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
Europe on the oil price cap: we will lower it alone
At the G7 Finance Ministers meeting in Banff, Canada, the EU delegation reportedly proposed lowering the G7 price cap on Russian seaborne crude from $60 per barrel to $50 or $45. The price cap is designed to permit Russia to use mainstream Western seafarer insurance (comprising about 90% of all global shipping) only if it sells below the market rate, thereby reducing revenues for use by Russia in furthering its war in Ukraine while stabilizing global oil prices. The US, although the original proponent of the price cap in 2022, is skeptical of further tightening. Its delegation did not outright dismiss the idea but argued that such a move may be unnecessary given that oil prices are already falling: Brent oil futures sold at $64 per barrel on Thursday and Russian crude sold about $10 less. As such, the G7 did not agree on communique language regarding the price cap.
While US Secretary of State Marco Rubio has suggested that the US could follow Europe’s sanctions campaign if Russia continues to avoid serious negotiations and barrage Ukrainian civilian centers, the US has steadfastly committed to dialogue with Russia and has refrained from coordinating its monitoring of Russia’s ‘shadow fleet’—a group of aging oil tankers with obscured ownership and non-Western insurance used to circumvent the oil price cap —with the EU and the UK.
Amid US hesitation, the EU has rolled up its sanctions sleeves and demonstrated unprecedented ambition to apply pressure. Earlier this month, it revealed its REPower EU roadmap to completely phase out Russian energy resources by 2027, including through interrupting long-term contracts and aggregating gas purchases to lower demand. Last week, the EU formalized its 17th sanctions package on Russia—sanctioning an additional 189 “shadow fleet” vessels (bringing the total to 342) and 31 companies deemed to provide support to Russia’s military-industrial complex. And, before it was even inked, European Commission President Ursula von der Leyen suggested new targets for an 18th package, chief among them are additional “shadow fleet” vessels, assets from Russian nationals, companies involved in the Nord Stream 2 pipeline project, and a tightened oil price cap—regardless of whether the G7 moves on the issue or not.
Europe, impatient with G7 nonalignment, is seizing the center of gravity in Western sanctions. The club of Western maritime insurers, based in the UK, offers a unique global chokepoint that the EU and UK can weaponize. Given the oil price cap’s effectiveness in undermining Russian oil revenues, Europe will likely trudge along: according to the Center for Research on Energy and Clean Air, Russia’s seaborne oil revenues decreased by 14% in April despite total volumes increasing by 3%—much more dramatic than an overall 6% drop and 1% volume increase for Russia’s entire fossil fuel economy. Moreover, sanctions against Russia’s “shadow fleet” have prevented outright circumvention, forcing Russia to use Western-insured vessels for about half of its crude exports in April. To compensate for lost oil revenues, Russia has depleted two-thirds of its sovereign wealth fund since the beginning of the war and has surged corporate debt by at least 70%, mostly to defense contractors.
A split in sanctions approaches among the G7 members carries political risks. For one thing, the US—which utilized the G7 format to convince the Europeans to take unprecedented actions against the Russian economy in 2022—may lose some of its diplomatic heft, potentially undermining its short-term objective of securing a ceasefire and long-term ability to coalesce positions among Western allies on other geopolitical challenges. More to the point of the oil price cap, disunity among Western allies could undermine maritime insurance clubs. There are no signals to suggest the US will walk away from the price cap (indeed, it may even tacitly support Europe’s pressure on Russia during negotiations in a way that is “out of its hands”), meaning that if Europe lowered the cap as low as $45 per barrel, it would likely become the market standard.
However, if the US were to outright reject the price cap, it could fracture the club of Western maritime insurers, undermining sanctions enforcement. Western vessels and insurers would have to navigate a fragmented sanctions regime, likely increasing compliance costs, and the market rate for Russian seaborne crude would likely sell above the European price cap, diminishing European leverage for ceasefire negotiations. Global energy prices could marginally decrease and especially benefit China and India as the new main buyers of Russian seaborne crude.
