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.
Subscribe to the Stepwise Risk Outlook here. To receive only the Sanctions Update edition (published most Mondays), select “Stepwise Risk Outlook: Sanctions Update.” For more detailed analysis on related issues, see Steptoe’s International Compliance Blog. For information on industry-specific monitoring or bespoke services, please contact the team here.
The Lede
New Report Identifies Russia as Key Player in North Korean Sanction Evasion
North Korea has been the subject of continuous sanctions since their inception, imposed for a broad range of reasons – most notably its development of nuclear weapons and ballistic missiles. Despite these punitive measures, North Korea has proven adept at evading sanctions by collaborating with global actors to circumvent both UN sanctions and those unilaterally imposed by individual governments. Last week, the Multilateral Sanctions Monitoring Team (MSMT) released its first report, detailing how Russia and North Korea’s expanded military cooperation since the beginning of the Russia-Ukraine war has bolstered North Korea’s evasion of UN sanctions. The findings reveal large-scale, previously unreported instances of sanctions evasion, including significant military support to Russia that has played a large hand in enabling its war on Ukraine.
Economic and strategic cooperation between North Korea and Russia has rebounded in recent years following a period of distance following the collapse of the Soviet Union and perestroika, during which Moscow revoked its significant monetary support to Pyongyang often aligned with Western states to condemn the country. Bilateral ties rebounded following Russia’s further invasion of Ukraine in 2022, after which North Korea quickly emerged as a key ally, supporting Russia on the international stage in exchange for renewed access to humanitarian aid and military technology. Their alliance soon expanded to constitute a united front against the West, an alignment that became particularly evident in March 2024, when Russia vetoed a UNSC resolution seeking to extend the Panel of Experts’ mandate – a move widely seen as Moscow shielding its own violations of UN sanctions in its dealings with North Korea. The partnership was further cemented when Putin visited North Korea in June 2024 and signed the “Treaty on Comprehensive Strategic Partnership,” an agreement that pledged mutual defense and military assistance in the case of an external attack, solidifying a renewed alliance between the two nations. Since then, North Korean troops have fought alongside Russia in the war, particularly against the Ukrainian incursion in the Kursk Oblast. Russia maintains a clear interest in leveraging support from North Korea for the duration of the war, utilizing its permanent member status to block UNSC actions.
The MSMT is a multilateral monitoring body established in 2024 by eleven UN member states to address the oversight gap left by the dissolution of the UNSC Panel of Experts, a UN Security Council body tasked with monitoring the implementation of UN sanctions on North Korea and investigation violations. The Panel was dissolved in March 2024 when Russia vetoed a resolution seeking to expand its mandate. MSMT’s first report revealed extensive evidence of collaboration between Russia and North Korea that flagrantly violates multiple UN sanctions. According to the report, North Korea has delivered over 20,000 containers of munitions and many other related materials – including 9 million rounds of artillery and rocket launcher ammunition – to Russia since September 2023 that has been used in Russia’s war against Ukraine. These munitions, transported by Russian-flagged, state-owned vessels, were identified as being used to target civilian infrastructure in Ukraine. While these shipments were initially conducted by rail, North Korea switched to using maritime transport to meet Russia’s heightened demand for artillery.
In turn, Russia has supported North Korea’s military by transferring advanced warfare systems and providing performance feedback on North Korea’s ballistic missile tests. According to MSMT, these transfers were coordinated by various Russian actors and networks – many of which had already been sanctioned by the US last year for using front companies to smuggle military equipment between the two nations. Additionally, in late 2023, North Korea deployed over 11,000 troops to Russia, where they received military training in artillery operations, unmanned aerial vehicles, and basic infantry tactics – a clear violation of UN sanctions. Russia not only provided this training but also facilitated North Korea’s circumvention of sanctions by allowing payments to be processed through the UN-sanctioned, state-owned North Korean bank that serves as the country’s primary foreign exchange institution.
