EU and UK Sanctions Developments: Key Updates and Impacts as of June 16, 2025

Sanctions Update: June 16, 2025

### Sanctions Overview

The Sanctions Update, compiled by attorneys from Steptoe’s renowned International Regulatory Compliance team and the Stepwise: Risk Outlook editorial team, is released every Monday. This update is guided by the expertise of Steptoe’s leading International Trade and Regulatory Compliance team, providing a comprehensive overview of weekly developments in international regulatory enforcement and compliance. It also offers insights into geopolitical contexts, business impacts, and potential risks. You can subscribe to the Stepwise Risk Outlook [here](#). To receive only the Sanctions Update edition (issued most Mondays), select “Stepwise Risk Outlook: Sanctions Update.” For more detailed analysis on related topics, refer to Steptoe’s International Compliance Blog. For industry-specific monitoring or tailored services, please contact the team [here](#).

### The Lede

#### The EU Breaks Precedents with New Proposed Sanctions

On June 10, 2025, just as the EU’s latest sanctions package against Russia was being finalized, European Commission President Ursula von der Leyen and High Representative for Foreign Affairs Kaja Kallas announced significant new measures targeting Russia’s economy. This proposed 18th sanctions package indicates a fundamental shift in the EU’s economic relationship with Russia, marking a complete disentanglement from their previous interdependence.

The announcement includes sanctions on an additional 77 “shadow fleet” vessels that assist Russia in evading the G7’s $60 price cap on seaborne crude oil, a unilateral reduction of this price cap from $60 to $45 per barrel, and sanctions on companies supplying dual-use goods to support Russia’s defense industry.

Among the notable measures is a ban on any transactions related to the Nord Stream pipelines, which effectively blocks the possibility of resuming these projects after a political resolution to the Ukraine conflict. The Nord Stream projects were already struggling—Nord Stream 2 remains damaged, and Gazprom’s reductions in gas flows through Nord Stream 1 prompted arbitration from at least 20 European customers, leading to around €15 billion in known awards. This EU announcement further diminishes political resistance to the “de-Russification” of Europe’s energy supply and reinforces the EU’s commitment to fully phasing out Russian gas by 2027.

Additionally, the EU is escalating its restrictions on sanctioned banks by transitioning from a SWIFT messaging service ban to a complete transaction ban. While the specifics of this “full transaction ban” remain unclear, it suggests that the EU may implement secondary sanctions against entities aiding sanctioned banks in circumventing the SWIFT ban. This latest measure explicitly targets two small regional Chinese banks that utilize decentralized cryptocurrency transactions to facilitate exchanges of sanctioned dual-use goods.

The potential implementation of secondary sanctions poses significant challenges for Russian banks that have integrated into China’s Cross-Border Interbank Payment System (CIPS). By December 2023, one-third of Russia’s trade was settled in yuan, and 42% of trades on the Moscow Exchange were conducted in yuan. However, an estimated 98% of Chinese banks had already declined renminbi-based transactions from Russia by 2024.

Furthermore, the EU has signaled its intention to introduce safeguards to shield Belgium from legal actions initiated by Moscow under their bilateral investment treaty regarding the freezing of Russian sovereign assets held by Euroclear, which manages approximately €180 billion in funds owned by the Russian central bank. Although the EU has not specified the protective measures it will enact, there are indications that diplomatic solutions, potentially involving a force majeure declaration, may be considered.

The EU’s protective stance for Belgium suggests an openness to explore options for reallocating Russian assets, such as transferring them to a holding entity that could allow for reinvestment and interest accrual. This strategy may serve to create leverage, as outright asset seizures are legally contentious and could undermine confidence in the euro.

The timing of these unprecedented actions aims to bolster the EU’s position ahead of the upcoming G7 summit from June 15-17, the NATO summit from June 24-25, and the European Council summit from June 26-27. The EU aims to negotiate effectively with G7 allies and set the diplomatic tone towards Russia, advocating for a firm stance to achieve a 30-day unconditional ceasefire.

Hungary and Slovakia, who hold veto power over the proposed sanctions, have expressed intentions to oppose these measures. However, the EU has previously navigated through 17 sanctions packages and renewed them every six months, even amidst complex diplomatic negotiations. Ultimately, neither Hungary nor Slovakia is likely to jeopardize their EU membership benefits for a structural energy shift that would be challenging to reverse, especially given that Russian gas constituted 45% of the EU’s energy needs in 2021, which plummeted to just 13% in 2024.