US Developments
OFAC Issues Sweeping General License for Syria
Nearly a week after President Trump announced that the US would be lifting sanctions on Syria, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued Syria General License (GL) 25, “Authorizing Transactions Prohibited by the Syrian Sanctions Regulations or Involving Certain Blocked Persons.” According to OFAC, GL 25 “authorizes transactions prohibited by the Syrian Sanctions Regulations, effectively lifting sanctions on Syria.” Among other activity, GL 25 enables new investment in Syria; the provision of financial and other services to Syria; and transactions related to Syrian-origin petroleum or petroleum products. GL 25 also authorizes all transactions with Syria’s interim government, led by President Ahmed al-Sharaa, and with certain blocked persons, identified in the GL, including major state- and privately-owned entities across the banking, energy, shipping, and tourism industries. OFAC stated that it plans to issue additional guidance with respect to GL 25.
On the same day as OFAC’s announcement, the Department of State issued a 180-day waiver of mandatory sanctions pursuant to the Caesar Syria Civilian Protection Act, which it says will facilitate “the provision of electricity, energy, water, and sanitation, and enable a more effective humanitarian response across Syria.” In addition, Treasury Department’s Financial Crimes Enforcement Network (FinCEN) announced exceptive relief to permit US financial institutions to maintain correspondent accounts for the Commercial Bank of Syria.
While the GL and related measures authorize a significant amount of conduct involving Syria, it is important to note that sanctions risks remain. Among other risks, there remains a high number of Specially Designated Nationals (SDNs) active in Syria (and who are not identified in the GL). Because the relief was provided via a GL and a waiver, rather than a repeal or amendment to the existing regulations, it would be relatively easy for the administration to change course and reimpose the sanctions. Therefore, it will be important to monitor the situation closely going forward.
State Department Issues New Iran Sanctions Determinations
The State Department has made two new determinations pursuant to Section 1245 of the Iran Freedom and Counter-Proliferation Act of 2012 (IFCA).
Specifically, the State Department has:
- Identified ten strategic materials as being used in connection with the nuclear, military, or ballistic missile programs of Iran, including austenitic nickel-chromium alloy, magnesium ingots, sodium perchlorate, EDM-11, EDM-14A, EDM-15, tungsten copper, AA2024-T351 aluminum sheets and tubes, ISO-68, and ISO-69; and
- Identified Iran’s construction sector as being controlled, directly or indirectly, by the Islamic Revolutionary Guard Corps.
Section 1245 of the IFCA requires the President to impose sanctions with respect to persons that knowingly sell, supply, or transfer materials that are, among other things, subject to a Section 1245 determination. Therefore, in accordance with the State Department’s determination, any person that knowingly sells, supplies, or transfers, directly or indirectly, the ten strategic materials mentioned above to or from Iran, regardless of end-use or end-user, will generally be subject to mandatory sanctions. The same is true for persons that knowingly sell, supply, or transfer, directly or indirectly, to or from Iran, certain materials if those materials are to be used in connection with Iran’s construction sector.
These determinations are the most recent sanctions-related measures that the US has imposed as part of its renewed “maximum pressure” strategy as set forth in National Security Presidential Memorandum (NSPM-2). The determinations were announced shortly before the fifth round of US-Iran nuclear negotiations.
Congressional Support Builds for Russia Sanctions as the Trump Administration Expresses Frustration with Peace Negotiations
The bipartisan Sanctioning Russia Act of 2025 (S. 1241) has gained over 80 cosponsors in the Senate, which far exceeds the thresholds necessary to overcome a Senate filibuster and override a potential veto by President Trump—and demonstrates strong support in the Upper Chamber for more sanctions on Russia, particularly if the peace negotiations stall. The bill would, among other things, impose a variety of sanctions on the Russian government, certain Russian financial institutions, and other foreign entities that support the Russian military or work to undermine Ukraine if the President were to determine that the Russian government is (1) refusing to negotiate a peace agreement with Ukraine, (2) violating a negotiated peace agreement, (3) initiating another military invasion of Ukraine, or (4) seeking to subvert the Ukrainian government. In addition, if the President makes such a determination, the bill generally requires the President to impose a 500 percent tariff for all goods or services imported into the US from a country that knowingly sells, supplies, transfers, or purchases oil, uranium, natural gas, or other petroleum and petrochemical products originating from Russia. Senator Richard Blumenthal (D-CT), a key sponsor of the bill, noted that, if the Kremlin’s term sheet for a ceasefire is “much of the same,” Russia should expect “decisive action” from the Senate.
