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 Member States Negotiate 21st Sanctions Package against Ticking Clock
European Union (EU) Member States are currently discussing the details of the bloc’s 21st proposed sanctions package related to Russia, introduced by the European Commission on June 15. The process is influenced by timing considerations linked to the Russian oil price-cap mechanism and by differing positions among Member States on proposed listings. These factors may affect the pace and scope of negotiations as the EU aims to conclude discussions by mid-July, before the summer recess in Brussels.
Tight Deadline for Consensus on Russian Oil Exports
The 27 EU Member States have approximately three weeks left to agree on the details of the new sanctions package. This timeline is relatively short, as negotiations on the 20th sanctions package earlier this year lasted a little over six weeks.
Under the EU’s current revised price-cap mechanism, the cap is automatically adjusted based on the average price of Russian Urals crude. Recent disruptions in the Strait of Hormuz caused global oil prices, including for Russian Urals crude, to increase sharply. If the price-cap adjustment were to occur as scheduled on July 15, the formula would potentially raise the cap to approximately $70 per barrel, allowing Russia to earn more from oil exports. To avoid this, Commission President Ursula von der Leyen proposed freezing the cap at $44.10 until January 2027.
Although the EU can amend its own sanctions, the oil price cap is fundamentally a G7 measure. Its effectiveness depends on coordinated implementation by coalition members providing shipping, insurance, and financial services for oil transactions under the mechanism. Reports indicate the Commission has been consulting with G7 partners, expecting support from the UK and Canada, but coordination remains an important political consideration. Interestingly, the 21st sanctions package appears to have been intentionally timed to coincide with the G7 summit in France, allowing EU leaders to discuss the package and raise key objections and concerns early in the negotiation process. During the summit, G7 members confirmed in a joint communique that it was “the right moment to proceed” with renewed sanctions on Russian energy exports.
Third-Country Sensitivities
Beyond Russia, the proposed 21st EU sanctions package includes transaction bans on 20 third-country banking, cryptocurrency, and oil trading firms, and introduces a full prohibition on cryptocurrency transactions between Russia and entities in third countries. An EU official later indicated that the affected countries include India, China, Türkiye, Kyrgyzstan, Kazakhstan, and the United Arab Emirates. Sanctions on Indian firms would mark a notable expansion of EU measures beyond previous targets, which focused mainly on entities in China, the UAE, and Central Asia.
Observers have noted ongoing concerns regarding Indian companies’ purchases of Russian oil and the export of dual-use goods to Russia. Past US sanctions against Indian entities for similar activities led to diplomatic and commercial frictions between Washington and New Delhi. Any comparable EU measures could have implications for EU–India relations, particularly as the two sides finalize a free trade agreement. They will also bring the EU closer to the imposition of secondary sanctions. Member States are therefore expected to consider carefully how such sanctions are implemented to balance enforcement objectives with broader economic and diplomatic interests.
Intra-EU Divisions
Bulgaria has publicly raised objections to an aspect of the sanctions package. On June 17, Foreign Minister Velislava Petrova said that Bulgaria opposed proposed sanctions targeting Russian oil giant Lukoil and Patriarch Kirill, the head of the Russian Orthodox Church. She argued that targeting Lukoil would be too disruptive for European countries still reliant on Russian energy facilities. Bulgaria’s only oil refinery is owned and operated by Lukoil. Similar proposed sanctions on Kirill in 2022 were previously dropped following opposition from Hungary.
The targeting of Lukoil will follow the sanctions recently imposed on its subsidiary, accused of operating unsafe "shadow fleet" vessels in the recent “mini sanctions package” released by the EU on the 15th.
Expected Agreement
Historically, the European Union has reached compromise decisions on sanctions, which require unanimous approval and renewal every six months. Recent developments suggest a potential shift in the renewal practice. According to press reports following the European Council summit of June 18, EU leaders agreed to extend the renewal period for Russia sanctions from six to twelve months. This change would reduce the frequency of renewal negotiations and could ease pressure on Member States to repeatedly secure consensus within short timeframes.