Moreover, the sanctions appear to be effective, as evidenced by a decline in Russia’s sovereign wealth fund, which fell from $42 billion to $36 billion in May alone. Before the conflict, this fund was approximately $117 billion but has drastically decreased due to plummeting gas revenues amidst ongoing war financing.

### UK Sanctions Developments

#### UK Designates Two Israeli Ministers

On June 10, 2025, the UK sanctioned two Israeli ministers, Itamar Ben-Gvir and Bezalel Smotrich, under the Global Human Rights Sanctions Regime. This action was taken due to their involvement in activities that constitute serious human rights abuses against Palestinians in the West Bank. The sanctions were coordinated with similar measures from Australia, Canada, New Zealand, and Norway.

The two ministers are now subject to an asset freeze, director disqualification sanctions, and a travel ban within the UK. In announcing these designations, officials underscored that these measures do not diminish the UK’s unwavering support for Israel’s security and reiterated condemnation of the October 7 terror attacks by Hamas. However, these sanctions mark a significant development and reflect growing concerns among Israel’s Western partners, who have taken unprecedented actions to condemn and now sanction in response to the situation in Gaza.

The Foreign, Commonwealth, and Development Office clarified that the designations were made in the ministers’ personal capacity, and the sanctions are not intended to extend to the Israeli ministries they lead.

#### OFSI Amends GTLK General License

On June 12, 2025, the Office of Financial Sanctions Implementation (OFSI) amended General License INT/2023/3263556, which authorizes specific insolvency-related payments and activities involving GTLK Europe, GTLK Capital, and their subsidiaries.

The amendments incorporate sanctions on providing financial services for foreign exchange reserve and asset management to certain Russian institutions covered by the license. Additionally, it clarifies that any resulting payments must be credited to the relevant account and that any available funds for UK-designated persons should be held in a frozen account, treating any economic resources made available as frozen. The reporting requirements under the license have also been expanded.

### EU Developments

#### EU Presents 18th Sanctions Package Against Russia

On June 10, 2025, European Commission President Ursula von der Leyen and High Representative Kaja Kallas unveiled the EU’s 18th sanctions package against Russia. This proposal targets Russia’s energy and banking sectors and its military industry, with the aim of intensifying pressure and furthering efforts toward a ceasefire in the ongoing war against Ukraine.

The new sanctions package seeks to tighten restrictions by adding 77 shadow fleet vessels, which are used to bypass oil transport prohibitions, to the list of entities barred from accessing EU ports. Additionally, it proposes a ban on the import of refined products derived from Russian crude oil.

This 18th sanctions package also aims to reduce the price cap on Russian oil from the current $60 per barrel, established by the G7, to $45 per barrel. Furthermore, a new transaction ban is set to be imposed on Nord Stream 1 and Nord Stream 2, preventing EU operators from engaging in any transactions related to these pipelines.

The banking sector is slated for expanded restrictions as well. The proposal will convert the existing SWIFT ban on specific Russian banks into a full transaction ban, extending this restriction to 22 additional banks and financial entities in third countries that assist Russia in evading sanctions. Additionally, the Russian Direct Investment Fund and its subsidiaries and investment projects will also face sanctions under the proposed measures.

In the military sector, the proposed restrictions aim to further undermine Russia’s war efforts, with plans to list 22 new entities, including companies from China and Belarus, involved in weapons production or support activities. Stricter controls on dual-use goods and technologies are also part of the proposal to limit Russia’s access to critical resources for military operations.

While several Member States, including France, Germany, Italy, and Poland, have welcomed the 18th sanctions package, others, such as Slovakia and Hungary, have raised concerns. Slovak Prime Minister Robert Fico has indicated opposition to any measures perceived as compromising national interests. Despite these hesitations, an agreement on the package is anticipated by the end of June, with discussions among Member States set to commence this week.

#### Advocate General Opinion Backs EU Sanctions Criterion Targeting Russian Businesspersons

Advocate General Medina of the European Court of Justice (ECJ) has recently issued a series of non-binding opinions supporting the legality of the EU sanctions criterion aimed at prominent businesspersons whose economic activities contribute significantly to the Russian government’s revenue.

