UK’s Long-Anticipated Expansion Of Iran Sanctions Take Effect

On September 29, 2026, the Iran (Sanctions) (Amendment) Regulations 2026 (“Amendment Regulations”) will come into effect, expanding UK sectoral sanctions on Iran’s finance, energy, shipping, software, and other sectors. The new measures amend both the Iran (Sanctions) (Nuclear) (EU Exit) Regulations 2019 (“2019 Regulations”) and the Iran (Sanctions) Regulations 2023 (“2023 Regulations”). The Amendment Regulations are broadly intended to reimpose sanctions previously lifted as part of the Joint Comprehensive Plan of Action. The UK government initially announced its intention to introduce this legislation nearly a year ago, following the reimposition of UN sanctions on Iran after the triggering of the snapback mechanism by the E3 (i.e., the UK, France, and Germany). 

The new sanctions will bring the UK into closer alignment with the EU, which already has reinstated a range of autonomous sanctions that go beyond the UN snapback measures. Businesses required to comply with UK financial sanctions should promptly familiarise themselves with the expanded measures, assess their impact on current business operations, and implement any necessary updates or enhancements to existing sanctions risk assessments, policies, procedures, and controls.

Overview of New Financial Sanctions Measures

The Amendment Regulations expand the financial sanctions imposed under Part 3 of the 2019 Regulations, including new prohibitions on:

• investments in persons connected with Iran involved in certain aspects of the defence, energy, petrochemical and nuclear sectors (e.g., joint ventures, loans, ownership interests, and participations);
• restrictions on banking relationships between UK financial institutions and financial institutions domiciled, or owned / controlled by a person domiciled, in Iran;
• providing insurance or reinsurance services to persons connected with Iran (i.e., individuals who are ordinarily resident or located in Iran, entities that are incorporated / constituted under the law of Iran or domiciled in Iran, as well as entities or owned / controlled by such persons) or those acting on behalf or at the direction of such a person; and
• the sale or purchase of certain bonds issued by the Government of Iran and provision of related brokering, advertising, and other services.

Overview of New Trade Sanctions Measures

The Amendment Regulations expand the trade sanctions imposed under Part 5 of the 2019 Regulations, including new:

• export prohibitions on energy-related goods and technology to or for use in Iran, or to a person connected with Iran (as well as energy-related services), including items for oil and gas exploration and production, oil, gas and LNG refining, and the petrochemical industry;
• import prohibitions on Iranian oil and petroleum products, as well as Iranian petrochemicals and natural gas;
• prohibition on making available vessels designed or modified for the transport or storage of oil and petroleum products to a person connected with Iran, as well as for use in, or the benefit of, Iran;
• technical assistance prohibitions in relation to tankers and cargo vessels to or for the benefit of persons connected with Iran, as well as ships to or for the benefit of a designated person;
• prohibitions on the provision of a wide range of services in relation to specified ships, as well as the procurement of services related to such ships;
• export prohibitions on sectoral software and technology to or for use in Iran, or to a person connected with Iran, including a wide range of business enterprise and industrial design software and technology;
• export and import prohibitions on gold, precious metals and diamonds; and
• export prohibitions on newly printed banknotes or newly minted coinage in any official currency of Iran to or for the benefit of the Central Bank of Iran.

The Amendment Regulations also expand the trade sanctions imposed under Part 6 of the 2023 Regulations by expanding the list of items classed as goods and technology of strategic concern.

Overview of New Transport Sanctions

The Amendment Regulations introduce new aircraft-related sanctions under Part 5A of the 2019 Regulations, including new prohibitions on the landing in the UK of aircraft used exclusively for the provision of air cargo services that are registered in Iran, or owned, chartered, or operated by a designated person or person connected with Iran.

Additionally, the Amendment Regulations introduce new ship-related sanctions under Part 5B of the 2019 Regulations. The restrictions include powers to specify ships and a prohibition on the chartering or operating of specified ships, as well as restrictions on UK port entry, UK ship registration, and certain ship movements covering specified ships and ships owned, controlled, chartered, or operated by designated persons.

The Amendment Regulations also introduce new ship-related sanctions under Part 6 of the 2023 Regulations. The restrictions include a prohibition on the provision of technical assistance relating to a ship to or for the benefit of a designated person. Additionally, a new power to specify ships and prohibitions the chartering or operating of specified ships, as well as restrictions on procuring services relating to specified ships and UK ship registration.

Exceptions and Licensing

The Office of Trade Sanctions Implementation (“OTSI”) has issued a General Trade Licence (“GTL”) to authorise certain otherwise prohibited activities in relation to energy-related goods and technology that are necessary for the continued operation of the Shah Deniz gas project, including the Shah Deniz Gas Field, the South Caucasus Pipeline and the Azerbaijan Gas Supply Company. Use of the GTL is subject to compliance with record-keeping obligations. Notification of use of the GTL must also be made to the Department for Business, Innovation, Science, and Trade within 30 calendar days of first use using OTSI’s contact form.

The Amendment Regulations also create a number of exceptions to the new prohibitions. For example, an exception for acts dealing with an emergency has been instituted in relation to a number of the new trade sanctions prohibitions. Additionally, exceptions have been created to authorise otherwise prohibited conduct in relation to (1) energy-related goods and technology necessary for the purpose of a UK petroleum project and (2) wind-down activities related to sectoral software and technology undertaken in discharge of contractual obligations arising prior to September 8, 2026 and carried out and notified to the Secretary of State for Business, Innovation, Science, and Trade before March 7, 2027.

On September 23, 2026, the Office of Financial Sanctions Implementation (“OFSI”) published new guidance stating that, with immediate effect, it will adopt a presumption of denial to licence applications made by five designated Iranian banks: (1) Bank Sepah; (2) Melli Bank Plc; (3) Bank Saderat; (4) Persia International Bank; and (5) Bank Tejarat, unless there are clear and compelling reasons to justify licensing on a case-by-case basis. OFSI published FAQ 204 on September 24, 2026, which outlines the criteria that it will use in assessing future licence applications in relation to the named banks. Additionally, OFSI has announced its intention not to renew General Licence INT/2025/7628424 (Iran Interim Basic Necessities) following its scheduled expiry on October 22, 2026.

Conclusions and Recommendations for Businesses

The impact of the new Iran sanctions measures for businesses that are required to comply with UK sanctions will depend, in significant part, on the level of exposure each such business has to persons connected with Iran and the sectors of the Iranian economy on which the measures are focused. In response to the new measures, affected businesses should review their activities for potential exposure to the new measures and, where relevant, consider whether any exceptions, wind-down, or licensing provisions are available to mitigate the effects of the newly introduced sanctions. Businesses should also confirm that their sanctions policies, procedures, and other controls have been appropriately updated to reflect the expansion of UK sanctions on Iran. Finally, businesses should continue to monitor for further changes to the UK’s Iran sanctions framework and any related licensing pathways.