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 International Trade and Regulatory Compliance 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
US Designates Balochistan Liberation Army as an FTO amid warming relations with Pakistan
On August 12, the US government designated the Balochistan Liberation Army (BLA), aka The Majeed Brigade, as a Foreign Terrorist Organization (FTO), adding to its 2019 designation as a Specially Designated Global Terrorist (SDGT). The BLA has been operating since at least the early 2000s in its current form. It is engaged in an insurgency against the Pakistani government for control over Balochistan, the largest but least populated province of Pakistan. Since its initial designation in 2019, the group has executed a number of high-profile terrorist operations in Pakistan, including the March 2025 hijacking of the Jaffar Express train traveling from Quetta to Peshawar, killing 31 civilians and security personnel, and holding over 300 train passengers hostage. The timing and political context of the designation suggest that far more than counterterrorism cooperation is involved; the Trump administration is seeking to boost American commercial opportunities and edge out Chinese companies operating in Balochistan.
While SDGT and FTO designations are similar, the FTO designation goes further by making it a federal crime to knowingly provide material support or resources to a designated FTO, thereby increasing risks of any type of engagement with the FTO. Members of an FTO are automatically inadmissible to the US. Furthermore, victims of terrorist attacks and their survivors are able to file civil lawsuits against FTOs and entities that support them, for justice and financial restitution.
Counterterrorism cooperation between the US and Pakistan, and bilateral relations more broadly, have had ups and downs, with the main problem being mutual distrust. During the Afghan War, the US intelligence community, while being reliant on Pakistani capabilities in Afghanistan, accused Islamabad of playing a double game, supporting some terrorist groups aligned with Islamabad’s political interests while selectively assisting the US against al-Qa’ida and the Taliban in Afghanistan. The joint raid capturing 9/11 mastermind Khalid Sheikh Mohammed in Rawalpindi in 2003 was a high point; the US operation against al-Qa’ida leader Osama bin Laden in his Abbottabad’s hideaway in 2011, conducted unilaterally because the US believed he was under the protection of individuals within Pakistani intelligence, was a decidedly low point. The US military exit from Afghanistan in 2021 rendered Pakistan less relevant to US interests, and the relationship further deteriorated.
The US-Pakistan relationship is witnessing a reset under the Trump administration. Pakistani officials arrested and extradited to the US an ISIS-K militant accused of planning the 2021 Abbey Gate bombing in Kabul, which killed 13 American service members and more than 160 Afghan civilians during the US military withdrawal. In March, Mohammad Sharifullah was charged in federal court in Virginia with providing and conspiring to provide material support and resources to a designated FTO that resulted in deaths. President Trump publicly praised Pakistan for helping with the arrest of Sharifullah. In May, the US took credit for brokering a ceasefire between India and Pakistan, after a four-day cross-border conflict threatened to bring the two nuclear powers to war. In June and August, the US hosted Pakistan Army Chief Asim Munir, first at a White House meeting with President Trump and then for discussions with the Chairman of the Joint Chiefs of Staff. Field Marshal Munir’s invitation for lunch at the White House was unprecedented, marking the first time a US president has hosted a Pakistani military chief who is not also the head of state.
While most military aid to Pakistan remains blocked, the Trump administration is seeking to open commercial opportunities in Pakistan for American companies. At the end of July, Washington and Islamabad reached a deal to lower the proposed reciprocal tariff on Pakistan, which includes an agreement for energy cooperation, i.e., for the US to help develop Pakistan’s oil reserves, which surveys indicate are technically recoverable in Balochistan. Balochistan is Pakistan’s largest and most resource-rich province, with reserves of oil, natural gas, copper, and critical minerals. But US businesses would be vulnerable to terrorist attacks by the BLA, which opposes Islamabad-backed development projects that do not benefit the local population. Strengthened ties between President Trump and Field Marshal Munir could open the door for a more business-friendly environment for American companies—particularly as Pakistan’s military plays a substantial role in the country’s political life and foreign policy.
