Sanctions Update: May 27, 2026

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 Sanctions Target Hizballah Support Network in Push for Disarmament

New US sanctions targeting Hizballah and its allies include unprecedented designations of mid-level Lebanese army and intelligence officers. The sanctions coincide with US efforts to encourage the Lebanese government and security forces to disarm Hizballah. Elements within Lebanon's political and security establishment have so far resisted aggressive actions against Hizballah, fearing sectarian violence. These sanctions represent an escalation in US efforts to kick-start Lebanon's long-promised disarming of Hizballah.

The counterterrorism sanctions, issued by OFAC on May 21 pursuant to Executive Order 13224, designated nine individuals accused of supporting Hizballah and impeding attempts to disarm it. The most significant designees were Brigadier General Khattar Nasser Eldin, National Security Department Chief of the General Directorate for General Security, and Colonel Samir Hamadi, Dahiyah Branch Chief of the Lebanese Armed Forces (LAF) Intelligence Directorate. Both officials were accused of passing military intelligence to Hizballah during its ongoing conflict with Israel. Eldin and Hamadi are the first sitting Lebanese state security officials to be sanctioned by the US. The designations come ahead of US-hosted meetings between Israeli and Lebanese military delegations at the Pentagon scheduled for May 29. Targeting Hizballah-sympathetic elements within Lebanon’s security apparatus could convince the military officials attending next week’s negotiations to overcome longstanding caution towards disarming Hizballah.

US impatience with LAF hesitance follows years of US financial support resulting in no credible attempts to confront and disarm Hizballah. Since 2006, the US has invested over $3 billion in the LAF through arms transfers, military training, and rank-and-file salaries. In October 2025, even as it pulled back from other foreign aid commitments, the US approved $230 million for Lebanese security forces in support of the government's promise to disarm Hizballah. The lack of action against Hizballah has damaged the LAF's reputation among its foreign supporters and anti-Hizballah constituencies in Lebanon. Lebanon’s senior military establishment has been accused of preferring the status quo over a disruptive confrontation with Hizballah. US funding and support are critical for the LAF's basic functionality. By imposing financial sanctions on active military officers, the US is threatening to disrupt the LAF's status quo whether or not it works to disarm Hizballah.

Another prominent designee was Iran's ambassador designate to Lebanon, Mohammad Reza Sheibani. Sheibani drew international attention in late March when he refused to comply with a diplomatic expulsion order from Lebanon's Ministry of Foreign Affairs. Lebanon's persona non grata decision was an attempt to punish Hizballah for triggering a new war with Israel in support of Iran. Hizballah condemned the order as “reckless” and counter to Lebanon's national unity. This defiance by Iran and Hizballah shows that they do not find administrative threats by the Lebanese government credible. OFAC cited Sheibani's refusal to leave Lebanon in its decision to designate him. This indicates that the US is attempting to bolster the credibility of Lebanon's government when it confronts Iranian meddling in Lebanon.

The sanctions issued by the US on May 21 show a carrot-and-stick approach to pushing Lebanese action against Hizballah. The “carrot” involves administrative and diplomatic support for Lebanese government directives targeting Hizballah's ties with Iran. This support is backed up by decades of US funding and training for the LAF. It could be expanded further in the next three months with US military advisors for LAF missions to disarm Hizballah. The US could also apply pressure on Israel to make concessions during military negotiations with Lebanon next week, enhancing the government's credibility with the Lebanese public. The US’ “stick” is escalating financial pressure on LAF officials to impose the long-promised disarmament of Hizballah. The unprecedented sanctions on LAF officers show that this pressure is progressing beyond public statements of encouragement and backchannel discussions. If negotiations between Lebanon and Israel fail to result in progress on Hizballah’s disarmament for another month, the US will likely impose more sanctions on “spoilers” in Lebanon’s political and security establishment.

US Developments

OFAC Designates Iranian Foreign Exchange House under “Economic Fury”

On May 19, 2026, OFAC designated a prominent Iranian foreign currency exchange house and associated front companies that it alleged oversee “hundreds of millions of dollars” in transactions on behalf of sanctioned Iranian banks. OFAC also blocked 19 vessels it said participated in Iranian petroleum and petrochemicals shipments to foreign customers.

These sanctions were accompanied and followed by similarly targeted packages against Iranian terrorist proxies in the Middle East, namely Hamas and Hizballah:

• On May 19, 2026, alongside the designation of the Iranian foreign exchange house, OFAC announced sanctions against four individuals associated with a pro-Hamas “flotilla” organized by the US-designated Popular Conference for Palestinians Abroad (PCPA) for allegedly attempting to access Gaza in support of Hamas. OFAC simultaneously sanctioned key actors operating within Hamas-aligned Muslim Brotherhood networks.
• On May 21, 2026, OFAC sanctioned nine individuals in Lebanon for allegedly obstructing the peace process in Lebanon and impeding the disarmament of Hizballah.

