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 expertise of Steptoe's industry-leading IRC 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
New Houthi Sanctions Come Amid Broad US Pressure Campaign
Last week, the Department of the Treasury's Office of Foreign Assets Control (OFAC) implemented new sanctions against the Houthi network of financial facilitators and weapons procurement operatives, including individuals and entities based in Russia and Hong Kong. The action comes as the US has engaged in an escalating airstrike campaign against the Iran-backed, Yemeni rebel group for its provocations in the Red Sea and strikes on Israel, engaging in a broad campaign to pressure the rebel group from various directions.
The sanctions, undertaken under the counterterrorism authority Executive Order 13224, target six individuals, four entities, and one vessel, primarily based in Russia, who have allegedly engaged with senior Houthi official Sa'id al-Jamal to procure weapons and enable financial transactions. The primary members of the Houthi procurement network targeted in this round of sanctions are Hushang and Sohrab Ghairat, Russia-based Afghan brothers and businessmen who orchestrated the delivery of arms and other goods to Yemen—including the diversion of at least two shipments of stolen Ukrainian grain. Those targeted also include a Hong Kong-based entity, two Russian nationals, three Russia-based companies, and a Turkish-based Iranian money launderer. Finally, OFAC identified eight cryptocurrency wallets used by the Houthis to circumvent existing US sanctions.
President Trump expanded US airstrikes against the Houthis in a bid to counter the group's 18-month campaign of assaults on international shipping lanes in the Red Sea (the subject of the Signal chat among US government officials that has garnered much controversy in recent weeks). The ramping up of US airstrikes also coincided with the US' re-designation of the Houthis as a terrorist organization; President Trump designated the group in his first term, after which the Biden White House lifted the designation, reflecting a partisan split on how to handle the Houthis and the ongoing humanitarian crisis in Yemen. The new campaign against the Houthis—including both the military strikes and stepped-up sanctions—was driven by the desire to curb the adverse effects of Houthi intimidation in the crucial Red Sea shipping lane (where 15% of global goods transited last year), support allies who have been the targets of Houthi drone strikes for years (namely Saudi Arabia, the UAE, and increasingly Israel), and reassert American military might in alignment with the Trump foreign policy doctrine.
While US precision strikes on the Houthis have been ongoing for years, the Trump administration's new campaign—which upped the pace of attacks, deployed more advanced military technology, including reportedly F-35s, and expanded the targets from military infrastructure to Houthi leaders—is the US taking off the gloves in the Red Sea and attempting to decisively end the Houthis' regional power projection.
Despite these stepped-up efforts on both fronts, Middle East watchers are ambivalent about the US' prospects for achieving that goal. The Houthis are scrappy and deeply entrenched—they have endured foreign airstrikes since their inception. Some analysts see the heightened conflict with the Houthis as a first step towards a broader confrontation with Iran (where bilateral tensions have also been skyrocketing in recent weeks). If Houthi attacks are cast as direct Iranian retaliation (an unclear proposition—Iranian support of the Houthis, while substantial, is usually seen as resulting more in influence than explicit direction), the conflict with the Houthis could escalate into, or be subsumed by, a broader conflagration between Washington and Tehran.
US Developments
Trump Announces Sweeping Tariffs, Eliminates De Minimis for China
President Trump announced the imposition of a 10 percent baseline tariff on all countries beginning on April 5, 2025, and higher individualized tariffs (also referred to as "reciprocal tariffs") on the countries with which the US has the largest trade deficits beginning on April 9, 2025. Trump also signed an executive order (EO) eliminating duty-free "de minimis" treatment for low-value imports from China as of May 2, 2025. All these actions were taken pursuant to the International Emergency Economic Powers Act (IEEPA). Trump declared a national emergency under IEEPA based on the deterioration of US national security due to the country's trade deficits.
As we have previously covered, IEEPA is the primary statute that underpins US sanctions programs. However, whereas the use of IEEPA for tariffs on Canada, Mexico, and China was considered novel at the time they were announced, the recent flurry of tariffs, including the 25 percent "secondary" tariff authorized on importers of Venezuelan crude oil or petroleum products, has demonstrated that IEEPA is one of the administration's preferred pathways for conducting trade policy. We anticipate that the Trump administration will continue using IEEPA-based tariffs to pursue its foreign policy and trade agenda. However, there are now several lawsuits challenging whether the President may use IEEPA in this manner.
For more on the Trump administration's tariffs, read Steptoe's recent Client Alert.
