This Week in Sanctions & Export Controls for the weeks ending 18 and 31 May 2026

Here are the five most important things that happened during the preceding two weeks in sanctions and export controls.

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1. The U.S. continues Operation Economic Fury designations targeting Iran and its proxies

Amid sporadic continued United States strikes on Iranian military targets and retaliatory Iranian attempts to strike U.S. interests and its Gulf neighbors, and as a negotiated settlement involving Iran’s forsaking its nuclear weapons ambitions appears reasonably possible, the United States Department of Treasury’s Office of Foreign Assets Control (OFAC) persisted in leveraging sanctions to pressure both Iran and its regional proxies on several fronts.

First, OFAC designated an Iranian foreign currency exchange, its Turkish-Iranian-Dominican Republic triple citizen owner, several of his associates and several related front companies in the U.A.E. and China. Iranian foreign exchanges and related companies use currency exchange markets to procure U.S. dollars via several layers of currency exchange laundering for sanctioned Iranian entities and persons. The designations are pursuant to Executive Order 13902 (Iran sectors) for operating in the Iranian financial sector. In the same action, OFAC also designated several shipping companies in China, the Marshall Islands, the United Kingdom, Liberia, Panama, St. Kitts and Nevis and the British Virgin Islands for shipping Iranian petroleum and identified their vessels as blocked property. The designations are for operating in the Iranian petroleum sector, also pursuant to Executive Order 13902. Also, if you’re looking for some extra money for that summer vacation, note that OFAC highlighted in its enforcement announcement that the U.S. Department of State’s Rewards for Justice (RFJ) program is offering a reward of up to $15 million for information leading to the disruption of the financial mechanisms of Iran’s Islamic Revolutionary Guard Corps (IRGC).

Second, OFAC designated Iran’s newly-created Persian Gulf Strait Authority (PGSA), which was created by the Iranian government for the purposes of extracting tolls for vessels seeking passage via the Hormuz Strait. The designation is pursuant to secondary authorities in Executive Order 13224 (terrorism), and particularly for PGSA’s provision of material support to the Iranian Revolutionary Guard Corps (IRGC).OFAC also published frequently asked question (FAQ) 1249 which clarifies that U.S. persons are in violation of U.S. sanctions against Iran if they pay PGSA tolls and that non-U.S. persons risk designation pursuant to Executive Order 13902 for operating in the Iranian maritime sector if they pay such tolls. Non-U.S. persons also risk U.S. criminal or civil sanctions enforcement if they pay tolls to the PGSA that have a U.S. nexus. FAQ 1249 follows a recent OFAC advisory cautioning vessel operators as to the sanctions risk for acceding to Iranian demands for payment to pass through the now nearly-dormant strait.

Third, OFAC designated five Chinese oil trading companies under secondary authorities in Executive Order 13224 for either providing material support to Sepher Energy Jahan Nama Pars Company, Iran’s sanctioned oil trader, to Iran’s Ministry of Defense and Armed Forces Logistics (MODAFL). Notably absent from the action were any Chinese so-called “teapot” refineries.

Fourth, OFAC designated two Iranian companies, eight associated Iranian nationals and two U.A.E.-based front companies that illicitly procured advanced electronics from U.S. companies for use by the Iranian military. All of the designations are pursuant to secondary authorities in Executive Order 13224 for providing material support to or for being owned or controlled by the Iranian military.

Fifth, OFAC designated nine persons tied to Hizballah, including Iran’s ambassador to Lebanon and several others embedded in Lebanon’s military and bureaucracy, for obstructing the cessation of hostilities between Israel and entrenched Hizballah militants in southern Lebanon and ensuring continued flows of weapons (mostly from Iran) to Hizballah. As Hizballah is a designated foreign terrorist organization (FTO), all of the designations are pursuant to Executive Order 13224.

Sixth, OFAC designated three persons and one entity tied to the Muslim Brotherhood in Egypt that have provided support to Hamas, all pursuant to Executive Order 13224. And, in the same action, OFAC designated two Spaniards, one Belgian and one Jordanian — all of whom are in the leadership of the Popular Front for the Liberation of Palestine (PFLP), which organized the so-called “flotillas” seeking to surpass the Israeli government’s maritime blockade of Gaza. According to OFAC, the PFLP is funded by Hamas, which is designated as foreign terrorist organization (FTO). Thus, the PFLP designations are all also pursuant to Executive Order 13224. OFAC highlighted in its enforcement action that organizations and their leadership that purport to provide humanitarian relief that act for the benefit of FTOs present significant risk for banks. Given these designations, the prospect of de-banking Greta Thunberg may have now become a material consideration for her current financial institution(s).

