US DEVELOPMENTS

Venezuela: OFAC continues controlled reopening and relaxes contract-law conditions.

OFAC continued materially expanding authorized Venezuela activity. GL 62, issued August 21, authorizes negotiations and contingent contracts for certain investment in the Venezuelan telecommunications sector. On August 27, OFAC amended numerous existing licenses covering oil/petrochemicals, diluent, supplies and services, oil and gas operations, minerals, PdVSA-related transactions and telecommunications. Importantly, OFAC removed the former requirement that certain authorized contracts be governed by U.S. law; however, contracts directly with the Government of Venezuela or specified blocked entities must generally still provide for dispute resolution in the United States, United Kingdom, France or Singapore. OFAC clarified that the forum requirement does not extend to indirect downstream contracts such as a separate shipping or insurance agreement. OFAC Venezuela-Related Sanctions

Venezuela is undergoing a meaningful but license-specific opening, not a repeal of sanctions. Companies considering new business should map the precise GL authorizing each activity, counterparties, payment route, reporting requirements and contractual conditions; using a generalized “Venezuela is opening” assumption would be unsafe.

Significant additional U.S. sanctions relief for Syria.

Treasury and State announced another major step in Syria sanctions relief. State rescinded Syria’s designation as a State Sponsor of Terrorism and revoked Hay’at Tahrir al-Sham’s designation as a Specially Designated Global Terrorist; OFAC simultaneously removed HTS from the SDN List. The action builds on the earlier termination of the comprehensive Syria sanctions framework and is expressly intended to facilitate economic reintegration and investment. Treasury and State Departments announcement

Companies that categorically prohibited all Syria-related activity under legacy compliance rules should reassess those policies. The change does not mean Syria has become an uncontrolled destination: residual SDN restrictions, terrorism authorities and BIS export-control requirements remain relevant, so the compliance exercise shifts from a blanket country prohibition toward party-, item- and end-use-specific analysis.

Cuba: E.O. 14404 significantly expands sanctions risk for non-U.S. counterparties.

The State Department designated Grupo Empresarial del Comercio Exterior (GECOMEX) and Grupo Empresarial de Transporte Marítimo Portuario (GEMAR) under E.O. 14404. Of particular importance, E.O. 14404 is not simply another blocking authority directed at U.S. persons: it creates sanctions exposure for certain non-U.S. persons providing material support to designated persons and potentially for foreign financial institutions conducting significant transactions involving persons blocked under the order. OFAC announced a non-enforcement/wind-down posture for non-U.S. persons and FFIs dealing with GECOMEX, GEMAR and their 50%-owned entities through August 12, 2026, while expressly warning that returning assets to the designated parties or moving them to another jurisdiction could itself present sanctions risk. OFAC FAQ 1262

Non-U.S. banks, shipping companies, traders and logistics providers should not treat the Cuba program solely as a U.S.-nexus prohibition anymore. Because the announced wind-down period expired on August 12, continuing transactions involving GECOMEX, GEMAR or their 50%-owned subsidiaries warrant specific secondary-sanctions analysis rather than reliance on the July transitional policy.

Treasury intensifies Iran sanctions against shipping, procurement, aviation, gold, shadow banking and digital assets

OFAC undertook a sustained series of Iran actions during the period. On July 14, Treasury targeted more than 50 persons, entities and vessels in Mohammad Hossein Shamkhani’s shipping and sanctions-evasion network, which Treasury says had expanded from Iranian oil into container shipping and commodities. On July 15, OFAC targeted an international IRGC weapons-procurement network using aviation, transportation and financial intermediaries. On July 24, Treasury targeted Babak Zanjani’s network across financial services, gold, digital assets, transport and infrastructure; on July 29, it designated Persian Gulf Marine Insurance Company and HormuzSafe over an IRGC-linked maritime-insurance scheme in the Strait of Hormuz; and on July 30, it targeted commercial agents for Mahan Air in China, India and Russia. On August 7, Treasury separately moved against Iran-linked shadow banking and two major digital-asset exchanges. Treasury press release

Iran due diligence now has to extend substantially beyond conventional SDN screening: vessels and IMO numbers, beneficial owners, shipping agents, general sales agents, precious-metals businesses, exchange houses, crypto platforms and wallet/payment infrastructure all require attention. The repeated targeting of UAE- and other third-country intermediaries also makes the use of an apparently independent distributor, bank or service provider outside Iran an inadequate compliance answer by itself.

