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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Lede
US Removes Syria’s Hayat Tahrir al-Sham from Terrorism List
Last week, the US revoked the Syrian militia group Hayat Tahrir al-Sham (HTS) designation as a Foreign Terrorist Organization (FTO) as part of Washington’s effort to unwind Syrian sanctions after the fall of the Assad regime and to enhance engagement with the transitional government of President Ahmed al-Sharaa, the former leader of HTS. According to US Secretary of State Marco Rubio, delisting follows recognized positive actions taken by the new Syrian government led by interim President al-Sharaa. The US is likely to take further steps to lift sanctions embedded in US law and press the UN Security Council (UNSC) to provide sanctions relief to HTS and key HTS leaders.
HTS was designated in 2018 by the first Trump administration. Even before its designation, HTS had sought to shed its al-Qa’ida roots, breaking off from al-Qa’ida and its transnational ideology seeking to establish a global caliphate in 2016. HTS adopted its new name in 2017 and refocused on a nationalist agenda of removing the brutal Assad regime and bringing an end to the Syrian civil war. On December 8, 2024, HTS fighters overran Damascus and assumed control as regime leaders fled to Russia.
Syria’s Political Transition and End of International Isolation
Interim President al-Sharaa has to overcome broad international and domestic skepticism by delivering on a number of promises. With rebuilding the country’s war-torn economy central to establishing a stable, internationally accepted government, Sharaa has taken intentional steps to rebuild trust with Western partners. While still Islamist in character, the new government is planning to hold elections to reconstitute a Syrian legislative body and pledges to rejoin the international community as a responsible member that adheres to international laws. Al-Sharaa has established an election body to organize elections for a transitional legislative authority, the People’s Assembly. The Syrian Ministry of Justice has reinstated judges who defected during the Assad regime as part of a broad effort to establish the rule of law and pursue transitional justice. The interim government is working to integrate all armed groups into the Syrian national army. The interim government is also working quietly with western intelligence agencies to document and secure chemical weapons sites and account for the Westerners who disappeared in Syria during the civil war. Al-Sharaa has expressed willingness to reimplement a 1974 disengagement agreement with Israel and has responded with restraint to Israeli military incursions inside Syria. The two countries are reportedly engaged in advanced talks on ending official hostilities and resolving the buffer zone matter.
The US’ delisting of HTS removes the legal and financial restrictions associated with that designation. It builds upon President Trump’s executive order to end sanctions against the country, with the exception of those against former President al-Assad, his top officials, relatives and individuals linked to human rights abuses, drug trafficking or Syria's illegal chemical weapons program. The US action removes risks of breaches of US laws for companies and entities operating in or with Syria, facilitating moves by western partners who led on lifting sanctions and enabling the flow of humanitarian and financial aid to Syria needed for reconstruction. The move also comes amid similar efforts from transatlantic partners, such as UK foreign minister David Lammy’s visit to Damascus, reestablishing relations and pledging 94.5 million pounds ($129 million) to provide urgent humanitarian aid and support the country's longer-term recovery through development assistance. Earlier in June, the EU pledge 175 million euros ($205 million) towards the social and economic recovery of the country.
Next Steps for Sanctions Relief
While the Trump administration’s June executive order lifted many US sanctions on Syria, some were waived for 180 days as they were mandated under the Caesar Syria Civilian Protection Act of 2019 (the “Caesar Act”). Bipartisan legislation to repeal the Caesar Act was introduced in June in both chambers of Congress. The bills currently are currently referred to committee, taking a backseat to other legislative priorities, such as passage of the budget earlier this month. These bills are likely to move forward after the August recess.
Meanwhile, the US and partners are expected to press the UNSC to lift sanctions on Syria. The UNSC will hold a meeting this month on political and humanitarian developments in Syria, with briefings from the Office of the UN Special Envoy for Syria and the Office for the Coordination of Humanitarian Affairs. UN officials will report on recent developments in Syria’s political transition, the security situation, humanitarian needs and reconstruction. In this context, the US is expected to present for discussion a draft resolution for sanctions relief.
Key issues that the UNSC will likely consider include efforts by the transitional government to pursue a credible, transparent and inclusive political process, in accordance with UNSCR 2254 (adopted December 18, 2015). Transitional justice will also figure in the discussions, with the UNSC likely seeking a briefing on the findings of a fact-finding committee established by the interim government on the mass killings in Latakia and Tartus in March, during which hundreds of Alawites were reportedly killed in retaliation for supporting the Assad regime. The Sharaa government has been accused of not acting decisively enough to curb both events.