US businesses would also face steep competition from entrenched Chinese businesses. The China-Pakistan Economic Corridor (CPEC), China’s 15-year, $62 billion investment in Pakistan and the flagship project of its Belt and Road Initiative, runs through Balochistan. The project has upgraded Pakistan’s infrastructure, building modern transportation networks, energy projects, and special economic zones. Rather than develop Pakistani businesses and workforce, however, Chinese companies with Chinese labor have largely benefited, leaving Islamabad deeply indebted. With Sino-Pak grievances growing, President Trump sees opportunities for preferential terms for American companies as leverage to push back against China’s dominant position. However, given China’s major stake in development projects in Balochistan, it is unlikely China will leave the province soon. Should the designation of BLA as an FTO come with increased US counterterrorism efforts, however, it could make Balochistan a more conducive environment for Chinese workers who have repeatedly been the target of BLA for the past few years.
US Developments
Trump and Putin Meet in Alaska to Discuss Ukraine Peace Deal
On August 15, President Donald Trump and Russian President Vladimir Putin met in Alaska to discuss a peace deal to end the Russian war in Ukraine. This summit marked the first meeting between a US President and Putin, who is still subject to US sanctions, since Russia’s 2022 invasion of Ukraine. Trump, Secretary of State Marco Rubio, and special envoy Steve Witkoff publicly hailed the progress on peace discussions at the summit, although Rubio said on Sunday that “big areas of disagreement” remain and that a peace agreement is still “a long ways off.”
The details of the negotiations have not been released, but public reporting suggests that Putin proposed a peace deal that would cement Russia’s territorial gains in Ukraine and, in the Donbas, extend Russia’s territorial gains past the current frontline. Ukrainian President Volodymyr Zelensky explicitly rejected that proposal when asked by reporters. Zelensky and several European leaders are scheduled to meet with Trump at the White House on Monday.
Trump had recently expressed frustration with Putin because of Russia’s continual attacks on Ukraine and had threatened significant new sanctions, including secondary tariffs. Trump imposed secondary tariffs on India on August 6 for its importation of Russian oil, but has not imposed further sanctions against Russia. It is unclear whether the Trump administration is still considering the adoption of stronger sanctions, which it may view as a tool to coax Russia into a peace deal.
OFAC Targets Crypto Exchange for Malicious Cyber Activities
The Department of the Treasury’s Office of Foreign Assets Control (OFAC) has sanctioned Garantex Europe OU (“Garantex”), a Russia-based cryptocurrency exchange, and certain of its senior executives, for their alleged involvement in malicious cyber activities. OFAC concurrently designated Garantex’s successor, Grinex, and six associated companies in Russia and the Kyrgyz Republic, which it alleges either participated in the malicious cyber activities or in sanctions evasion schemes related to them.
Garantex was previously designated pursuant to Executive Order (EO) 14024 on April 5, 2022, for operating or having operated in the financial services sector of the Russian economy. Specifically, OFAC alleged, at that time, that Garantex processed millions of dollars’ worth of illicit transactions in violation of anti-money laundering (AML) and countering the finance of terrorism (CFT) regulations. Garantex’s re-designation under cyber authorities (EO 13694) reiterated this point and built on it, alleging that Garantex also “directly facilitated notorious ransomware actors.”
The recent designations closely follow the Department of Justice’s (DOJ) coordinated action with Germany and Finland, announced March 7, 2025, to “take down” the online infrastructure used to operate Garantex, and its concurrent unsealing of indictments against certain Garantex officers. The DOJ enforcement action and OFAC designations both align with Deputy Attorney General Todd Blanche’s Memorandum from April 7, 2025, in which he stated that, pursuant to EO 14178, the DOJ will prioritize, among other things, investigations and prosecutions involving those who use digital assets in furtherance of criminal offenses.
OFAC’s designation of Garantex, Grinex, and associated personnel and companies aligns with Treasury’s previous targeting of Cryptex, PM2BTC, SUEX, Shatex, Bitpapa, NetEx24, and AWEX, all of which were sanctioned or identified as being a primary money laundering concern by the Financial Crimes Enforcement Network (FinCEN) for their alleged provision of financial services to criminal actors, or alleged facilitation of illicit activities.
Treasury Sanctions Increase Pressure on Mexican Cartels with New Sanctions
Last week, OFAC continued its sanctions campaign against cartels and their supporters or affiliates. Across two separate actions, OFAC imposed sanctions on two cartels, 11 individuals, and 13 companies for various alleged unlawful activities.
