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
US Considering Lifting Eritrea Sanctions as Red Sea Strategy Overtakes Human Rights Pressure
Reuters reported last week that Washington is preparing to rescind a 2021 executive order that targeted Eritrea’s military, ruling party, and senior officials for their role in Ethiopia’s Tigray war. The move is likely tied to Eritrea’s strategic importance as a coastal state in the contested Red Sea maritime corridor. It follows talks held in Cairo by US Africa envoy Massad Boulos and Eritrean and Egyptian officials over easing US sanctions and resetting relations with Asmara. The sanctions being lifted were imposed in November 2021 under Executive Order 14046, which was designed to target actors contributing to the humanitarian and human rights crisis in northern Ethiopia. OFAC designated the Eritrean Defense Force, the People’s Front for Democracy and Justice (PFDJ), Eritrean intelligence chief Abraha Kassa Nemariam, the PFDJ-linked Hidri Trust, senior party economic adviser Hagos Ghebrehiwet W. Kidan, and the Red Sea Trading Corporation. At the time, Treasury accused Eritrean forces of operating in northern Ethiopia amid reports of massacres, looting, sexual assault, obstruction of humanitarian aid, and broader destabilizing conduct.
Eritrea’s long Red Sea coastline, its proximity to the oil-rich Arabian Gulf, and ongoing tensions in the Horn of Africa are shifting Washington’s perspective on the nation from a pariah state to a difficult but strategically useful actor in the Horn of Africa. The region has surged in its geopolitical value as a result of the Strait of Hormuz closure due to the Iran war. The Suez-Red Sea corridor normally carries roughly 12–15% of global trade and about 30% of global container traffic, and the Bab el-Mandeb is a key energy chokepoint linking the Red Sea to the Gulf of Aden. Previous Houthi attacks demonstrated how quickly disruption in this corridor can raise shipping costs and force vessels around the Cape of Good Hope: crude and petroleum-product flows through Bab el-Mandeb fell by more than 50% in the first eight months of 2024 compared to the same period in 2023. If Washington expects the Strait of Hormuz to remain closed or for structural risks to outlast the conflict, then strengthening ties with Eritrea is one tool to deepen regional cooperation to secure the Red Sea route from Houthi attacks, especially as that corridor becomes more important to global trade and energy flows.
The move also doubles as a warning to Ethiopia amid worsening tensions with Eritrea. Formerly a part of Ethiopia, Eritrea declared independence in 1993, leaving the rest of Ethiopia landlocked. Ethiopian Prime Minister Abiy Ahmed has repeatedly stated that a lack of access to the Red Sea is an “existential” problem and that the Port of Assab belongs to Ethiopia, which Eritrea has interpreted as a threat to its sovereignty. The US government document detailing its sanctions removal plan explicitly said Washington had told Ethiopia it opposed any attempt to acquire sea access by force, while also warning both Ethiopia and Eritrea about destabilizing behavior toward each other. US diplomacy with Eritrea through Egypt’s mediation is also significant: Egypt is allied with Eritrea and Somalia because all three have become more wary of Ethiopia’s regional ambitions, meaning Egypt had both the access and the interest to mediate for the US. It is possible that Egypt wants the US to oppose the UAE’s regional influence in the Horn of Africa, but the US will likely seek to avoid situations that would put it directly at odds with Abu Dhabi, a close partner.
Human rights organizations criticized the report, arguing that sanctions removal could remove accountability for Eritrea’s wartime actions and “signal tolerance” for potential future abuses. However, “lifting sanctions” does not mean full normalization. The reported action concerns only the 2021 Ethiopia-related sanctions order, not every US restriction touching Eritrea. General Filipos Woldeyohannes, the Eritrean Defense Forces chief of staff, was separately sanctioned under the Global Magnitsky Sanctions program in August 2021 for serious human rights abuses in Tigray, and that designation would remain unless separately removed. Eritrea also remains subject to a US policy of denial for exports of defense articles or defense services destined for Eritrean armed forces, police, intelligence, or internal security forces under ITAR §126.1. In addition, a 2026 State Department visa policy fully suspended visa issuance to Eritrean nationals across immigrant and nonimmigrant categories, with limited exceptions.
