Sanctions News Update
October 2026
The end of September brought the biggest expansion of the UK's Iran sanctions regime in a decade and a much stricter OFSI licensing policy for five designated Iranian banks.
In the US, the Lindsey O. Graham Act allows tariffs of up to 100% on goods from the top five buyers of Russian energy or the top five facilitators of Russian oil sanctions evasion. It also exposes insurers and other facilitators of shadow-fleet trade to designation on a "should have known" standard.
The EU, meanwhile, extended its Ukraine sovereignty measures to 2029.
Looking ahead, we examine the Houthi–Saudi conflict, which is already reshaping Red Sea risk even though no sanctions have followed yet.
United Kingdom
Iran Sanctions
The Iran (Sanctions) (Amendment) Regulations 2026 came into force on 29 September 2026. They amend the Iran (Sanctions) (Nuclear) (EU Exit) Regulations 2019 and the Iran (Sanctions) Regulations 2023, making this the largest expansion of the UK's Iran regime since the JCPOA.
What's changing
Trade: new prohibitions, with controlled items listed in new Schedules 1A to 1I, cover energy-related goods and technology; gold, precious metals and diamonds; maritime goods and technology; natural gas; oil and petroleum products; petrochemicals; and sector-specific software and technology. They also catch supply and delivery (including third-country trade), technology transfer, making goods available and associated services.
Finance: restrictions on persons connected with Iran cover loans, credit, investment and joint ventures in sensitive sectors (oil and gas, petrochemicals, uranium); banking relationships with Iranian institutions; insurance and reinsurance linked to Iran; and dealing in Iranian sovereign bonds.
Transport: new powers to specify ships, restrict their operation and related services, and enforce port access bans and detention. Iranian cargo aircraft are banned from landing in the UK, subject to limited exemptions.
Key Takeaways:
In substance, this restores the pre-2016 position. It uses the "person connected with" test, sectoral goods schedules, third-country and ancillary-service prohibitions, ship-specification and detention powers, and an aircraft landing ban.
Many firms haven't touched Iran since 2018, and particularly for firms with a US nexus, the commercial position may barely change. Four key considerations:
Legal Obligation. Avoiding Iran is now a UK legal obligation, with criminal and civil liability. OTSI civil penalties are strict liability.
Firms without a US nexus, such as smaller traders, ship brokers and intermediaries, may have been lawfully operating in gaps that are now closing.
Different tests. "Person connected with Iran" is a UK definition. List-based screening won't automatically capture UK exposure, under that definition, or for the goods in Schedules 1A to 1I.
Multiple licence considerations. A US authorisation doesn't cover the same activity under UK law, and vice versa.
The Shah Deniz carve-out. Iranian state entity NICO holds a stake in Azerbaijan's Shah Deniz gas field, a key source of gas for Europe. The UK has two licences to keep the field operating, in line with EU and US carve-outs:
OTSI General Trade Licence: Services Necessary for the Continued Operation of the Shah Deniz Gas Field disapplies regulations 27J to 27N of the 2019 Regulations for energy-related goods, technology, technical assistance, and financial and brokering services connected with essential Shah Deniz operations, including the South Caucasus Pipeline and the Azerbaijan Gas Supply Company.
OFSI General Licence INT/2025/7363752 was amended on 29 September 2026 to include investment in relation to Iran, and Insurance and Reinsurance services, in line with the new Regulations 17A and 17C.
OFSI sets strict new test for licence applications from five Iranian banks
On 23 September 2026, OFSI published guidance on the presumption of denial to licence applications from Bank Sepah, Melli Bank plc, Bank Saderat, Persia International Bank and Bank Tejarat. FAQ 204, published on 24 September, set out in more detail how the test will work.
A higher bar: Meeting a statutory licensing ground is no longer enough. Licences will only be granted where required by law or in exceptional and urgent circumstances. This echoes the OFAC policy adopted on 10 September.
What may still be considered: Risks to life or limb; environmental safety; essential insurance premiums and property management fees; staff remuneration and pensions; tax, rent, mortgage and utilities; essential regulatory payments; asset preservation; and wind-down, including insolvency. Important to note that these are areas OFSI may consider, not categories licensed as of right.
Conditions on any licence: Requirements covered only "at the most basic level"; a strong presumption that transactions stay within the UK; no remittance of UK funds to Iran; recordable, auditable transactions only, with no cash; and no transfers between designated banks. Applicants must provide clear written evidence with their application.
Interim Necessities General Licence ending: General Licence INT/2025/7628424 will not be renewed when it expires at 23:59 on 22 October 2026. It currently lets Bank Melli (including Melli Bank plc), Bank Saderat Iran, Bank Tejarat, Persia International Bank plc, Iran Insurance Company and their UK subsidiaries pay staff, pensions, IT providers and accountants.
United States
The Lindsey O. Graham Act
President Trump signed the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026 on 18 September 2026. Most of it takes effect on 18 October 2026.
Key provisions
Designations: The President must review and block senior Russian officials, defence-sector suppliers and supporting energy and transport leaders within 30 days, then every 180 days.
Shadow fleet: Vessels moving Russian energy, uranium, coal or arms to evade sanctions or the price cap can be blocked, along with their owners, operators, managers, captains, receiving port owners and anyone who knowingly insures or reinsures them. A separate, broader test covers any vessel knowingly carrying Russian-origin energy, with no price-cap carve-out on its face.