While Member States may raise objections regarding specific sanctions targets, effective early negotiations at the G7 conference and limited Member State objections increase the likelihood that the EU will reach agreement on the proposed package before the July 15 deadline.
US Developments
US-Iran MOU Provides for Sanctions Relief, but Questions Remain
On June 17, 2026, the trajectory of US sanctions against Iran took a significant turn when President Trump and Iranian President Masoud Pezeshkian signed a 14-point Memorandum of Understanding (MOU) for further negotiations to end the Iran War.
As it relates to sanctions, the MOU broadly outlines three types of relief for Iran, which can be thought of as (i) immediate relief, (ii) benchmarked relief, and (iii) long-term relief.
Immediate Relief
Paragraph 9 of the MOU provides for a “sanctions moratorium” while a final agreement is negotiated. During this period, the US “will not impose any new sanctions” on Iran, effectively pausing the Trump administration’s “Economic Fury” campaign and related actions under National Security Presidential Memorandum 2 (“NSPM-2”).
Paragraph 10 of the MOU commits the US Department of the Treasury to issuing waivers for the “export of Iranian crude oil, petroleum products and derivatives, and all associated services including banking transactions, insurances, [and] transportation” immediately upon signing by the two parties.
On June 22, 2026, OFAC implemented this commitment through the issuance of Iran-related General License X. With certain limitations, the GL broadly authorizes “all transactions prohibited by the above-listed authorities that are ordinarily incident and necessary to the production, sale, delivery, or offloading of crude oil, petrochemical products, or petroleum products of Iranian origin….” This includes transactions involving vessels blocked under a number of sanctions authorities. The GL is valid through 12:01 a.m. Eastern Daylight Time, August 21, 2026.
Benchmarked Relief
As opposed to the relief which enters into force upon signing of the MOU, there are a few levers which will only be pulled if and when the Iranian regime meets certain “benchmarks.”
For example, Paragraph 11 of the MOU states that the US will, upon signing of the MOU, undertake to make fully available for use the frozen or restricted funds and assets of Iran. Moreover, the US will undertake to issue all “necessary licenses and authorizations” for the release of these funds.
However, Paragraph 11 also states that the US and Iran “will mutually agree on the procedures related to the release of these funds during the negotiations” (emphasis added), signalling that a release mechanism has not yet been determined and may be subject to negotiation. However, Paragraph 11 does not expressly condition the release of funds on the completion of a final agreement.
Long-term Relief
While the MOU holds that a sanctions moratorium and licenses for the export of Iranian crude oil and related activities will take effect immediately, and while Paragraph 11 carves out room for discussions on the release of frozen or restricted funds and assets, there are yet more provisions within the MOU that will only enter into force after a final agreement is reached.
Paragraph 6 states that the US, with its “regional partners,” will develop a mutually agreed plan for the reconstruction and economic development of Iran. The US will only grant the required “licenses, waivers, and permissions” for relevant transactions after a final agreement is reached. Notably, Vice President JD Vance has said that any reconstruction fund would not include American taxpayer dollars; instead, it will come from “investment from other countries,” which suggests that the role the US will play in the implementation of Paragraph 6 will be largely confined to licensing, facilitating, or supporting Gulf countries’ investments—again, after a final agreement is reached.
Finally, Paragraph 7 commits the US to terminating “all types” of sanctions against Iran, including United Nations Security Council (UNSC) resolutions, International Atomic Energy Agency (IAEA) Board of Governors resolutions, and all “unilateral US sanctions,” including both primary and secondary sanctions. However, similar to Paragraph 6, the implementation of Paragraph 7 will only come “in an agreed-upon schedule as part of the final agreement.”
Conclusion and Outlook
As mentioned above, the MOU and pending final agreement represent a potentially significant shift in US sanctions policy toward Iran. However, much remains unknown about the final form of any sanctions relief, and the relief provided to date is temporary and could potentially be rolled back at any time should negotiations break down.