On August 13, OFAC designated four Mexican individuals and 13 Mexican companies for their alleged connections to a timeshare fraud led by the Cartel de Jalisco Nueva Generacion (CJNG), a Foreign Terrorist Organization (FTO) and Specially Designated Global Terrorist (SDGT). OFAC noted that this was the fifth time it has sanctioned those connected to CJNG’s timeshare fraud activities, following related actions on July 16, 2024, November 30, 2023, April 27, 2023, and March 2, 2023. OFAC has previously issued a Notice to help financial institutions identify and report suspicious activity related to timeshare fraud, specifically that which is orchestrated by Mexico-based transnational criminal organization (TCO).
On August 14, OFAC sanctioned two Mexican cartels—Carteles Unidos (a.k.a. United Cartels) and Los Viagras—as well as seven affiliated individuals allegedly connected to terrorism, drug trafficking, and extortion in Mexico’s agricultural sector. OFAC stated that this action was in furtherance of President Trump’s Directive from January 20, 2025, which called for, among other things, the “total elimination” of cartels and TCOs.
OFAC Designates Entities Linked to Violence and Illegal Mining in the DRC
OFAC has sanctioned multiple entities it says are connected to armed group violence and the illicit sale of critical minerals in the Democratic Republic of the Congo (DRC). These include Coalition des Patriotes Résistants Congolais-Force de Frappe (PARECO-FF), a successor movement to PARECO, which allegedly generated revenue by overseeing mining operations, collecting illegal fees and taxes from miners, and engaging in minerals smuggling, as well as a Congolese mining company and two of its Hong Kong-based export companies.
The State Department has previously highlighted concerns with the illicit trade and exploitation of minerals that contribute to instability in the DRC. The Trump administration is particularly concerned with the “conflict mineral” trade in the DRC as it attempts to secure a resolution to the conflict in the eastern part of that country.
State Department Imposes Visa Restrictions for Involvement with Cuban Forced Labor
On August 13, the State Department announced that it was taking steps to impose visa restrictions on African, Cuban, and Grenadian government officials, and their family members, for their alleged involvement in the Cuban regime’s “medical mission” labor export scheme. Concurrently, the State Department announced that it was taking steps to revoke visas and impose visa restrictions on several Brazilian government officials, former Pan American Health Organization (PAHO) officials, and their family members, for their alleged complicity with the Cuban regime’s labor export scheme in the Mais Médicos program.
The Trump administration first expanded the Cuba-related visa restriction policy targeting Cuba’s forced labor export program on February 25, 2025. These most recent actions follow the related visa restrictions imposed on several Central American government officials and their family members on or around June 3, 2025. According to the Trump administration, these programs exploit Cuban medical workers while enriching the Cuban government.
EU Developments
EU To Prepare 19th Sanctions Package Against Russia
Following a meeting of EU foreign ministers on August 11, the High Representative for Foreign Affairs Kaja Kallas confirmed that the EU will begin preparing its 19th sanctions package against Russia. In the reported statement, Kallas underscored the importance of maintaining pressure on Russia and cautioned against any discussions of concessions until Russia agrees to a full and unconditional ceasefire. The confirmation came ahead of US President Trump’s high-profile meeting with President Putin in Alaska, in which the leaders reportedly discussed a peace deal that would cement Russian territorial gains in Ukraine—and from which European and Ukrainian leaders were excluded.
EU Council Amends Sanctions Against Iraq
The EU Council has amended Council Regulation 1210/2003, which imposes specific restrictions on economic and financial relations with Iraq, following a recent update at the UN level. Commission Implementing Regulation 2025/1751 revises the list of sanctioned individuals and entities associated with the former regime of Saddam Hussein, aligning with changes made by the UN Sanctions Committee on August 5, 2025. This amendment specifically updates Annex IV of Council Regulation 1210/2003 to reflect the revised sanctions list. The designated individuals and entities are subject to asset freezes on their funds and economic resources.
Third Countries Align with EU Sanctions Targeting Russia And Lebanon
The High Representative of the EU has announced that Albania, Bosnia and Herzegovina, Iceland, Liechtenstein, Montenegro, North Macedonia, Norway, and Ukraine have aligned themselves with several Council decisions from the 18th sanctions package against Russia. First, these countries have aligned themselves with Council Decision 2025/1478, which added 14 individuals and 41 entities responsible for actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine to the listing set out in the Annex to Decision 2014/145/CFSP. Second, they have aligned themselves with Council Decision 2025/1495, introducing a set of restrictive measures targeting Russia’s energy, banking and military-industrial sectors. Third, these countries have aligned themselves with Council Decision 2025/1471, which imposes further restrictive measures to minimize the risk of circumvention. Lastly, the fourth alignment concerns Council Decision 2025/1461, which amended the list of individuals and entities subject to restrictive measures outlined in Annexes I and II to Decision 2012/642/CFSP.
