Welcome to this month’s Sanctions and Export Controls Update, highlighting IFI’s take on key developments from July 2026.
The June Islamabad Memorandum of Understanding collapsed in July. Iran’s attacks on commercial vessels in the Strait of Hormuz triggered U.S. retaliatory strikes and the revocation of the oil sanctions waiver (GL X) just two weeks after its issuance, and both sides declared the MOU effectively void by mid-month, though a fragile informal pause emerged at month’s end.
The EU adopted its 21st Russia sanctions package on July 23—the most expansive by designation count since the invasion, with 218 new listings, a landmark new mechanism enabling jurisdiction-level bans on crypto-asset services that facilitate Russian sanctions circumvention, and transaction bans on over 100 banks in total—while the EU and UK simultaneously announced their first-ever joint cyber sanctions package targeting Russia’s FSB and GRU.
In other developments, President Trump formally notified Congress of his intent to rescind Syria’s nearly 50-year-old State Sponsor of Terrorism designation, and a series of new cartel, organized crime, and terrorism designations reflected a continued high pace of Treasury and State Department activity.
The June MOU disintegrated in July under a cycle of Iranian vessel attacks and U.S. retaliatory strikes. Iran struck three commercial vessels in the Strait of Hormuz in early July, triggering CENTCOM strikes on more than 80 Iranian targets overnight July 7–8 and a mutual exchange of claims that the MOU was void. From a sanctions and compliance standpoint, the pivotal development was OFAC’s revocation of GL X on July 7—just 15 days after its issuance—which ended the brief window of authorized Iranian oil trade. GL X was replaced by Iran General License X1 (GL X1), which authorized only a narrow wind-down on July 17, explicitly prohibited new purchases or loading of Iranian energy products on or after July 7, and required that any payments to blocked persons made during wind-down be deposited into interest-bearing accounts in the United States. A fragile informal pause emerged at month’s end, but the Strait remained severely disrupted—fewer than 10 commodity ships were transiting daily, versus approximately 100 pre-war. For a detailed account of the breakdown, see the House of Commons Library briefing on U.S.–Iran ceasefire and nuclear talks in 2026.
OFAC issued several tranches of Iran-related designations throughout July. On July 10, OFAC designated Iranian financial facilitator Ali Ansari and his network, including Smart Global Limited, a holding company registered in Saint Kitts and Nevis that Ansari used to accumulate a global portfolio of real estate and commercial properties spanning Germany, Luxembourg, Spain, the United Kingdom, Cyprus, the UAE, and other locations, on behalf of Supreme Leader Mojtaba Khamenei, his family, other regime elites, and the IRGC. On July 15, OFAC designated an IRGC weapons procurement network including Iranian national Behrouz Namazi and his Nigeria- and Italy-based intermediaries, as well as two Russian nationals at Moscow aviation firm Avratek OOO. On July 30, OFAC designated six entities and individuals in China, India, Russia, and Iran for supporting the IRGC and Mahan Air, including China-based general sales agents Shanghai Wings and Shanghai Elite and their manager Tang Xin, India-based Skiez Travels, Russia-based Air Cargo Pro, and IRGC-affiliated front company DadeNegar Startup Studio, which ran a public website to solicit locations of American and Israeli military equipment and receive IRGC strike requests.
July was a significant month for Russia-related sanctions. The EU adopted its 21st package and the EU and UK jointly announced their first-ever coordinated cyber sanctions package, alongside coordinated UK-EU designations targeting Russia’s chemical weapons scientists.
On July 23, the EU Council adopted its 21st sanctions package against Russia, the largest by designation count since the invasion, with 218 new listings. The measures of greatest significance to financial sector and virtual asset compliance include:
On July 13, the EU and UK jointly announced the first-ever EU-UK coordinated cyber sanctions package, designating 33 individuals and entities tied to Russia’s FSB Centre 16 and GRU—including GRU head Admiral Igor Kostyukov—for conducting cyberattacks across at least nine EU member states and attempting to attack Poland’s power grid. Separately, on July 3, the EU designated six individuals linked to Russia’s chemical weapons program—scientists and researchers at SC Signal and GNIII VM—for developing epibatidine, the toxin found in Alexei Navalny’s body, and Novichok. Three days later, on July 6, the UK designated seven individuals and two of the same research institutes in a parallel, but separately timed, action to coincide with the NATO summit in Ankara.