The legislation’s prospects in the House are still unclear. Currently, the companion bill in the House has only garnered 31 cosponsors, signaling that it will likely require the support, or at least the acquiescence, of the Trump administration to clear the final legislative hurdles. Although the President has not yet imposed new sanctions on Russia, recent comments by top officials, such as Secretary of State Marco Rubio and Vice President JD Vance, in addition to President Trump himself, suggest that the administration’s frustrations with the Kremlin may be reaching a tipping point.
US To Impose Sanctions on Sudan for Chemical Weapons Use
The State Department announced its intention to impose sanctions on Sudan for its alleged non-compliance with the Chemical Weapons Convention (CWC). The State Department stated that the US has determined that the Government of Sudan used chemical weapons in 2024. Biden administration officials had reportedly confirmed the use of chemical weapons, including chlorine gas, in remote areas of Sudan.
According to the State Department, following a 15-day Congressional notification period, the US will impose sanctions on Sudan, including restrictions on US exports to Sudan and on access to US government lines of credit. The sanctions will take effect immediately upon publication of a notice in the Federal Register, which the Department expects to issue on or around June 6, 2025.
OFAC Sanctions Cartel del Noreste Members
OFAC sanctioned two alleged members of the Mexico-based Cartel del Noreste (CDN), which has been designated as a Specially Designated Global Terrorist (SDGT) and a Foreign Terrorist Organization (FTO). The State Department alleges that the two designated individuals contributed to CDN’s drug trafficking, arms trafficking, and acts of violence. These designations are the most recent round of sanctions against cartels and transnational criminal organizations, which have been prioritized by the Trump administration as outlined in Executive Order (EO) 14157.
Any entity dealing with a FTO can potentially be exposed not only to US primary and secondary sanctions risk, but also can be exposed to the risk of a private lawsuit being brought against them under the Anti-terrorism Act (ATA), potentially leading to awards of treble damages. With the increasing number of entities designated by the Trump administration as FTOs for their alleged activity in drug trafficking and gang violence, especially in Mexico, it is important that both US and non-US companies carefully screen their counterparties to mitigate the heightened risk of not only civil and criminal sanctions liability, but also of private lawsuits.
State Department Imposes Visa Restrictions for Immigration and Human Rights Violations
The State Department has imposed visa restrictions on two separate groups of individuals for alleged violations of immigration and human rights policies, respectively:
- On May 19, the State Department announced that it was imposing visa restrictions on owners, executives, and senior officials of certain travel agencies in India for allegedly knowingly facilitating illegal immigration to the US.
- On May 21, the State Department imposed visa restrictions on four Cuban regime officials for alleged gross violations of human rights, specifically the arbitrary detention of Luis Robles Elizástigui.
Lawmakers Reintroduce Bill Sanctioning Haitian Gangs and Elites
Senator Jeanne Shaheen (D-NH), the Ranking Member of the Senate Foreign Relations Committee, alongside Senators Tim Kaine (D-VA), Rick Scott (R-FL), John Curtis (R-UT), and Chris Coons (D-DE), reintroduced the Haiti Criminal Collusion Transparency Act (S. 1854) to Congress. Companion legislation (H.R. 2643) was previously introduced to the House by Representative Gregory Meeks (D-NY) on April 9, 2025.
Among other things, the legislation would require the President to impose sanctions and visa restrictions on each foreign person determined by the Secretary of State to be a leader of a prominent criminal gang in Haiti, or to be a “political or economic elite” in Haiti who knowingly has direct and significant connections to criminal gangs. It is unclear whether the Trump administration will support the bill, but the State Department recently designated Viv Ansanm and Gran Grif, two Haitian gangs, as SDGTs and FTOs.
Rubio Says the Taliban’s FTO Designation Is Under Consideration
During a House Foreign Affairs Committee hearing, Secretary of State Marco Rubio stated that the Taliban’s classification as a FTO is “under review.” According to Rubio, who was answering a question from Representative Tim Burchett (R-TN), the FTO designation will ultimately hinge on what the Trump administration thinks its future policy is going to be with respect to Afghanistan. Despite having success with negotiating the release of American detainees, Rubio stated that the Trump administration wants to see more cooperation from the Taliban, the de facto government of Afghanistan, on al-Qaeda and certain “other elements in the country.”