Expansive Bipartisan Russia Sanctions Legislation Introduced in Congress
Sens. Richard Blumenthal (D-CT) and Lindsey Graham (R-SC), along with 50 of their colleagues, evenly divided by party affiliation, unveiled expansive legislation (S. 1241), the Sanctioning Russia Act of 2025, which would impose sanctions and other trade-related measures on Russia if the Russian government did not cooperate in the Trump administration's efforts to negotiate a ceasefire in Ukraine. Companion legislation (H.R. 2548) was introduced by Reps. Brian Fitzpatrick (R-PA), Mike Quigley (D-IL), Joe Wilson (R-SC) and Marcy Kaptur (D-OH).
The bill outlines a variety of sanctions applicable to both Russians and non-Russians, as well as a "secondary" tariff program on sellers and purchasers of Russian oil and petroleum products. Most of the sanctions measures contained in the bill would be mandatory but would require a determination to be issued by the president before they came into effect.
This legislation is the strongest expression of the current Congress's stance on Russia thus far. However, the prospects for the bill's passage remain uncertain. Though Trump may welcome the bill as leverage in negotiations on Ukraine and, eventually, enforcement of any resulting peace agreement, he may also have reservations about endorsing such sweeping legislation, which may limit his discretion at least to some degree. We anticipate that the bill's success will largely depend on the Trump administration's preferred approach to Russia and what the administration signals to Republican lawmakers.
OFAC Increases Pressure on Iranian Procurement Networks
The Department of the Treasury's Office of Foreign Assets Control (OFAC) sanctioned an alleged network of six entities and two individuals based in Iran, the United Arab Emirates (UAE), and China who are said to have participated in the procurement of unmanned aerial vehicle (UAV) components for Qods Aviation Industries (QAI), a leading manufacturer for Iran's UAV program. OFAC also alleged that the designees facilitated the procurement of similar technologies for other entities, including Iran Aircraft Manufacturing Industrial Company (HESA) and Shahid Bakeri Industrial Group (SBIG).
One day after announcing the UAV-related sanctions, OFAC designated individuals, entities, and vessels it says are connected with Sa'id al-Jamal, who is alleged to be a senior Houthi financial official backed by Iran's Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF). The designees were allegedly part of a network that procured millions of dollars' worth of commodities from Russia, including weapons, sensitive goods, and stolen Ukrainian grain, for onward shipment to Houthi-controlled Yemen.
These actions continue to build on President Trump's National Security Presidential Memorandum (NSPM-2), reinstating President Trump's "maximum pressure" campaign against Iran. OFAC is likely to continue targeting alleged procurement networks, both for Iran and its known or emergent proxy organizations.
FinCEN Meets with Financial Institutions for Maximum Pressure Campaign
The Department of the Treasury's Financial Crimes Enforcement Network (FinCEN), the primary US anti-money laundering regulator, convened 16 financial institutions and law enforcement agencies for its first event in the "Iran Maximum Pressure and Counter Terrorism" (or "IMPACT") Exchange series. FinCEN said the event helped the financial sector better understand challenges in complying with US sanctions on Iran and its oil and "shadow banking" sanctions evasion networks.
During his remarks to the attendees, Secretary of the Treasury Scott Bessent stated that the administration's strategy under President Trump's National Security Presidential Memorandum (NSPM-2) is to apply economic pressure "to the maximum extent possible" to disrupt the Iranian regime's access to the resources that enable its destabilizing activities. Bessent noted that, as part of this work, the Treasury Department would continue "[providing] financial institutions with more regular feedback on the effectiveness of [their] Bank Secrecy Act reporting."
OFAC Targets Money Laundering Network for Cartel
OFAC designated six individuals and seven entities alleged to be involved in a money laundering network for the Sinaloa Cartel, a Foreign Terrorist Organization (FTO) and Specially Designated Global Terrorist (SDGT). The designations follow a March 31 Alert from FinCEN, which urges financial institutions to be vigilant in identifying and reporting transactions potentially related to the cross-border smuggling of bulk cash from the US into Mexico, and from Mexico into the US, by Mexico-based transnational criminal organizations (TCOs). The Trump administration is likely to continue its aggressive use of sanctions authorities to combat cartels, drug smuggling, and similar conduct.