In a significant development with implications for both the Russia and Iran tracks covered above, the Senate on July 28 voted 86–12 to clear a key procedural cloture hurdle on the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026 (S. 5025)—renamed in honor of the late senator, who announced a White House deal on a revised version of the bill at a press conference in Kyiv on July 10. The 86–12 margin, with Rand Paul the only Republican opposed, suggests final passage is likely before the August recess. Its key provisions include: mandatory primary and secondary sanctions on Russia and actors supporting Russia’s war in Ukraine (targeting officials, oligarchs, shadow fleet vessels, and defense suppliers); authority for the President to impose tariffs of up to 100% on the five largest importers of Russian crude oil and gas (principally China and India) and the top five facilitators of Russian sanctions evasion; and a congressional review mechanism allowing termination of Russia-related sanctions only upon a verified peace agreement.
Critically for the Iran track, a provision added July 28 extends the Iran Sanctions Act of 1996 from its 2026 expiration through 2031—preventing a lapse in the statutory authority that has for three decades restricted foreign investment in Iran’s energy and weapons sectors and underpins secondary sanctions on foreign companies dealing with Iranian oil, gas, and petrochemicals. Given the current MOU negotiations, the ISA renewal is a significant legislative signal about the durability of U.S. sanctions pressure regardless of executive branch diplomacy. The Senate bill must still be reconciled with the House’s June 4 Ukraine Support Act (passed 226–195), which also includes Russia sanctions but additionally authorizes $8 billion in Ukraine military finance loans that Trump opposes; the path to reconciliation when the House returns in September remains uncertain.
July brought a wide range of further significant developments: the U.S. moved to rescind Syria’s State Sponsor of Terrorism designation; OFAC delivered one of its largest CJNG takedowns and targeted Brazil’s PCC network and ISIS-associated digital assets; the EU coordinated with the U.S. on Southeast Asian scam center sanctions; the U.S. Commerce Department lifted all AI model export restrictions on Anthropic; and the EU proposed a new dedicated sanctions regime for migrant smuggling and organized crime. In enforcement, sanctioned Sinaloa Cartel co-founder “El Mayo” Zambada was sentenced to life in prison and ordered to forfeit $15 billion, and the enforcement pipeline continued to produce notable outcomes on both sides of the Atlantic.
Trump Notifies Congress of Intent to Rescind Syria’s State Sponsor of Terrorism Designation
On July 8, President Trump formally notified Congress of his intent to rescind Syria’s designation as a State Sponsor of Terrorism (SST), initiating a mandatory 45-day review period. Absent congressional opposition—considered unlikely given broad bipartisan support—the designation, in place since 1979, is expected to lapse around late August 2026. The notification followed a meeting between Trump and Syrian President Ahmed al-Sharaa at the NATO summit in Ankara. This is the final major structural step in a sanctions rollback that began with Trump’s June 2025 executive order revoking Syria’s sanctions EOs and continued through BIS’s September 2025 export control liberalization and the December 2025 NDAA’s repeal of the Caesar Act. Removal of the SST designation will carry concrete legal consequences: it eliminates the statutory ban on U.S. defense exports and sales to Syria, removes the requirement that the U.S. oppose Syria’s access to multilateral assistance (World Bank, IMF), lifts dual-use export controls conditioned on SST status, and restores Syrian sovereign immunity in U.S. courts.
OFAC Designates 50+ CJNG Members, Including Alleged New Cartel Leader
On July 23, OFAC sanctioned more than 50 individuals and entities linked to CJNG in one of the largest single CJNG actions to date. Among those designated is dual Mexican-U.S. national Juan Carlos González (a.k.a. “Pelón”), who became the cartel’s new leader following the death of his stepfather and CJNG founder Rubén Oseguera Cervantes (“El Mencho”) in a Mexican government operation in February 2026. Designations were issued under E.O. 14059 and E.O. 13224. The action was coordinated with the FBI, HSI, and DEA, and follows June’s OFAC-FinCEN action against CJNG’s cross-border fuel smuggling network.
OFAC Targets Brazilian PCC Money Laundering Network
On July 1, OFAC designated two Brazilian nationals, three Brazilian companies, and one Portuguese company for laundering more than $30 million in drug proceeds for Brazil’s Primeiro Comando da Capital (PCC)—now designated as the largest transnational criminal organization in the Western Hemisphere. The network used cryptocurrency and corporate structures to route funds from Florida to Brazil. The action highlights PCC’s growing use of the U.S. financial system and OFAC’s expanding attention to Latin American TCOs beyond the major Mexican FTOs.
State Department Designates Ecuador’s Chone Killers as Foreign Terrorist Organization
The State Department designated Ecuador’s Chone Killers as a Foreign Terrorist Organization and Specially Designated Global Terrorist under the Immigration and Nationality Act and E.O. 13224, citing attacks on civilians, police, and government officials including high-profile assassinations. The Chone Killers broke away in 2020 from Los Choneros, itself a designated FTO and SDGT, and has since become one of Ecuador’s most violent criminal groups.