OFAC Enforcement – OFAC settles Rice Lake case involving foreign subsidiary and UAE distributor.

OFAC reached a $60,764 settlement with Wisconsin-based Rice Lake Weighing Systems covering eight apparent Iran sanctions violations by its Italian subsidiary, Dini Argeo. Between 2019 and 2021, Dini exported weighing equipment through a UAE distributor knowing that the goods were ultimately destined for Iran. OFAC characterized the violations as voluntarily self-disclosed and non-egregious. OFAC Rice Lake settlement

The matter is another reminder that a U.S. parent’s sanctions exposure can arise through the conduct of controlled foreign subsidiaries and that inserting a UAE distributor does not eliminate the Iranian nexus where the ultimate destination is known. The comparatively modest resolution also illustrates the continuing value of prompt voluntary self-disclosure and cooperation once a problem is discovered.

BIS Enforcement – Plexon settlement: Entity List controls reach neuroscience and research technology.

BIS announced an administrative settlement with Texas neuroscience company Plexon, Inc. over eight unlicensed exports of OmniPlex neural-recording systems and accessories worth approximately $178,721 to China’s Academy of Military Medical Sciences (AMMS), which had been on the Entity List since December 2021. The transactions occurred through an Asian distributor from February 2022 through August 2023. The settlement imposed a $1.7 million civil penalty, suspended for five years subject to compliance conditions, together with a suspended denial order. BIS Plexon settlement

This is particularly important for life-sciences, university-facing and research-technology companies that may not view themselves as traditional “defense” exporters. Restricted-party screening should be performed at the transaction and ultimate-end-user level, refreshed for established customers, and not delegated entirely to a distributor.

BIS Enforcement – BIS $1 million Container Manufacturing Russia settlement: EAR99 and third-country-routing lesson.

BIS announced a settlement with Container Manufacturing Ltd. concerning ten EAR violations involving exports to a Russian end user between March 2023 and March 2025. The goods were EAR99 but fell within HTS codes included in the Russia/Belarus Industry Sector Sanctions List in Supplement No. 4 to Part 746 and therefore required licenses. Several transactions were routed through third-country distributors, including in the UAE; according to the enforcement materials, warning signs included a bank refusing to process Russia-related payments and requests to change shipping arrangements. The resolution imposed a $1 million penalty. BIS Container Manufacturing settlement

This is a particularly useful compliance precedent because it illustrates why EAR99 does not mean NLR for Russia: exporters must also check the HTS-based controls in Part 746. A rejected bank payment followed by a request to substitute a third-country customer, consignee or shipping route should be treated as a mandatory stop-and-escalate red flag, not as a commercial problem to solve.

DOJ Criminal Enforcement – DOJ criminal cases emphasize Russia diversion through third countries and false documentation.

DOJ continued an active criminal export-control enforcement campaign. On July 23, Estonian national Andrey Shevlyakov pleaded guilty in connection with procurement of sensitive electronics for Russian military/government contractors. On August 24, Manfred Gruber received an 18-month sentence for routing U.S.-made military ammunition through Italy and Kyrgyzstan toward Russia while disguising its destination. On August 25, Florida firearms-parts dealer Maxim Larin pleaded guilty in a Russia-linked scheme involving exports to Kazakhstan, including mislabeling and undervaluation. On August 28, a jury convicted Alexander Mamonov on all charges for exporting more than $900,000 of aircraft parts to Russia and Aeroflot while representing that destinations included the UAE and China. DOJ Export Control and Sanctions News

The recurring enforcement fact pattern is now unmistakable: Kazakhstan/Kyrgyzstan/UAE/China or another intermediary destination + altered description or consignee + Russian ultimate demand presents potentially criminal – not merely administrative – risk. Exporters should preserve records and escalate immediately when a customer changes destination, end user, routing or product description after learning that the original transaction cannot proceed.

EU DEVELOPMENTS

EU adopts sweeping 21st Russia sanctions package.