North Korea's military collaboration with Russia to circumvent UN sanctions illustrates a broader pattern of the government’s ability to leverage increasingly sophisticated methods to generating millions in revenue to sustain its weapons programs. Beyond its collaboration with Russia, North Korea also maintains an extensive network of third-party intermediaries that enable its ongoing sanctions evasion. A report by Conflict Armament Research (CAR) found that ballistic missiles manufactured by North Korea contain nearly 300 imported electronic components. These components are primarily branded by companies based in the United States (75%), with the remaining components linked to companies in Europe (16%) and Asia (9%). Furthermore, over 75% of these components were identified as having been produced between 2021 and 2023. CAR’s findings highlight North Korea’s ability to operate an elite and sophisticated network capable of acquiring restricted foreign components without detection. The report also underscores North Korea’s capacity to integrate these modern parts into advanced weaponry, even as international sanctions continue to target its supply chains.
The scale of the sanctions evasion detailed by MSMT’s first report and concurrent CAR research implies sobering conclusions about North Korea’s ability to circumvent Western sanctions, and the durability of the North Korean supply chains responsible for enabling, in part, Russia’s war on Ukraine. With the UNSC’s Panel of Experts dissolved and various regional actors enabling sanctions evasion, North Korea finds itself well positioned to continue these illicit activities with reduced international oversight. Pyongyang’s strengthened military and economic ties with Moscow provide the country opportunities to access more advanced technology that could further enhance its military capabilities, bolstering Kim Jong-un’s continued efforts to expand North Korea’s weapons arsenal. The influx of munitions from North Korea shows no signs of slowing as the Russia-Ukraine war continues to escalate, highlighting the steadfast alignment between the two nations. MSMT’s first report underscores North Korea’s significant abilities to circumvent Western oversight and Russia’s willingness to aid its efforts, reducing the effectiveness of sanctions as a tool of pressure in the Russia-Ukraine war and on the Korean peninsula alike.
US Developments
State Department Sanctions ICC Judges, Issues GLs
The Department of State designated four International Criminal Court (ICC) judges—Solomy Balungi Bossa, Luz del Carmen Ibáñez Carranza, Reine Adelaide Sophie Alapini Gansou, and Beti Hohler—for allegedly “directly engag[ing]” in efforts to investigate, arrest, detain, or prosecute US or Israeli nationals without the consent of either nation. Neither state is a party to the Rome Statute, which is the treaty that established the ICC. Specifically, according to the State Department, Judge Bossa and Judge Ibáñez Carranza authorized the ICC’s investigation against US personnel in Afghanistan, and Judge Alapini Gansou and Judge Hohler authorized the ICC’s issuance of arrest warrants targeting Israeli Prime Minister Benjamin Netanyahu and former Minister of Defense Yoav Gallant.
On the same day as the State Department’s designations, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued seven general licenses (GL) exempting certain persons or activities from the ICC-related sanctions. In response to the US’s designations, which follow the designation of ICC Prosecutor Karim A. A. Khan, the ICC issued a press release “deplor[ing]” the additional designations and labeling them a “clear attempt to undermine the independence of an international judicial institution.”
Congress Continues to Back Russia Sanctions as Trump Urges Restraint
Senator Jeanne Shaheen (D-NH), the Ranking Member of the Senate Foreign Relations Committee, has continued her call for greater pressure on Russia to bring an end to its ongoing war with Ukraine. “We need to maximize pressure on Putin,” Shaheen asserted. “That means new sanctions, like those in the Graham-Blumenthal legislation…[as well as] enforcing the sanctions already in place.” Shaheen’s remarks are the most recent push for Congress to consider and, ultimately, pass the Sanctioning Russia Act of 2025, which was introduced by Senators Lindsey Graham (R-SC) and Richard Blumental (D-CT) and currently has over 80 co-sponsors in the Senate (S. 1241) and nearly 60 co-sponsors in the House (H.R. 2548).
After recently visiting President Zelenskyy in Ukraine, Graham claimed that he will be “pushing the Senate to take action by using the expedited Rule 14 process to bring the sanctions bill to the floor,” and that he hopes to have new sanctions implemented by the G7 Summit (starting June 15 in Alberta). Notably, when asked about increasing pressure on Russia, Speaker of the House Mike Johnson (R-LA) expressed support, stating that “[t]here’s [sic] many members of Congress that want us to sanction Russia as strongly as we can…[a]nd I’m an advocate of that.”