EU Sanctions Prince Group and Jin Bei Group for Southeast Asian Scam Center Operations
The EU Council designated seven individuals and three entities under the EU’s Global Human Rights Sanctions Regime for serious human rights violations linked to scam centers in Cambodia and Myanmar. Designees include Chen Zhi and his Prince Holding Group (previously sanctioned by the U.S. in October 2025 and targeted again by OFAC in June 2026), the Jin Bei Group casino and scam-compound developer and its chairman Zhu Zhongbiao, and Myanmar’s Democratic Karen Benevolent Army, which protects scam operations in Karen State. The EU action marks a significant coordinated step with the U.S. in holding trafficking-based fraud compound operators accountable across jurisdictions.
OFAC Updates ISIS-Khorasan Sanctions with Over 100 Cryptocurrency Wallets
On July 1, OFAC added 134 cryptocurrency wallet addresses—131 Tron and 3 Monero—to ISIS-Khorasan’s existing SDN entry, reflecting continued efforts to disrupt terrorist financing via virtual assets. Tether immediately froze balances on all 131 Tron addresses; the three Monero addresses reportedly could not be frozen due to Monero’s privacy architecture, a compliance gap the designation does not resolve. The 131 Tron wallets had received more than $1.4 million in crypto donations since 2023, per Chainalysis tracing.
Commerce Lifts All Export Restrictions on Anthropic’s AI Models Following Safety Framework Agreement
On July 1, the U.S. Commerce Department Secretary Lutnick confirmed via post on X that BIS had withdrawn its export controls on Anthropic’s Mythos 5 and Fable 5 models, ending an 18-day standoff. The original June 12 restriction was triggered by Amazon researchers who demonstrated that Fable 5 could be prompted to identify software vulnerabilities and, in one case, produce exploit code—though Anthropic subsequently showed that less capable models, including Opus 4.8 and GPT-5.5, could reproduce the same findings, indicating no capability unique to Mythos or Fable was exposed. To secure the withdrawal, Anthropic deployed an improved classifier that blocks the relevant prompting technique in more than 99% of cases. The Center for AI Standards and Innovation, Commerce’s AI evaluation body, tested the old and new safeguards and called them “extraordinarily strong.”
Anthropic also committed to proactively detect and address security risks in future models, work with the government on standards for upcoming releases, and notify the government of malicious activity. The withdrawal concludes the full arc of a dispute that began with Commerce’s June 12 restriction—the first use of the Export Control Reform Act’s emerging technology authority against a commercial AI model—followed by a partial June 26 restoration to roughly 100 vetted U.S. organizations, and finally the full July 1 lifting. Notably, the entire episode played out through private correspondence and posts on X rather than any formal BIS rule, license, or Federal Register notice, a procedural approach that leaves significant uncertainty for other frontier AI developers assessing their potential exposure to similar actions.
FCC Adds Foreign-Produced Robots and Power Inverters to Covered List on National Security Grounds
On July 28, the Federal Communications Commission updated its Covered List to include two new categories of foreign-produced equipment following a White House-convened interagency national security review: advanced robotic devices (defined as mobile robots, including humanoids and quadrupeds) and connected power inverters. The additions bar new foreign-produced devices in both categories from receiving FCC equipment authorization to be imported, marketed, or sold in the United States. The measures do not affect models already authorized for sale, though the FCC retains authority to revoke prior approvals; and existing devices may continue to receive software and firmware updates until at least January 1, 2029. The robotics ban targets humanoid and quadruped robots—among the leading categories of Chinese industrial exports—citing networked vulnerabilities, data collection risks, and the potential for foreign intelligence services to remotely commandeer the devices. The power inverter ban reflects concerns about cyberattack vectors (including the risk of remote shutdown or data harvesting) in grid-connected and data center infrastructure dominated by Chinese suppliers such as Sungrow and Huawei.
State Department Issues ITAR Debarments Against 13 Individuals and One Company
The State Department barred 14 individuals from all ITAR-regulated activities for three years for violations of U.S. military export laws. Debarred parties are prohibited from exporting or importing defense articles, brokering deals, and transferring ITAR-controlled technical data.
European Commission Proposes First Dedicated EU Sanctions Regime for Organized Crime
The European Commission proposed a new EU sanctions framework targeting migrant smuggling, human trafficking, and other serious forms of organized crime including firearms trafficking, drug trafficking, and money laundering. If adopted, this would be the EU’s first dedicated organized crime sanctions framework, enabling designations of individuals and entities involved in these activities regardless of geographic location.
