U.S. sanctions update – Syria SST rescission, Operation Economic Outcast, and Iran sanctions developments

Overview

On 24 August 2026, the United States took coordinated action across its Syria and Iran sanctions programmes. Secretary of State Marco Rubio rescinded Syria’s State Sponsor of Terrorism (SST) designation after the 45-day Congressional notification period, and Hay’at Tahrir al-Sham (HTS) was delisted as a Specially Designated Global Terrorist (SDGT) organisation and removed from the Specially Designated Nationals and Blocked Persons (SDN) List. In Iran, the Treasury Department launched “Operation Economic Outcast”, made five sectoral determinations under E.O. 13902, designated nearly 60 entities, individuals and vessels across multiple jurisdictions, and suspended Iran General Licences F and G. It issued General Licences AA and BB, published an alert on Strait of Hormuz passage risks, and designated Singapore-based Wellbred Capital and affiliated entities linked to Mohammad Hossein Shamkhani.

Syria: Rescission of SST designation

On 24 August 2026, Secretary of State Marco Rubio rescinded Syria’s SST designation after the 45-day Congressional notification period that began on 8 July 2026, ending prohibitions under the Terrorism List Governments Sanctions Regulations (31 CFR Part 596) and 22 USC 7205(a)(1). The State Department also revoked Hay’at Tahrir al-Sham (HTS)’s SDGT designation and OFAC removed HTS from the SDN List; its FTO designation had been revoked on 8 July 2025.

Regulatory consequences

• Syria General Licence 25 – OFAC revoked GL 25.
• OFAC guidance – FAQs 1220–1222 updated; FAQ 1223 removed.
• Tri-Seal Advisory – Updated advisory on sanctions and export-control relief for Syria.
• USML exports – Syria Accountability Act’s USML export prohibition waived.

The SST rescission represents the final step in a sequence of relief measures: E.O. 14312 revoking the Syria sanctions programme (June 2025), removal of the Syrian Sanctions Regulations from the CFR (August 2025), and repeal of the Caesar Act (December 2025).

Although these measures remove the final major barriers to private-sector investment in Syria, list-based sanctions remain in force against Bashar al-Assad and his associates, human rights abusers, Captagon traffickers and other destabilising regional actors under E.O. 13894 and other authorities, including the PAARSS programme; further EAR adjustments are expected. The rescission does not affect investigations or enforcement actions concerning apparent violations before rescission.

Iran: Operation Economic Outcast and new designations

On 24 August 2026, the U.S. Department of the Treasury launched “Operation Economic Outcast”, a sweeping whole-of-government economic campaign directed at Iran and those facilitating the regime’s activities globally. The legal framework rests principally on E.O. 13902 of 10 January 2020, alongside E.O. 13382 (WMD proliferators), E.O. 13694, as amended (malicious cyber activities), and E.O. 13224, as amended (counter-terrorism).

Industries and sectors affected

Five new sectoral determinations under Section 1(a)(i) of E.O. 13902 took effect immediately on 24 August 2026 and extend potential sanctions exposure to any person, regardless of location, operating in the following sectors of the Iranian economy:

• Digital assets – The Iranian regime increasingly turns to cryptocurrency as a tool for sanctions evasion, supporting transactions linked to the IRGC and regime insiders.
• Technology – Iran is attempting to access advanced technologies and integrate them into its domestically manufactured weapons programmes.
• Gold – As Iran’s formal financial sector collapses, the regime is increasingly attempting to stabilise the rial with gold to hedge against rampant inflation.
• Aviation – Iran continues to use ostensibly “commercial” airlines, many of which are controlled by the regime and the IRGC, to ferry fighters, ship weapons and sensitive technologies, and move gold and hard cash to its proxies.
• Shipping – Iran’s national shipping line regularly transports sensitive weapons components and missile precursors, while its national tanker service illicitly ships oil for the regime and its military services.

Exposure for companies

Nearly 60 entities, individuals and vessels were designated across multiple jurisdictions, including the UAE, Hong Kong, China, Singapore, India, Turkey, Switzerland, France, Greece, the United Kingdom and the Marshall Islands. The designations target illicit nuclear and missile technology procurement, MOIS-directed cyber operations and Iranian oil-revenue generation; companies with operations or counterparties in these jurisdictions should remain vigilant.

• MODAFL procurement network – Front companies in Shenzhen, Hong Kong and Malaysia procuring dual-use technology for Malek Ashtar University of Technology.
• MOIS cyber actors – MOIS-linked cyber actors, digital asset wallets and addresses.
• Shadow fleet and oil-revenue networks – Shadow fleet vessels, bunkering providers and financial intermediaries across the UAE, Hong Kong, Singapore and Europe.