UK Sanctions Developments
UK Imposes New Round of Sanctions Against Russia
On May 20, 2025, the UK sanctioned 20 individuals, 62 entities, and 18 “shadow fleet” ships under the Russia sanctions regime in response to Russia’s largest-ever drone attack on Ukraine. These sanctions target Russian revenue-generating sectors, including energy, communications, and financial services, the Russian military-industrial complex, and its third-country suppliers, as well as malign actors involved in democratic interference and Russia’s information war on Ukraine. These designations reflect an increasing trend for UK-Russia sanctions to target those operating in third countries that are viewed as enabling the circumvention of UK sanctions against Russia.
UK Imposes New Round of Sanctions on Israeli Settlers and Related Organisations
On May 20, 2025, the UK sanctioned three individuals, including prominent settler leader Daniella Weiss, two illegal settler outposts, and two entities under the Global Human Rights sanctions regime for their involvement in inciting and promoting violence against Palestinian communities in the West Bank. In announcing the sanctions measures, a formal pause of the UK’s free trade agreement negotiations with Israel was also anticipated, which was confirmed by a statement to the House of Commons by Foreign Secretary Lammy later the same day.
OFSI Issues New Russia General Licences
On May 20, 2025, OFSI issued two new general licences in relation to the following newly designated entities (i) St Petersburg Currency Exchange and Non-bank Credit Organization Joint-Stock Company Petersburg Settlement Center pursuant to INT/2025/6275812 and (ii) Deposit Insurance Agency pursuant to INT/2025/6279615. INT/2025/6275812 authorises persons subject to UK sanctions jurisdiction to wind down from any transactions to which they are a party involving St Petersburg Currency Exchange and Non-bank Credit Organization Joint-Stock Company Petersburg Settlement Center, including the closing out of any positions, until 23:59 on June 19, 2025. INT/2025/6279615 authorises persons subject to UK sanctions jurisdiction to make or process insurance premiums due to be paid to the Deposit Insurance Agency.
UK Extends Whistleblower Protections to Reporting Concerning UK Sanctions
On May 21, 2025, the Public Interest Disclosure (Prescribed Persons) (Amendment) Order 2025 was laid before parliament and will come into effect on June 26, 2025. This will amend existing UK whistleblowing legislation to include matters disclosed to the Secretary of State for Business and Trade (trade sanctions), Secretary of State for Transport (transportation sanctions), and HM Treasury (financial sanctions) under existing whistleblower protections. These changes are intended to strengthen the implementation and enforcement of UK sanctions by helping whistleblowers qualify for employment protections when disclosing information about financial, transport, and certain trade sanctions to the relevant UK government department.
EU Developments
EU Council Adopts 17th Sanctions Package Targeting Russia
The EU Council has introduced a significant 17th sanctions package targeting individuals and entities undermining Ukraine’s stability and territorial integrity across the broadest range of sectors since the start of Russia’s aggression against Ukraine. The package strengthens existing restrictive measures by listing 189 additional shadow fleet vessels subject to a ban on port access and on the provision of services related to maritime transport, alongside export restrictions on dual-use goods and technologies for 31 newly listed companies added to Annex IV of persons or entities providing direct or indirect support to Russia's military-industrial complex or engaged in sanctions circumvention. This includes 18 companies established in Russia and 13 established in third countries, including 6 in Turkey, 3 in Vietnam, 2 in the United Arab Emirates, 1 in Serbia, and 1 in Uzbekistan. Furthermore, the measures also include 75 additional listings of persons and entities subject to asset freezes and travel bans, including 17 individuals and 58 entities in respect of actions undermining or threatening the territorial integrity, sovereignty, and independence of Ukraine.
As part of the 17th package, the EU Council also introduced amendments to three additional sanctions regimes. First, it imposed restrictive measures on 28 individuals responsible for serious violations of human rights, the repression of democratic opposition, and actions undermining the rule of law in Russia. Second, the EU Council imposed restrictive measures against an additional 21 individuals and 6 entities tied to Russia’s destabilizing actions abroad, while also broadening the scope of Decision 2024/2643. The expanded scope enables the EU to target tangible assets linked to Russia's destabilizing activities, revoke broadcasting licenses of Russian state-controlled media outlets, and ban the broadcast of their content within the EU. Lastly, additional restrictive measures were imposed on three Russian entities belonging to the Russian Armed Forces, involved in the development and use of chemical weapons.
