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
EU designates the Islamic Revolutionary Guard Corps as a terrorist organization
On Thursday, EU member states designated the Islamic Revolutionary Guard Corps (IRGC) as a terrorist organization. The Iranian political-military organization, which operates independently of the country’s military and answers directly to the Ayatollah, was first designated by the US in 2019. Kaja Kallas, the EU’s High Representative for Foreign Policy, emphasized that the move is in response to Iran’s crackdown against protestors, who took to the streets after the collapse of the rial currency (currently trading at about 1,500,000 rials to one US dollar). The US-based Human Rights Activists News Agency estimates that around 6,842 people were killed, of which 247 were security personnel, but an exact estimate is difficult given the internet blackout that began on January 8. In the decision, the EU sanctioned 15 individuals, including Interior Minister and Head of the National Security Council Eskandar Momeni, in addition to several IRGC commanders and six entities involved in spreading mass disinformation about the crackdown.
Designating the IRGC as a terror group increases the risks of EU secondary sanctions against the IRGC’s economic network, which assists the IRGC’s fundraising beyond the public budget. One prime target would be so-called bonyads, a network of up to 500 revolutionary-religious organizations that initially grew out of the 1979 revolution to redistribute seized assets previously owned by nobles and business owners from the Shah era. Through the trappings of religious endowments, these bonyads span mining concessions, commercial farms, construction firms, real estate holdings, and professional services, most of which have been concentrated within the IRGC and the clergy. Companies that are majority-owned by the IRGC and its affiliates, companies that smuggle on behalf of the IRGC and its affiliates (such as those based in Turkey or the UAE), and companies that interact with affiliates like bonyads could become future targets of EU sanctions.
The EU’s sanctions regime against Iran has dramatically escalated since 2022, in protest of Iran’s crackdown on the “Women, Life, Freedom” movement and growing security cooperation with Russia, including the transfer and deployment of Shahed drones in Ukraine. As part of this regime, the EU has already sanctioned affiliates of the IRGC, through the “snapback” relisting of Khatam al-Anbiya, aka Ghorb, an engineering firm that focuses on strategic assets like pipelines, refineries, railways, and airports. Beyond bonyads, Ghorb is the IRGC’s primary corporate conglomerate.
Historically, the EU’s Iran sanctions regime, requiring unanimity among all 27 member states, hesitated to target the IRGC. France, a member of the “E3” group party to the JCPOA, in addition to Spain and Italy, has previously argued against the IRGC’s listing to preserve contact with the group as a diplomatic backchannel, especially to hold optionality since the US instituted a “maximum pressure” campaign in 2018. Nonetheless, the benefit of this backchannel has diminished over time. Negotiations over a new nuclear deal failed to bear fruit in 2025, resulting in “snapback” sanctions in September. And affiliates of the IRGC continue to entrench Russia’s missile advantage in Ukraine, ultimately undermining any chance of an EU détente with Iran. Despite the EU’s disagreements with the US over targeting the energy sector and unilateral withdrawal from the JCPOA, Iran’s support for Russia and continued efforts at acquiring a nuclear weapon have ultimately pushed the EU back toward geopolitical alignment.
The EU’s designation of the IRGC brings the bloc’s Iran sanctions regime closer to the US sanctions regime. In total, the EU has now sanctioned 247 individuals and 50 entities under its regime. In comparison, the US has sanctioned 613 individuals (mostly non-Iranians) in 2025 alone and aggressively applied secondary sanctions, including on Chinese “teapot” refineries, which are thought to facilitate up to 90% of China-Iran fuel exchanges. The designation of the IRGC may open the door to secondary sanctions, but the EU is likely to continue fixating its sanctions efforts on companies or individuals that facilitate Russia’s war against Ukraine. The EU is expected to avoid antagonizing China over its connections to Iran amid geopolitical and trade turbulence.
