Sanctions Watch | Weekly Vol. 178

Sanctions Watch Vol 178

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

OFAC Warns of Designation and Penalty Risks as Iranian Shadow Fleet Expands Use of False Flags

The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued an alert on November 4, 2026, warning that companies providing services to vessels using false flags to evade U.S. sanctions on Iran face substantial risk of designation or penalties. Issued in support of Operation Economic Outcast, the alert says Iranian shadow fleet operators are increasingly using fraudulent registries and falsely claimed flags to continue trading Iranian-origin petroleum and petrochemicals.

OFAC highlighted a network involved in operating fraudulent ship registries that continued issuing flags even after countries including Dominica, Guyana, Eswatini, and Nicaragua revoked authorization and publicly denounced the services as fraudulent. Treasury said it will continue targeting fraudulent registries that facilitate the false flagging of sanctioned vessels or vessels engaged in sanctionable trade.

The alert also places heightened compliance expectations on insurers, financial institutions providing trade finance, and other maritime service providers. OFAC encouraged enhanced due diligence where false-flag indicators appear, warning that failures could result in involvement in sanctionable or violative activity. Key red flags include unknown flags, conflicting vessel identity data, flags linked to nonexistent registries, and registration documents that cannot be verified.

EU and International Partners Intensify Sanctions Enforcement Focus on Russia, Circumvention and Shadow Fleet

The European Commission convened the tenth meeting of the High-Level Group on Union Restrictive Measures on November 5, 2026, bringing together EU Member States and institutions to address sanctions loopholes and strengthen consistent enforcement. Commissioner Maria Luís Albuquerque hosted the meeting as the EU reinforced coordination with G7 partners and other international allies to limit sanctions circumvention and maintain pressure on Russia.

The Commission highlighted the 21st sanctions package adopted on July 23 and said effective implementation remains critical to restricting Russian revenues and preventing enablers from weakening EU measures. The meeting also examined emerging circumvention risks, including the use of crypto assets, while the European Anti-Fraud Office presented its work on sanctions evasion.

In the afternoon, EU Sanctions Envoy David O’Sullivan convened the eighth Sanctions Coordinators Forum with partners including the United States, United Kingdom, Canada, Japan, Australia, South Korea, Switzerland, Norway and Ukraine. Discussions focused on constraining Russian financing through third-country payment networks, identifying circumvention patterns linked to the Russian military-industrial complex, monitoring energy exports, and examining shadow-fleet operations. The Commission stressed that close international coordination is essential to make sanctions implementation and enforcement mutually reinforcing.

OFAC Extends PdVSA 2020 Bond Restrictions Until December 18 Before Authorizing Certain Transactions

The U.S. Treasury Department’s Office of Foreign Assets Control issued Venezuela-related General License 5AA on November 4, 2026, replacing General License 5Z and further delaying authorization for certain transactions involving Petróleos de Venezuela, S.A.’s 2020 8.5 percent bond.

Under General License 5AA, beginning December 18, 2026, transactions related to the bond, including financing and other dealings otherwise prohibited by subsection 1(a)(iii) of Executive Order 13835, will be authorized. That provision restricts transactions involving the sale, transfer, assignment, or pledging as collateral of certain equity interests owned by the Government of Venezuela.

Until December 18, however, no general authorization is in effect for bondholders seeking to enforce rights against CITGO shares pledged as collateral for the PdVSA bond. Consequently, transactions involving the sale or transfer of those shares remain prohibited unless specifically authorized by OFAC.

The license does not authorize activities otherwise prohibited under the Venezuela Sanctions Regulations or other OFAC regulations. OFAC also noted that restructuring or refinancing arrangements involving the bond may require additional licenses and said it would maintain a favorable licensing policy toward agreements addressing payments owed to bondholders.

U.S. Expands Cuba Sanctions, Targeting Oil Shipping, State Entities, Chinese Suppliers and Foreign Enablers

The U.S. Department of State announced new sanctions on November 5, 2026, designating eight entities and two individuals and identifying five vessels as blocked property under Executive Order 14404. The measures target networks linked to Cuba’s oil shipments, state-owned enterprises, regime elites, and China-based companies supplying equipment to the Cuban military.

The action includes maritime companies and vessels involved in transporting petroleum products to and from Cuba, as well as Cuban state-owned entities CUBAELECTRONICA and TECNOSIME. The United States also designated China National Electronic Import and Export Company and Beijing H&C Technologies for providing components, surveillance equipment, or other support connected to the Cuban government and military.

The sanctions block property and interests in property of designated persons under U.S. jurisdiction and prohibit transactions involving blocked persons unless authorized or exempt. Entities owned 50 percent or more by blocked persons are also blocked. The State Department further warned that foreign persons, including financial institutions, dealing with designated parties or operating in specified Cuban economic sectors may themselves face sanctions risk.

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