Considerations for clients in the Gulf region

Clients operating in or from the Gulf Cooperation Council states should note the following:

• Several newly designated entities are registered in the UAE (Dubai, Ajman).
• The Treasury has stated that teams from the Departments of Treasury, State, and War are engaging counterparts globally and that every country will be given a “defined timeline” to shut down identified Iran-related activity, failing which Treasury will act unilaterally.
• The expanded secondary sanctions risk means that non-U.S. persons—including those operating exclusively outside the United States—face potential designation for operating in or facilitating activity in any of the five newly determined sectors.

General licence developments

OFAC made the following changes to Iran-related general licences on 24 August 2026:

• Iran GL F suspended – Certain services in support of professional and amateur sports activities and exchanges between the United States and Iran.
• Iran GL G suspended – Academic exchanges and the exportation or importation of certain educational services.
• Iran GL AA issued – Authorises certain activities involving La Nivernaise de Raffinage SAS.
• Iran GL BB issued – Authorises the wind-down of certain transactions previously authorised under the Iranian Transactions and Sanctions Regulations (ITSR).
• OFAC published a Notice of Suspension of Certain Iranian Transactions and Sanctions Regulations General Licences.
• OFAC issued an Alert titled “Sanctions Risks of Iranian Demands for Strait of Hormuz Passage”, highlighting risks for shipping, trade finance, commodities and other businesses responding to demands concerning passage.

Implementation and compliance steps

In light of the breadth and immediacy of these measures, clients should consider the following actions:

1. Screening updates – Immediately update sanctions screening systems to incorporate the new SDN List additions, including the entities, individuals and vessels added on 24 August 2026. Particular attention should be paid to digital currency wallet addresses associated with designated persons.
2. Sectoral exposure review – Assess business activities, supply chains and counterparty relationships for any nexus to aviation, digital assets, gold, shipping and technology in relation to the Iranian economy.
3. Contractual and beneficial ownership review – Review existing contracts for sanctions compliance representations, designation-triggered termination rights and relevant force majeure clauses; conduct enhanced due diligence on front companies, layered corporate structures and nominee arrangements, particularly for counterparties in Hong Kong, Singapore, Turkey, India, the UAE and China.
4. General licence wind-down planning – Determine whether current activities rely on suspended GL F or GL G, or fall within GL AA or GL BB. Establish applicable timelines and plan an orderly wind-down for affected sports, academic, La Nivernaise-related and other ITSR-authorised transactions.
5. Syria compliance programme updates – Reflect the SST rescission, removal of TLGSR restrictions and revocation of GL 25 in compliance programmes; assess new private-sector investment and potential USML export opportunities; continue screening for Assad-linked persons, human rights abusers, Captagon traffickers and other PAARSS-designated persons; and monitor forthcoming EAR adjustments.
6. Screening and regulatory engagement – Screen Wellbred entities, La Nivernaise de Raffinage SAS, affiliates, beneficial owners, counterparties, vessels, commodities and financial flows for Shamkhani links; financial, shipping, energy, trade finance and commodities teams should engage regulators and counsel and brief operational teams on the Strait of Hormuz alert.
7. Regulatory engagement – Clients in regulated sectors (financial institutions, shipping, energy) should proactively engage with relevant regulators and legal counsel to ensure that compliance programmes reflect the expanded risk landscape.

Forward-looking analysis

The framing of these measures as the beginning of a “sustained and systematic campaign” signals that further designations and enforcement actions are likely in the near term.

• Escalating enforcement posture – Treasury has stated that it has mapped the networks, facilitators and financial channels used by Iran and will be uncompromising in targeting remaining sources of revenue. Clients should anticipate successive tranches of designations in the coming weeks and months.
• Secondary sanctions, digital assets and technology – Expanded sectoral determinations widen secondary-sanctions exposure for non-U.S. persons, including foreign financial institutions that knowingly facilitate significant transactions for designated persons and risk losing U.S. correspondent banking access. Cryptocurrency wallets, Iran-linked cyber actors and technology intermediaries remain in focus.
• Engagement with third countries – The announcement of “defined timelines” for counterpart governments suggests that coordinated pressure on jurisdictions identified as enabling Iranian sanctions evasion, particularly the UAE, China, Hong Kong, Turkey, India and Singapore, will intensify.
• Geopolitical context and Syria opportunities – Syria’s SST rescission may support private-sector investment, trade, technology and USML exports, but PAARSS, other targeted sanctions, EAR requirements and counterparty screening remain relevant. The action sits within a broader pattern of maximum pressure on Tehran, framed as seeking “severe global isolation or a path to reintegration”, and suggests a wider recalibration of U.S. Middle East policy with differentiated treatment based on states’ current posture towards U.S. interests.

Our International Trade and Sanctions team is monitoring these developments closely and is available to advise on any matters arising from these measures, including screening assistance, compliance programme reviews, and strategic counsel on exposure management. Please do not hesitate to reach out to your usual contact within the team.