US Developments
OFAC Authorizes Certain Activities Involving Venezuelan Oil
On January 29, OFAC issued Venezuela-related General License (GL) 46, “Authorizing Certain Activities Involving Venezuelan-Origin Oil.” GL 46 represents the most comprehensive sanctions-related measure taken by the Trump administration since US forces captured former Venezuelan President Nicolás Maduro and his wife on January 3, 2026, and marks a significant step toward expanding international access to the Venezuelan oil market.
Under GL 46, OFAC authorizes all transactions prohibited by the Venezuela Sanctions Regulations (“VSR”), including those involving the Government of Venezuela (“GoV”), Petróleos de Venezuela, S.A. (“PdVSA”), or any entity in which PdVSA owns, directly or indirectly, a 50 percent or greater interest (“PdVSA Entities”), that are ordinarily incident and necessary to the lifting, exportation, reexportation, sale, resale, supply, storage, marketing, purchase, delivery, or transportation of Venezuelan-origin oil, including the refining of such oil, by an “established” US entity (i.e., an entity organized under US law on or before January 29, 2026). GL 46 also authorizes the arranging of shipping and logistics services, including chartering vessels, obtaining marine insurance and protection and indemnity (P&I) coverage, and the arranging of port and terminal services, including with port authorities or terminal operators that are part of the GoV.
GL 46 introduces a number of conditions on this authorization, including that any contract for the aforementioned transactions with the GoV, PdVSA, or PdVSA Entities, be governed by US law, and that any monetary payment to a blocked person be made into the Foreign Government Deposit Fund, as specified in Executive Order (EO) 14373. GL 46 also introduces a reporting requirement for persons that export, reexport, sell, resell, or supply Venezuelan-origin oil to countries other than the United States pursuant to the license. According to GL 46, such persons must provide a report to the Departments of State and Energy that identifies certain information about each transaction within ten days after execution, and every 90 days thereafter while the transaction is ongoing.
Note that GL 46 does not authorize, among other things, transactions involving persons in or organized under the laws of Russia, Iran, North Korea, or Cuba, or with entities that are owned or controlled by such persons or in joint ventures with such persons. It also does not authorize transactions involving US or Venezuelan entities that are owned or controlled by, or in a joint venture with, a person located in or organized under the laws of China.
For more information about GL 46, please reach out to Steptoe’s Economic Sanctions team.
President Trump Authorizes Secondary Tariffs Against Countries Supplying Oil to Cuba
On January 29, President Trump signed an Executive Order declaring a national emergency with respect to the policies, practices, and actions of the Cuban government and authorizing secondary tariffs on goods from countries that sell or otherwise provide oil to Cuba. The Executive Order does not mention specific tariff rates; however, past secondary tariffs announced by the Trump administration (Venezuela, India, and Iran) have all imposed tariffs of 25 percent. The Executive Order comes at a time when Cuba is already experiencing a significant oil shortage following the ouster of President Nicolás Maduro from Venezuela, which had long supplied the country with oil.
The Executive Order directs the Secretary of Commerce to determine whether a foreign country sells or otherwise provides oil to Cuba. After an affirmative determination, the Secretary of State is to determine whether and to what extent an additional tariff should be applied on goods that are products of that foreign country. Like many other tariffs imposed by President Trump, the new tariff would be imposed under the International Emergency Economic Powers Act (IEEPA). In a widely-followed case, the US Supreme Court is currently reviewing the President’s authority to use IEEPA to impose tariffs.
While the Trump administration has not yet publicly taken further steps to impose the tariffs, the prospect of secondary tariffs already appears to be impacting the flow of oil to Cuba. Politico reported on January 31 that Mexico’s state-owned oil company, Pemex, paused a shipment of oil headed from Cuba after the Executive Order was announced. The Financial Times reported that Cuba only has an estimated 15 to 20 days of oil remaining.
Treasury Continues to Sanction the Iranian Regime Amid Protests
On January 30, OFAC announced another round of sanctions against members of the Iranian regime who it says are responsible for violent crackdowns on public protests. Among the officials sanctioned was Eskandar Memei Kalagari, Iran’s Minister of the Interior, who OFAC says oversees the Law Enforcement Forces of the Islamic Republic of Iran (LEF). This is OFAC’s second round of sanctions targeting Iranian officials for their alleged roles in violent crackdowns on public protests, following a similar package on January 15.
