For businesses operating in the global economy, where cross border payments are a crucial part of operations, geopolitical pressures are heightening sanctions and economic trade risks. Sanctions are highly dynamic and often implemented without warning, making it difficult for businesses of all sizes to monitor and address. In fact, PwC’s 2024 Global Economic Crime Survey found that although 44% of executives view sanctions compliance as a priority, only 30% have comprehensive assessments of their programs.
From updates to the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) Specially Designated Nationals (SDN) list, to new restrictions imposed against “teapot” oil refineries, we cover the latest international sanctions alerts your business needs to know.
International cartels added to OFAC’s SDN list as terrorist organizations
OFAC recently issued the International Cartels Designated as Foreign Terrorist Organizations and Specially Designated Global Terrorists alert, raising awareness of the resulting sanctions and criminal liability risks for U.S. and foreign financial institutions, and others with exposure to these cartels. The U.S. Department of State officially designated eight such organizations, and OFAC has updated its Specially Designated Nationals and Blocked Persons (SDN) list accordingly.
As a result, all property and interests in property of these entities within the United States or under the control of U.S. persons are blocked. U.S. persons are generally prohibited from engaging in transactions with these organizations unless authorized. Non-U.S. persons are also prohibited from actions that evade U.S. sanctions or cause U.S. persons to violate them. Violations may lead to civil or criminal penalties, including for providing material support to these designated organizations under 18 U.S.C.
OFAC advises companies and financial institutions, especially those operating in high-risk jurisdictions where these cartels are active, to assess and strengthen their sanctions compliance programs to mitigate exposure. For more information on OFAC-administered sanctions programs and compliance frameworks, visit the OFAC website.
UK law firm fined for breaching Russia sanctions during Moscow office closure
The UK’s Office of Financial Sanctions Implementation (OFSI) has fined Herbert Smith Freehills CIS LLP (HSF Moscow) £465,000 for violating UK sanctions against Russia. The breaches occurred in May 2022, as HSF Moscow was winding down operations following Russia’s invasion of Ukraine. Over seven days, the subsidiary made six payments totalling approximately £3.93 million to sanctioned Russian banks: Alfa-Bank, PJSC Sovcombank, and PJSC Sberbank.
These transactions contravened asset freeze restrictions, making funds directly available to designated entities. OFSI attributed the violations to inadequate due diligence and sanctions screening, exacerbated by the hasty closure of the Moscow office. HSF London, the parent company, voluntarily disclosed the breaches, resulting in a 50% reduction of the penalty. OFSI emphasized that no fault was found with HSF London’s actions.
Economic Secretary to the Treasury Emma Reynolds highlighted the UK’s commitment to enforcing financial sanctions as a means to disrupt Russia’s war efforts and support Ukraine. This case underscores the importance for businesses operating in high-risk environments to maintain robust compliance measures, especially during periods of operational transition.
OFAC sanctions “teapot” oil refinery for facilitating Iranian oil exports
OFAC has imposed sanctions on Shandong Shouguang Luqing Petrochemical Co., Ltd., a Chinese “teapot” refinery, and its CEO, Wang Xueqing, for purchasing and refining hundreds of millions of dollars’ worth of Iranian crude oil. These transactions involved vessels linked to the Iranian Ministry of Defense and Armed Forces Logistics (MODAFL) and the Houthi movement, Ansarallah. The refinery’s activities are seen as a significant economic lifeline for Iran, a state sponsor of terrorism.
Additionally, OFAC sanctioned 19 entities and vessels comprising Iran’s “shadow fleet,” which employs deceptive shipping practices to transport Iranian oil. These includes eight vessels and several companies based in Hong Kong, Panama, Seychelles, and other jurisdictions, all implicated in operating within Iran’s petroleum sector. The sanctions, enacted under Executive Order 13902, block all U.S.-linked assets of the designated parties and prohibit U.S. persons from engaging in transactions with them.
This action represents the fourth round of sanctions targeting Iranian oil sales since the issuance of National Security Presidential Memorandum 2 on February 4, 2025, reinforcing the U.S. commitment to disrupting Iran’s revenue streams that fund terrorism and its nuclear program.
Sanctions: what you don’t know could cost you
In today’s global economy, businesses of all sizes engage in cross-border transactions, whether importing goods, managing global supply chains, or sending payments to international partners. With this opportunity comes a critical layer of risk: economic sanctions. These powerful policy tools are used by governments and international bodies to influence the behavior of foreign actors, ranging from individuals and companies to entire regimes. For internationally active businesses, understanding and complying with sanctions regimes is not optional, it’s essential.
What are international sanctions?
Sanctions are legal restrictions imposed by one country (or group of countries) on another, targeting trade, financial transactions, travel, and more. These measures are typically used to address issues such as terrorism, human rights abuses, nuclear proliferation, or regional instability. Sanctions can be comprehensive, banning almost all trade and financial transactions with a country, or focused on targeting specific individuals, entities, or sectors like defense or energy.
Key authorities issuing sanctions include the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), the European Union, the United Nations, and the UK’s Office of Financial Sanctions Implementation (OFSI). Each has its own rules, lists, and enforcement practices, making global compliance a complex undertaking.
Why international sanctions matter to businesses
Sanctions carry significant implications for businesses. A single misstep, such as unknowingly paying a supplier linked to a sanctioned entity can lead to severe penalties, frozen assets, reputational damage, or even criminal liability.
- Legal and financial risk: The cost of non-compliance can be high. OFAC, for example, regularly issues multimillion-dollar fines to companies for international sanctions violations, even when those violations are unintentional. In some cases, individuals within the company may be held personally liable.
- Reputational damage: Beyond fines, a sanctions breach can tarnish a business’s reputation with investors, partners, and customers. In our digital age where transparency is expected, even being indirectly linked to sanctioned entities can erode trust and lead to long-term brand harm.
- Operational disruption: Sanctions can restrict access to global markets, freeze transactions, or require the rapid withdrawal from regions where a company has invested heavily. Changes to sanctions regimes often come with little warning, causing supply chain disruptions, payment delays, and operational challenges
- Regulatory scrutiny: businesses dealing with cross border payments are expected to maintain rigorous compliance systems, including Know Your Customer (KYC) protocols, transaction screening, and regular audits. As enforcement tightens globally, businesses that fall short risk heightened scrutiny and costly investigations.
Navigating an evolving landscape
International sanctions are dynamic. They shift with the geopolitical landscape and often evolve rapidly in response to conflicts or political developments. In recent years, we’ve seen sweeping sanctions in response to Russia’s invasion of Ukraine, ongoing restrictions on Iran and North Korea, and growing scrutiny around Chinese technology companies. In 2025, the U.S. government issued a new National Security Presidential Memorandum (NSPM-2), intensifying pressure on Iran and signaling a new phase of enforcement that impacts financial institutions and corporates worldwide.
For businesses operating internationally, staying ahead of these changes is critical to maintaining business operations. Proactively managing sanctions risks gives businesses a competitive edge by helping to protect their reputation, ensuring business continuity, and maintaining trusted relationships across markets. In a world where trust and transparency are more important than ever, sanctions compliance should be embedded in every aspect of cross-border operations—from payment systems and procurement processes to executive decision-making. Talk Convera today about how we can support your compliance journey in an increasingly regulated world.
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