With G7, US Agrees to Support Ukraine, Strengthen Sanctions on Russia
On June 17, 2026, the Group of Seven (“G7”) leaders issued a joint statement committing to “increase pressure on the Russian war economy,” including by strengthening their sanctions on Russia’s oil and gas sector. The G7 placed this commitment in the broader context of supporting Ukraine, and said that they consider this the “right moment” to proceed with additional measures given the promise of a deal with Iran to reopen the Strait of Hormuz, which President Trump and Iranian President Masoud Pezeshkian signed shortly after the G7 published its joint statement. Separately, in the hours before the G7’s joint statement was published, President Trump hinted to reporters that he may reimpose certain oil sanctions on Russia, which were eased during the Iran conflict, although such measures had mostly expired prior to President Trump’s statement.
If President Trump does seek to pursue additional sanctions against Russia, there are multiple bills currently in Congress which could potentially find themselves under consideration for the Trump administration’s support.
- Sen. Lindsey Graham (R-SC), for instance, said on January 7, 2026, that the Trump administration had “green lit” his and Sen. Richard Blumenthal’s (D-CT) bill, the Sanctioning Russia Act of 2025. The bill has not yet been subject to a vote in either Chamber of Congress.
- Rep. Gregory Meeks’s (D-NY) bill, the Ukraine Support Act, which would require sanctions on Russian financial institutions, oil and mining companies, and tankers that violate the international price cap, among others, had already passed the House on June 4, 2026, by a vote of 226-195. It is now in the Senate.
- If this measure were to pass the Senate, it could face a veto by President Trump. Administration officials have expressed concerns about bills that do not provide President Trump with flexibility in imposing or removing sanctions, which the Ukraine Support Act does not.
- Russia sanctions could also find their way into the National Defense Authorization Act for Fiscal Year 2027 (NDAA).
- Reps. Joe Wilson (R-SC) and Jimmy Panetta (D-CA), for example, have proposed an amendment to the NDAA that would impose sanctions on individuals and entities involved in kidnapping Ukrainian children.
As it relates to the NDAA, note that Reps. Wilson and Panetta’s amendment, as all other amendments at this stage (at least in the House), must first be approved for consideration by the House Committee on Rules. Amendments that progress to floor consideration and are then incorporated into the House NDAA may then be subject to reconsideration when the Senate, with its own version of the NDAA, negotiates (or reconciles) a final version.
The Trump administration has not yet imposed any new sanctions on Russia, despite its commitment to the G7 and calls from lawmakers, such as Sen. Dick Durbin (D-IL), to do so. However, it has elected not to renew Russia-related General License (GL) 134C, which expired on June 17, 2026. As we covered previously, GL 134 authorized certain transactions that were ordinarily incident and necessary to the sale, delivery, or offloading of crude oil or petroleum products of Russian origin, subject to certain conditions.
OFAC Sanctions Hizballah-Aligned Officials
On June 18, 2026, OFAC sanctioned multiple Hizballah-aligned officials, as well as multiple Hizballah-associated businesses that are allegedly part of a network overseen by Alaa Hassan Hamieh, a Specially Designated Global Terrorist (“SDGT”).
According to OFAC, the Hizballah-aligned officials “have used their influence to obstruct Lebanon’s peace process and delay the disarmament of Hizballah.” The businesses, OFAC said, are “interlocutors” for Hamieh located in Lebanon, Syria, Iraq, and Oman, who raise funds, execute contracts, and operate front companies as a means to generate revenue for Hizbillah.
These designations follow recent sanctions against Hizballah-aligned individuals and entities on May 21, 2026.
OFAC Issues New, Amended Venezuela GLs
On June 18, 2026, OFAC issued two amended Venezuela-related GLs (GLs 5X and 24A) and one new Venezuela-related GL (GL 59).
