Overview
The Sanctions Update, compiled by attorneys from Steptoe’s award-winning International Regulatory Compliance team and the Stepwise: Risk Outlook editorial team, publishes every Monday. Guided by the knowledge of Steptoe’s industry-leading IRC team, the Sanctions Update compiles and contextualizes weekly developments in international regulatory enforcement and compliance, as well as offers insights on geopolitical context, business impacts, and forthcoming risks.
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The Lede
The US ratchets up sanctions against drug trafficking
Last week, US Department of Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Jesus Alfredo Beltran Guzman, a key leader of the Beltran Leyva Organization (BLO) and nephew of Joaquin Guzman Loera, AKA El Chapo. The BLO, a splinter and rival of the prominent Sinaloa Cartel, remains diminished from its heyday in 2009 after the arrests and killings of key leadership but maintains connections to the Jalisco New Generation Cartel (a designated Foreign Terrorist Organization) and remains a large trafficker of fentanyl, cocaine, heroin, and other drugs into the US. These sanctions follow a December 2024 raid conducted by the Mexican Secretariat of Security and Citizen Protection against criminal cells linked to the BLO, resulting in the largest seizure of fentanyl in history—over a thousand kilos, or 20 million doses.
The BLO was sanctioned by the US in 2009 pursuant to the Foreign Narcotics Kingpin Designation Act and again under EO 14059, a December 2021 directive that enables Treasury to sanction any foreign person engaged in drug trafficking or receiving certain property connected to the proceeds of drug trafficking—not just kingpins. This executive order was the legal basis used to sanction Beltran Guzman, whose property and interests on property are blocked. Certain individuals and entities connected to Beltran or engaged in dealings with Beltran can also be subjected to blocking sanctions under the EO.
According to a recent statement from Director of Treasury’s Financial Crimes Enforcement Network (FinCEN) Andrea Gacki, halting the flow of deadly drugs and pursuing the “total elimination of cartel activity in the United States” are priorities for the Trump administration. The sanctions against Beltran Guzman are complemented by the designation of several Mexican cartels as Foreign Terrorist Organizations, the issuance of a recent Geographic Targeting Order requiring Southwest financial institutions to report any cash transfers over $200, and the threat of punitive tariffs on Mexico if it fails to cooperate with the US to curb drug trafficking.
The Trump administration has opened the fight against cartels primarily with financial tools, and there may be two reasons for this push. First, a financial-focused strategy may prove effective compared to the kingpin strategy, which has led to the violent splintering of cartels rather than their disintegration. A recent FinCEN report reveals that $1.4 billion in suspected transactions enabling just fentanyl trafficking in the US were reported under the Bank Secrecy Act in 2024, primarily from depository institutions (57%) and money-service businesses (32%). Electronic funds transfers (such as wire transfers) comprised 80% of such reports, which underscores the centrality of commercial financial institutions to drug trafficking. Many of these filings were Mexico-based companies remitting funds to China-based chemical manufacturers to procure chemical precursors to fentanyl. With potential secondary sanctions, these financial flows through financial institutions subject to the Bank Secrecy Act could be disrupted, at least temporarily.
Second, these financial actions can be done unilaterally. While US-Mexican law enforcement cooperation continues, it has diminished amid a shift in Mexico’s strategy to utilizing military forces instead of DEA-trained anti-narcotics special police, who were equipped under the $3 billion Merida Initiative, a security cooperation framework that expired in 2021. Now, law enforcement cooperation mostly entails information-sharing—which the US may find unsatisfying, especially given Mexico’s slow pace in implementing anti-corruption measures. The US-Mexico security relationship also took a hit when the US arrested former Defense Minister Gen. Salvador Cienfuegos Zepeda in Los Angeles in late 2020 for his alleged support to the H-2 Cartel.
Nonetheless, the US and Mexico have both signaled their willingness to continue their cooperation against the cartels. Notably, the US Army’s 7thSpecial Forces Group began joint training with Mexico’s elite Naval Marine Corps in February. If security cooperation were to deepen further, this could open the door to military action against the cartels’ infrastructure, such as fentanyl production labs or weapons depots. If so, US forces would likely provide intelligence support to Mexico’s naval forces. Unilateral action from the US, although reportedly considered, remains unlikely given the risk of the US-Mexico relationship deteriorating.
If the Trump administration continues embracing significant financial measures against drug trafficking, financial institutions should consider strengthening their due diligence and compliance practices.