State Department Sanctions Chinese and Hong Kong Officials
The Department of State announced that it was imposing sanctions on Beijing and Hong Kong officials allegedly involved in the extraterritorial application of the 2020 National Security Law (NSL) and 2024 Safeguarding National Security Ordinance (SNSO), which it says resulted in the intimidation, silencing, and harassment of 19 pro-democracy activists, including a US citizen. The announcement was accompanied by the publication of the Department of State's "Hong Kong Policy Act Report" to Congress, which states that the adoption of the NSL, SNSO, and other related measures negatively impacted freedom in Hong Kong.
Sens. Jim Risch (R-ID) and Jeanne Shaheen (D-NH), the Chairman and Ranking Member of the Senate Foreign Relations Committee, respectively, issued a statement in support of the Department of State's sanctions. Specifically, the Senators stated that the US "must continue to hold the Hong Kong authorities accountable for their role in eroding Hong Kong's autonomy and their abuses against the internationally recognized human rights of Hong Kongers." They also noted that their resolution (S.Res.98) condemning Beijing's destruction of Hong Kong's democracy passed out of committee and now awaits further action.
The Department of State's sanctions follow recent visa restrictions imposed on Chinese officials who were allegedly involved in the "formulation or execution of policies related to access for foreigners to Tibetan Areas, pursuant to the Reciprocal Access to Tibet Act of 2018." These recent sanctions suggest that the Trump administration will continue to focus on what it determines are human rights abuses, or a deliberate opacity regarding human rights abuses, by China.
Lawmakers Threat Sanctions On UNHRC
Senator Risch and Rep. Brian Mast (R-FL), the Chairman of the House Foreign Affairs Committee, sent a letter to United Nations (UN) Secretary-General Antonio Guterres warning against the establishment of an international investigative mechanism (IIM) to investigate Israel. The lawmakers state that "any HRC [Human Rights Council] member state or UN entity that supports an Israel-specific IIM in any form will face the same consequences as the ICC [International Criminal Court] faced for its blatant overreach and disregard for sovereign prerogatives." While the US has sanctioned the ICC Prosecutor Karim Khan, a related measure in Congress failed when Senate Democrats blocked the legislation.
UK Developments
UK Broadens Use of Urgent Designation Procedure Across UK Sanctions Regimes
The Sanctions (EU Exit) (Miscellaneous Amendments) Regulations 2025 will amend 26 UK sanctions regimes to clarify the application of the "urgent procedure" first introduced by the Economic Crime (Transparency and Enforcement Act 2022) to designations made under those regimes. The urgent procedure enables the UK government to designate individuals even when the UK lacks reasonable grounds to suspect an individual is "involved" at the time of initial designation, provided that the person is already designated by the US, EU, Australia, or Canada and designation is considered in the public interest. Such urgent designations expire after 56 days unless further conditions are met, or they are converted to standard designations following the compilation of evidence to satisfy the legislative test for designation. This development expands the UK's flexibility to align with key allies on sanctions designations and take swift action in response to emerging threats. These changes come into force on April 18, 2025.
UK Targets Those Undermining Democracy and the Rule of Law
The UK has made 12 new designations under its Global Human Rights sanctions regime, targeting actors in Guatemala, Moldova and Georgia. The designations reflect a growing focus by the UK government on persons deemed to be undermining democracy and the rule of law. The action underscores recent steps taken by Foreign Secretary, David Lammy, to crack down on corruption and illicit finance through the "dirty money campaign."
OFSI Publishes Legal Services Threat Assessment Highlighting Potential Breaches of Russia Sanctions
OFSI has published a Legal Services Threat Assessment highlighting significant sanctions compliance risks in the UK legal sector. The report finds that most non-compliance likely results from breaches of OFSI licence conditions and that UK trust and company service providers have likely failed to self-disclose all suspected breaches. It also notes that complex corporate structures linked to Russian UK designated persons and their families have likely obscured asset ownership and that transfers to non-designated parties may, in some cases, breach UK sanctions. Of the threat reports received, 87% related to Russia sanctions. The report outlines key red flags for legal services providers, including close name matches with designated persons, payments by non-designated parties for designated persons' obligations, and the use of low-profile firms to facilitate breaches—emphasizing the need for enhanced due diligence and controls across the sector.
EU Developments
Third Countries Align with several recent EU Sanctions
The High Representative of the EU has announced that Albania, Bosnia and Herzegovina, Iceland, Liechtenstein, Montenegro, North Macedonia, Norway, the Republic of Moldova, and Ukraine have aligned themselves with several Council decisions, reported in our March, 24 Sanctions Update. Specifically, these countries have aligned with Decision 2025/510, which adds nine individuals and one entity responsible for serious human rights violations and abuses in the Democratic Republic of the Congo.
