Last Week's Major Developments in Sanctions - June 29 to July 3, 2026

Monday, June 29

• OFAC launched a new online Reconsideration Portal for the submission of requests to be removed from an OFAC sanctions list. OFAC announced that this portal is intended to streamline the petitions process by guiding submitters to provide necessary information upfront, rather than through a series of questionnaire/answer exchanges that can delay efficient adjudication of a delisting petition. Listed persons can also request certain unclassified, non-privileged information underlying their sanctions determination (a "courtesy document") through the Reconsideration Portal. Alongside the launch of the portal, OFAC published two quick-reference guides on "Delisting Petitions Best Practices" and "What to Include in a Delisting Petition". OFAC also updated FAQ 897, and added a new FAQ 1261. (Here)

• HMRC published a £569,157.07 settlement notice with Petrofac Facilities Management Limited (PFML) on 29 June 2026, for breaches of The Russia (Sanctions) (EU Exit) Regulations 2019. The breaches occurred during PFML's 2022–2023 divestment of its Russian operations and comprised two breaches of Regulation 46Y(2)(c) (making sanctioned industrial goods under the G7 Dependency and Further Goods chapter available to a Russia-connected person and for use in Russia) and one breach of Regulation 46Z(1)(b) (providing technical assistance related to those goods). The case originated from PFML's own voluntary disclosure to HMRC, and the firm fully cooperated with the investigation, consistent with HMRC's compound settlement criteria, which require both an inadvertent breach (not intentional circumvention) and voluntary self-reporting. (Here)

• The SEC has reached a settlement with Merrill Lynch for failing to file numerous Suspicious Activity Reports with FinCEN between April 8, 2020 and September 10, 2024, in violation of Exchange Act Section 17(a) and Rule 17a-8. Merrill relied on it parent's enterprise-wide BSA/AML transaction monitoring system, "Event Processor," which only promoted alerts scoring 20 points or higher for investigation—despite internal sampling analyses showing, as early as April 2020, that many sub-threshold Event Groups carried SAR yields comparable to or higher than those above the cutoff. The threshold wasn't lowered until December 2023, during which time Merrill failed to file SARs on hundreds of millions of dollars in suspicious transactions, including transfers with no apparent lawful purpose, large round-dollar transfers, high-risk jurisdiction activity, structured cash transactions, and activity in previously flagged accounts. Without admitting or denying the findings, Merrill agreed to a cease-and-desist order, censure, and a $7.5 million civil penalty. The SEC credited Merrill's cooperation and remedial steps, including lowering the detection threshold, conducting a retrospective review that generated additional SAR filings, and Bank of America's engagement of a compliance consultant for a full BSA/AML assessment. Notably, this marks Merrill's third SEC enforcement action for SAR-filing deficiencies (following settlements in 2017 and 2023) and follows a related December 2024 OCC consent order against Bank of America, N.A. for BSA and sanctions compliance program deficiencies. (Here)

Tuesday, June 30

• OFAC imposed blocking sanctions against two individuals (both in Mexico) and nine entities (eight in Mexico, and one in the UK) under its counter-narcotics and counter-terrorism sanctions program for facilitating cross-border fuel smuggling schemes benefiting the Cartel de Jalisco Nueva Generacion (CJNG), a group designated as a Foreign Terrorist Organization and Specially Designated Global Terrorist. The designations target key facilitators including an accountant who creates shell companies and falsifies customs documents to smuggle mislabeled fuel into Mexico evading IEPS taxes. (Here)

• Alongside OFAC's designations, FinCEN issued Supplemental Alert FIN-2026-Alert003 on fiscal fuel theft (huachicol fiscal), building on its May 2025 Cartel Oil Smuggling Alert. The Alert explains how CJNG, Sinaloa, Gulf Cartel, and other Mexico-based TCOs exploit the U.S.-Mexico energy trade, complicit U.S. fuel traders sell to Mexican brokers holding CNE (commercialization) permits but not SENER (import) permits, who then falsify customs paperwork to evade Mexico's IEPS import tax. Since the May 2025 Alert, financial institutions have reported over $7 billion in suspicious activity across 160+ SARs, concentrated in Texas and Florida. Key takeaways for financial institutions:

  • SAR keyword requirement: Reference "FIN-2026-FISCALFUELTHEFT" in SAR field 2 and in the narrative when filing related reports; the same term goes in the Comments section of Form 8300 filings (Box 1b).

  • Core red flag: permit mismatch: The single highest-value red flag is a U.S. oil/gas customer receiving wire transfers from a Mexican counterparty that holds a CNE permit but lacks a SENER import permit.