In the same press release, OFAC also designated Babak Morteza Zanjani, an Iranian businessman. OFAC alleges that Zanjani helped Iran’s Islamic Revolutionary Guard Corps evade sanctions, including through two UK-registered digital asset exchanges, Zedcex Exchange, Ltd., and Zedxion Exchange, Ltd., which were also sanctioned.
UK Developments
UK Moves to Single Sanctions Designation List
The UK transitioned to a single sanctions designations list on January 28, 2026. The UK Sanctions List maintained by the Foreign Commonwealth & Development Office (FCDO) is now the sole list of UK sanctions designations and the OFSI Consolidated List of Asset Freeze Targets has been retired. Businesses must ensure that their screening and compliance systems source designation data exclusively from the UK Sanctions List. Businesses that relied on now retired “OFSI Group ID” will need to switch to the UK Sanctions List’s “Unique ID” for any new designations made on or after January 28, 2026, although historic OFSI Group IDs will remain available for pre-existing entries. The UK Government has issued updated guidance to support implementation of this changeover.
OFSI Fines Bank of Scotland £160,000 for Russia Sanctions Breach
OFSI has imposed a £160,000 civil monetary penalty on Bank of Scotland, part of Lloyds Banking Group, for breaches of the UK’s Russia financial sanctions regime. According to the penalty notice published by OFSI, between February 8 and 24, 2023, the bank processed 24 payments totaling approximately £77,000 to and from a personal account held by a UK-designated person. OFSI concluded that these transactions breached the prohibitions on dealing with, and making funds available to, a UK-designated person. The penalty notice underscores several compliance lessons for UK firms, including the importance of well-calibrated and sufficiently enriched sanctions screening tools, particularly for institutions with higher exposure to sanctions risk, which may benefit from enhanced commercial screening solutions. The case also illustrates the need for robust controls to mitigate the limitations of automated screening, including clear escalation procedures in higher-risk scenarios such as those involving politically exposed persons. OFSI further emphasized the value of keeping sanctions training under regular review to reflect evolving regulatory and geopolitical risks. Notably, the bank received a 50% penalty reduction due to its prompt and voluntary disclosure, reinforcing OFSI’s expectation that firms proactively report potential breaches.
OFSI Targets Growing Use of Cryptoassets in Sanctions Evasion
OFSI has published a blog announcing its enhanced cooperation with UK enforcement and regulatory partners to tackle the growing use of cryptoassets in sanctions evasion and illicit finance. OFSI recently collaborated with the multi-agency Crypto Cash Fusion Cell, bringing together the National Crime Agency, Metropolitan Police Service, HM Revenue and Customs, Financial Conduct Authority, and the City of London Police to identify and disrupt crypto-linked sanctions breaches. Intelligence sharing and joint analytical work led to action against suspected UK-based offenders and strengthened understanding of evolving evasion techniques. OFSI emphasised that cryptoasset transactions remain traceable and will be pursued with the same rigour as traditional financial channels. The initiative signals closer public-private cooperation, including with blockchain analytics providers, and reinforces expectations that firms operating in or exposed to cryptoassets maintain robust sanctions compliance controls and monitoring frameworks.
OFSI Publishes Response to Financial Sanctions Enforcement Consultation
OFSI has published a blog regarding its consultation response outlining forthcoming reforms to its civil enforcement processes, aimed at improving clarity, efficiency, and deterrence in UK financial sanctions enforcement. The changes follow the 2025 cross-government review of sanctions implementation and are intended to give firms greater certainty while supporting faster case resolution. Key measures include set penalties for lower-level reporting, licensing, and information breaches, the introduction of a new case assessment matrix, and updated guidance to improve transparency around enforcement decisions, as well as new settlement and Early Account schemes to streamline suitable cases. These measures do not require legislative change and will be implemented by amendments to OFSI’s Enforcement and Monetary Penalties guidance in February 2026. OFSI also plans to double the maximum civil monetary penalties for serious violations of UK financial sanctions, subject to legislative approval. Together, these reforms signal a continued shift toward more predictable, proportionate, and robust enforcement of UK financial sanctions.