US Developments
US Makes First Designations under New Cuba EO
On May 7, 2026, the Department of State imposed sanctions against three foreign persons under 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.
Specifically, the Department of State sanctioned the following persons:
- Grupo de Administración Empresarial S.A. (“GAESA”), for operating or having operated in the financial services sector of the Cuban economy;
- Ania Guillermina Lastres Morera (“Lastres”), for being or having been a leader, official, senior executive officer, or member of the board of directors of GAESA; and
- Moa Nickel SA (“MNSA”), for operating or having operated in the metals and mining sector of the Cuban economy.
As we covered previously, EO 14404 expands the scope of existing Cuba-related sanctions to cover sectoral involvement or status rather than just sanctionable conduct. We note that EO 14404 authorizes sanctions against any foreign persons—not just Cuban persons—that are determined to be operating or to have operated in the (i) energy, (ii) defense and related materiel, (iii) metals and mining, (iv) financial services, and (v) security sectors of the Cuban economy (and additional sectors as determined by the Secretary of the Treasury). Notably, MNSA is a joint venture between a Canadian multinational mining and energy company and Cuba’s state-owned La Compañía General de Níquel.
These are the Trump administration’s first sanctions under the new authority, and they target persons the Trump administration alleges to have exploited Cuba’s funds or natural resources to the benefit of “corrupt elites” at the detriment of the Cuban people.
Alongside the designations, OFAC published a new Cuba-related general license (“GL”), “Transactions Authorized Pursuant to the Cuban Assets Control Regulations” (“GL 1”), which generally authorizes transactions prohibited by EO 14404 that are authorized or exempt under the existing Cuban Assets Control Regulations (“CACR”) (i.e., 31 C.F.R. part 515), including those authorized by a general or specific license pursuant to the CACR. In addition, OFAC published six new Cuba-related FAQs (FAQs 1251-1256), which largely serve to provide clarity on sanctions risks under EO 14404 and the interplay of the CACR and EO 14404.
Notably, the Department of State cautioned in its press release that “[a]dditional designations [pursuant to EO 14404] can be expected in the following days and weeks.”
OFAC Issues New Designations under “Economic Fury”
On May 7, 2026, OFAC designated multiple individuals and businesses it alleged were exploiting Iraq’s oil sector and undermining the country’s security. Among those sanctioned by OFAC were Iraq’s Deputy Minister of Oil, Ali Maarij Al-Bahadly, and three alleged senior leaders of Iran-aligned terrorist militias.
On May 8, 2026, OFAC designated 10 individuals and companies based in several jurisdictions across the Middle East, Asia, and Eastern Europe for allegedly enabling Iran’s efforts to secure weapons and raw materials for its unmanned aerial vehicle (“UAV”) and ballistic missile program. Concurrently, the State Department designated three Chinese entities and one Iranian agency pursuant to EO 13949 for allegedly providing satellite imagery to Iran’s military that enables its strikes against US forces in the Middle East.
These sanctions were the latest in OFAC’s “Economic Fury” campaign against Iran, which the Trump administration has claimed will be the “financial equivalent” of a bombing campaign to increase pressure on Tehran unless and until a framework to end the war is agreed upon. Specifically, the May 7, 2026 sanctions follow similarly targeted actions taken by OFAC on April 15, April 17, April 21, April 24, April 28, and May 1, 2026.
OFAC Publishes New Venezuela-related GL
On May 5, 2026, OFAC published Venezuela-related GL 58, “Authorizing Certain Services to the Government of Venezuela in Connection with Potential Debt Restructuring.”
Broadly, GL 58 generally authorizes transactions otherwise prohibited by the Venezuela Sanctions Regulations (“VSR”) (i.e., 31 C.F.R. part 591) that are ordinarily incident and necessary to the provision of legal, financial advisory, and consulting services to the Government of Venezuela (“GoV”), including Petróleos de Venezuela, S.A. (“PdVSA”) and any entity in which PdVSA owns, directly or indirectly, a 50 percent or greater interest (“PdVSA Entities”), in connection with potential restructuring of debt of the GoV, including debt of PdVSA and PdVSA Entities. GL 58 excludes certain activities, including, among others, the restructuring, transfer, or settlement of debt of GoV, including debt of PdVSA and the PdVSA Entities, and direct negotiations between those entities and creditors regarding such restructuring, transfer, or settlement.