- GL 5X, “Authorizing Certain Transactions Related to the Petróleos de Venezuela, S.A. 2020 8.5 Percent Bond on or After August 4, 2026,” extends the term of GL 5 from June 19, 2026, to August 4, 2026.
- GL 24A, “Certain Transactions Involving the Government of Venezuela Related to Telecommunications and Mail Authorized,” updates the language of GL 24, which was issued on August 5, 2019, to reflect that certain transactions otherwise prohibited specifically by Executive Order (EO) 13884 are permitted, subject to conditions.
- It also expands the authorizations for transactions of common carriers to include those incident to the receipt or transmission of mail and packages to, from, or within Venezuela—not just between the US and Venezuela.
- GL 59, “Authorizing the Supply of Certain Items and Services Involving Consorcio Venezolano de Industrias Aeronáuticas y Servicios Aéreos, S.A. (Conviasa),” authorizes certain transactions involving Consorcio Venezolano de Industrias Aeronáuticas y Servicios Aéreos, S.A. (“Conviasa”), all of its 50 percent or more-owned entities (“Conviasa Entities”), and aircraft in which it or the Conviasa Entities hold an interest, that are ordinarily incident and necessary to the provision from the United States or by a US person of goods, technology, software, or services for the maintenance, repair, upgrade, refurbishment, improvement, safety, or airworthiness of such aircraft.
These changes and additions to the Venezuela licensing regime come shortly after OFAC amended seven Venezuela-related GLs on June 10, 2026, which we covered in the previous edition of the Sanctions Update here.
UK Developments
UK Announces Major Russia Sanctions Package Targeting Shadow Fleet, Military Procurement and Sanctions Evasion
The UK Government has designated 11 individuals and 32 entities, and specified 27 ships, under the Russia Sanctions Regime that are linked to Russia’s war effort and sanctions circumvention activities. According to a UK Government press release, the measures focus on three key areas: Russia’s shadow fleet, military procurement networks and illicit financial channels used to evade Western sanctions. The package includes sanctions on more than 20 additional oil tankers, shipping service providers and insurers connected to Russia’s shadow fleet, as well as several LNG vessels supporting Russia’s Arctic LNG 2 project. The UK has now sanctioned more than 600 shadow fleet and Russian LNG vessels and almost 500 individuals, entities and ships under the Russian regime during 2026 alone.
The package also targets a Russian military intelligence procurement network centred on GRU-linked company LLC Neptune Co Ltd, with sanctions imposed on entities and individuals accused of acquiring Western technology for Russia’s military. In addition, the UK designated suppliers in China, Thailand and Turkey alleged to be providing critical military equipment and dual-use goods to Russia, alongside entities involved in facilitating sanctions evasion and illicit financial flows, including links to the A7 network. The measures underscore the UK’s continued focus on disrupting Russia’s energy revenues, military supply chains and sanctions circumvention networks in coordination with G7 partners.
OFSI Imposes Russia-related Civil Monetary Penalty on Sabre Global Technologies Limited
OFSI has published details of a £1,000,920.59 civil monetary penalty imposed on Sabre Global Technologies Limited (“SGTL”), for violating the prohibitions on making funds and economic resources available to, or for the benefit of, a UK designated person, as well as the sanctions circumvention prohibition under Regulations 13, 14, and 19 of the Russia (Sanctions) (EU Exit) Regulations 2019. The SGTL penalty represents the largest civil monetary penalty imposed under the UK’s Russia sanctions regime since Russia’s February 2022 invasion of Ukraine. The enforcement action is notable because it represents the first use of OFSI’s civil enforcement powers in relation to sanctions circumvention, as well as for underscoring the breadth with which the concept of economic resources is interpreted by OFSI. Several useful hints as to OFSI’s enforcement approach and compliance expectations for businesses required to comply with UK sanctions can be discerned from the SGTL case, which affected businesses should factor into their UK sanctions compliance efforts.