EU Developments
EU Council Adopts Sanctions Against Iran for Serious Human Rights Violations and Support of Russia’s War of Aggression Against Ukraine
The EU Council recently adopted restrictive measures against 15 individuals and six entities responsible for serious human rights violations in Iran, including the violent repression of peaceful protests through the use of force, arbitrary detentions, and intimidation by security forces. The listings include Iran’s Interior Minister Eskandar Momeni, Prosecutor General Mohammad Movahedi Azad, and Iman Afshari, presiding judge of Branch 26 of Tehran’s Revolutionary Court, as well as several Islamic Revolutionary Guard Corps (IRGC) commanders and senior officers of the Iranian police and Law Enforcement Force (LEF). The sanctioned entities include SATRA, the Seraj Cyberspace Organization, and various software companies involved in censorship, online disinformation campaigns, and the development of tools enabling surveillance and internet disruption.
In parallel, the EU Council adopted restrictive measures against four individuals and six entities under the EU sanctions regime in view of Iran’s military support for Russia’s war of aggression against Ukraine. Russia continues to use Iranian‑produced unmanned aerial vehicles (UAVs) and UAV components in its attacks on Ukraine. The designations include Khojir Missile Development and Production, a leading entity in Iran’s ballistic missile program, and Sahara Thunder, an import‑export company acting as a front company for the Ministry of Defense and Armed Forces Logistics. Additional sanctioned entities include private companies supplying critical components to the IRGC or linked to Iran’s missile program. The designated individuals include businessmen, CEOs, and shareholders involved in the development and production of Iran’s ballistic missiles and UAVs.
Lastly, the EU Council also decided to extend the prohibition on the export, sale, transfer or supply from the EU to Iran to include further components and technologies used in the development and production of UAVs and missiles.
EU Council Revises Russia Sanctions Listing Over Hybrid Activities
On January 29, the EU Council listed an additional six individuals under the sanctions regime addressing Russia’s destabilizing activities, in response to its continued hybrid activities, such as Foreign Information Manipulation and Interference (FIMI) targeting the EU, its Member States, and partners. The newly listed individuals include Russian television presenters and a propagandist who have worked for or supported Russian state‑controlled propaganda channels, or hosted rallies and shows spreading disinformation about the war in Ukraine. The restrictive measures include a travel ban, asset freezes, and a prohibition on the provision of funds or economic resources.
EU Council Updates Sanctions Listing Targeting Sudan
The EU Council announced new sanctions listings in view of activities undermining the stability and political transition of Sudan. The seven newly designated individuals include five affiliated with the Rapid Support Forces (RSF) and two associated with the Sudanese Armed Forces (SAF). With these listings, the Sudan sanctions regime now applies to 18 individuals and eight entities responsible for actions that threaten the peace, stability, or security of Sudan.
Asia-Pacific Developments
Sanctions on UK Lawmakers Lifted by China
China has lifted the sanctions it previously placed on six sitting members of the British Parliament following Prime Minister Keir Starmer’s discussions with President Xi Jinping. The sanctions, introduced in 2021, had restricted the lawmakers’ ability to travel to China and conduct financial activities there. Members of the sanctioned group noted concerns that others, including former lawmakers, academics, and human rights researchers, remain subject to restrictions and argued that easing measures only for current parliamentarians may create an uneven standard.
China Urges Washington to End Cuba Blockade, Lift Sanctions Immediately
China’s foreign ministry criticized the US for reportedly considering tightening its long‑standing blockade on Cuba, with spokesperson Guo Jiakun stating that such measures undermine the Cuban people’s basic rights to subsistence and development. Responding to Cuba’s denunciation of potential US actions, Guo said China is deeply concerned and firmly opposes Washington’s approach, urging the US to stop affecting regional stability, halt violations of international law, and immediately lift its sanctions and embargo. He added that China will continue its assistance to Cuba.