The most significant opposition to delisting may come from China if the resolution does not sufficiently address Beijing’s concerns about threats of foreign fighters currently residing in Syria. China is opposed to the interim government’s plans to integrate them into the Syrian national army. Many of the foreign fighters are Uyghurs who are members of the Eastern Turkistan Islamic Movement (aka Turkistan Islamic Party) which China considers a terrorist organization and is under UN sanctions for its connection to Da’esh, al-Qa’ida, and related groups. Beijing is seeking Syrian assurances that foreign fighters cannot use Syrian territory to threaten other countries.
The US initially opposed integration of foreign fighters into the Syrian military, but changed positions to support transparent integration as preferable to marginalization. The interim government argued that the Uyghurs have been highly disciplined and loyal, supporting al-Sharaa when he broke from al-Qa’ida, and fighting alongside HTS against Islamic State cells and hardline Islamist factions such as Hurras al-Din. The interim government offered the US explicit guarantees that the foreign fighters would not participate in destabilizing activities or cross-border operations. The US previously demanded that they be excluded from senior positions, but it is unclear whether this demand has been dropped. Notably, the US removed the Eastern Turkistan Islamic Movement from the terrorism list in 2020 on the basis that there was no credible evidence that the group continued to exist. It is not clear what additional guarantees Beijing will demand, but it can be expected that China will seek to balance its counterterrorism goals with its larger agenda of establishing productive relations with the new Syria state.
US Developments
Trump Signals Openness to Sweeping Russia Sanctions Bill
Last week, the White House signaled that President Trump is open to the Sanctioning Russia Act of 2025 (S. 1241/H.R. 2548), a significant Russia sanctions bill with strong bipartisan support in Congress. Among other things, the legislation would impose a variety of tariffs and secondary sanctions on supporters of the Russian economy or war effort. It would also be the first major sanctions-related action against Russia since President Trump entered into office for his second term.
President Trump’s interest in the bill seems to be growing as negotiations with the Kremlin over a peace deal with Ukraine have stalled. President Trump also said that the US would be resuming weapons transfers to Ukraine in the wake of Russia’s recent attacks.
The bill has long had significant bipartisan support in the Senate, but its prospects were uncertain in the House of Representatives without the support of the administration. Senate Majority Leader John Thune (R-SD) and House Speaker Mike Johnson (R-LA) have indicated a desire to move the bill forward with the White House’s support, including passage in the Senate before the August recess.
It is expected that the bill may undergo changes before it is voted on as the administration has engaged with Senate and House leadership to provide Trump with more discretion to calibrate sanctions under the legislation. The Trump administration has repeatedly expressed the need for flexibility in the negotiations involving Ukraine.
OFAC Sanctions North Korean IT Workers
The Department of the Treasury’s Office of Foreign Assets Controls (OFAC) has sanctioned Song Kum Hyok, a cyber actor allegedly associated with North Korea’s Reconnaissance General Bureau (RGB). According to OFAC, Song facilitated an IT scheme in which individuals were recruited and provided with falsified identities and nationalities to obtain employment at various companies to generate revenue for the North Korean regime and its weapons of mass destruction and ballistic missiles programs. In the same press release, OFAC also sanctioned four entities and one individual allegedly involved in a Russia-based IT worker scheme that generates revenue for North Korea.
In connection with OFAC’s sanctions, the State Department announced that it is offering a reward of up to $10 million for “information leading to the identification or location of any person who, while acting at the direction or under the control of a foreign government, engages in certain malicious cyber activities against U.S. critical infrastructure in violation of the Computer Fraud and Abuse Act” through its Rewards for Justice program. The State Department is also offering a reward of up to $5 million for information leading to the disruption of financial mechanisms of persons engaged in certain activities that support North Korea.
US Continues to Designate New Individuals Under ICC Sanctions Authority
The State Department announced that it was sanctioning Francesca Paola Albanese, the United Nations Human Rights Council (UNHRC) “Special Rapporteur on the Situation of Human Rights in the Palestinian Territories Occupied since 1967,” pursuant to EO 14203. According to the State Department, Albanese has directly engaged with the International Criminal Court (ICC) in efforts to investigate, arrest, detain, or prosecute US or Israeli nationals, including by recommending that the ICC issue arrest warrants for Israeli Prime Minister Benjamin Netanyahu and former Defense Minister Yoav Gallant.
Moreover, and as further reason for her designation, the State Department alleges that Albanese has sent letters to dozens of companies worldwide, calling on them to stop doing business with Israel lest they be complicit in war crimes. Albanese’s designation is the first of an individual or entity not explicitly tied to the ICC, and follows the designation of four ICC judges who either authorized the ICC’s investigation against US personnel in Afghanistan, or who ruled to authorize the aforementioned arrest warrants against Netanyahu and Gallant.