OFSI Amends Lukoil International General Licence
OFSI has amended General Licence INT/2025/8031092, which permits the continuation of business involving Lukoil International GmbH and its subsidiaries (the “GL”). The amendment removes the restriction previously contained in paragraph 4.2 of the GL, which had required funds otherwise payable to Lukoil International or its subsidiaries to be paid into a frozen account while the entities remained owned or controlled by PJSC Lukoil. The GL continues to authorise a wide range of business activities involving Lukoil International entities, including payments under existing or new contracts and the provision or receipt of economic resources, subject to the licence conditions. The amendment represents a further adjustment to the UK’s approach to facilitating the continuation of legitimate business activities involving Lukoil’s international operations. However, the amendment does not permit funds to be returned to PJSC Lukoil. Parties relying on the GL should review the updated version carefully to understand the revised permissions and compliance requirements.
EU Developments
EU Council Adopts New Sanctions Listings Targeting Russia’s Military-Industrial Complex, Shadow Fleet and Hybrid Activities
On June 15, the EU Council adopted a set of restrictive measures in response to Russia’s continued war of aggression against Ukraine, adding 34 individuals and 47 entities to the sanctions lists under Council Regulations 269/2014, 2024/2642, and 2024/1485. The designations target actors materially supporting Russia’s military and industrial complex, including manufacturers and suppliers of drones and military equipment. The listings also extend to third-country enablers, including three Chinese companies, among them Xinxiang Richful Lubricant Additive Company, a major manufacturer of lubricant additives supplying components used in support of Russia’s military capabilities.
The restrictive measures further address Russia’s energy revenues by designating individuals and entities involved in the transport of crude oil and petroleum products through the shadow fleet, including Tahir Garayev and Konstantin Rogach, as well as shipping operators such as Lukoil Western Siberia, Liberia-based Moonstone Maritime Corporation, and additional companies based in Türkiye, the United Arab Emirates, Azerbaijan and Hong Kong.
The package also expands listings targeting foreign information manipulation and interference, as well as serious human rights violations and repression in Russia. Newly designated individuals include propagandists and influencers such as Alexandra Jost and Anatoly Kuzichev. In parallel, 15 individuals and one entity, IPJSC NTK, were listed for their involvement in the persecution, poisoning and death of Alexei Navalny, including members of the Federal Security Service, as well as Russian judges and prosecutors.
Additionally, Council Regulation (EU) 2026/1336 introduces a derogation from EU asset freeze measures in respect of the Chinese IDM manufacturer Yangzhou Yangjie Electronic Technology Co., Ltd. The derogation allows, subject to prior authorization by national competent authorities, the release of funds strictly necessary for the wind-down of contracts concluded before April 23, 2026, until December 31, 2026, and for limited purchases of critical components until March 15, 2027, with a view to enabling EU operators to transition to alternative sources of supply.
Following the annual review, the EU Council also renewed the restrictive measures in response to the illegal annexation of Crimea and the city of Sevastopol until June 23, 2027.
EU Council Publishes Updated FAQs on Import Ban for Refined Products Obtained from Russian Crude Oil
The European Commission published updated FAQs on sanctions against Russia, with a focus on the prohibition on the purchase, import, or transfer of refined petroleum products obtained from Russian crude oil, including where such products are imported via third countries.
The updated FAQs clarify the enhanced due diligence obligations for EU operators importing refined products from third-country refineries that process Russian crude oil and provide more detailed guidance on when such imports may be permitted. The FAQs also set out the information that segregated refinery operators must include in written attestations accompanying each export cargo, as well as the applicable timing requirements and the conditions under which independent verification must be carried out.
EU Council Designates Six Individuals Under Moldova Sanctions Framework
The EU Council recently updated its sanctions framework targeting Moldova by designating six individuals responsible for actions aimed at destabilizing, undermining or threatening the sovereignty and independence of the Republic of Moldova. The listings target members of successor entities linked to the ȘOR political party involved in interference with the September 2025 parliamentary elections, including disinformation activities, vote‑buying schemes and coordinated influence operations connected to Ilan Shor and the non-governmental association organization Evrazia.