UK Developments
House of Commons Briefing Highlights Divergence in Russia Sanctions Since 2025
The House of Commons has published a research briefing analysing developments in Russia sanctions regimes across the UK, EU and US since 2025. The briefing notes that the UK has continued to expand its sanctions framework, with a total of 3,252 individuals, entities and vessels designated under the Russia regime as of April 30, 2025, the vast majority since February 2022. Recent measures have included designations targeting major Russian oil companies, including Rosneft and Lukoil, as well as entities supporting Russia’s energy sector. The latest UK sanctions package was announced on February 24, 2026, while debate continues over the legality of seizing Russian state assets.
The briefing contrasts this with continued tightening by the EU, which has adopted five additional sanctions packages since January 2025, including its 20th package in April 2026, and is progressing plans to phase out Russian gas imports by 2027. By comparison, the US approach has diverged in several respects under the current administration, including the absence of new Russia designations, lack of support for lowering the Oil Price Cap, and the disbandment of Task Force KleptoCapture. The US has also taken more flexible measures in response to market disruptions, including temporarily lifting certain restrictions on Russian oil transactions following the closure of the Strait of Hormuz in March 2026.
UK Targets Drone Networks and Migrant Trafficking in New Russia-linked Designations
The UK Government has designated 12 individuals and five entities under the Global Irregular Migration sanctions regime and designated a further 10 individuals and eight entities under the Russian sanctions regime. According to a UK Government press release, these designations target networks supporting Russia’s military capabilities and the trafficking of migrants linked to the war in Ukraine. Notably, this marks the first use of the irregular migration regime to address human trafficking and the “instrumentalisation of migration” for destabilisation purposes.
The Russia-related designations focus on three key areas: (i) individuals and entities linked to the Alabuga Start programme, which recruits migrants to work in drone production facilities, (ii) actors involved in the development and supply of drone technologies within Russia; and (iii) third-country suppliers, including entities based in Thailand and China, providing drone components and dual-use goods. The irregular migration designations target networks involved in recruiting and transporting foreign nationals into Russia, including overseas recruitment agencies, as well as individuals accused of facilitating the movement of migrants from regions such as the Middle East and Africa to support Russian military efforts. These new designations will now be subject to an asset freeze, and, in the case of individuals, a UK travel ban.
EU Developments
European Commission Updates FAQs on Sanctions Against Russia
The European Commission published a series of updates to its FAQs on sanctions against Russia. The revised FAQs include guidance on asset freeze sanctions and the prohibition to make funds or economic resources available to designated persons or entities under Council Regulation (EU) 269/2014, reflecting the interpretations of the recent Court of Justice judgments in EM System (C‑84/24) and SBK Art (C‑465/24). The updates include clarifications on amendments to Article 2, the freezing of voting rights held by designated shareholders, and the execution of payments to frozen accounts. The FAQs also provide guidance on the definition of “control” under Article 1(j). In this context, the Commission describes the term “administrative, management or supervisory bodies” as encompassing all key governance organs that direct, manage, or oversee a legal person. Accordingly, assessments of control should take into account the decision‑making and oversight functions exercised by these bodies, irrespective of the specific corporate form or national legal system.
The Commission also published updated FAQs regarding the restrictions on movements of Russian diplomats under Article 5v and 5w of Council Regulation (EU) 833/2014, including clarifications on procedural requirements for travel notifications.
EU Council Amends Sudan Sanctions Listing
The EU Council adopted amendments to Regulation (EU) 747/2014 and Decision 2014/450/CFSP concerning restrictive measures in view of the situation in Sudan, following an update at the UN level. Specifically, three individuals of Colombian nationality were added to the sanctions list targeting Sudan for their involvement in recruiting and deploying former Colombian military personnel to support the Rapid Support Forces (RSF) in Sudan. The newly designated individuals are subject to asset freezes, a prohibition on making funds or economic resources available, as well as travel restrictions.