The 21st package is the largest EU development in the period. It added 48 individuals and 170 entities; imposed asset freezes on 94 banks and major financial institutions; added 33 Russian financial institutions and four non-Russian banks to transaction bans; extended restrictions to 14 third-country crypto platforms; created authority for a broader third-country crypto-services prohibition; added 41 shadow-fleet vessels and expanded measures to the supporting maritime ecosystem; introduced a mechanism to target refineries processing Russian crude; imposed LNG-tanker notification requirements; tightened dual-use restrictions for 51 additional entities, including numerous entities in China/Hong Kong, India, Kazakhstan, Kyrgyzstan, Türkiye and the UAE; and added new export and import restrictions. The measures generally entered into force on July 24, although several provisions have later effective dates or transitional periods. Council of the EU press release

Companies should run a fresh screening exercise across banks, crypto platforms, vessels/IMO numbers, refineries and third-country distributors, rather than simply adding the newly listed Russian parties. Trade-compliance teams also need to refresh CN-code and dual-use matrices and build effective-date logic into transactional reviews because the package contains multiple transition periods rather than a single implementation date.

Commission publishes major Russia/Belarus FAQ refresh implementing the 21st package.

The Commission issued an updated consolidated Russia/Belarus sanctions FAQ together with revised topic-specific guidance on the Article 5ae infrastructure/refinery transaction ban, Article 3n oil-price-cap rules, and Article 3ra LNG restrictions. These materials provide important operational interpretation of several measures introduced or modified in the 21st package. European Commission Russia sanctions FAQs

Energy, shipping, commodity-trading and financial institutions should use the August 24 FAQs when updating transaction checklists and internal interpretations of the July legislation. The FAQs are Commission guidance rather than the legislation itself, so difficult cases should still be tested against the text of Regulation 833/2014 and the applicable national competent authority’s position.

General Court adopts broad interpretation of “facilitating circumvention” in Beloglazov v Council.

In T-492/24, Beloglazov v Council, the EU General Court upheld a designation based on facilitating circumvention of Russia sanctions. The judgment addresses the meaning of facilitating violations of the anti-circumvention prohibition and the territorial scope of Regulation 269/2014. Subsequent analysis of the judgment highlights the Court’s conclusion that facilitating circumvention can include making an operation whose object or effect is circumvention easier, that the scheme need not ultimately succeed, and that a structure involving non-EU parties outside the EU can still be relevant where the underlying frozen assets remain within EU sanctions jurisdiction. Beloglazov v Council judgment

Companies should not assume that a transaction becomes safe merely because the restructuring step occurs outside the EU or involves non-EU parties. Deliberately altering ownership, payment, contractual or transaction structures to make blocked assets accessible can itself generate sanctions exposure even if the attempted circumvention is unsuccessful.

UK DEVELOPMENTS

HMRC announces two compound settlements for unlicensed military exports.

HMRC disclosed that two UK exporters had paid compound settlements of £216,530.30 and £20,889.15 for unlicensed exports of military-listed goods and related activity contrary to the Export Control Order 2008 and Customs and Excise Management Act 1979. HMRC expressly noted that compound settlements may be appropriate where an exporter voluntarily reports a breach that was inadvertent or resulted from internal-control weaknesses; deliberate offending will not normally be resolved in this manner. HMRC Notice to Exporters 2026/16

UK voluntary disclosure can materially affect the enforcement route but does not eliminate financial liability. Companies should therefore treat classification, licensing and export documentation errors as potentially reportable compliance events and maintain a documented process for deciding whether to approach HMRC.

Airbus pays record £6.4 million UK strategic-export-control settlement.

Airbus Operations Limited paid more than £6.4 million, the largest HMRC compound settlement to date for strategic export-control offences. The breaches were not described as illicit transfers to an obviously prohibited military customer; rather, Airbus repeatedly failed to maintain accurate records concerning transfers of controlled technology as required by three Open General Export Licenses. Airbus self-reported and cooperated with the HMRC investigation. HMRC Airbus announcement

This may be the most important UK export-control compliance case of the period. It demonstrates that OGEL conditions and recordkeeping are substantive legal requirements, and that intangible transfers of controlled technology require the same auditability and evidence trail as physical shipments; even a sophisticated exporter that self-reports can face a multimillion-pound settlement.