OFAC Removes 84 Outdated SDN List Entries, Launches Reconsideration Portal
On July 27, OFAC announced the second major action in its sanctions modernization initiative, removing 84 individuals and entities from the SDN List (including deceased individuals, defunct entities, and decades-old designations with insufficient identifying information), improving data for 22 additional entries, and consolidating 18 duplicate entries. This follows the first round of 76 removals in May. OFAC also launched a new online Reconsideration Portal on June 29 for streamlined delisting petitions. For compliance teams, the cleanup should reduce false-positive screening hits, while the portal may increase the volume of counterparty delisting petitions requiring legal review.
Sinaloa Cartel Co-Founder Sentenced to Life in Prison; Ordered to Forfeit $15 Billion
On July 21, Ismael “El Mayo” Zambada García, 77, the sanctioned co-founder and longtime principal leader of the Sinaloa Cartel, was sentenced to life in prison without the possibility of parole in federal court in New York and ordered to pay a $15 billion forfeiture money judgment—the largest such judgment ever entered in a U.S. drug trafficking case. Zambada García had pleaded guilty in August 2025 to being a principal leader of a continuing criminal enterprise and to RICO violations, admitting to nearly four decades of overseeing the Sinaloa Cartel’s smuggling of fentanyl, cocaine, heroin, and methamphetamine into the United States, and to using murder, kidnapping, and corruption to protect the cartel’s operations. He was arrested in July 2024 after arriving on a private plane at a Texas airport alongside Joaquín Guzmán López, the son of El Chapo; Zambada García has claimed he was kidnapped and involuntarily brought to the U.S. The sentence is a landmark outcome in the decades-long U.S. effort to dismantle the Sinaloa Cartel. Mexico’s president has requested that the $15 billion forfeiture be directed to Mexico’s poorest communities.
Finnish CEO Sentenced to Nearly Four Years for Exporting 164 Trucks to Russia
Finland’s South Karelia District Court sentenced Risto Riihimäki, CEO of Idän Liikenteenvälitys IL Oy, to three years and eight months in prison—just below the four-year statutory maximum under Finnish law—for an aggravated regulation offence involving the export of 164 trucks and trailers to Russia in 2022 and 2023 in violation of EU sanctions. The company had declared the vehicles as destined for Türkiye and Kazakhstan and merely transiting Russia; the court found they were in fact customs-cleared into Russia by a company importing and reselling trucks. The court also ordered the company—now operating as Rent ja Kalusto Oy—to forfeit approximately €600,000 in criminal proceeds and property worth €6 million. Riihimäki denied wrongdoing and the ruling can be appealed. The case is one of the most severe sentences imposed on a corporate executive by any European court for Russia sanctions violations.
July produced two notable UK enforcement outcomes that together illustrate both the reach and the evidentiary limits of UK Russia sanctions enforcement. First, Jonathan Hornby, 54, became the first person convicted under UK Russia luxury goods sanctions, pleading guilty at Westminster Magistrates Court to attempting to ship artwork to Russia through Heathrow Airport in February 2024; HMRC fined him £30,085. HMRC noted the case demonstrates authorities “can and will investigate and penalize” luxury goods violations.
In a contrasting outcome, Hauser & Wirth, the international mega-gallery where Princess Eugenie has served as a director since 2015, was cleared of the first-ever criminal prosecution brought under UK Russia luxury goods sanctions. The charges, brought by HMRC against the gallery and co-defendant shipping company Artay Rauchwerger Solomons in November 2025, concerned a George Condo work on paper (“Escape from Humanity”) sold to Alexander Popov—a sale agreed in July 2021, before Russia’s invasion, and collected by Popov in August 2022. At Southwark Crown Court on July 10, the judge dismissed all charges, ruling that prosecutors had failed to produce sufficient evidence that Popov was a Russian resident at the time of the transaction; defense counsel noted Popov had renounced Russian citizenship and held properties in Bosnia and Armenia, and that a Moscow address on the delivery paperwork was a DHL error.
Hawaii Resident Pleads Guilty to Violating U.S. Iran Sanctions
Arash Einolghozati, of Waialua, Oahu, has pled guilty on July 13 to transferring funds from the United States to Iran without a license, in violation of U.S. sanctions, according to the DOJ. Court records show Einolghozati sent government-issued currency and cryptocurrency to recipients in Iran or intermediaries who forwarded funds there, beginning as early as March 2017 and continuing until at least April 2022. Einolghozati knew a license from OFAC was required but proceeded anyway. Einolghozati transferred more than $150,000 to Iran, according to DOJ.
This report is prepared by the Institute for Financial Integrity (IFI) for informational purposes only and does not constitute legal advice. Links to underlying sources are provided for reference. For questions or to subscribe to future reports, please contact IFI.
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