The update follows the decision of the United Nations Security Council (UNSC) Committee, which on April 28 added the three individuals to the UN sanctions list for providing the RSF with tactical and technical expertise in Sudan.
European Commission Publishes Updated Information Note on Dual-Use Export Controls
The European Commission recently published an updated Information Note on measures adopted by Member States under the EU’s Dual-Use Regulation. The Information Note provides a comprehensive overview of how Member States have implemented or extended export controls, including national authorization measures for exports of non‑listed dual‑use and cyber‑surveillance items, as well as measures governing brokering services, transit controls, and the provision of technical assistance.
The publication also identifies the competent national authorities responsible for issuing export and brokering authorizations, prohibiting transit, and enforcing dual‑use controls, and notes whether Member States have designated specially empowered customs offices for the export of such items. Lastly, the Information Note provides an updated overview of national administrative and criminal penalties applicable to infringements of the Dual-Use Regulation.
Asia-Pacific Developments
New Zealand Announces Sanctions on Malicious Russian Cyber Actors
On May 7, 2026, New Zealand announced a new round of Russia-related sanctions targeting malicious cyber actors and online platforms supporting Russia’s war against Ukraine. The measures designate 20 individuals and entities associated with cyber activities, propaganda dissemination, and broader hybrid warfare efforts linked to the Kremlin. The package also includes sanctions on an alternative payment provider identified as facilitating sanctions evasion, alongside designations of actors connected to Russia’s military industrial complex, including persons from the Democratic People’s Republic of Korea and Iran. The announcement reflects an expanded focus within New Zealand’s sanctions framework on financial enablers supporting Russia’s military activities.
India–Singapore Boost Counterterrorism Cooperation
On May 7, 2026, India and Singapore convened the 5th Joint Working Group on Combating Terrorism and Transnational Crime in New Delhi, during which both sides reaffirmed their commitment to counterterrorism cooperation and underscored the importance of multilateral frameworks. In this context, the parties specifically discussed enhanced cooperation in combating terrorists and terror groups designated under the United Nations Security Council 1267 Sanctions Committee regime, which targets ISIL(Da’esh), Al-Qaida, and associated persons and entities. The joint statement emphasised the need to strengthen information-sharing mechanisms to improve the timeliness and effectiveness of responses to cross-border threats, while also highlighting broader bilateral efforts to address evolving risks such as terrorist financing, radicalisation, and the nexus between transnational organised crime and terrorism.
Australia Imposes Counter-Terrorism Financing Sanctions on Balochistan Liberation Army
On May 8, 2026, Australia announced new counter terrorism financing sanctions targeting the Balochistan Liberation Army and three of its senior leaders for their involvement in and support of terrorist attacks. The designation, made under Australia’s sanctions framework, imposes targeted financial restrictions, making it a criminal offence to use or deal with the assets of listed persons or entities or to make assets available to them, with violations subject to significant penalties including fines and imprisonment. The measures are intended to disrupt terrorist financing by constraining the group’s ability to fund operations, recruit members, and disseminate its ideology, and reflect Australia’s continued coordination with international partners to address terrorism financing risks and dismantle transnational threat networks.
PRC Sanctions Listing Prompts Corporate Compliance Measures
A Taiwanese company with operations in mainland China has taken internal compliance action following Beijing’s designation of a senior Taiwanese official under its sanctions framework. According to reports, a mainland subsidiary of Long Time Technology Co Ltd dismissed an employee who is the nephew of Taiwan’s interior minister, Liu Shyh-fang, after Liu was placed on China’s sanctions list. The company stated that employees are required to “stay away from any political behaviour that undermines peace and stability across the Taiwan Strait,” and that corporate resources are strictly prohibited from supporting individuals or organisations associated with specific political positions. The case illustrates how PRC sanctions designations linked to cross-strait political considerations can have downstream implications for corporate operations and personnel decisions involving entities with mainland exposure.
