 percent or more by an Entity List entity. Although not explicitly stated by Secretary Bessent, US officials reportedly confirmed that the two-month extension applies to the BIS Affiliates Rule.
President Donald Trump recently received authority under the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026 that would permit him to impose tariffs of up to 100 percent on China due to its status as a major market for Russian oil. We covered the bill in our previous update. The trade truce appears likely to delay President Trump’s use of the bill’s tariff authorities against China.
Although the Busan Agreement has delayed US imposition of further tariffs and export controls on China, it has not prevented sanctions designations involving Chinese individuals and entities. Many sanctions designations involving China-based individuals and entities over the past year were made under the Treasury’s Iran sanctions program. Most notably, on the day of the launch of “Operation Economic Outcast,” the Treasury Department designated numerous Chinese entities, individuals, and vessels as part of a broader action involving nearly 60 targets for allegedly supporting Iran.
In their discussions this week, President Trump reportedly told President Xi that Chinese help for Iran is unacceptable. On September 25, David Purdue, the US Ambassador to China, said that the US “made it very clear to [China] weeks ago that… any help they’d give Iran, whether it be direct or indirect, whether it be intelligence or parts or military equipment, was totally unacceptable.” We expect that the Trump Administration will continue to sanction Chinese persons allegedly involved in sensitive sectors of the Iranian economy, such as oil and defense.
Countries Ban Iranian Airlines Following US Sanctions on Iran’s Aviation Sector
Last week, several countries suspended flights operated by Iranian airlines to and from their airports, reflecting the broader impact of recent US measures targeting Iran’s aviation sector.
On September 24, the United Arab Emirates, the Middle East’s busiest aviation hub, announced it would suspend all flights by Iranian airlines. The UAE’s General Civil Aviation Authority said the flights were suspended “in light of the US ban imposed on Iranian airlines from using airports in various countries around the world.” Other countries that suspended flights from Iranian airlines include Oman, Iraq, Azerbaijan, Georgia, and Turkmenistan. On September 8, the Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) sanctioned 36 targets for supporting Iran’s aviation sector, including 27 Iranian commercial airlines. We covered the sanctions on Iran’s aviation sector in our September 14 update.
OFAC Consolidates Information on Enforcement Penalties and Removes Syria General License
On September 24, OFAC issued a final rule adding the Sanctions Penalties Regulation. The new regulation consolidates information about enforcement procedures and penalties, including the rights of US persons being investigated for violations. The information was previously located throughout 31 CFR chapter V. The new rule became effective on September 25.
On the same day, OFAC issued another final rule amending the Terrorism List Government Sanctions Regulations and removing and reserving a Syria-specific general license in order to implement the removal of Syria from the State Sponsor of Terrorism list.
OFAC Removes One Individual and One Entity from the DRC Sanctions List
On September 23, OFAC removed François Olenga and Safari Club from the Specially Designated Nationals List. Olenga was designated in 2017 for allegedly undermining democratic processes in the Democratic Republic of Congo, while Safari Club was designated for being owned or controlled by Olenga. OFAC did not provide comment on the delisting.
UK Developments
OFSI Introduces Presumption of Denial for Licence Applications Involving Designated Iranian Banks
OFSI has published guidance introducing a new licensing approach for transactions involving five designated Iranian banks: (i) Bank Sepah, (ii) Melli Bank plc, (iii) Bank Saderat, (iv) Persia International Bank; and (v) Bank Tejarat. With immediate effect, HM Treasury will apply a presumption of denial to licence applications involving these banks, meaning applications will generally be refused unless there are clear and compelling grounds for an exception. OFSI has also published FAQ 204 providing further detail on how this approach will operate in practice, confirming that applications will continue to be assessed on their individual facts but generally will only be granted when required by law or in exceptional and urgent circumstances. Examples include circumstances involving risks to life or environmental safety, essential regulatory payments, the preservation of assets, or the orderly wind-down of operations. The FAQ therefore indicates that the threshold for licensing transactions involving the five banks will be significantly higher than under OFSI’s ordinary case-by-case licensing approach, with applicants expected to demonstrate why their circumstances justify an exception to the general presumption of refusal.
OFSI has also confirmed that it will not renew the Iran Interim Basic Necessities General Licence (INT/2025/7628424) when it expires on October 22, 2026. Transactions currently relying on that licence will therefore cease to be authorised after expiry unless another applicable general licence or a specific HM Treasury licence is available, making it important for firms currently relying on the licence to assess alternative authorisation arrangements ahead of the deadline.
EU Developments
EU Council Renews Russia Asset Freeze Sanctions Regime for Three Years
On September 22, the EU Council renewed the restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine under Council Decision 2014/145/CFSP and Council Regulation (EU) 269/2014, until September 22, 2029. The renewal extended the targeted financial sanctions and travel bans applicable to more than 3,000 listed individuals and entities and, for the first time, provided for their renewal for a three-year period rather than the customary six-month period.
At the same time, the Council removed Russian businessmen Alisher Usmanov and Mikhail Fridman, as well as Andrey Falaleev and Redbird Corporate Services Ltd., from the EU sanctions list. In addition, the entries of 104 individuals and 71 entities designated under the EU asset freeze sanctions regime were updated.