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 19, 2026 sanctions followed similarly targeted actions taken by OFAC on April 15, April 17, April 21, April 24, April 28, May 1, May 7, May 8, and May 11, 2026.

State Department Sanctions Cuban Regime Elites

On May 18, 2026, the Department of State announced sanctions against 11 Cuban regime elites and three government organizations that it alleged have been involved in repressing the Cuban people. The Department of State said that these “[r]egime-aligned actors…bear responsibility for the suffering of the Cuban people, the failing Cuban economy, and the exploitation of Cuba for foreign intelligence, military, and terror operations,” and that additional Cuba-related sanctions “can be expected in the following days and weeks.”

The Department of State’s designations mark the second time the US has imposed sanctions 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. They follow the State Department’s sanctions against Grupo de Administración Empresarial S.A. (GAESA), Moa Nickel SA (MNSA), and Ania Guillermina Lastres Morera on May 7, 2026.

OFAC Targets Individuals and Entities Linked to the Sinaloa Cartel

On May 20, 2026, OFAC sanctioned more than a dozen individuals and entities it alleged were linked to the Sinaloa Cartel and its fentanyl trafficking activities.

Specifically, OFAC sanctioned two “distinct networks.”

• The first, led by Armando de Jesus Ojeda Aviles (“Ojeda Aviles”), is alleged to have collected bulk quantities of cash (proceeds of fentanyl and other illicit drug sales) in the United States, which are then converted into cryptocurrency for ultimate transfer to the Sinaloa Cartel. OFAC said Ojeda Aviles is also directly involved in overseeing shipments of narcotics into the United States, including illicit fentanyl, cocaine, and methamphetamine, and that his network is composed of Mexico-based drug suppliers and US-based couriers.
• The second, led by Jesus Gonzalez Penuelas (“Gonzalez Penuelas”), is allegedly responsible for the production and distribution of methamphetamine and heroin to the United States. OFAC alleged that Gonzalez Penuelas operates primarily in Sinaloa, Mexico, with US-based distribution cells in California, Texas, Colorado, Washington, Utah, and Nevada. Gonzalez Penuelas was previously sanctioned under the Kingpin Act on May 12, 2021.

According to OFAC, these sanctions reflect the culmination of a coordinated Homeland Security Task Force (HSTF)-led investigation involving the Drug Enforcement Administration (DEA). They also reflect strong coordination with the Government of Mexico’s financial intelligence unit, the Unidad de Inteligencia Financiera (UIF).

OFAC Extends Russia-related GL

On May 18, 2026, OFAC issued Russia-related General License (GL) 134C.

As we covered in the March 16, 2026 edition of the Sanctions Update, GL 134 generally permits transactions otherwise prohibited under a number of US sanctions programs, including the Russian Harmful Foreign Activities Sanctions Regulations (RuHSR), Ukraine-/Russia-Related Sanctions Regulations (URSR), and the Iranian Transactions and Sanctions Regulations (ITSR), that are ordinarily incident and necessary to the sale, delivery, or offloading of crude oil or petroleum products of Russian origin, subject to certain conditions.

GL 134C extends the term of the license from May 16, 2026, to June 17, 2026.

Senators Propose Bill Authorizing Sanctions on Tanzania

On May 20, 2026, Senators Jeanne Shaheen (D-NH), the Ranking Member of the Senate Foreign Relations Committee, and Ted Cruz (R-TX), introduced bipartisan legislation requiring a comprehensive review of the US-Tanzania relationship in light of reports that authorities committed widespread and systemic human rights violations, including hundreds of alleged “extrajudicial killings, enforced disappearances, and mass arbitrary detentions targeting protesters, opposition figures, and civil society” following national elections on October 29, 2025.

Among other things, the Reassessing the United States-Tanzania Bilateral Relationship Act would require the Trump administration to:

• Conduct a comprehensive reassessment of the US-Tanzania bilateral relationship, including Tanzania’s democratic trajectory, political repression, and the impacts of recent unrest on US businesses and regional stability;
• Evaluate the extent of China’s military, economic and political engagement in Tanzania;
• Produce a report identifying Tanzanian government, ruling party and security officials responsible for political violence, enforced disappearances, censorship, religious persecution, and other gross human rights violations; and
• Suspend certain US security assistance, economic and development assistance, and trade support for Tanzania until the Secretary of State certifies that Tanzania has implemented meaningful democratic reforms and ended politically motivated prosecutions and censorship.