2. The EU also focuses on the Middle East with listings and expanded Iran and Hamas listing authorities

In parallel (but not cooperation) with U.S. focus on the Hormuz Strait, the Council of the European Union amended Council Regulation (EU) 2023/1529 (Iranian support for Russia and armed groups in Middle East) to include a new authority allowing for the listing of persons or entities “responsible for, supporting, implementing or benefiting from Iran’s actions or policies undermining the freedom of navigation in the Middle East”. However, the Council did not list any parties in tandem with the new authority. The action highlights the vitiated position of the European Union in Iran affairs relative to its prominent role in negotiating the now-invalid Joint Comprehensive Plan of Action (JCPOA) in 2015.

The Council also expanded its listing authorities under Council Regulation (EU) 2024/386 (Hamas and Palestinian Islamic Jihad) to allow for listing of “members of the Political Bureau of Hamas”, but only insofar as the Council evidences that such persons “exercise influence over violent actions conducted by Hamas”. In tandem with the expanded authority, the Council listed two persons — one Palestinian and one Jordanian — as members of the Political Bureau of Hamas responsible for the organization’s violent activities.

Finally, the Council listed four entities and three persons responsible for extremist Israeli settlement activity in the West Bank. The targets are all non-government settler organizations and persons involved in them and are pursuant to Council Regulation (EU) 2020/1998 (global human rights).

3. The U.K. bans most Russian oil imports, then issues a general license effectively hollowing out the ban while the U.S. renews two Russia-related general licenses

The United Kingdom amended its Russia (Sanctions) (EU Exit) Regulations 2019 to include a ban on the import of petroleum products (CN 2710) refined in third countries derived from Russian crude (closing the so-called “refinement loophole”), a prohibition on maritime transportation of Russian LNG, broader restrictions on Russian shadow fleet vessels sanctioned by the U.K. and an import and transport ban on Russian uranium. The third country refined third country import ban and LNG measures largely mirror existing EU measures under Article 3ma and Article 3ra of Council Regulation (EU) 833/2014 (Russia trade), respectively.

However, remarkably the U.K. immediately hollowed out the refined third country import ban (codified at section 46Z9F of the Russia (Sanctions) (EU Exit) Regulations 2019) with General License GBSAN0004, which indefinitely exempts imports of both Russian-origin jet fuel and diesel refined in third countries from the new ban. Since Russia’s February 2022 invasion of Ukraine, the U.K. has imported an estimated EUR 2.1 billion in of Russian crude refined in third countries, 99 percent of which is jet fuel (84 percent) and diesel (15 percent). Notwithstanding a muted, euphemistic characterization of the general license as “unfortunate” by one U.K. think tank pundit, most are (justifiably) confounded by the development.

Also on Russia, OFAC renewed two general licenses.

First, General License 131F, which extends the exemption relating to Lukoil’s designation pursuant to Executive Order 14024 (Russia) allowing until 27 June 2026 for any transactions related to Lukoil’s sale of Lukoil International GmbH (LIG), which is the Vienna-based holding company that owns over 100 of Lukoil’s entities world-wide. I OFAC also published FAQ 1224, which clarifies that General License 131F only permits negotiations terms to sell LIG entities, and related financial, legal, or operational due diligence, including engagement of outside counsel or advisors. Actual sales must be separately licensed specifically by OFAC. In FAQ 1225, OFAC also clarified that, while General License 131F authorizes certain activities related to the sale of LIG entities, General License 128C (which expires 29 October 2026) separately authorizes the operation of Lukoil commercial entities (i.e., gas stations) outside Russia (of which there are many across Europe). Recall that General License 126 which allowed for wind down of Lukoil-related transactions expired on 21 November 2025, thus all Lukoil-related activity is permitted only (currently) permitted via general licenses as to certain specified activities, such as the sale of its non-Russian assets as provided in General Licenses 128C and 131F.