Additionally, these countries have aligned themselves with Council Decision 2025/514, adding one entity to the EU's autonomous sanctions list targeting ISIL (Da'esh) and Al-Qaeda affiliates. For more information on the content of these decisions, please see our blog post here. These countries, including EU candidate nations, have regularly aligned themselves with EU sanctions.
EU Discusses 17th Sanctions Package
The High Representative of the EU, Kaja Kallas, announced during the latest Common Foreign and Security Policy meeting that the 17thsanctions package is currently under discussion. She clarified that there already is a clear consensus on the matter. Discussions are in very early stages, with little information on what may be included in the package. It has been reported that the European Commission is set to present its 17thsanctions proposals in early summer.
China Developments
China's Measures to Counter US Tariffs Include Sanctions
On April 4, 2025, China announced a raft of "resolute countermeasures" responding to the 34% US tariff imposed on Chinese imports on April 2. In addition to imposing a matching 34% tariff on American imports, effective April 10, China's Ministry of Commerce announced it had imposed sanctions on 11 US companies due to their inclusion on the Unreliable Entities List. The Unreliable Entities List imposes restrictions that prohibit companies from engaging in China-related import or export activities and from investing in China. The listings include Skydio and BRINC Drones, drone manufacturers, for engaging in military technology cooperation with Taiwan. Also included were Red Six Solutions, SYNEXXUS, Inc., Firestorm Labs, Inc., Kratos Unmanned Aerial Systems, Inc., HavocAI, Neros Technologies, Domo Tactical Communications, Rapid Flight LLC, and Insitu, Inc. It should be noted that these are not new additions, despite media reports to the contrary. All 11 newly added companies had previously been sanctioned by China's Ministry of Foreign Affairs, which subjected them to asset freezes and transaction prohibitions. Additionally, five of these companies were already on the blacklist, which prohibits exports of dual-use items to the entities listed.
China also added 16 American companies to its blacklist, which prohibits exports of dual-use items to the listed entities. Most of the entities are involved in defense, aerospace, drone manufacturing, intelligence, and logistics. But an advocacy group promoting trade-protectionist policies (i.e., "de-coupling"), the Coalition for A Prosperous America, was also included. The entities were found to pose a threat to China's national security and interests. The announcement included High Point Aerotechnologies, Universal Logistics Holdings, Inc., Source Intelligence, Inc., Coalition For A Prosperous America, Sierra Nevada Corporation, Edge Autonomy Operations LLC, Cyberlux Corporation, Hudson Technologies Co., Saronic Technologies, Inc., Oceaneering International, Inc., Stick Rudder Enterprises LLC, Cubic Corporation, S3 AeroDefense, TCOM, Limited Partnership, TextOre, and ACT1 Federal. However, once again, among the 16 blacklisted companies, 12 had previously been sanctioned by China's Ministry of Foreign Affairs, and six were already on the Unreliable Entities List due to prior designations made on March 4, 2025. Therefore, only four companies were newly sanctioned in this round: High Point Aerotechnologies, Universal Logistics Holdings, Inc., Source Intelligence, Inc., and Coalition For A Prosperous America.
Besides sanctions and tariffs, China tightened controls on exports of medium and heavy rare earth products used for aircraft and spacecraft, nuclear power, energy, medical equipment, laser devices, and other high-technology industries. This includes samarium, gadolinium, terbium, dysprosium, lutetium, scandium, yttrium and their alloys. These are all important elements for making magnetic parts in high-performance motors, nuclear reactor control rods, electronic and optics equipment, MRI imaging machines, fuel cells, superconductors, and semiconductors. It also initiated an anti-dumping investigation of CT tubes from the United States and India, and an anti-monopoly investigation of Dupont China Group.
China enacted these measures after it urged the cancellation of new US "reciprocal" tariffs and threatened retaliation. When there was no response or offer of negotiation, China announced these measures, which are broader than prior retaliatory measures, two days later. A spokesperson at the Ministry of Finance quoted an old Chinese saying, "courtesy demands reciprocity." Despite this significant escalation, the Ministry stated further that "China is willing to strengthen foreign cooperation and promote compliant trade through lateral export control dialogue and exchange mechanisms." It appears that China is ready to talk but also to fight.
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