Xinjiang Reports Strong Growth Despite Sanctions
Xinjiang recorded 5.5% economic growth in 2025—above China’s national average—despite ongoing US and European sanctions on industries such as cotton, tomatoes, and polysilicon, Governor Erkin Tuniyaz reported at the region’s annual People’s Congress. GDP reached 2.15 trillion yuan, foreign trade grew nearly 20%, and rural incomes surpassed 20,000 yuan for the first time. The review of the 14th Five‑Year Plan noted reduced industrial activity and workforce losses from Western sanctions but highlighted tourism gains, with 323 million visitors generating 370 billion yuan.
Russia–China LNG Trade Persists Despite Sanctions
Russia’s Arctic LNG 2 project continues operating despite US, UK, and EU sanctions, with China maintaining steady imports of Russian liquefied natural gas into 2026. According to shipment data, China’s Beihai LNG terminal received its first 2026 cargo after the Buran tanker loaded LNG near Murmansk and traveled via the Suez Canal, a route Russia is increasingly using due to harsh winter ice restricting the Northern Sea Route. Russia has continued carrying LNG through Arctic conditions, but with limited Arctic transport capacity, Russia has also increased LNG exports from the sanctioned Portovaya facility on the Baltic Sea. The combined output from Arctic LNG 2 and Portovaya has helped drive China’s Russian LNG imports to record highs in December, exceeding previous monthly volumes.
Myanmar’s Jet Fuel Supply Linked to Sanctions‑Evading ‘Ghost Ships’
Amnesty International’s investigation finds that Myanmar’s military is continuing to secure aviation fuel for air strikes through a clandestine network of “ghost ships” that disable tracking systems, obscure their identities, and rely on ship‑to‑ship transfers to evade international sanctions five years after the coup. Despite restrictions intended to cut off such supplies, Myanmar imported over 109,000 metric tons of jet fuel in 2025—a 69% increase from the previous year—making it the highest volume since the military takeover and contributing to what Amnesty says is the deadliest year for air attacks on civilians. The organization identified at least nine shipments delivered between mid‑2024 and the end of 2025 by four vessels—HUITONG 78, YONG SHENG 56, REEF, and NOBLE—whose movements included AIS blackouts, falsified location data, and repeated activity near the UAE’s offshore transfer zone and Iran’s Bandar Abbas port. Two of the ships, REEF and NOBLE, have prior links to sanctioned Iranian fuel transport, while satellite imagery and trade‑flow analysis point to Iran as the likely source of much of the fuel.
Japan Says Sanctioned Russian LNG Hard to Replace
Japan Gas Association chief Takashi Uchida said that Japan will struggle to phase out sanctioned Russian liquefied natural gas, noting that Russian supplies—especially from the Sakhalin‑2 project, which accounts for about 10% of Japan’s LNG imports—remain economically advantageous and difficult to replace. He acknowledged that US pressure to halt Russian energy purchases, along with continued sanctions, has created uncertainty, but stressed that cooperation between the government and industry is essential to ensure stable procurement from Sakhalin‑2 under the current exemption granted by Washington.
Stablecoins Become Key Tool for North Korea, Iran, and Russia in Sanctions Evasion
A UN report and blockchain‑analysis data show that stablecoins—especially Tether—now dominate illicit financial activity among sanctioned states, with North Korea, Iran, Russia, and Venezuela increasingly using them to evade restrictions. North Korean arms deals, including multimillion‑dollar sales to buyers in Sudan and Laos, were conducted in Tether, while Israeli authorities uncovered a $1.5 billion Tether transaction tied to Iran’s Revolutionary Guard, and Russia reportedly converted large amounts of its ruble‑pegged stablecoin into Tether for trade amid sanctions. Chainalysis found that stablecoins accounted for 84% of illicit crypto transactions last year, up from 63% the previous year, as their stability and trace‑resistant nature make them more practical than Bitcoin. Venezuela’s former leadership also relied heavily on Tether after its state oil company was shut out of global payment systems. Experts caution that as countries consider launching their own national stablecoins—such as a proposed won‑pegged token—strong safeguards will be required to prevent money laundering and sanctions evasion.