Second, OFAC extended the exemption allowing for the delivery and sale of Russian-origin crude and petroleum loaded on vessels as of 17 April 2026 for an additional month, i.e., until 17 June 2026 in General License 134C. The general license effectively lifts the U.S. current $60 per barrel price cap on services related to the transport of Russian oil. And, on a related note, it now appears that the European Union and other G7 members currently implementing a $44.10 per barrel price cap are likely to retain the price cap at its current level (pursuant to the dynamic price cap mechanism at Article 3n of Council Regulation (EU) 833/2014) rather than abandon the price cap in favor of a full maritime service ban as touted as likely in the EU’s twentieth tranche of Russia sanctions.

4. The U.S. makes numerous designations in furtherance of its focus on the Western Hemisphere

On Cuba, the U.S. Department of State announced numerous designations under (new) Executive Order 14404 (Cuba), including of Cuba’s intelligence agency — the Directorate of Intelligence — and its national police force and Ministry of the Interior (the latter two of which are already also designated pursuant to Executive Order 13818 (Global Magnitsky) for human rights abuses). Eleven Cuban government officials (two of whom are also already designated pursuant to Executive order 13818) were also designated. As previously noted in this brief, Executive Order 14404 designations are distinct from other Cuba designations under the Cuban Assets Control Regulations (31 C.F.R. Part 515) because they carry secondary designation risk for parties that provide material support or services to or that act on behalf of parties designated under Executive Order 14404.

OFAC also continued listings flowing from its focus on FTOs as required by Executive Order 14157 (Cartels and others as FTOs). Specifically, OFAC designated 12 persons and two entities involved in a cryptocurrency money laundering network that services the Sinaloa cartel (which is an FTO and is designated pursuant to Executive Order 14059 (illicit drug trade) and pursuant to the Foreign Narcotics Kingpin Sanctions Regulations (31 C.F.R. part 598)). The designations are all pursuant to to Executive Order 14059, and some also are pursuant to Executive Order 13224.

Also with regard to FTOs, the U.S. Department of State designated Comando Vermelho (CV) and Primeiro Comando da Capital (PCC) as specially designated global terrorists (SDGTs) pursuant to the Global Terrorism Sanctions Regulations (31 C.F.R. part 594) and as FTOs pursuant to Executive Order 13224 and 8 U.S.C. Section 1189. CV and PCC are both Brazilian criminal organizations with roots in and ties to leftist insurgent organizations in South America (most notably the Revolutionary Armed Forces of Colombia (FARC)) that currently operate in illicit drug trade throughout the Americas.

5. The U.S. imposes a significant civil sanctions penalty against Indian conglomerate Adani Enterprises Limited

OFAC entered into a $275,000,000 civil penalty settlement with Adani Enterprises Limited (AEL), which an infrastructure development company in the Indian conglomerate Adani Group. The settlement arises from 32 violations of the U.S.’s Iran sanctions. Specifically, between November 2023 and June 2025, AEL engaged in 32 U.S. dollar purchases of Iranian liquified petroleum gas (LPG) that were processed via the U.S. correspondent banking system, thus causing U.S. banks to violate section 560.206(a) of the Iranian Transactions Sanctions Regulations (ITSR) (31 C.F.R. Part 560 et seq.).

Specifically, AEL purchased the Iranian LPG for import to India from a U.A.E.-based trader that purported that the product was of Iraqi and Omani origin. AEL relied solely on rudimentary sanctions screening of involved parties and review of shipping documents while ignoring information it had including reports from third parties that the LPG was Iran-origin, suspicious behavior of the vessels carrying the LPG and market conditions clearly revealing the LPG as Iranian. Notably, OFAC observed that this behavior amounted to either evasion or a conspiracy to evade U.S. Iran sanctions pursuant to section 560.203(a) of the ITSR, which exposes AEL (and relevant employees) to criminal prosecution pursuant to section 1705 of the International Emergency Economic Powers Act (50 U.S.C. Sec. 1701 et seq.). OFAC also highlighted that AEL stopped the purchases only after news reports that AEL was buying Iranian LPG. Both factors weighed in favor of the heavy penalty.

