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
UK, Canada, France, and Norway Sanction Networks Enabling West Bank Settler Violence
In coordinated action last week, the UK, Canada, France, and Norway announced sanctions against Israeli settlers and settler organizations alleged to be responsible for financing, enabling, and carrying out attacks against Palestinians in the West Bank. In their joint statement, the European foreign ministers stated the purpose of the sanctions is to hold extremist settlers accountable for “horrific levels” of settler violence against Palestinian civilians. The statement called on the Israeli government to ensure meaningful accountability for violence in the West Bank, through swift and thorough investigations and actions against settler outposts and organizations that allow violence to flourish.
While the announcement was coordinated, the targets of the sanctions differ by country.
- The UK sanctions targeted six Israeli entities and one individual involved in financing, enabling, and carrying out settler violence in the occupied West Bank. The restrictive measures include asset freeze and making available sanctions, as well as travel bans and director disqualification sanctions for the individuals designated.
- Canada sanctioned two individuals and five entities for their role in directly or indirectly facilitating, supporting, providing funding for, or contributing to the use or attempted use of violence by extremist settlers against Palestinian civilians or their property. The sanctions prohibit the provision of goods and services by Canadian nationals and impose travel bans.
- France banned Israeli Finance Minister Bezalel Smotrich for actively promoting the annexation of the West Bank. Paris also barred four leaders of settler organizations and 21 settlers from entering France. Earlier this year, Paris barred Israeli National Security Minister Itamar Ben-Gvir from entering France.
- Norway imposed entry bans on more than 20 violent settlers, in addition to aligning with EU sanctions imposed in May.
These new sanctions are being imposed against the backdrop of growing criticism by Western governments of Israel’s disengagement with the Palestinian peace process. Chief among concerns is the viability of the two-state solution given the continued expansion of Israeli settlements. Of particular concern is the E1 settlement, whose expansion threatens to bifurcate the West Bank, rendering contiguous territory impossible for a future Palestinian state.
For the first time, the UK’s official guidance also explicitly advises businesses against economic and financial activity in settlements. The guidance notes the risks of disputed title to the land, water, mineral, or other natural resources, in addition to risks of being associated with human rights abuses. The UK joins a number of European countries that have issued advisories warning their businesses of the legal, financial, and reputational risks for commercial dealings within the settlements. In response to settlement expansion and other concerns, the UK, Canada, and France have adopted the New York Declaration on the Peaceful Settlement of the Question of Palestine and the Implementation of the Two-State Solution and have recognized Palestinian statehood.
Nations issuing sanctions see these measures as supporting their two-state solution policy. But the sanctions and growing international backlash to settler activity in general are unlikely to shift attitudes or actions in Jerusalem. The Israeli government rejects foreign sanctions on Israelis and entities in the West Bank, asserting that Jews have a right to live on this land. Israeli sentiment is likely only to harden as the country approaches a general election in fall 2026 – its first in four years. Most viable challengers to Prime Minister Binyamin Netanyahu lean right and see the cementing, if not growth, of Israeli West Bank gains as an imperative. Prime Minister Netanyahu, with erratic performance in the polls and a fractious far-right coalition, may still come out on top – if only in a caretaker role as political parties attempt to form a coalition. No party is polling close to the threshold to form a government. In that case, Netanyahu will continue to seek to appease his ultra-conservative government to shore up parliamentary support. Abroad, the US continues to support Jerusalem, no longer explicitly backing the two-state solution and lifting previously imposed sanctions on settlers.
US Developments
US and Iran Reach Cease-Fire Agreement
On Sunday, June 14, President Trump announced that the US reached an agreement with Iran to reopen the Strait of Hormuz and end the US naval blockade on Iranian ports. The agreement reportedly includes a 60-day cease-fire, but does not resolve key sticking points between the countries, including Iran’s nuclear program and sanctions relief.
