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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UK targets organized illegal immigration rings with sanctions
In a world first, on July 23, the UK announced a sanctions regime targeting irregular migration, designating 25 individuals and entities involved in . The purpose of the sanctions is to prevent and combat people smuggling, human trafficking, and the instrumentalization of migration for the purpose of destabilization. The first designations under the new regime target a range of different actors that enable people smuggling, including a small boat supplier, facilitators of illicit payments through informal money exchanges (Hawala) in the Middle East, document forgers, and organized criminal networks in the Balkans and North Africa orchestrating the trafficking of migrants.
The new sanction regime is given effect by the Global Irregular Migration and Trafficking in Persons (Sanctions) Regulations 2025, which authorizes the UK Government to impose asset freezes, a prohibition on making funds or economic resources available to or for the benefit of persons designated under the regime, travel bans on individuals, and a prohibition on designated persons acting as directors of UK companies. The regulations entered into force on July 23 under the made affirmative procedure, as is usual for UK sanctions regulations. Both Houses of the UK Parliament now have a set period of time in which to debate and approve the new sanctions regime.
The sanctions are part of a whole-of-government initiative to secure Britain’s borders through a three-pronged ‘disrupt, deter, return’ strategy, which seeks to tackle irregular migration globally. In addition to enhanced interdiction at the border led by the National Crime Agency and Border Security Command, the UK Foreign, Commonwealth and Development Office is charged with working with source and transit countries to deter would-be migrants, and negotiate the return of people who are in the UK illegally.
The initial round of designations imposed under the new regime focuses, in particular, on small boat trafficking of irregular migrants across the English Channel from Europe. According to the Migration Observatory at the University of Oxford, around 37,000 people were detected crossing the English Channel in 2024, 25% more than the year before. Despite government pledges to crack down on irregular migration through enhanced border security, illegal immigration continues to grow. In the first half of 2025, small boat arrivals increased 48% compared to the same period in 2024. The sharp rise in small boat crossings means that they now account for more than 80% of detected arrivals. The political significance of this issue was apparent during French President Emmanual Macron’s recent state visit to the UK, with plans for the new sanctions regime and a “one in, one out” scheme to manage English Channel migrant flows being discussed.
Irregular immigration is a topic that has gained significant political traction in recent years. For decades, the UK has had a relatively open immigration policy. More recently, there has been growing debate regarding the imposition of tighter restrictions on legal immigration and more robust enforcement targeting irregular migration. Debate on immigration policy can, at times, also touch on the allocation of government resources, with the use of asylum hotels to house migrants and asylum seekers pending immigration review often being a particular focal point for debate.
Immigration policy continues to be a potent political issue in the UK. The new Labour government pledged to secure the UK’s borders in its 2024 election manifesto and remains focused on demonstrating effective action against illegal and irregular migration, issues increasingly being focused on by challenger parties such as Reform UK. The initial designations under the new sanctions regime are relatively targeted and squarely focused on criminal actors that facilitate illicit people smuggling. It remains to be seen to what extent the UK Government will scale up the program and harmonize these sanctions with the efforts of other authorities to maximize their impact.
The UK is not alone in the struggle against people smuggling – the political tide of increased border restrictions has risen in Europe over the past year. The wars and insurgencies in the Middle East and Africa have displaced millions of people, many of whom have sought refuge in Europe. Under pressure by member states, the EU has revised immigration policy, giving member states greater authorities to stop migrants at their borders and return them to their point of origin. The Trump administration has likewise prioritized stricter immigration policies, strengthening US border controls, and forcibly deporting illegal immigrants under controversial legal authorities. In June, the G7 endorsed the use of sanctions to counter migrant smuggling and people trafficking, “consistent with our legal systems.”
US Developments
Iran Threatens to Withdraw from the NPT in Response to “Snapback” Sanctions
Iran’s Deputy Foreign Minister, Kazem Gharibabadi, told reporters that Iran would consider withdrawing from the Nuclear Non-Proliferation Treaty (NPT) if Europe were to initiate a “snapback” mechanism to reimpose United Nations Security Council (UNSC) sanctions that were suspended as a result of the Joint Comprehensive Plan of Action (JCPOA). Gharibabadi’s comments were ahead of negotiations between Iran and the United Kingdom, Germany, and France (the “E3”) on Friday.