According to reports, EU Member States agreed to delist Alisher Usmanov and Mikhail Fridman as part of a political compromise that secured unanimous support for the three-year renewal of the sanctions regime. France reportedly advocated for Usmanov’s removal amid negotiations with Azerbaijan concerning the release of French nationals detained in the country. The day after the Council adopted the renewal, Azerbaijani President Ilham Aliyev pardoned French national Martin Ryan, who had been convicted on espionage charges. Meanwhile, Luxembourg reportedly supported Fridman’s delisting during the negotiations, against the backdrop of a $16 billion arbitration claim brought by Fridman concerning assets frozen by the Grand Duchy under EU sanctions.
The negotiations proved contentious, with Latvia initially opposing the proposed delistings before ultimately abstaining and allowing the renewal decision to be adopted. Following the decision, Latvian Prime Minister Andris Kulbergs reportedly indicated that Latvia would look to impose national sanctions measures against the delisted individuals.
EU Council Announces News Listing Targeting Russian Hybrid Threats
The EU Council recently adopted restrictive measures against an additional individual involved in Russia’s continued hybrid activities, in particular Foreign Information Manipulation and Interference (FIMI) targeting the EU and its Member States and partners. The newly designated individual under the restrictive measures in view of Russia’s destabilizing activities is Russian media figure and former senior executive of Russia Today France, Xenia Fedorova.
According to the Council, Fedorova participated in the implementation and dissemination of RT France’s editorial line, including narratives aligned with those promoted by the Russian authorities in the context of Russia’s war of aggression against Ukraine. Following the suspension of RT’s broadcasting activities in the EU, Fedorova continued to disseminate such narratives through French media outlets, including CNews, Europe 1, and Le JDNews. The listing also notes that French authorities publicly identified Fedorova as relaying Kremlin disinformation and adopted an expulsion measure against her in July 2026.
With this update, EU sanctions in response to Russia’s destabilizing actions now apply to a total of 81 individuals and 20 entities.
EU Council Updates Sanctions Listings Targeting Individuals and Entities Associated with the Taliban
The EU Council updated the entries relating to 24 individuals and one entity under the restrictive measures directed against certain individuals, groups, undertakings and entities in view of the situation in Afghanistan, following an update at the UN level. Changes under Council Regulation (EU) 753/2011 reflect the March and April decisions of the UN Security Council Sanctions Committee updating the identifying information of 24 individuals associated with the Taliban, as well as that of Haji Khairullah Haji Sattar Money Exchange (HKHS). According to HKHS’s updated listing, Taliban leaders have used HKHS to disseminate funds to Taliban shadow governors and commanders and to receive informal money remittance transfers for the Taliban.
Asia-Pacific Developments
China imposed export restrictions on an additional two precursor chemicals used in the production of fentanyl
On September 22, 2026, China expanded its export control regime on drug-related precursor chemicals by adding two more substances to the list of chemicals that require export permits for shipments to the United States, Canada, and Mexico, bringing the total number of controlled chemicals to 18. The move came ahead of a meeting between Chinese President Xi Jinping and US President Donald Trump and reflects continued pressure from the United States, which has long criticized China as a major source of precursor chemicals used in the illicit manufacture of fentanyl, methamphetamine, and other synthetic drugs.
China Criticizes Expanded US Sanctions Campaign Targeting Iranian Aviation Sector
On September 22, 2026, China reaffirmed its opposition to US sanctions against Iran, with Foreign Ministry spokesman stating that Beijing rejects unilateral sanctions that are not authorized by the UN Security Council and opposes the extraterritorial application of US laws. At the same time, US Treasury Secretary Scott Bessent announced that, beginning September 23, the United States would seek to effectively halt the global operations of Iranian commercial airlines by enforcing sanctions against 27 Iranian airlines and related aviation entities.
Japan Reaffirms Support for Ukraine and Sanctions Pressure on Russia
On September 22, 2026, Japanese Prime Minister Sanae Takaichi reaffirmed Japan’s support for Ukraine during her first formal meeting with Ukrainian President Volodymyr Zelenskyy on the sidelines of the UN General Assembly, pledging to continue coordinating with the international community on assistance to Ukraine and sanctions against Russia. Takaichi emphasized that sustained international support is essential to achieving a fair and lasting peace, while Zelenskyy thanked Japan for its humanitarian and energy assistance.
South Korean President Urges Sanctions Relief for North Korea in Exchange for Nuclear Freeze
South Korean President Lee Jae Myung has called on the United States to consider easing sanctions on North Korea in exchange for a freeze on Pyongyang’s nuclear weapons and intercontinental ballistic missile programs, arguing that existing sanctions have had limited effectiveness and that diplomacy offers the only realistic path forward. Lee advocated a step-by-step approach in which sanctions relief and other incentives would help build trust following a negotiated freeze, eventually encouraging North Korea to scale back its nuclear arsenal.
Australia Expands Russia Sanctions as It Commits to Long-Term Ukraine Support
On September 23, 2026, Ukraine and Australia signed a 10-year bilateral security agreement during the UN General Assembly, formalizing long-term cooperation in defense, energy security, democratic reforms, and broader geopolitical coordination. The agreement highlights the expanded pressure on Russia by imposing 106 new sanctions designations, including measures targeting 38 vessels associated with Russia’s “shadow fleet” used to circumvent restrictions on fossil fuel exports, as well as organizations involved in the indoctrination and militarization of children, including Ukrainian children taken from occupied territories.
