Sanctions Watch | Weekly Vol. 163

Sanctions Watch Vol 163

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

OFAC Issues Cuba-Related General Licenses to Facilitate Wind-Down, Divestment, and Diplomatic Activities Under New Sanctions

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has issued General Licenses (GLs) 2, 3, and 4 under Executive Order 14404, which imposes sanctions on individuals and entities deemed responsible for repression in Cuba and threats to U.S. national security and foreign policy.

General License 2 authorizes transactions necessary to wind down dealings involving CEIBA Investments Limited and entities it owns 50% or more, through 12:01 a.m. EDT on August 22, 2026. Payments to blocked persons must be made into blocked interest-bearing accounts in the United States.

General License 3 permits the divestment or transfer of CEIBA Investments Limited debt or equity to non-U.S. persons, as well as the clearing, settlement, and wind-down of certain derivative contracts until August 22, 2026. However, it prohibits U.S. persons from selling such securities to blocked persons or making new investments beyond activities necessary for divestment.

General License 4 authorizes transactions ordinarily incident and necessary for the official business of third-country diplomatic and consular missions in Cuba, including certain personal expenditures of mission staff. It does not permit financial transfers to blocked people except for limited official payments such as taxes, fees, permits, licenses, or utility services, nor does it authorize the unblocking of blocked property.

OFAC Extends Authorization for Lukoil International GmbH Sale Negotiations and Wind-Down Activities

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has issued General License No. 131H under the Russian Harmful Foreign Activities Sanctions Regulations (31 CFR Part 587), authorizing certain transactions related to Lukoil International GmbH (LIG) and its majority-owned entities.

The license permits U.S. persons to negotiate and enter into contingent contracts with Public Joint-Stock Company Oil Company Lukoil or its affiliates for the sale, disposition, or transfer of LIG and its majority-owned subsidiaries through 12:01 a.m. EDT on August 22, 2026. Any contract executed under this authorization must explicitly state that its performance is contingent upon receiving separate authorization from OFAC.

Additionally, the license authorizes transactions necessary for the maintenance or wind-down of operations, contracts, and other agreements involving LIG entities during the same period. Blocked accounts of LIG entities may be used, debited, or credited solely for these authorized activities.     

General License 131H does not permit the unblocking of blocked property, transactions involving other sanctioned persons unless separately authorized, or transfers of funds to any person or account located in the Russian Federation. Effective July 24, 2026, General License 131H replaces and supersedes General License 131G, updating the authorization framework for transactions involving Lukoil International GmbH and related entities.

EU Adopts 21st Sanctions Package Targeting Russia’s Energy, Financial, and Military Sectors

The European Union has adopted its 21st package of sanctions against Russia, introducing additional measures aimed at weakening Russia’s ability to finance its war in Ukraine. The package targets key sectors including energy, financial services, crypto assets, trade, and the military-industrial complex, while also laying the groundwork for a future visa ban on Russian combatants.

The new measures expand restrictions on Russia’s energy sector by maintaining the oil price cap through July 2027, designating additional ports, airports, refineries, and 41 more shadow fleet vessels, and tightening controls on LNG tanker sales and terminal services. The EU also broadened transaction bans on oil traders involved in circumventing sanctions.

Financial measures significantly expand transaction bans on Russian and third-country banks, with more than 100 Russian banks now affected. The package also introduces stricter restrictions on crypto-asset service providers and additional crypto platforms, while extending prohibitions on Russian nationals owning or serving on the boards of crypto service companies.

Trade restrictions have been strengthened through new export controls on technologies used in Russia’s aerospace and drone industries, additional import bans, and anti-circumvention measures targeting 51 entities across Russia and several third countries. The package also adds 218 new listings, including 48 individuals and 170 entities, covering Russia’s banking, energy, defense, gold, diamond, propaganda, and shadow fleet sectors. Similar trade and crypto-related measures have also been extended to Belarus.

China Introduces Export Restrictions on 14 EU Defense and Technology Firms Following EU Sanctions

China has introduced export restrictions on 14 European defense and technology companies following the European Union’s decision to sanction 14 Chinese and Hong Kong entities under its latest Russia sanctions package. The measures represent Beijing’s most significant response to date against EU sanctions targeting Chinese businesses.

Under the new restrictions, Chinese exporters are prohibited from supplying dual-use goods—products with both civilian and military applications—to the listed European firms without prior government approval. Companies affected include Germany’s Rheinmetall, Czech truck manufacturer Tatra, Dutch naval engineering firm IHC Merwede, and several European optics and laser technology companies. Export licenses may still be granted where shipments are considered essential.

The EU’s sanctions, adopted as part of its 21st package against Russia, target Chinese and Hong Kong entities alleged to have facilitated the transfer of Western technologies to Russian importers, supporting Russia’s military-industrial supply chains. European companies are prohibited from engaging in business with the sanctioned entities.

China criticized the EU’s sanctions as unjustified and stated that the export controls are intended to safeguard its national interests. The latest measures reflect increasing trade and regulatory tensions between China and the European Union, particularly over the enforcement of Russia-related sanctions and the movement of dual-use technologies.

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