As we previously noted, the US reportedly agreed in a phone call with the E3 to set the end of August as a deadline for reaching a nuclear deal with Iran. US Senators have also argued for the E3 to initiate the “snapback” mechanism, saying that such a decision “is only the beginning,” and that, once UNSC sanctions are reimposed, the countries imposing them should commit to their enforcement. For its part, Iran has recently said that it will suspend cooperation with the International Atomic Energy Agency (IAEA). Meanwhile, although the direct negotiations between the US and Iran on a nuclear deal appear to have slowed, Iran has repeatedly said that it is willing to reenter those negotiations—even after US strikes on Iranian nuclear sites—on the condition that the US upholds “several key principles,” including a commitment against further military action, respecting Iran’s rights to enrichment for civilian purposes, and the lifting of sanctions.
Treasury Sanctions North Korean Revenue Network
OFAC has sanctioned Korea Sobaeksu Trading Company and three associated individuals—Kim Se Un, Jo Kyong Hun, and Myong Chol Min—for their alleged involvement in US and UN sanctions evasion, including the construction of fraudulent IT worker schemes aimed at generating revenue for North Korea. Concurrently, the State Department announced that it is offering rewards from up to $500,000 to up to $7 million under its Transnational Organized Crime Rewards Program for information leading to the arrest or conviction of the aforementioned individuals.
These sanctions follow two closely related rounds of sanctions imposed by OFAC on July 8, 2025, under the Trump administration, and on January 16, 2025, under the Biden administration.
OFAC Targets Houthi-Linked Smuggling and Sanctions Evasion Network
OFAC has designated two individuals and five entities allegedly involved in laundering money and importing petroleum products into territory controlled by Ansarallah (the “Houthis”), a Specially Designated Global Terrorist (SDGT) and Foreign Terrorist Organization (FTO) connected to the Iranian regime and a number of destabilizing activities in the Middle East.
This announcement follows eight rounds of sanctions designations over the past year targeting Houthi revenue generation and weapons procurement, including a recent round of designations on June 20, 2025. The impetus for further intervention remains amid the Houthis’ renewed naval attacks on commercial shipping.
Secretary Rubio Imposes Visa Restrictions on Brazilian Judicial Officials
Secretary of State Marco Rubio has ordered visa revocations for Brazilian Supreme Federal Court Justice Alexandre de Moraes “and his allies on the court,” as well as their immediate family members. The State Department has said that Moraes’s “political witch hunt against [former Brazilian President] Jair Bolsonaro created a persecution and censorship complex so sweeping that it not only violates basic rights of Brazilians, but also extends beyond Brazil’s shores to target Americans.”
The State Department’s announcement comes as the Trump administration continues to raise a variety of issues with the current Brazilian government as outlined in President Trump’s letter to Brazilian President Luiz Inacio Lula da Silva from July 9, 2025, particularly concerns on digital censorship and the trade balance.
Hurley Confirmed As Next Under Secretary for TFI
John Hurley, a Managing Partner of Cavalry Asset Management, Managing Member of TGK Ventures, and former member of the President’s Intelligence Advisory Board (PIAB) during Trump’s first term, was confirmed by the Senate to be the next Under Secretary for Terrorism and Financial Intelligence (TFI) at the Department of the Treasury.
TFI oversees, among other offices, OFAC and the Financial Crimes Enforcement Network (FinCEN). During the confirmation hearing, Hurley indicated that he would try to align sanctions with the Trump administration’s foreign policy objectives and would therefore not commit to any one action in particular. He also emphasized he would prioritize enforcement and work with Congress on matters of sanctions and anti-money laundering (AML) to the extent that the proposed measures aligned with the Trump administration’s foreign policy objectives.
UK Developments
UK Imposes New Sanctions on Russian Energy and Shadow Fleet Operations
The UK has designated two entities and specified 135 ships involved in Russia’s energy and oil sectors to further restrict funding for its war in Ukraine. The measures include the specification and imposition of travel sanctions on 135 oil tankers used by Russia’s shadow fleet, as well as the designation of Intershipping Services LLC and Litasco Middle East DMCC for their role in enabling the illicit trade in Russian oil using the shadow fleet.
Several general licences have been issued including, INT/2025/6403704 (Intershipping Services LLC - Continuation of Business), which permits continued business with Gabonese government-owned vessels; INT/2025/6397444 (Intershipping Services LLC Wind-down General Licence) enabling wind-down transactions involving Intershipping Services LLC; and INT/2025/6488808 (Wind Down of Positions Involving Litasco Middle East DMCC) allowing wind-down transactions with Litasco Middle East DMCC. These general licences came into effect on July 21, 2025, and, with the exception of INT/2025/6403704, will expire at 23:59 on September 18, 2025.