The sanctions framework now applies to 29 individuals and five entities. The restrictive measures include asset freezes, a prohibition on making funds or economic resources available, and travel bans preventing listed individuals from entering or transiting through the EU.
EU Council Amends Libya Sanctions Framework
The EU Council introduced targeted amendments to the restrictive measures in view of the situation in Libya, following an update at the UN level. Changes to Council Regulation (EU) 2016/44 implement UN Security Council Resolution 2819 (2026) of April 14, which updates the listing criteria for individuals and entities subject to restrictive measures and modifies the scope of measures applicable to the Libyan Investment Authority.
In particular, the amendments incorporate the new UN designation grounds and provide that, subject to prior notification to and approval by the UN Sanctions Committee, competent authorities of EU Member States may authorize the use of certain frozen cash reserves of the Libyan Investment Authority for investment in low‑risk time deposits or fixed income instruments with financial institutions located in the Member State where the funds are held, in accordance with the conditions set out in the relevant UN Security Council resolutions. The amendments further provide, subject to notification by the Member State concerned and approval by the UN Sanctions Committee, for the transfer of certain frozen funds or economic resources between custodial institutions within the same jurisdiction to enable a change of global custodian, provided that the assets remain frozen and their value is preserved.
Asia-Pacific Developments
China Expands Financial Legal Toolkit to Counter External Sanctions
China’s Vice-Premier He Lifeng announced plans to incorporate anti-sanctions provisions into financial legislation to counter what Beijing views as unjust foreign pressure, highlighting draft rules that enable blocking and retaliatory measures against unilateral restrictions. Speaking at the Lujiazui Forum, he said similar provisions will be extended across financial laws to strengthen the country’s regulatory toolkit, while emphasizing that China does not seek conflict but will firmly resist external containment. The initiative, supported by recent steps such as a blocking order against certain US sanctions and rules targeting extraterritorial jurisdiction, is anchored in a proposed overarching financial law that allows countermeasures against discriminatory actions.
China Imposes Sanctions on Philippine Defense Chief
China has imposed sanctions on Philippine Defense Secretary Gilberto Teodoro Jr. and his immediate family, barring them from entering mainland China, Hong Kong, and Macao, in response to statements Beijing claims have damaged its sovereignty and strained bilateral ties. The measures also prohibit Chinese individuals and organizations from conducting any form of business or cooperation with the sanctioned parties. While Beijing has not specified the exact remarks that prompted the action, it characterized them as repeated statements harmful to China’s core concerns, reflecting ongoing political and security tensions between China and the Philippines.
China Pushes Back Against UK Sanctions Over Russia Links
China has criticized the United Kingdom for imposing sanctions on several entities, including four Chinese firms, accused of supplying key military-related goods to Russia, urging London to reverse what it described as an erroneous move. According to a statement from the Chinese embassy in Britain, Beijing has conveyed strong dissatisfaction and warned that it will take necessary steps to protect the legitimate rights and interests of its companies. China maintained that it has consistently advocated for peace efforts in the Ukraine conflict and strictly regulates exports of dual-use items, arguing that standard economic and trade cooperation between China and Russia should not be disrupted.
Cambodian Minister Moves to Counter Potential US Sanctions
Cambodia’s Deputy Prime Minister and Interior Minister has hired two American law firms to contest his possible designation under proposed U.S. legislation targeting global online scam networks. The legal teams are tasked with engaging U.S. authorities and lawmakers to address his inclusion in a bill that would require the U.S. president to assess whether named foreign individuals should face sanctions. His appearance in the draft legislation has been linked in past reports to alleged connections with entities associated with transnational fraud operations, stemming in part from previous business affiliations with figures later subjected to sanctions. He has denied any involvement in such activities, while officials from his ministry stated that the move to retain legal counsel is intended to defend both his personal reputation and that of Cambodia against what they characterize as unfounded accusations.