These sanctions, introduced in February 2022 by amending Decision 2014/145/CFSP under Article (2)(1)(g), include asset freezes targeting leading businesspersons who provide substantial revenue sources for the Russian government. Five prominent businesspersons, listed in the amended Annex I to Regulation 269/2014, challenged the Council’s decision before the General Court, arguing that the restrictive measures were unwarranted due to their lack of direct influence over the Russian government.

In five opinions, Advocate General Medina recommended that the Court dismiss the appeals based on the interpretation and appropriateness of the listing criterion. The Advocate General clarified that “leading businesspersons” refers to individuals with significant influence within their economic sectors, emphasizing that the EU Council is not required to demonstrate a direct link or specific conduct connecting them to the Russian government.

Regarding appropriateness, the Advocate General concluded that the measures are lawful and justified, noting that the sanctions imposed under the listing criterion aim to address the severity of Russia’s actions by targeting major revenue streams that support its war efforts.

#### EU Council Amends Sanctions Regime to Target Individuals and Entities Undermining Democracy and Rule of Law in Guatemala

The EU Council has revised several sanctions regulations in response to the situation in Guatemala. Council Decision 2024/254 and Council Implementing Regulation (EU) 2024/287 were amended to include three additional individuals and one entity, while entries for five individuals were updated. The restrictive measures now encompass eight individuals and one entity, involving asset freezes, travel bans, and prohibitions on making funds available to those listed. These amendments were adopted amid ongoing threats to the democratically elected government of President Bernardo Arévalo.

### Asia Pacific Developments

#### China Plans to Turn Shenzhen into AI and Aviation Hub Amid US Sanctions

In response to increasing US sanctions, China has announced a comprehensive reform plan aimed at enhancing its high-tech industries in Shenzhen, seeking to strengthen the city’s position as a national technology hub and counter pressures on major firms such as Huawei and DJI.

The plan includes initiatives to enhance scalability in sectors like artificial intelligence, aviation, and energy storage through improved talent development, expanded financing opportunities, and streamlined technology deployment. Shenzhen, home to major corporations like Huawei and Tencent, will bolster its role within the Greater Bay Area by enabling secondary stock listings and fostering cross-border collaborations in trade, aviation, and technology.

The reforms also emphasize building AI-powered healthcare systems, modernizing regulations for unmanned aerial vehicles, upgrading trade infrastructure, and promoting the international use of the digital yuan.

#### Japan Imports Russian Crude on Sanctioned Tanker After Two-Year Halt

Japan has received its first shipment of Russian crude oil in over two years, even though the tanker, Voyager, is sanctioned by both the US and EU as part of efforts to limit Russian energy exports. Taiyo Oil Co., at the request of Japan’s Ministry of Economy, Trade, and Industry (METI), facilitated the purchase to ensure the continuation of a Japan-backed LNG project linked to Sakhalin energy production.

While US and EU sanctions aim to restrict Russian oil exports, Japan continues to receive waivers for Sakhalin crude imports due to national energy security needs, with the EU waiver valid until mid-2026 and the US waiver likely extending beyond June 2024. Before Russia’s invasion of Ukraine, Japan typically sourced oil from Sakhalin but halted imports following the conflict, despite retaining stakes in the project.

The global reluctance to utilize sanctioned Russian tankers is diminishing, as indicated by increased Russian crude shipments to nations like India, China, and Syria, often employing methods such as ship-to-ship transfers. Meanwhile, the EU has accused Sovcomflot, Russia’s state-owned shipping company, of evading sanctions by transferring tanker management to UAE-based entities.

#### Venezuela’s Oil Surge to China Defies US Crackdown

Despite enhanced US sanctions that revoked permissions for companies to purchase Venezuelan oil, Venezuela’s overall oil exports have remained stable, largely due to increased sales to China. While exports to traditional buyers in the US and Europe have declined, China has emerged as Venezuela’s primary customer, importing 584,000 barrels per day in May, an increase from April.

State oil company PDVSA has adapted by redirecting shipments, including heavy crude like Boscan, to Asia, circumventing the need for US permissions. In May, Venezuela exported 779,000 barrels of crude oil and fuel daily, matching levels from the previous month, and secured significant oil deals before US licenses expired. These adjustments have enabled Venezuela to mitigate the impact of sanctions, which President Nicolas Maduro labels an “economic war,” allowing the country to sustain its oil trade amid ongoing political and economic challenges.