In addition to the penalty, AEL also agreed to implement new sanctions controls that include due diligence elements that account for indica beyond sanctions screening that suggest AEL’s activity may be causing U.S. sanctions violations, regular sanctions risk assessments that account for AEL’s exposures, testing and auditing of AEL’s sanctions controls that account for sanctions evasion typologies related to maritime transport of hydrocarbons from Iran, training of relevant staff and documented management commitment to the foregoing. OFAC also required AEL to certify its compliance with the foregoing annually for five years. Notably, the settlement permits OFAC to impose the statutory maximum for the 32 violations in addition to any additional penalties for violations during this five-year window.

While risk assessments, due diligence and testing and auditing of sanctions controls are not required by U.S. law, this enforcement action highlights that failure to implement such measures may result in a higher penalty where linked to an underlying violation. The AEL penalty also is noteworthy given OFAC’s decision to waive criminal referral to the U.S. Department of Justice where probable cause (the standard for initiating a criminal enforcement in the U.S.) clearly existed.

Also, the timing of the AEL enforcement and the significant penalty both signal U.S. focus on curtailing India’s renewed purchases of Iranian energy after a seven-year hiatus.

Bonus: The U.S. removes numerous (ostensibly) outdated sanctions targets

OFAC removed 76 sanctions designees — including persons, companies and vessels identified as blocked property — across a total of 213 designations. The removals include deceased persons (some of which have been targeted by recent U.S. operations in the Middle East), scrapped and decommissioned vessels, persons designated for belong to illicit networks that no longer exist and — notably — persons whose designations are more than 10 years old who, pursuant to an interagency review, appear to no longer meet the criteria for designation.

The removals are thematically diverse across numerous sanctions programs, including the Narcotics Trafficking Sanctions Regulations (31 C.F.R. part 536), the Global Terrorism Sanctions Regulations (31 C.F.R. part 594), the Foreign Narcotics Kingpin Sanctions Regulations (31 C.F.R. part 598), the Transnational Criminal Organizations Sanctions Regulations (31 C.F.R. part 590), the Libyan Sanctions (31 C.F.R. part 570), Executive Order 13818 (Global Magnitsky), Executive Order 13850 (Venezuela), Executive Order 13882 (Mali), Executive Order 14014 (Burma) and Executive Order 14024 (Russia).

Further removals are expected in the coming months, particularly of designees who no longer meet designation criteria.

Comments

One of the most compelling instances of litigation challenging a sanctions designation has had further developments.

Recall this brief’s last edition highlighting Further, OFAC’s quiet publication of a notice on its International Criminal Court sanctions program page clarifying that OFAC is not enforcing the asset freeze designation against Francesca Albanese upon a 13 May 2026 U.S. District Court decision granting Albanese temporary relief from her designation by OFAC pending the outcome of litigation challenging her designation.

The U.S. District Court’s decision arose in a lawsuit brought by Albanese’s husband and minor child challenging the U.S.’s July 2025 sanctions designation of Albanese pursuant to Executive Order 14203 (International Criminal Court). The decision granting temporary suspension of Albanese’s sanctions designation pending outcome of the lawsuit notably highlighted that the U.S. government’s designation of Albanese likely violated her First Amendment free speech rights.

Notwithstanding OFAC’s prior notice suspending Albanese’s designation, about a week later on 20 May 2026 OFAC (also quietly) removed the notice and (again, also quietly) issued a removal notice of Albanese from its list of specially designated nationals. Note that OFAC was not required to delist Albanese pursuant to the U.S. District Court’s above-mentioned decision; however, it did so nonetheless — ostensibly given (most) sanctions screening tools do not capture asset freeze suspension notices.

Immediately upon the U.S. District Court’s decision, the U.S. government filed an interlocutory appeal before the D.C. Circuit Federal Court of Appeals challenging the decision. On 22 May 2026, D.C. Circuit granted the U.S. government’s emergency motion for an immediate administrative stay pending the outcome of this appeal. Thus, on 27 May 2026 OFAC re-designated Albanese.

However, this designation could be again voided upon the D.C. Circuit’s full consideration on the merits of the U.S. government’s appeal or by the U.S. District Court upon a summary judgment motion or after trial.

A key, novel issue to observe will be judicial consideration of the the extent to which the First Amendment to the U.S. Constitution precludes the U.S. government from designating a person as sanctioned on the basis solely of such person’s speech where no other factual criteria (such as actions flowing from such speech arise that are inconsistent with U.S. foreign policy objectives) are met relevant to the designation.

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Copyright 2026 — Jeff Nielsen