The European Commission and Member States have reportedly begun discussions on the 18th sanctions package. While the timeline for its adoption remains uncertain, sources suggest that the draft measures may include new restrictive measures on Russian banks, potentially removing them from the SWIFT international payment system, along with new oil price caps and a ban on the construction of future Nord Stream gas pipelines.
EU Agrees to Lift Economic Sanctions Against Syria
The High Representative of the EU has announced that the EU has agreed to lift all economic sanctions on Syria. According to the Council statement, the EU will maintain sanctions related to the Assad regime, as well as sanctions based on security grounds, including arms and technology that might be used for internal repression. Additionally, the EU plans to introduce new targeted restrictive measures against individuals and entities responsible for human rights violations or contributing to instability in Syria.
During the Foreign Affairs Council meeting on May 20, the High Representative clarified that the decision to lift economic sanctions on Syria is reversible and contingent on tangible progress on the ground.
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, Norway, and Ukraine have aligned themselves with two Council decisions. Specifically, these countries have aligned themselves with Decision 2025/887, which renews restrictive measures against cyber-attacks threatening the EU or its Member States until May 18, 2026, and extends the cyber-attacks sanctions regime for three more years, until May 18, 2028.
Additionally, the same group of countries, together with Liechtenstein, have aligned themselves with Decision 2025/904, which introduced a new listing criterion targeting individuals or entities involved in the transfer of business interests linked to prominent businesspersons operating in Russia.
New Listings and Extension of Restrictive Measures related to Human Rights Violations in Russia Until 2026
On May 26, the EU Council amended several pieces of sanctions legislation targeting Russia. Regulation (EU) 2024/1485 has been updated with two new listings under Annex IV of designated individuals subject to restrictive measures, such as asset freezes and funding prohibitions, due to their involvement in serious human rights violations in Russia. Additionally, Decision 2024/1484 has been amended to extend the enforcement of restrictive measures concerning the situation in Russia until May 28, 2026. The amendments to Decision 2024/1484 also add two new listings of individuals involved in serious human rights violations in Russia.
Asia Pacific Developments
China Vows Legal Pushback on US Huawei Chip Ban
On May 22, 2025, the Ministry of Commerce of the People’s Republic of China (MOFCOM) criticized US efforts to block Huawei’s AI chips worldwide, labeling the move as “unilateral bullying and protectionist practices.” Citing China’s Anti-Foreign Sanctions Law, MOFCOM threatened to pursue possible legal action against anyone following the guidance against using Huawei Ascend models, recently issued by the Bureau of Industry and Security (BIS). Without providing specifics as to what such action would entail, MOFCOM also emphasized that the United States is abusing “export controls to contain and suppress China” and called on the United States to reverse what it described as harmful policies.
Media reports noted that BIS had softened its language compared to a previous announcement: instead of explicitly stating that “using Huawei Ascend chips anywhere in the world violates US export controls,” the agency now only cautioned about possible “risks.” This change followed MOFCOM’s strong objections, highlighting that such restrictions could seriously undermine “the consensus reached at the high-level talks between China and the United States in Geneva.”
China and Japan Split on EU’s Russia Sanctions
After the EU unveiled its 17thsanctions package against Russia, media reported that Japan’s Mitsui O.S.K. Lines (MOL), the country’s second-biggest shipping firm, is currently assessing the impact of the May 20, 2025, EU blacklisting of three of its liquefied natural gas (LNG) vessels, which delivered cargoes from Russia’s Yama LNG project to China and Taiwan. On May 21, 2025, MOL stated, “We intend to fully cooperate with the EU and Japanese governments in complying with the sanctions. We will consult with various parties and take appropriate measures.”
In contrast, China reacted with strong opposition to the blacklisting of three Chinese companies sanctioned for supplying Russia’s defense sector and drone manufacturing, calling the EU sanctions on its entities “unjustified.” The Ministry of Foreign Affairs (MOFA) argued that the sanctions lack international legitimacy and unfairly target Chinese businesses. The MOFA criticized what it called the EU’s “double standard,” emphasizing that “[m]ost countries, including those in Europe and the United States, continue to trade with Russia. The normal exchanges and cooperation between Chinese and Russian companies should not be disrupted or affected.”
The EU’s 17th sanctions package against Russia, the “largest ever package targeting Russia’s so-called shadow fleet,” blacklisted 189 vessels, including the three from Japan. They also target Hong Kong shipping firms alleged to support Russian operations.