Treasury Sanctions Iranian “Shadow Banking” Network
OFAC has sanctioned 22 entities across Hong Kong, the United Arab Emirates (UAE), and Türkiye for their alleged roles in facilitating the sale of Iranian oil, which OFAC further alleges benefits the Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF), an FTO and SDGT. According to OFAC, many of the sanctioned entities serve as front companies for the IRGC-QF, moving funds acquired from the sale of Iranian oil to offshore accounts until they eventually reach an account controlled directly by the IRGC-QF. OFAC claims that the IRGC-QF uses those funds to support its weapons programs and proxies across the Middle East.
OFAC’s designations follow a similar action on June 6, 2025, in which OFAC sanctioned over 30 individuals and entities tied to Iranian nationals who allegedly laundered billions of dollars through the international financial system for the ultimate benefit of sanctioned regime officials and affiliated businessmen. At the same time as OFAC’s sanctions from June 6, 2025, the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued an updated Advisory to assist financial institutions in identifying, preventing, and reporting suspicious activity connected with Iranian illicit financial activity.
OFAC Announces Settlement Agreement with Harman International Industries, Inc.
OFAC has announced that it will enter into a $1,454,145 settlement agreement with Harman International Industries, Inc. (“Harman”) for 11 apparent violations of Iran-related sanctions. According to the Enforcement Release, overseas employees of a US subsidiary of Harman actively enabled the diversion of its products from its UAE distributor to Iran. This included shipping goods to the UAE distributor on an “ex works” basis despite allegedly knowing that the end user(s) and the transaction itself may be prohibited or otherwise unauthorized and then allegedly obfuscating references to Iran in internal emails and sales presentations.
The penalty amount reflects OFAC’s determination that Harman self-disclosed the apparent violations and that the apparent violations constituted an egregious case. With the addition of Harman, OFAC has now announced three settlement agreements with companies since the beginning of June. The Harman agreement follows those entered into between OFAC and Key Holding, LLC and Unicat Catalyst Technologies, LLC.
UK Developments
UK Imposes New Sanctions Under Chemical Weapons
OFSI has designated two individuals and one entity under its Chemical Weapons sanctions regime. Major Generals Andrei Marchenko and Aleksey Viktorovich Rtishchev, both members of the Russian Ministry of Defence’s Radiological, Chemical, and Biological Defence Troops, have been sanctioned for their involvement in the transfer and use of chemical weapons in Ukraine. Additionally, JSC Federal Scientific and Production Centre Scientific Research Institute of Applied Chemistry was designated for supplying chemical grenades to Russian forces for use in Ukraine. All three are now subject to asset freeze and trust services restrictions.
UK Exporter Pays £1.16 Million Settlement for Russia Sanctions Breach
HM Revenue and Customs (HMRC) has agreed to a compound settlement with a UK exporter for breaching The Russia (Sanctions) (EU Exit) Regulations 2019 by making goods available to Russia. The settlement, finalised in May, involved a payment of £1,160,725.67, the largest compound settlement HMRC has imposed to date for a Russia-related sanctions offence. In line with usual practice, HMRC did not name the exporter involved in the settlement.
OFSI Updates General Guidance with New HM Treasury Debt Exception
OFSI has updated its general guidance to include a new exception allowing payments towards HM Treasury debt owed by UN-designated persons, provided the payment obligation arose before their designation. These changes were published within the Sanctions (EU Exit) (Treasury Debt) Regulations 2025 on June 19, 2025. Payments must be made into specified accounts, such as a frozen UK account or an account in a corresponding jurisdiction, and reasonable steps must be taken to comply with these conditions. This ensures that key Treasury transactions can proceed despite existing sanctions (further details are available in section 6.21 of OFSI’s updated guidance). These changes came into force on July 10, 2025.
Asia Developments
China Expands Sanctions on Taiwanese Defense Firms Over Independence Push
China has added eight Taiwanese entities, including major defense contractors like Aerospace Industrial Development Corporation and GEOSAT Aerospace & Technology, to its export control list in response to what it calls repeated provocations by pro-independence forces in Taiwan. The Chinese Ministry of Commerce (MOFCOM) accused these companies of deliberately cooperating with separatist movements and announced a ban on the export of dual-use items to them. The move, supported by the State Council Taiwan Affairs Office, is framed as a measure to protect China’s sovereignty, security, and regional stability.
Manila Protests Chinese Sanctions on Former Senator Tolentino
Last week, we reported that China imposed sanctions on former Philippine senator Francis Tolentino, barring him from entering mainland China, Hong Kong, and Macau related to his actions in supporting maritime legislation opposed by China. This week, in response, the Philippines summoned China's ambassador criticizing the sanctions as inconsistent with diplomatic norms between sovereign states, while China defended the move as a legal right in response to what it called repeated provocations. The incident reflects growing tensions between the two nations, particularly over the South China Sea dispute, which has worsened under President Ferdinand Marcos Jr.'s administration.