Though the White House has grown increasingly frustrated with the Kremlin, the Wall Street Journal reported that the Trump administration has asked Graham to significantly weaken the bill while the White House seeks to repair its relationship with Putin. President Trump has called the bill “harsh” and said that the bill should not move forward without his approval.
OFAC Targets Iranian “Shadow Banking” Network
OFAC has sanctioned over 30 individuals and entities tied to an Iranian family that has allegedly laundered billions of dollars through the international finance system as part of Iran’s “shadow banking” network. According to OFAC, Iran’s government uses the network to evade sanctions and move money from its oil and petrochemical sales. The designees included 17 entities based in Hong Kong and 5 entities based in the United Arab Emirates.
The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) concurrently issued an updated advisory on detecting Iran’s oil smuggling and shadow banking activities. Treasury Secretary Scott Bessent has said that “Treasury will continue to leverage all available tools to target” Iran’s shadow banking system. These developments are the latest steps in the Trump administration’s “maximum pressure” strategy set forth in National Security Presidential Memorandum 2.
OFAC Sanctions Cocaine Trafficking Network
OFAC has sanctioned two Colombian nationals and four Guyanese nationals for allegedly trafficking tons of cocaine from South America to the US, Europe, and the Caribbean. According to OFAC, the designees used “boats and narco-subs” and clandestine airstrips to traffic the drugs with the assistance of an allegedly corrupt Guyanese official from the Guyana Police Force (GPF). The designations continue the trend of the Trump administration targeting drug trafficking through the use of sanctions authorities.
Senator Expresses Concerns Over Terrorist Fundraising on X
Senator Elizabeth Warren (D-MA), the Ranking Member of the Senate Banking, Housing, and Urban Affairs Committee, sent a letter to Scott Bessent, the Secretary of the Treasury, and Marco Rubio, the Secretary of State and National Security Advisor, raising concerns about a recent investigative report from the Technology Transparency Project alleging that the social media platform “X” allows sanctioned individuals to pay for services or perks using cryptocurrencies, thereby circumventing US sanctions.
In the letter, Warren asks the Treasury Department to investigate X for alleged violations of US sanctions authorities and, more broadly, to report whether Treasury has conducted assessments about the increasing prevalence of cryptocurrencies and their impact on the efficacy of sanctions. Warren also raises concerns about the bipartisan GENIUS Act, which would regulate stablecoins and she claims would, if passed in its current iteration, “turbocharge sanctions evasion and other illicit activity.”
State Department Imposes Visa Restrictions for Exploiting Cuban Medical Professionals
The State Department has taken steps to impose visa restrictions on several Central American government officials and their family members for their alleged ties to Cuba’s forced labor scheme, particularly as they relate to Cuban medical mission programs. This follows an announcement from February 25, 2025, in which Secretary Rubio noted that the US would be expanding “an existing Cuba-related visa restriction policy that targets forced labor linked to the Cuban labor export program.”
UK Sanctions Developments
OFSI Releases New Video Guidance on UK Financial Sanctions
On June 4, 2025, OFSI released a new video series to provide introductory guidance on UK financial sanctions to industry. The bite size guidance videos address a range of topics, including OFSI guidance, sanctions screening, reporting to OFSI, and the use of general and specific licences. The new guidance builds on the UK government’s recent commitment in its first cross-government review of sanctions implementation and enforcement to provide additional guidance for sectors less familiar with sanctions compliance.
UK Publishes Strategic Defence Review
On June 2, 2025, the UK government published the Strategic Defence Review 2025, a root and branch review of UK defence. Among other topics the review identifies Russia as “an immediate and pressing threat” and China, Iran, and North Korea as posing strategic challenges. The review also recommends the creation of a new Defence Exports Office within the Ministry of Defence to drive defence collaboration and trade with the UK’s allies, as well as a review of export licensing policies. The review represents a pivotal moment for UK security policy, however, much remains to be clarified with respect to the implementation and funding of the recommendations made in the review.