UK Issues General Trade Licence for Russia Sectoral Software and Technology Sanctions
The Export Control Joint Unit (ECJU) has published a new General Trade Licence permitting certain activities related to business enterprise software and technology prohibited under Chapter 4N of The Russia (Sanctions) (EU Exit) (Amendment) Regulations 2025, which came into force earlier this year. The licence allows providers, subject to its terms and conditions, to transfer business enterprise software and technology, make available business enterprise software and technology, and provide ancillary services relating to that software and technology otherwise prohibited under these sanctions to multinational clients headquartered outside Russia with global subsidiaries and affiliates (including in Russia), where the software or technology is provided pursuant to a contract concluded before April 23, 2025 (or an ancillary contract needed to satisfy such a contract), or where the enterprise software and technology and related services are only for non-predominant use by a subsidiary established in Russia. Users must register online via SPIRE within 20 days of their first use of the licence and comply with the terms and conditions set out in the licence. The licence is effective from July 21, 2025, to October 20, 2025.
NCA Highlights Sanctions Evasion as Top Economic Crime Priority
The UK National Crime Agency (“NCA”) has published a report identifying sanctions evasion as a top priority in its economic crime strategy for 2025. The report emphasises that sanctions evasion facilitated by UK-based professional enablers remains a significant threat, particularly in relation to Russia sanctions. Professional enablers are individuals or firms who assist criminals in disguising assets or laundering money linked to sanctions evasion. The NCA calls for closer cooperation between business and government to identify such enablers and their behaviour patterns, prioritise high-risk sectors for preventative outreach, review high-risk customers providing services to designated persons, and enhance joint investigations into front-company networks used to circumvent sanctions. The NCA’s priorities aim to guide businesses in allocating compliance resources effectively to combat economic crime.
OFSI Publishes Cryptoassets Threat Assessment Highlighting Key Sanctions Risks
OFSI has published a Cryptoassets Threat Assessment Report (the “Assessment”), which is part of a series of sector-specific assessments surveying trends in the UK’s financial sanctions landscape and identifying threats to compliance. The Assessment’s purpose is to aid businesses in identifying and prioritising sanctions risks as part of their compliance efforts. The Assessment addresses threats to sanctions compliance relating to transactions involving cryptoasset firms arising out of the unprecedented expansion of financial sanctions following Russia’s invasion of Ukraine in February 2022. In pertinent part, the Assessment focusses on five key threats including, reporting issues, inadvertent non-compliance, exposure to sanctioned Russian exchange Garantex, risks from DPRK-linked hackers, and the facilitation of transfers to Iranian cryptoasset firms. However, many of the insights in the Assessment will be of broader relevance to businesses when developing, reviewing, and enhancing their sanctions compliance controls.
OFSI Launches Consultation on Sanctions Enforcement Reforms
OFSI has opened a public consultation on proposed changes to its enforcement policies and procedures. Aimed at resolving cases more efficiently and reducing burdens on both OFSI and those subject to investigation, the proposals include updates to OFSI’s case assessment guidance, revised penalty discounts for voluntary disclosure and cooperation, and the introduction of new tools such as various settlement schemes for cases involving civil monetary penalties, as well as a streamlined process with indicative penalties for certain breaches of licence conditions, reporting obligations and information offences. OFSI is also consulting on a potential doubling of the statutory maximums for civil penalties and an increase in the baseline financial penalties used in calculating civil monetary penalty amounts. Stakeholders are invited to submit their views by 23:59 on October 13, 2025.
EU Developments
EU Council Amends Sanctions Listing Against Mali
The EU Council has updated the framework concerning restrictive measures against individuals or entities undermining peace, security, and political stability in Mali. Specifically, Council Decision 2017/1775 and Regulation (EU) 2017/1770 were amended to remove former Malian Prime Minister Choguel Maïga from the list of sanctioned individuals and entities detailed in the respective annexes to these sanctions legislation. Maïga had been sanctioned in 2022 following allegations of obstructing Mali's political transition to civilian governance after a military coup disrupted the country’s stability. The restrictive measures previously imposed on Maïga included asset freezes, travel bans, and a prohibition on access to funds.
EU Moves to Tighten and Accelerate Phase-out of Russian Gas
The European Union is advancing discussions on the European Commission’s proposed plan to phase out Russian gas and oil imports into the EU. The legislative proposal, which calls for an immediate ban on short term Russian gas contracts and a gradual phase-out of long-term contracts by 2027, is currently under negotiation by EU co-legislators.