US Developments
US and Iran Negotiate Amid New Sanctions
The US and Iran held nuclear talks on Saturday, both sides have confirmed. The negotiations mark an early opportunity in the second Trump administration for President Trump to achieve one of his key foreign policy aims of denying Iran a nuclear weapon. Iran, on the other hand, will likely use the opportunity to seek a reprieve from US “maximum pressure,” including sanctions, under the National Security Presidential Memorandum (NSPM-2). Saturday’s conversations were considered preliminary in nature, but additional negotiations have already been scheduled for next week, suggesting some early momentum.
The negotiations have not caused the Trump administration to put a pause on targeting Iran with new designations. On April 9, the Office of Foreign Assets Control (OFAC) announced that it was designating five entities and one individual based in Iran for allegedly procuring or manufacturing critical technologies for the Atomic Energy Organization of Iran and the AEOI-subordinate Iran Centrifuge Technology Company, which were both previously designated entities under Executive Order (EO) 13382. This followed a similar announcement on April 1, in which OFAC designated six entities and two individuals based in Iran, the United Arab Emirates, and China for allegedly participating in an unmanned aerial vehicle procurement network benefiting Iran.
Similarly, on April 10, OFAC designated a United Arab Emirates (UAE)-based Indian national, Jugwinder Singh Brar, for allegedly owning multiple shipping companies and vessels that participate in Iran’s “shadow fleet.” This is OFAC’s fifth round of sanctions targeting Iranian oil sales since President Trump issued NSPM-2, and coupled with the other recently announced designations, suggests that the Trump administration will continue to ratchet up the pressure until it reaches a deal with Iran.
It remains unclear whether the negotiations will move the needle on US “maximum pressure” under NSPM-2. However, the US Secretary of Energy, Christopher Wright, recently stated during an interview with CNBC that, if Iran does not abandon its nuclear program, it can expect “very tight sanctions.”
US Revokes Licenses for Gas Projects in Venezuela
The US has reportedly revoked licenses held by the Government of Trinidad and Tobago for its Venezuelan gas projects. Activity authorized under the licenses held by Trinidad and Tobago with Shell in relation to the Dragon field, and BP in relation to the Manakin-Cocuina field, is reportedly required to wind down by May 27.
The announcement comes as the Trump administration continues to exert pressure on the Maduro regime. Last month, the Treasury Department revoked exemptions for major oil companies, including Chevron, to operate in Venezuela. Earlier this month, President Trump authorized “secondary” tariffs on countries importing Venezuelan oil and other petroleum products, although it remains to be seen which countries, if any, Secretary of State Marco Rubio will designate as subject to the tariffs.
Senators Introduce Bill to Disrupt Russian “Ghost Fleet”
US Senators Joni Ernst (R-IA) and Richard Blumenthal (D-CT) introduced the Global Hunt for Offshore Smuggling and Trafficking (GHOST) Act last week. The bill aims to increase US efforts to disrupt the so-called “ghost fleet” of vessels that transport oil from Russia in excess of the price cap imposed by the US and its allies. In particular, the bill would establish a $150 million “Russian Sanctions Enforcement Fund” to support the seizure and forfeiture of property made with respect to certain violations of the sanctions imposed by the United States. The bill would also establish an Export Enforcement Coordination Center operated by Homeland Security Investigations within the US Department of Homeland Security. The Center would serve as the coordinator between US federal agencies, including the Departments of Commerce, Treasury, and State, and the US Intelligence Community. Although many lawmakers from both parties support restricting Russia’s oil exports, the prospects of the bill remain uncertain as the Trump administration negotiates with Russia on a resolution to the war in Ukraine.
State Department Imposes Visa Restrictions on South Sudan
The Department of State has begun the revocation of all visas held by South Sudanese passport holders and has prevented further issuance of visas. The announcement was made by Secretary of State Marco Rubio, who stated that the Transitional Government of South Sudan failed to accept the return of its citizens in a timely manner.
Days after the announcement, South Sudan agreed to accept Makula Kintu, an individual that South Sudan alleged to be a Congolese citizen illegally using the documents of a South Sudanese citizen to enter the US. The Spokesperson for the South Sudanese Ministry of Foreign Affairs, Apuk Ayuel Mayen, said that they would permit Kintu’s entry “in the spirit of maintaining friendly relations” with the US.
Rubio stated that the US “will be prepared to review these actions when South Sudan is in full cooperation.” However, as of Monday, there has been no announcement of any change in the State Department’s visa policy. The State Department’s decision follows recent disputes between the Trump administration and Colombia and Venezuela on the acceptance of deportation flights and suggests that the administration will continue to use foreign policy tools to advance its immigration agenda.