The agreement follows two months of the Trump Administration’s “Economic Fury” sanctions campaign against Iran, which aimed to pressure the Iranian government to reach a deal while, at the same time, the US reduced its use of military force in the conflict. As recently as last Wednesday, OFAC and the State Department had issued new sanctions targeting persons for their alleged support of Iran. More specifically:
- On June 10, 2026, OFAC sanctioned nine individuals and entities alleged to have supported weapons procurement on behalf of Iran’s Islamic Revolutionary Guard Corps (IRGC) and Ministry of Defense and Armed Forces Logistics (MODAFL). Among those designated by OFAC were China- and Hong Kong-based individuals and companies that are alleged to have facilitated the procurement of weapons for the IRGC and MODAFL, as well as a Hong Kong-based company that allegedly attempted to facilitate weapons procurement-related transactions.
- On the same day, the State Department designated four Iran- and Belarus-based individuals and entities alleged to be involved in the procurement of arms and related materiel intended to support Iran’s military.
The future of the Economic Fury initiative remains uncertain. If the Trump Administration believes its negotiations with Iran over its nuclear program are progressing well, it is possible that the pace of Iran sanctions designations will return to the frequency prior to Economic Fury. However, if negotiations stall or the current deal falls apart, the Trump Administration has repeatedly shown its willingness to use sanctions to bring Iran to the negotiating table.
State Designates Cuba’s State-Owned Oil and Gas Company
On June 11, 2026, the Department of State designated Cuba’s state-owned oil and gas company, Union Cuba-Petroleo (CUPET), pursuant to Executive Order (EO) 14404, which President Trump signed on May 1, 2026, and which we covered in the May 4, 2026 edition of the Sanctions Update. These designations follow related actions taken by the Trump administration on June 4, May 18, and May 7, 2026.
In the accompanying press release, Secretary of State Marco Rubio stated that “energy has long been weaponized by Cuba’s Communist government as a tool of repression and self-serving regime kleptocracy,” and that the Trump administration, through this and future designations, “will continue to target Cuba’s ability to leverage energy trade to further its corrupt agenda and repressive security apparatus.”
OFAC Amends Multiple Venezuela-related GLs
On June 10, 2026, OFAC published seven amended Venezuela-related general licenses (GLs), namely:
- GL 46C, “Authorizing Certain Activities Involving Venezuelan-Origin Oil or Petrochemical Products;”
- GL 47A, “Authorizing the Sale of U.S.-Origin Diluents to Venezuela;”
- GL 48B, “Authorizing the Supply of Certain Items and Services to Venezuela;”
- GL 50B, “Authorizing Transactions Related to Oil or Gas Sector Operations in Venezuela of Certain Entities;”
- GL 51B, “Authorizing Certain Activities Involving Venezuelan-Origin Minerals, Including Gold;”
- GL 52A, “Authorizing Certain Transactions Involving Petróleos de Venezuela, S.A.;” and
- GL 54A, “Authorizing the Supply of Certain Items and Services for Minerals Operations in Venezuela.”
Each amendment expands the permissible venues for dispute resolution—related to contracts entered into with the Government of Venezuela, PdVSA, or entities in which PdVSA owns, directly or indirectly, a 50 percent or greater interest (“PdVSA Entities”) pursuant to the respective general license—to include the UK, France, and Singapore, subject to conditions. Moreover, each amendment introduced a provision authorizing the inclusion of contract terms that “recognize that certain aspects of the underlying activity in Venezuela may be subject to applicable Venezuelan laws and regulations.”
A new FAQ (FAQ 1260) issued with the amended licenses clarifies that the requirement in each license that the terms of contracts be “construed and interpreted in accordance with the laws of a state or other jurisdiction within the United States” does not necessarily mean that US law must govern each aspect of the underlying activity. Instead, OFAC says the requirement means “the laws of a state or other jurisdiction within the United States must govern questions of contract law between the parties relating to the contract, including interpretation, contractual performance obligations, breach, contractual remedies, payment obligations, termination, validity, assignment or novation, and enforceability of the contract.”
Separately, OFAC issued another new FAQ (FAQ 1259) on the same day, clarifying that private and commercial flights are authorized to arrive in and depart from airports in Venezuela, and are also authorized to receive ground services in-country, under Venezuela-related GL 30B.
OFAC Extends the Terms of Russia-related GLs
On June 11, 2026, OFAC issued two amended Russia-related GLs, namely:
- GL 55F, “Authorizing Certain Services Related to Sakhalin-2;” and
- GL 115D, “Authorizing Certain Transactions Related to Existing Civil Nuclear Energy Projects.”