EU Developments
Discussions on EU-US Coordination on Russian Sanctions
On June 2, European Commission President Ursula von der Leyen met with US Senator Lindsey Graham in Berlin to discuss strengthening EU-US coordination on sanctions against Russia in response to its ongoing aggression in Ukraine. In the read-out of the meeting, the Commission stressed the need for a ceasefire and welcomed US Senator Graham’s bipartisan bill proposing steep tariffs on countries buying Russian energy, which aligns with the EU’s upcoming 18th sanctions package targeting Russia’s energy and banking sectors. The bill runs counter to President Trump’s attempts to bring Putin to the negotiating table, and the White House has reportedly sought to water down the Graham-Blumenthal package, despite rising momentum and EU support.
Third Countries Align with EU Sanctions
The High Representative of the EU has announced that Albania, Bosnia and Herzegovina, Iceland, the Republic of Moldova, Montenegro, North Macedonia, and Ukraine have aligned themselves with several Council decisions adopted on May 20. Specifically, these countries have aligned themselves with Decision 2025/963, which introduced economic measures targeting transactions involving tangible assets, as well as those of financial institutions, credit institutions, and entities providing crypto-asset services connected to Russia’s destabilizing activities. The same group of countries, along with Georgia, Liechtenstein, and Norway, have also aligned themselves with Decision 2025/960, which adds three entities to the annex of Decision 2018/1544 listing individuals and entities subject to restrictive measures against the proliferation and use of chemical weapons.
Additionally, Albania, Bosnia and Herzegovina, Iceland, Liechtenstein, Montenegro, North Macedonia, Norway, and Ukraine have aligned themselves with Decision 2025/931, which strengthened restrictions against Russia as part of the 17th sanctions package. This group of countries, together with the Republic of Moldova, have also aligned with two further Council decisions under the 17th sanctions package. The first alignment pertains to Decision 2025/957, which imposes restrictive measures on 28 individuals responsible for serious violations of human rights. The second alignment concerns Decision 2025/936, which added 17 persons and 58 entities responsible for actions undermining or threatening the territorial integrity, sovereignty, and independence of Ukraine to the list of persons, entities and bodies subject to restrictive measures set out in the annex to Decision 2014/145/CFSP.
Asia Pacific Developments
North Korea Condemns Multilateral Sanctions Monitoring Report While Reaffirming Support for Russia
In early June 2025, North Korea issued a strong rebuke against a report by the Multilateral Sanctions Monitoring Team that scrutinized the country’s expanding economic and military cooperation with Russia. The report, which highlighted potential violations of international sanctions regimes, particularly those imposed by the United Nations and the United States, was labeled by Pyongyang as “hostile” and “outrageous encroachment” on its sovereignty. North Korea emphasized that its bilateral engagements with Russia are lawful and framed the report as an attempt to interfere with sovereign economic activities. The statement did not directly address specific allegations related to sanctions evasion, such as arms transfers or financial transactions, but dismissed the Monitoring Team’s claims as politically motivated.
Shortly thereafter, on June 4, during a meeting between North Korean leader Kim Jong Un and Russian Security Council Sergei Shoigu, North Korea reiterated its full support for Russia’s military actions in Ukraine, describing the relationship as one of “unconditional support.” Pyongyang emphasized that its backing of Russia was rooted in shared strategic interests. Analysts note that the reaffirmation of ties between Pyongyang and Moscow could prompt closer monitoring by sanctions authorities, particularly regarding dual-use technologies, financial channels, and ballistic missile programme.
Operational Fallout in Asia from US Sanctions on Iranian Oil Smuggling Networks
In June 2025, US sanctions enforcement actions targeting Iranian oil smuggling networks have had direct operational consequences in Asia, notably impacting China Certification & Inspection Group (CCIC) Singapore. Following its sanctioning by OFAC for facilitating Iranian oil shipments to China, the company, a key player in commodity inspection and certification, reportedly laid off around 300 employees. According to OFAC, between late 2023 and 2024, CCIC Singapore provided inspection services for multiple sanctioned vessels transporting Iranian oil, including ship-to-ship transfers and alleged falsification of cargo documentation to disguise Iranian crude as Malaysian.