Notably, the bill also authorizes sanctions, including visa bans and asset blocking, against government officials determined to be responsible for serious human rights abuses and political repression.

The Senators’ introduction of the Reassessing the United States-Tanzania Bilateral Relationship Act came just one day before the Department of State announced that it was designating Tanzanian Police Force (TPF) Senior Assistant Commissioner Faustine Jackson Mafwele for his alleged involvement in Gross Violations of Human Rights (GVHR), preventing him from entering the United States.

UK Developments

UK Issues Wide-Ranging New Package of Russia Sanctions

The UK has introduced a new package of Russia sanctions through an amendment to the Russia (Sanctions) (EU Exit) Regulations 2019. The package is wide-ranging and contains new trade sanctions measures targeting oil products processed in third countries from Russian oil, the maritime transportation of liquefied natural gas (LNG), uranium, and ships and aircraft detained in the UK. Existing trade sanctions measures have also been meaningfully expanded through the addition of new items and services to the scope of pre-existing restrictions. The measures came into force on May 20, 2026. Additional details about the new sanctions can be found here. Businesses required to comply with UK financial sanctions should promptly familiarize themselves with these changes, consider their impact on current business operations, and consider whether they necessitate updates or enhancements to existing sanctions risk assessments, policies, procedures, and controls.

In tandem with the introduction of these new sanctions, OTSI issued two new General Trade Licences. The first, GBSAN0004, authorises activity otherwise prohibited by the new import ban on oil and oil products falling within commodity code 2710 that have been processed in a third country from oil and oil products falling within commodity code 2709 that originate in Russia where the product in question is diesel and jet fuel with certain specified commodity codes. This licence effectively delays the implementation of these new sanctions in respect of these products, likely in response to the ongoing global energy crisis related to the situation in the Strait of Hormuz.

OTSI also issued a General Trade Licence in relation to the new sanctions on the maritime transportation from a place in Russia to a third country, or between two third countries of LNG falling within commodity code 2711 11 00 that originates in, or is consigned from, Russia. The licence authorises activity otherwise prohibited by these sanctions where the activity is undertaken in fulfilment of a contract with a duration of one year or less and the maritime transportation of Russian LNG involves LNG originating at the Sakhalin-2 or Yamal LNG terminals. The licence will expire on January 1, 2027.

Any persons intending to use these General Trade Licences should consult a copy of the relevant licence for full details of its permissions, limitations, and usage requirements.

UK Designates Russian Crypto and Financing Networks

The UK Government has made 18 new designations under the UK’s Russia sanctions regime. According to a UK Government press release, these designations target cryptocurrency exchanges used to evade the UK’s Russia-related sanctions, as well as the A7 network and linked individuals that reportedly exploit Kyrgyzstan’s financial systems to channel funds into Russia’s war economy.

These newly designated persons will now be subject to an asset freeze, and, in the case of individuals, a UK travel ban. Additionally, a number of the entities have been designated for the purpose of Regulation 17A, meaning that UK credit and financial institutions are now prohibited from establishing or continuing correspondent banking relationships with the designated entities or any entities that they own or control, as well as from processing payments to, from, or via these designated entities.

OFSI Updates General Licence INT/2024/4761108 to Address Cryptoassets

OFSI has amended General Licence INT/2024/4761108, which allows non-designated persons to make or receive permitted payments via a designated credit or financial institution up to a certain limit. The amended licence includes a new definition of a cryptoasset and new reporting requirements for any person using cryptoassets to make or receive payments under the licence. The total cumulative value of payments processed under the authorisations in the licence in relation to an individual for personal use was also increased to £55,000. Payments relating to the provision of goods or services for commercial purposes are not permitted under the licence. The amended licence will expire on February 23, 2028. Any persons intending to use the licence should consult a copy of the licence for full details of its permissions, limitations, and usage requirements.

EU Developments

EU Council Renews Sanctions Against Syria

The EU Council has renewed the restrictive measures against Syria under Decision 2013/255/CFSP for another year, until June 1, 2027. Following the annual review of the sanctions framework, the EU Council has determined that networks associated with the former al‑Assad regime continue to pose risks to Syria’s transition and reconciliation process, warranting the continuation of targeted restrictive measures against individuals and entities, as well as sectoral restrictions addressing security concerns.

As part of the review, the EU Council removed seven entities from the sanctions list and updated the entries of 11 designated individuals. The entities delisted include Syria’s Ministry of Defense, Ministry of Interior, General Intelligence Directorate, and Military Intelligence Directorate.