Each license extends the term of its previous version by six months, from June 18, 2026, to December 18, 2026. No other substantive amendments to the licenses were made.
Alongside the amended licenses, OFAC published eight amended Russia-related FAQs reflecting the changes to GLs 55 and 115, namely FAQs 967, 978, 999, 1011, 1117, 1182, 1203, and 1216.
UK Developments
OFSI Publishes Mandatory Corporate Action FAQ
OFSI has published FAQ 187 addressing how mandatory corporate actions engage the UK’s Russia and Belarus sanctions regimes for those trading transferable securities and money market instruments. FAQ 187 explains that new instruments, created through a mandatory corporate action, will not automatically engage the transferable security and money-market provisions under Regulation 16 of the Russia Regulations or Regulation 15A of the Belarus Regulations. Instead, whether these restrictions apply will depend on the specific facts on a case-by-case basis. FAQ 187 is intended to support firms to continue trading whilst remaining compliant with UK sanctions.
OFSI Publishes New Transneft-related FAQs
OFSI has published new FAQs 188 to 195, which clarify how UK financial sanctions apply in relation to Transneft and activity associated with Transneft-owned or controlled ports. The new FAQs provide additional guidance to industry on how relevant prohibitions operate in practice and set out when licensing may be required. The new FAQs have been issued in response to stakeholder queries with the goal of supporting a consistent understanding of the relevant restrictions with a view to reducing the risk of sanctions circumvention. The new FAQs are of particular relevance to insurers, financial institutions, and maritime operators, who should take the guidance into consideration in their internal compliance processes.
EU Developments
EU Presents 21st Sanctions Package Against Russia
On June 9, European Commission President Ursula von der Leyen officially presented the EU’s 21st sanctions package against Russia. The proposed package focuses on the energy, financial services and trade sectors, with the aim of increasing pressure on Russia’s war economy.
In the energy sector, the new sanctions package proposes to temporarily suspend the adjustment mechanism of the Russian oil price cap until January 2027. The package also expands restrictive measures against Russia’s shadow fleet by adding 30 vessels to the sanctions list. As a further step, the 21st sanctions package targets vessels that assist the shadow fleet by providing services, such as bunkering. Further measures include restrictions targeting infrastructure involved in the transport and processing of Russian oil, such as ports, airports and refineries, and a ban on the sale of LNG tankers to Russia.
In the financial sector, the package expands transaction bans to an additional 31 Russian banks and introduces restrictions targeting entities in third countries, including banks, crypto-asset service providers and oil traders involved in facilitating sanctions circumvention. Notably, the proposal introduces the possibility of imposing a full prohibition on the provision of crypto-asset services to certain third countries hosting platforms that assist Russia in evading EU sanctions.
In the trade sector, the 21st sanctions package proposes new export restrictions on goods and technologies contributing to Russia’s military and industrial capabilities, including additional metals and alloys used in the aerospace and defense sectors. New import bans are also proposed on certain goods, such as metals, metal ores and automotive components. The package further extends restrictive measures to the fisheries sector, introducing both partial and full import bans on certain Russian fish products. Additionally, Russian trade restrictions will be mirrored in the Belarusian sanctions regime to prevent circumvention. According to High Representative of the EU Kaja Kallas, the export control measures will target 50 companies, including entities based in China, Türkiye, Kyrgyzstan, Kazakhstan, the United Arab Emirates and India.
Lastly, the Commission proposes a comprehensive ban on entry into the EU for individuals who have served in the Russian Armed Forces since the beginning of the war.
EU foreign ministers are expected to make progress towards agreement on the 21st sanctions package at the June 15 Council meeting.
EU Council Lists IRGC Navy Unit and Iranian Individuals for Actions Undermining Freedom of Navigation in the Strait of Hormuz
The EU Council adopted restrictive measures against two Iranian individuals and the Hormozgan Provincial Command of the Islamic Revolutionary Guard Corps Navy (IRGCN) under Decision (CFSP) 2023/1532 for their role in implementing actions and policies undermining freedom of navigation in the Middle East, in particular in the Strait of Hormuz.