UK Developments
UK Targets Existing Designated Persons with Director Disqualification Sanctions
Following the UK’s introduction of director disqualification sanctions in 2024, the UK Government has varied the designations of 2996 individuals and 818 entities across 28 UK sanctions regimes to additionally make those persons subject to these sanctions. The effect of these designations is to prevent persons so designated from being a director of a UK company or a non-UK company that has sufficient connection to the UK (i.e., carries out business or has assets in the UK), as well as from taking part or being concerned in the promotion, formation or management of a company. The UK government guidance page on director disqualification sanctions also has been updated to reflect these changes.
UK Further Targets Georgian Actors Undermining Democracy and the Rule of Law
The UK Government has made four new designations under the Global Human Rights Sanctions Regime. This package of measures responds to the violent targeting of Georgian citizens, political opposition leaders, journalists, and youth activists during the protests that occurred after the passage of the Georgian foreign influence law by security forces from the Ministry of Internal Affairs Special Task Department and Tbilisi Police Department. The designations target Georgian officials involved in overseeing, or failing to hold law enforcement accountable for, this activity. The designations reflect a growing focus by the UK government on persons deemed to be undermining democracy and the rule of law, and underscores recent steps taken by Foreign Secretary Lammy to crack down on corruption and illicit finance.
OFSI Publishes Property and Related Services Threat Assessment Report
OFSI has published its first Property and Related Services Threat Assessment, which identifies key sanctions evasion threats and warning flags that property management and related services firms should be aware of, as well as suggestions on areas where sanctions compliance within the sector could be further strengthened. Among other things, OFSI reported that just over one percent of all suspected sanctions breach reports submitted to OFSI since February 2022 were made by property and related services firms, while seven percent of all suspected breach reports submitted to OFSI by other types of firms involved property and related services firms in some capacity, a discrepancy that suggests under reporting to OFSI by firms operating in the UK property and related services sector. From May 14, 2025, letting agents will be brought within the UK’s mandatory financial sanctions reporting framework and required to report to OFSI knowledge or reasonable suspicion that a person is a designated person or has breached UK financial sanctions as soon as practicable.
First UK Prosecution for Breaches of Russian Sanctions Secures Convictions
Dmitrii Ovsyannikov, the former Governor of Sevastopol, was convicted and sentenced to 40 months imprisonment in the UK’s first criminal prosecution for Russia-related sanctions breaches, including receiving over £76,000 and attempting to buy a luxury car, and related money laundering for handling the proceeds of his sanctions evasion. His brother, Alexei Owsjanikow, was also found guilty of facilitating financial sanctions breaches by paying over £41,000 in school fees on Mr. Ovsyannikov’s behalf and sentenced to a 15 month suspended sentence. Mr. Ovsyannikov had been sanctioned since 2017 for his role in the Russian administration of annexed Crimea. The case highlights an increased focus on the enforcement of sanctions breaches, as well as a willingness to pursue criminal enforcement in appropriate cases against both sanctioned individuals and their enablers.
EU Developments
EU Imposes Restrictions on 8 Russian Entities
In the 16thsanctions package announced last February, the suspension of broadcasting activities for eight media outlets was implemented. Through Council Implementing Regulation 2025/701, the Council has recently decided that the ban will take effect on 9 April 205 for the listed media outlets.
EU Commission Clarifies Current State of Sanctions on Syria
After the fall of the Assad regime in Syria, the EU decided to suspend several sanctions against the country to support its political transition, economic recovery, reconstruction, and stabilization. The EU Commission has recently published FAQs regarding the update to EU sanctions concerning Syria. These FAQs clarify which sanctions have been lifted, the impact of the suspension, the conditions under which EU financial or credit institutions can, for example, open a new representative office in Syria, and more.
EU Renews Sanctions Against Iran and Delists Two Individuals
On April 4, 2025, the EU Council has renewed the sanctions against Iran directed against certain persons and entities in view of the situation in Iran. These sanctions will be extended for another year, until April 13, 2026. Additionally, two individuals were removed from the sanctions list, and the entries for 20 listed individuals were modified. These two individuals are Iran’s former Vice-Minister for Press and the Deputy Commander for Operations of the Islamic Revolutionary Guard Corps, the latter having passed away in September 2024.
Third Countries Align with Recent EU Sanctions
The High Representative of the EU has announced that Albania, Bosnia and Herzegovina, Iceland, Liechtenstein, Montenegro, North Macedonia, Norway, the Republic of Moldova, and Ukraine have aligned themselves with several Council decisions, reported in our March, 17 Sanctions Update. Specifically, these countries have aligned with Decision 2025/528, which delists four individuals and removes three deceased persons from the annex of Decision 2014/145/CFSP concerning restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty, and independence of Ukraine. In addition, this decision extends the Russian sanctions for another six months.