UK/EU designations as evidence: A vessel's designation by the UK, EU, G7 or a Five Eyes country is prima facie evidence of evasion.
"Knowingly" includes "should have known" for every secondary sanctions trigger.
Banks: Sberbank, VTB, Gazprombank and all state-owned Russian banks must be fully sanctioned, along with foreign financial institutions that transact significantly with them.
Tariffs: can be imposed up to 500% on Russian goods, and up to 100% on goods from top-five buyers of Russian energy or top-five facilitators of Russian oil sanctions evasion.
Iran: The Iran Sanctions Act is extended to 31 December 2031.
Exceptions and duration: Humanitarian trade, existing OFAC general licences, civil nuclear and vessel safety are carved out. Wind-down relief runs to 15 June 2027. The Russia provisions expire September 2031 and can only be lifted earlier with a Ukraine-accepted peace deal and congressional review.
Key Takeaways
No new UK prohibition. UK cover for Russian oil is still governed by the UK regime and price cap. The tariff hits countries, not firms.
Designation risk for UK insurers has been strengthened. Anyone who knowingly insures a shadow-fleet vessel is in scope, and the "should have known" test, could expose weak due diligence. Reinsurers of third-country fronting insurers should assume they're in scope.
Price-cap-compliant cover isn't the apparent target, but the broad vessel test has no direct carve-out.
Insurers are financial institutions for OFAC purposes. Premium, claims and reinsurance flows touching the named Russian banks, including through intermediaries, all need to be carefully mapped out.
Indirect effects may matter most. Tariffs on major Russian energy buyers could disrupt clients' cargo volumes, trade credit and counterparty risk, and prompt changes of vessel, bank or insurer.
Scrutiny of insurance hubs. Jurisdictions providing financing, insurance or shadow-fleet services count towards the facilitator test. The UK is unlikely to be top five, but tanker insurance will draw attention.
UK subsidiaries of US groups aren't US persons, but remain fully exposed to secondary sanctions.
Wind-down relief (s.114(i)) runs only to 15 June 2027. Document steps now.
Blocking statute: the Iran Sanctions Act is covered by the UK's retained Blocking Regulation, so Iran refusals should rest on UK law and risk appetite. The new UK Iran regime makes this less relevant in practice.
New Cuba Sanctions Regulations take effect
OFAC has issued the Cuba Sanctions Regulations (31 CFR Part 516), which came into effect on 30 September 2026. They implement Executive Order 14404, signed on 1 May 2026, which targets those responsible for repression in Cuba and threats to US national security.
In addition, there have been amendments to the existing Cuban Assets Control Regulations, which also came into effect on 30 September.
Key changes:
New restrictions on travel: Professional meetings and conferences in Cuba, previously one of the 12 authorised travel categories, are no longer authorised as of 30 September. Travellers already in Cuba under that authorisation have until 30 October to wind down and leave. Educational travel must now be under the auspices of an organisation subject to US jurisdiction, and almost all travellers must be accompanied by a representative of that organisation.
Expanded prohibition on financial transactions with Cuban related list entities.
Banks are now required to reject U Turn transactions, so those that started and ended outside of the US, where Cuba or Cuban nationals had an interest.
Restrictions on bank accounts for independent private sector entrepreneurs. While these used to be an exception, there is no grandfathering and existing accounts must be blocked and reported to OFAC. Banks can still open and maintain bank accounts for Cuban nationals located in Cuba for the purpose of receiving payment for authorised transactions
Iran: Operation Economic Outcast
The US campaign launched on 24 August against Iran's economic lifelines has produced new designations targeting a digital asset exchange, banks, airlines, weapons procurement networks and international facilitators. Among the most significant is Russia's VTB Bank, already sanctioned under Russian programmes, and now also designated under Iran authorities for enabling sanctions evasion. Announcements also pointed to recent actions against banks in Türkiye and the UAE.
UN / Other Jurisdictions
UN Security Council condemns Houthi attacks on Saudi Arabia
In mid September, in a rare show of unity, the UN Security Council condemned continued Houthi attacks on Saudi Arabia's civilian and energy infrastructure, along with attacks and threats against Red Sea shipping. It affirmed Saudi Arabia's right to self-defence and called for strict enforcement of the Resolution 2216 arms embargo, including cooperation to stop the Houthis obtaining arms, training and financing.
Looking Ahead
Yemen, Saudi Arabia and the Red Sea
On 20 July when the Houthis declared a maritime embargo against Saudi Arabia, they opened a new front in the Iran war. With Hormuz closed, Saudi Arabia has been diverting around 4 million barrels a day to its Red Sea port of Yanbu. The Houthis have since struck a Bahri tanker, the Amzan, off Yanbu and taken Yemen's Red Sea coast, including Mocha and Mayyun Island in the Bab al-Mandab strait, which carries a significant percentage of global oil trade.
Any payment resembling safe-passage fees is a red flag.
Ship-to-ship transfers (with tankers gathering at Port Said) and AIS gaps are increasing, making origin and destination checks harder.
Ambrey rates Saudi-flagged, owned or operated vessels, and those trading to Saudi ports, as high risk, so current ownership data matters.
With the UN calling for Houthi financing to be cut off, new designations of Houthi procurement networks, Iranian suppliers or vessels look increasingly likely (although it should be noted that existing Houthi measures, including the US FTO designation and UN/UK listings of Houthi leaders, already apply.)
This article is for information only and does not constitute legal advice.