On August 12, the High Representative of the EU announced that Albania, Bosnia and Herzegovina, Iceland, Liechtenstein, Montenegro, North Macedonia, Republic of Moldova, Serbia, and Ukraine have aligned themselves with Council Decision 2025/1555. This Council decision extended the framework for imposing targeted restrictive measures to address the situation in Lebanon for an additional year, until July 31, 2026.
Asia-Pacific Developments
China Retaliates Against EU Over Russia-Related Sanctions
In response to EU sanctions on two Chinese financial institutions, China’s Ministry of Commerce (MOFCOM) has announced countermeasures against two European banks—UAB Urbo Bankas and AB Mano Bankas—effective August 13, 2025. MOFCOM cited violations of international law and harm to the legitimate interests of Chinese companies as the basis for its decision. Under China’s Anti-Foreign Sanctions Law (AFSL), and with approval from the national anti-foreign sanctions coordination mechanism, Chinese individuals and organizations are now prohibited from engaging in transactions or cooperation with the two EU banks. These countermeasures follow the EU’s 18th round of sanctions against Russia. In response, the EU has called on China to lift what it describes as “unjustified” sanctions, arguing that the move is largely symbolic since the targeted banks do not operate in China.
Iran Teams with China, Russia to Block European Sanctions Over Nuclear Deal
Iranian Foreign Minister Abbas Araghchi stated that Iran is working with China and Russia to prevent the reimposition of European sanctions over its nuclear program, after Britain, France, and Germany threatened to trigger the 2015 deal’s snapback mechanism if no diplomatic solution is reached by late August. The Joint Comprehensive Plan of Action (JCPOA), which lifted sanctions in exchange for nuclear limits, is set to expire in October and has largely unraveled since the US withdrew in 2018. Iran has since increased uranium enrichment, and tensions rose further after US and Israeli strikes on Iranian nuclear sites. Iran denies seeking nuclear weapons despite Western accusations.
Nayara Energy Strives to Maintain Fuel Supply Amid EU Sanctions
Russia-backed Nayara Energy, a major Indian refiner, announced it is working with government authorities and partners to maintain stable operations and fuel supplies at its 400,000 barrels-per-day Vadinar refinery, despite EU sanctions disrupting its supply chain. The sanctions, targeting entities linked to Russian oil, have forced Nayara to reduce output to 70–80%, impacted exports, and led to executive resignations and shipping challenges. Despite these setbacks, Nayara continues to supply fuel across India via coastal, rail, and road networks, operating its retail stations normally and seeking assistance from India’s shipping ministry to secure vessels for fuel transport.
Japan Probes Sanctions Evasion in Exports to Russian Defense Firms
Japan's Ministry of Economy, Trade and Industry (METI) uncovered a sanctions-evasion scheme where over 300 precision tools from Tsugami Corp. were diverted to Russia via Chinese firms, with 30 already traced to Russian territory. Japan has ordered Tsugami to cut ties with the implicated companies and halt support for equipment in Russia. A parallel probe found that Ferrotec Holdings Corp., a Japanese firm led by a Chinese CEO, had supplied chemicals and tools to Russian defense contractors. Ferrotec has since suspended several contracts and pledged tighter monitoring.
Myanmar Junta Acquires European Drone Tech Despite Sanctions
Despite EU sanctions, Myanmar’s military junta has acquired and deployed European anti-jamming technology in combat drones, according to Conflict Armament Research (CAR). The advanced GNSS modules, originally shipped to a commercial firm near the China-Myanmar border under non-military use declarations, were later diverted to the junta and integrated into modified quadcopters and hexacopters. This case reflects a broader pattern of sanctioned entities obtaining commercial components to enhance military capabilities. The ongoing civil war and continued foreign arms flows, including supplies from Russia, China, and Serbia, have raised international concerns, especially following the US decision to lift certain sanctions on Myanmar-linked entities.