A new proposal, reportedly spearheaded by Denmark, which currently holds the EU Council Presidency, seeks to strengthen the European Commission’s plan by introducing stricter controls on exemptions to close loopholes that allow continued imports through alternative routes, such as via Turkey. The amendments also reportedly clarify that exceptions for existing contracts should only be permitted when mandated by judicial or arbitration procedures.
At the same time, it has been reported that the European Parliament is pushing to accelerate the final phase-out deadline by one year, moving it from January 1, 2028, to January 1, 2027.
Asia Pacific Developments
China Allegedly Ships Drone Engines to Russia Under False Labels
To circumvent Western sanctions, Chinese-made engines are being covertly shipped to Russia’s state-owned drone maker IEMZ Kupol disguised as “industrial refrigeration units,” according to European security officials. These covert shipments have enabled Kupol to ramp up production of its Garpiya-A1 attack drones, with over 1,500 units delivered by April and a target of more than 6,000 for 2025—triple the previous year’s output. The drones, used against Ukrainian targets, rely on L550E engines originally made by Xiamen Limbach Aviation Engine Co., which was sanctioned by the US and EU in late 2024. Following sanctions, a new Chinese intermediary, Beijing Xichao International Technology and Trade, began supplying the engines, though how it sourced them remains unclear. China’s foreign ministry denied knowledge of the exports and emphasized its opposition to unilateral sanctions not backed by the UN.
China Strongly Opposes EU’s Inclusion of Chinese Entities in Russia Sanctions
In the days leading up to the China-EU summit, Beijing issued a forceful condemnation against the EU’s latest sanctions, which targeted two Chinese banks and several companies allegedly linked to Russia’s military operations in Ukraine. This marks the first time that Chinese banks have been included in EU sanctions since the Russian invasion of Ukraine in 2022. Both the Ministry of Foreign Affairs (MFA) and the Ministry of Commerce (MOFCOM) criticized the sanctions as unilateral, lacking international legal basis or UN authorization, and warned of necessary countermeasures to protect the legitimate rights of Chinese entities. Officials emphasized that normal trade and financial exchanges between Chinese and Russian institutions should not be disrupted and accused the EU of undermining China-EU economic relations.
Indian Explosives Export to Russia Sparks US Sanctions Risk
Amid US threats of sanctions against entities supporting Russia’s war in Ukraine, an Indian company in December 2024 exported $1.4 million worth of HMX—a high-powered explosive with critical military applications—to Russian firms, according to Indian customs data. One recipient, Promsintez, is linked to Moscow’s military and was targeted by a Ukrainian drone strike, while the other, HTIS, is a subsidiary of Spanish explosives firm Maxam, controlled by US-based Rhone Capital. HMX is considered critical to Russia’s war effort and is used in advanced weaponry. Although the shipments did not violate Indian policy, they raise concerns amid India’s balancing act between its strategic partnership with the US and its longstanding ties with Russia. The US has cautioned India about the risk of sanctions, but enforcement has been limited due to geopolitical sensitivities.
Japan, EU Pledge Stronger Sanctions Over Russian Aggression
At the 30th EU-Japan Summit in Tokyo, Japan and the European Union pledged to strengthen sanctions against Russia as a central measure to counter its continued aggression in Ukraine. The two sides reaffirmed their shared commitment to upholding international law and the UN Charter, emphasizing the need for coordinated efforts to prevent sanctions evasion. They also reiterated their support for Ukraine and agreed to deepen cooperation on global security and economic resilience. The move is also a sign that the EU and Japan may drive the sanctions tempo of the G7 members while the US charts a potential pivot from its diplomatic approach with Moscow to a more punitive posture.
US Eases Sanctions on Myanmar Military Allies Amid Policy Shift Concerns
In a shift in policy, the US lifted sanctions on several Myanmar military-linked individuals and companies in July 2025, just weeks after junta leader Min Aung Hlaing praised Trump for reduced tariffs and eased sanctions. The delisted entities, previously sanctioned for ties to Myanmar’s defense sector and the 2021 coup, include KT Services & Logistics, MCM Group, Suntac Technologies, and key associates of the military regime. Treasury and the White House has yet to comment, while Myanmar’s rare earth resources—strategically important in the US-China rivalry—remain a key factor in bilateral considerations. The apparent transactional shift in the US-Myanmar relationship drew critique from human rights groups, who have called for accountability for potential crimes against humanity committed by the Myanmar military.