EU Council Expands Scope of Sanctions Regime Targeting Iran’s Military Support to Russia and Armed Groups in the Middle East and Red Sea Region

On May 22, the EU Council expanded the scope of the existing sanctions regime under Decision (CFSP) 2023/1532 to cover individuals and entities responsible for, supporting, implementing or benefitting from Iran’s actions or policies undermining the freedom of navigation in the Middle East. The update builds on the EU Council’s March conclusions on the Middle East, which had called for the full implementation of UN Security Council Resolution 2817 (2026) and condemned actions that threaten shipping or obstruct vessels entering or leaving the Strait of Hormuz.

The sanctions regime was initially introduced in 2023 to target Iran’s military support to Russia’s war of aggression against Ukraine and was subsequently expanded in 2024 to address Iran’s support to armed groups and entities in the Middle East and the Red Sea region.

Following the update, the EU Council may now designate individuals and entities involved in actions undermining the freedom of navigation in the Middle East and impose restrictive measures, including asset freezes, travel restrictions, and a prohibition on making funds or economic resources available.

European Commission Updates FAQs on Sanctions Against Russia

The European Commission recently published updated FAQs on sanctions against Russia. Specifically, guidance on the prohibition under Article 3s of Council Regulation (EU) 833/2014 relating to designated vessels now clarifies the derogation allowing national competent authorities to authorize dealings with a designated vessel for recycling purposes.

The Commission also updated its FAQs regarding restrictions on the sale or transfer of ownership of tanker vessels transporting crude oil or petroleum products, as set out in Article 3q. According to the updated guidance, “transfer of ownership” should be interpreted broadly, with the aim of preventing circumvention. In addition, the Commission has further clarified the due diligence obligations of EU sellers of tanker vessels under Article 3q(2). Lastly, the updated FAQs confirm that EU operators are free to choose the appropriate wording for contractual clauses prohibiting resale or transfer to Russia, provided that such clauses meet the requirements of Article 3q(5) and (6). The Commission has also provided suggested wording for these clauses, which EU operators may use as a reference.

CJEU Judgements on the Interpretation of “Belonging to” and “Control” under the Russia Asset Freeze Sanctions Regulation

The Court of Justice of the European Union (CJEU) delivered two separate judgments in Case C-483/23 and Joined Cases C‑428/24 and C‑476/24, following requests of preliminary rulings concerning the interpretation of Article 2(1) of Council Regulation (EU) 269/2014. In the judgments, the Court examined whether asset freeze measures under Article 2(1) may apply to assets placed in a trust by a settlor who is a person designated under EU sanctions.

The Court clarified that the concept of “belonging to” covers not only situations where power over funds and economic resources can be established legally, but also situations where an individual or entity exercises such power de facto, even if another person or entity is the formal legal holder. Likewise, the concept of “control” encompasses any situation in which an individual or entity is able to influence the decisions of another person, even without a legal or ownership link between them.

Accordingly, the Court held that funds and economic resources placed in a trust by a person subject to EU sanctions must be regarded as “belonging to” or “controlled” by that person if they retain powers to use, benefit from or dispose of those assets, or exercise influence over them or over the decisions of the trustee in relation to them.

Asia-Pacific Developments

China and Russia Oppose Sanctions Against North Korea

Following a summit in Beijing, Chinese President Xi Jinping and Russian President Vladimir Putin jointly rejected the use of sanctions, diplomatic isolation, and military pressure against North Korea, arguing that such measures threaten regional stability rather than resolve tensions. In their official statement, the two leaders emphasized the importance of maintaining peace on the Korean Peninsula through political dialogue and called on all parties to avoid actions that could intensify conflict, including military buildups and strategic defense expansions by the United States, South Korea, and Japan.

Indonesia Moves to Facilitate Russian Oil Imports

Indonesia is preparing new regulations to allow state entities to purchase oil—including supplies from Russia—despite ongoing Western sanctions related to the Ukraine conflict. A senior official of the Energy and Mineral Resources Ministry explained that while the state energy firm Pertamina currently handles crude imports, directly engaging with Russia poses challenges due to the company’s exposure to international financing arrangements, necessitating an alternative import framework to avoid breaching financial obligations. The initiative follows a recent agreement between Jakarta and Moscow to acquire roughly 150 million barrels of Russian oil in stages through the end of the year. To support this plan, the government has introduced rules enabling both state-owned enterprises and designated public service agencies to conduct imports under clearer legal guidelines, while also broadening sourcing options to include multiple global regions.

India Maintains Russian Oil Purchases Regardless of US Sanctions

India has reaffirmed that its imports of Russian oil will continue independently of any US sanctions waivers, emphasizing a pragmatic approach guided by commercial and energy security considerations rather than external political factors. Sujata Sharma, a joint secretary in the petroleum ​ministry, highlighted that India has consistently sourced crude from Russia both before and after waiver periods, stressing that ample supplies have been secured through ongoing arrangements.

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