Sanctions Watch | Weekly Vol. 177

Sanctions Watch Vol 177

In the latest edition of our Sanctions Watch weekly digest, we present significant updates on sanction watchlists and regulatory developments.

OFAC Extends Wind-Down Authorization for Transactions Involving Iraq Development Bank Until December 1, 2026

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued General License FF-1 on October 29, 2026, under the Iranian Transactions and Sanctions Regulations (ITSR), authorizing certain transactions necessary to wind down dealings involving International Development Bank for Investment and Finance, also known as Iraq Development Bank.

The authorization also applies to entities in which Iraq Development Bank owns, directly or indirectly, a 50% or greater interest. Covered wind-down transactions are permitted on December 1, 2026. Any payment involving a blocked person must be placed into a blocked account in accordance with the ITSR.

General License FF-1 does not authorize transactions prohibited under the ITSR, including dealings with other blocked people unless separately authorized. The license, effective October 29, 2026, replaces and supersedes General License FF dated October 15, 2026.

UK Treasury Issues General Licence Allowing Legal Services Payments for Sanctioned Persons Through April 2027

The UK’s HM Treasury’s Office of Financial Sanctions Implementation (OFSI) has issued General Licence INT/2026/11112108, permitting certain payments and related transactions for legal services provided to persons designated under specified UK autonomous sanctions regimes. The licence allows persons, relevant financial institutions and qualifying non-UK banks to receive, make and process payments involving designated persons where the applicable conditions are met.

The licence covers professional legal fees, Counsel’s fees and related expenses, subject to detailed financial limits and conditions under Parts A and B. Where both parts are used, aggregate professional legal and Counsel’s fees must not exceed £4 million per law firm or directly instructed Counsel, while associated expenses are capped at the lower of 10% of those fees or £400,000.

The authorization does not permit funds or economic resources to be made available to designated persons and excludes payments benefiting persons designated to implement UN sanctions obligations.

The licence is effective from 29 October 2026 through 28 April 2027 and may be varied, suspended or revoked by HM Treasury.

UK Extends Sanctions Licence Allowing Lukoil Bulgaria Entities to Continue Business Through February 2027

The UK’s HM Treasury’s Office of Financial Sanctions Implementation (OFSI) has issued General Licence INT/2026/11112108, permitting certain payments and related transactions for legal services provided to people designated under specified UK autonomous sanctions regimes. The licence allows people, relevant financial institutions and qualifying non-UK banks to receive, make and process payments involving designated people where the applicable conditions are met.

The licence covers professional legal fees, Counsel’s fees and related expenses, subject to detailed financial limits and conditions under Parts A and B. Where both parts are used, aggregate professional legal and Counsel’s fees must not exceed £4 million per law firm or directly instructed Counsel, while associated expenses are capped at the lower of 10% of those fees or £400,000.

The authorization does not permit funds or economic resources to be made available to designated people and excludes payments benefiting persons designated to implement UN sanctions obligations.

The licence is effective from 29 October 2026 through 28 April 2027 and may be varied, suspended or revoked by HM Treasury.

OFAC Amends Sanctions FAQs on Blocking, Rejected Transactions and Reporting Requirements

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) amended 11 Frequently Asked Questions (FAQs 10, 32–36, 41–42, 49–50 and 53) on October 26, 2026, as part of its review of existing sanctions guidance. The amendments primarily address the treatment of blocked and rejected transactions and associated reporting obligations.

The revised guidance clarifies that blocked funds must be placed in segregated, interest-bearing accounts and reported through the OFAC Reporting System (ORS) within 10 business days. Institutions using omnibus blocked accounts must maintain an audit trail and provide a disaggregated list of assets in their annual blocked-property report.

OFAC also provides clearer guidance on the distinction between blocking and rejecting transactions. Transactions involving a block able interest, such as an SDN or blocked government, generally must be blocked, while prohibited transactions with no block able interest must instead be rejected and returned to the originator. Both blocked and rejected transactions must generally be reported through ORS within 10 business days.

The amendments further clarify that receiving an actual payment instruction involving a blocked party can trigger blocking requirements, whereas a customer merely asking whether a transaction is permissible does not itself create a reportable transaction.

OFAC also updated guidance on customer notification, commercially reasonable interest on blocked funds, permissible service charges, annual blocked-property reporting, and the jurisdictions currently subject to broad U.S. sanctions. The October 26 action represents an update to OFAC compliance guidance rather than the imposition of new sanctions or new designations.

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Sanctions Watch is a weekly recap of events and news related to sanctions around the world.