Sanctions Watch | Weekly Vol. 172

Sanctions Watch Vol 172

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

UK OFSI Introduces Presumption of Denial for Licence Applications from Five Designated Iranian Banks

The UK Office of Financial Sanctions Implementation (OFSI) has introduced, with immediate effect, a presumption of denial for licence applications from five designated Iranian banks operating in the UK. The guidance, published on 23 September 2026, applies to Bank Sepah, Melli Bank plc, Bank Saderat, Persia International Bank and Bank Tejarat, all designated under the Iran (Sanctions) (Nuclear) (EU Exit) Regulations 2019.

The measure forms part of the UK Government’s broader effort to increase economic pressure on Iran over its nuclear programme and follows the UK’s snapback of UN Iran sanctions on 1 October 2025. It also follows additional sanctions legislation introduced on 8 September 2026 to restrict the Iranian government’s access to the UK financial system and its ability to raise funds.

Under the new approach, applications from the five banks will ordinarily be denied unless applicants demonstrate clear and compelling grounds. Licences will generally be considered only where legally required or in exceptional and urgent circumstances, including risks to life, limb or environmental safety.

OFSI also confirmed that General Licence INT/2025/7628424 will not be renewed when it expires on 22 October 2026. Thereafter, previously covered transactions will require another applicable general licence or a specific HM Treasury licence.

Any licences granted will be tightly restricted to basic requirements and auditable transactions. Cash payments, transfers between designated banks, and direct or indirect remittances of UK-held funds back to Iran will not be permitted. OFSI will nevertheless continue assessing applications individually based on their specific circumstances.

US OFAC Removes Syria-Specific General License Following Rescission of State Sponsor of Terrorism Designation

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has amended the Terrorism List Governments Sanctions Regulations (31 CFR Part 596) following the removal of Syria’s designation as a State Sponsor of Terrorism. The final rule, scheduled for publication in the Federal Register on September 25, 2026, removes and reserves the Syria-specific general license under § 596.505, which OFAC says is no longer necessary.

Syria had been designated a State Sponsor of Terrorism since December 1979. According to the rule, on July 8, 2026, the President certified and reported to Congress that the Syrian government had not provided support for acts of international terrorism during the preceding six months and had provided assurances that it would not support such acts in the future. Based on these considerations and applicable law, the Secretary of State formally rescinded Syria’s designation effective August 24, 2026.

As a result, the Government of Syria is no longer considered a Terrorism List Government for purposes of the regulations. OFAC is therefore eliminating the Syria-specific authorization previously contained in § 596.505.

The amendment is a technical regulatory change directly resulting from Syria’s changed designation status. OFAC also notes that willful violations of applicable regulations may carry criminal penalties under U.S. law, with willfulness required for criminal liability.

The rule takes effect upon its publication in the Federal Register and represents a further regulatory consequence of the U.S. government’s formal rescission of Syria’s longstanding terrorism-related designation.

EU Extends Ukraine Territorial Integrity Sanctions on Over 3,000 Individuals and Entities Until September 2029

The Council of the European Union has extended restrictive measures against individuals and entities identified as responsible for undermining or threatening Ukraine’s territorial integrity, sovereignty and independence for another 36 months, until 22 September 2029. The decision was announced on 22 September 2026.

The sanctions currently cover more than 3,000 individuals and entities. Measures include travel restrictions applicable to listed natural persons, asset freezes, and a prohibition on making funds or other economic resources available to sanctioned individuals and entities. As part of its latest review, the Council decided not to renew the listings of three individuals and one entity and removed three deceased persons from the sanctions list.

The measures form part of the EU’s sanctions framework concerning actions undermining or threatening Ukraine’s territorial integrity. Since Russia’s full-scale invasion of Ukraine in February 2022, the EU has substantially expanded its sanctions, including measures aimed at Russia’s economic base, energy revenues, access to critical technologies and markets, and military-industrial complex.

The latest three-year extension represents a notable shift from the six-month renewal adopted in March 2026, when sanctions applied to around 2,600 individuals and entities and were extended until 15 September 2026.

The European Council had reaffirmed in June 2026 its support for Ukraine’s independence, sovereignty and territorial integrity within its internationally recognised borders, alongside continued political, financial, economic, humanitarian, military and diplomatic assistance.

OFAC Consolidates Sanctions Enforcement and Penalty Rules into New Regulatory Framework

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced a significant regulatory restructuring aimed at simplifying and standardizing the administration of U.S. sanctions. OFAC is consolidating existing provisions on sanctions enforcement procedures and penalties into a new standalone part of the Code of Federal Regulations called the Sanctions Penalties Regulations. OFAC

Previously, information governing enforcement procedures, penalties, and the rights of U.S. persons under investigation was distributed across individual sanctions programs within 31 CFR Chapter V. Under the new structure, those individual regulations will instead cross-reference the centralized Sanctions Penalties Regulations. OFAC expects the consolidation to allow it to eliminate more than 100 regulatory subparts, reducing duplication across the U.S. sanctions framework. OFAC

The September 24 action also included an amendment to the Terrorism List Governments Sanctions Regulations following the rescission of Syria’s designation as a State Sponsor of Terrorism. OFAC removed a Syria-specific general license that had become unnecessary. Separately, OFAC published its quarterly TSRA licensing report for April–June 2026, covering licensing related to exports of agricultural commodities, medicines, and medical devices to Iran.

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