Additionally, these countries have aligned themselves with Council Decision 2025/510, adding nine individuals and one entity responsible for serious human rights violations and abuses in the Democratic Republic of the Congo. For more information on the content of these decisions, please see our blog post here and here. These countries, including EU candidate nations, have regularly aligned themselves with EU sanctions.
Asia-Pacific Developments
China Calls US Tariffs “a Joke,” Matches Them, and Raises Four Countermeasures
China reiterated its firm stance against US tariff threats after media reports indicated that President Trump would raise “reciprocal tariffs” on Chinese goods to 125%, in addition to an earlier 20% levies applied for fentanyl trafficking. In raising its own tariffs on US-origin goods to 125%, and announcing that, after this rate hike, US tariffs were no longer worth matching, the Ministry of Finance explained, “Given that American goods are no longer marketable in China under the current tariff rates, if the US further raises tariffs on Chinese exports, China will disregard such measures.” The Ministry of Commerce (“MOFCOM”) said that the US tariffs had “become a joke.”
Instead, China would impose other measures. When it announced the 125% tariff hike on April 11, 2025, effective April 12, 2025, China also announced it was adding more US entities to the Export Control List (“ECL”), placing additional US firms on the Unreliable Entity List (“UEL”), and filing lawsuits against the United States with the WTO.
MOFCOM announced it was adding 12 US defense and tech entities to the ECL, effective April 10, 2025, but only four of the companies had not previously been sanctioned by China’s Ministry of Foreign Affairs (“MOFA”) and listed on the UEL. The new companies are American Photonics, Novotech, Inc., Echodyne, and Marvin Engineering Company, Inc. Previously listed entities include Exovera, Teledyne Brown Engineering, Inc., BRINC Drones, Inc., SYNEXXUS, Inc., Firestorm Labs, Inc., Kratos Unmanned Aerial Systems, Inc., Domo Tactical Communications, and Insitu, Inc. Including these 12 companies brings the total number of US entities on the ECL to 71. All these entities are prohibited from receiving dual-use exports or engaging in export-related activities unless exceptions are granted. The eight companies previously sanctioned by MOFA have been subjected to asset freezes and transaction prohibitions.
Moreover, MOFCOM announced it had added six US defense companies to the UEL, effective April 10, 2025, but all six were previously sanctioned by MOFA and were listed on the ECL. These companies are Shield AI, Inc., Sierra Nevada Corporation, Cyberlux Corporation, Edge Autonomy Operations LLC, Group W, and Hudson Technologies Co. With this addition, the total number of US entities on the UEL rises to 55. The UEL imposes restrictions that prohibit these companies from engaging in China-related import or export activities and investing in that country.
Finally, China filed formal complaints with the WTO in February, March, and April 2025, challenging the legality of the US tariff measures. A spokesperson from MOFCOM described the tariffs as “a typical unilateral bullying practice” that undermines global trade and economic stability.
On April 10, 2025, media reported that the White House had clarified that the total tariffs imposed on Chinese goods now stood at 145%. While President Trump announced a 90-day pause of “reciprocal tariffs” against other countries, he increased pressure on China in raising the effective tariff rate to 145%. In response, MOFCOM reaffirmed China’s resolve, “If the US wants to fight, our response will continue to the end. Pressure, threats, and coercion are not the right way to deal with China.”
Japan Extends Trade Ban on North Korea for Two Years Amid Missile Threats and Abduction Disputes
On April 8, 2025, media reported Japan would extend its ban on all exports to and imports from North Korea until April 13, 2027. This trade ban was first introduced for imports in 2006 and expanded to exports in 2009.
At a press conference, Chief Cabinet Secretary Yoshimasa Hayashi outlined two key reasons for the extension. The first is North Korea’s continued development of nuclear weapons and ballistic missiles, including repeated nuclear tests and missile launches. On March 10, 2025, media reported North Korea fired multiple ballistic missiles into the Yellow Sea, protesting joint military drills conducted by South Korea and the United States. This marked North Korea’s first reported missile launch since US President Trump took office.
The second reason is the unresolved abduction of Japanese nationals by North Korea. At least 17 Japanese citizens were abducted in the 1960s and 1970s. In 2002, North Korea admitted to kidnapping 13 of these individuals after years of denial, but only five returned to Japan. Japan continues to demand the return of all abductees and has urged President Trump to assist in addressing the matter.