  • Payment pattern indicators: Watch for multiple large/non-descriptive wires from a single Mexican company, digital asset (especially stablecoin) payments where fiat/trade finance would be customary, structured cash deposits at border-area branches outside the customer's normal geography, and pass-through account behavior (funds received then immediately forwarded).

  • Shell company markers: Small, recently formed U.S. LLCs/sole proprietorships sharing names with Mexican companies, registered to residential addresses, with little online presence, or with transaction volumes/profit margins inconsistent with legitimate peers.

  • Downstream money laundering signs: Complicit U.S. fuel traders often convert proceeds into luxury goods, real estate, or investment assets—outgoing transactions to unrelated sectors (luxury vehicles, jewelry, vacation rentals) from an oil/gas customer is a flag.

  • Enhanced due diligence tools: Institutions should consider requesting export documentation and SENER-permit verification for customers exporting fuel to Mexico, and are encouraged to use Section 314(b) safe harbor information-sharing given the cross-institution, repeat-actor nature of these networks.

  • No blanket de-risking: FinCEN explicitly cautions against wholesale de-risking of the oil/gas, freight, and logistics sectors—red flags should trigger risk-based review, not automatic account closure. (Here)

• OFAC's Second Quarter Report for Fiscal Year 2026, covering January through March 2026, shows the Licensing Division received 322 applications under Section 906(a)(1) of the TSRA — 297 for agricultural commodities, 17 for medicine, and 8 for medical devices. OFAC issued 298 licensing determinations during the period, comprising just 3 licenses (2 agricultural, 1 medical device), 0 license amendments, 2 return-without-action letters, 0 denials, and 1 general license guidance letter. (Here)

Wednesday, July 1

• OFAC imposed blocking sanctions on two individuals (both in Brazil) and four entities (three in Brazil and one in Portugal) under its counter-narcotics and counter-terrorism sanctions program for laundering drug proceeds on behalf of Primeiro Comando da Capital (PCC), Latin America's largest transnational criminal organization. The designations target São Paulo-based Victor Henrique de Oliveira Shimada, who laundered over $30 million in U.S.-generated drug proceeds using cryptocurrency to move funds to Brazil, along with his close associate Stella Stefanie Nunes Henrique de Oliveira, and his corporate network, Victory Trading, Pixwave, and Wave (all Brazil-based financial/construction firms) and Avenidas Flutuantes (a Portugal-based transportation and storage company), used to receive and launder illicit funds while evading detection. (Here)

• The U.S. Department of State designated Chone Killers as a Foreign Terrorist Organization (FTO) and Specially Designated Global Terrorist (SDGT). Chone Killers is an Ecuadorian gang responsible for numerous attacks on civilians, law enforcement, and government officials, including high-profile assassinations; the group splintered off from Los Choneros (itself a designated FTO/SDGT) in 2020. The action was taken pursuant to Section 219 of the Immigration and Nationality Act and E.O. 13224, in coordination with the Ecuadorian government under President Daniel Noboa, and takes effect upon publication in the Federal Register. OFAC proceeded to add Chone Killers to the SDN List following the designation under its counter-terrorism sanctions program. (Here)

• OFAC issued a reminder to file the 2026 Annual Report of Blocked Property (ARBP) under 31 C.F.R. § 501.603 of the Reporting, Procedures and Penalties Regulations (RPPR) which requires U.S. persons holding blocked property as of June 30 of the current year to file an ARBP with OFAC by September 30. Resources for filing are in the links in the feed. (Here)

Thursday, July 2

• There were no major developments on this day.

Friday, July 3

• EU Council adopted Council Decision (CFSP) 2026/1542 imposing asset freezing sanctions against six Russian individuals, scientists and researchers within the military sphere, several affiliated with the Signal Scientific Centre (SC Signal), Russia's State Scientific Research Institute for Organic Chemistry and Technology (GosNIIOKhT), and the Military Academy for Radiological, Chemical and Biological Defence, targeting their role in researching, synthesizing, and testing epibatidine, the toxin found in Alexei Navalny's body after his February 2024 death in a Russian penal colony, which was assessed as highly likely to have caused his death. This brings the total under the EU's chemical weapons sanctions regime to 31 individuals and 6 entities. (Here)

• France imposed asset freezing sanctions under its autonomous counter-terrorism sanctions regime on a cultural association based in Aulnay-sous-Bois (Seine-Saint-Denis) along with two individuals linked to it, as well as any legal entities owned or controlled by them or acting knowingly on their behalf or instructions. (Here)