According to the Council, the IRGCN has assumed control over the Strait of Hormuz and established a toll system requiring vessels to submit identifying documentation, as well as cargo and destination information, through intermediaries. This information is subsequently transmitted to the Hormozgan Provincial Command, which screens vessels and determines whether they may be authorized to transit the Strait of Hormuz, in some cases subject to the payment of a toll. On this basis, the Council determined that the IRGCN’s Hormozgan Provincial Command implements Iran’s actions and policies undermining freedom of navigation in the Middle East.
The two newly listed individuals are Mohammad Akbarzadeh, Deputy Commander for Political Affairs of the IRGCN, and Hamid Hosseini, spokesperson for Iran’s Oil, Gas and Petrochemical Products Exporters’ Union, who have been designated for their involvement in measures restricting lawful transit through the Strait of Hormuz, including through public statements and the promotion of transit requirements imposed on vessels.
With the update, restrictive measures under the recently expanded sanctions framework now apply to 26 individuals and 27 entities.
CJEU Judgment on the Interpretation of the “Supporting, Materially or Financially” Criterion under the EU Russia Asset Freeze Regulation
The Court of Justice of the European Union (CJEU) delivered its judgment in Case C‑801/24 P, following an appeal brought by NKO AO National Settlement Depository (NSD) against the General Court’s ruling upholding its inclusion on the EU Russia asset freeze sanctions list. The listing was based on Article 3(1)(f) of Council Regulation (EU) 269/2014, which provides for the freezing of funds and economic resources of persons or entities “supporting, materially or financially” the Russian Government.
The Court confirmed that criterion (f) must be interpreted broadly, as covering any form of support capable, by its quantitative or qualitative importance, of providing the Russian Government with material or financial resources or facilities enabling it to pursue actions destabilizing Ukraine. It further clarified that the application of the criterion does not depend on a direct transfer of funds or goods, nor is it necessary to establish a link between the support provided and specific actions destabilizing Ukraine. The Court also distinguished criterion (f) from the concept of “financial assistance” under Council Regulation (EU) No 833/2014, which concerns the disbursement or commitment of a person’s own funds or economic resources.
Lastly, the Court noted that criterion (f) aims to exert pressure on the Russian Government by targeting entities that play a crucial role in its financial system. Accordingly, the Court held that NSD’s position as a systemically important central securities depository enables the functioning of Russia’s financial infrastructure and therefore constitutes support within the meaning of that criterion.
Asia-Pacific Developments
China Imposes Sanctions on Philippine Defense Secretary
On June 11, 2026, China’s Ministry of Foreign Affairs (MOFA) announced sanctions against Philippine Defense Secretary Gilberto Teodoro Jr., citing what it described as “irresponsible remarks” that undermine China’s interests and bilateral relations, and imposed measures prohibiting him, his spouse, and child from entering mainland China, Hong Kong, and Macao, as well as barring Chinese individuals and entities from engaging in transactions with them. In response, the Philippine government described the sanctions as an “unfriendly act” that complicates bilateral relations and undermines efforts to build trust. It added that such measures do not support constructive engagement between the two countries. Teodoro stated he would continue performing his duties and indicated that the sanctions reflect China’s response to criticism of its conduct.
Japan and the Republic of Korea Reaffirm Sanctions Coordination in Trilateral Talks on North Korea
On June 12, 2026, Japan and the Republic of Korea convened trilateral meetings in Tokyo with the United States, focusing on developments relating to the Democratic People’s Republic of Korea, during which the parties reaffirmed their shared commitment to the denuclearization of North Korea and to the strict implementation of United Nations and autonomous sanctions targeting its nuclear and ballistic missile programs.
China Condemns US Designation of Companies on the Chinese Military Companies List
On June 13, 2026, China strongly criticized the United States following the U.S. Department of Defense’s June 2026 update to its list of Chinese Military Companies, with the Ministry of Commerce stating that the designation of additional Chinese firms, including major technology and manufacturing companies, “abuses state power” and undermines recent bilateral consensus on stabilizing relations. The Ministry further called on the United States to reverse the listings and warned that, failing such action, China would take “resolute and forceful countermeasures,” holding the United States responsible for any resulting consequences. The response highlights Beijing’s opposition to the reputational and commercial impact of the US measure.
