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On August 24, 2026, the U.S. government announced “Operation Economic Outcast,” initiating a “whole-of-government campaign” centered on additional economic sanctions against Iran. Acting at the direction of President Trump, the U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC): (i) issued five new sectoral sanctions determinations under Executive Order (E.O.) 13902 targeting Iran’s digital assets, technology, gold, aviation, and shipping sectors; (ii) issued new guidance on the sanctions risks associated with Iranian demands related to shipping in the Strait of Hormuz; (iii) suspended several general licenses (GLs) that previously had authorized certain remittance payments and cultural and academic exchanges with Iran; and (iv) designated nearly 60 entities, individuals, and vessels across multiple jurisdictions on the list of Specially Designated Nationals and Blocked Persons (SDN List).[1] The Treasury Department’s announcement also warned of consequences for third countries that continue to do business with Iran, stating that the U.S. government has engaged counterparts in foreign governments to provide timelines for terminating existing business with Iran or face punitive measures from the U.S. government.[2]

As Iran has been subject to comprehensive territory-wide U.S. sanctions, secondary sanctions, and other restrictions for decades, the practical impact of the latest actions for market actors is centered primarily on the heightened threat of secondary sanctions (in particular, among the new covered sectors and in activities relating to the Iranian tolling regime for the Strait of Hormuz) and the suspension of previously licensed activities.

I. Heightened Secondary Sanctions Exposure

Across his first and second administrations, President Trump has intensified economic pressure on Iran and countries perceived as supporting the Iranian regime with the aim of degrading Iran’s economy and weakening its military capabilities. To do so, President Trump primarily has leveraged E.O. 13902, signed on January 10, 2020,[3] authorizing the Secretary of the Treasury, in consultation with the Secretary of State, to impose blocking sanctions on any person determined to operate in, or to engage in significant transactions involving, specified sectors of the Iranian economy. Importantly, E.O. 13902 also empowers the Secretary of the Treasury to identify additional sectors of the Iranian economy for designation at any time. The E.O. initially covered the Iranian construction, mining, manufacturing, and textiles sectors, and the Treasury Department subsequently added the Iranian financial sector in 2020 and the Iranian petroleum and petrochemical sectors in 2024.[4] Under Operation Economic Outcast, the Treasury Department has now issued five new sector determinations, enabling OFAC to impose blocking sanctions on any person determined to operate in the aviation, digital asset, gold, shipping, and technology sectors of the Iranian economy.[5]

In announcing the new determinations, the Treasury Department warned that the action expands secondary sanctions exposure for parties that continue to do business with Iranian entities and that such parties should expect increased enforcement.[6] Under E.O. 13902, OFAC may impose restrictions on foreign financial institutions’ access to U.S. correspondent accounts (and, thereby, their access to the U.S. financial system) for knowingly conducting or facilitating any significant financial transaction on behalf of parties sanctioned pursuant to E.O. 13902. Additionally, any non-U.S. person determined to have “materially assisted” or “provided financial, material, or technological support for,” or goods or services to any party sanctioned under E.O. 13902 may be designated and subject to blocking sanctions under E.O. 13902.

In practical terms, the new determinations and the Treasury Department’s warning regarding secondary sanctions risk put third-country parties on notice that activities relating to Iran’s digital asset ecosystem (including by making payments to Iranian entities through Iranian digital asset exchanges), technology supply chains, gold trade, commercial aviation industry, and shipping sectors may now form the basis for U.S. sanctions even if those activities occur entirely outside of U.S. jurisdiction (e.g., meaning no involvement of any U.S. parties, U.S.-origin goods or services, or U.S. dollar payments). Although OFAC has not yet defined the precise scope of “operating” in the newly designated sectors, past guidance from other contexts has broadly included production, sales, financing, and procurement activities.

II. Guidance on Strait of Hormuz Shipping and Sanctions Risks

OFAC also issued an update to its May 1, 2026 alert addressing the sanctions risks arising from Iranian threats to shipping, demands for “toll” payments, and other requirements from the Government of Iran or its representatives in exchange for safe passage through the Strait of Hormuz.[7] The updated guidance makes clear that both U.S. and non-U.S. persons risk the imposition of sanctions or other penalties for engaging with the Persian Gulf Strait Authority (PGSA), Persian Gulf Marine Insurance Company (PGMIC), and HormuzSafe Marine Services Authority (Hormuz Safe), including by accepting insurance or other services or responding to information demands for guarantees of safe passage even if there is no associated payment or other exchange of value.[8] The guidance further warns that prohibited payments demanded by these entities could take various forms, including fiat currency, digital assets, offsets, government-to-government deals, informal swaps, or sham charitable donations, and that parties face sanctions risks regardless of payment method or structure. Additionally, the guidance warns that where payments to Iranian entities cause U.S. persons (e.g., insurers, reinsurers, or financial institutions) to violate sanctions, non-U.S. persons could face civil liability or criminal enforcement.

The guidance strongly encourages all maritime service providers to conduct enhanced due diligence on any vessels attempting to transit the Strait of Hormuz, including by reviewing all available information for red flags, such as voyage planning or actual transits through Iranian territorial waters, and asking counterparties for details regarding who they coordinated with to transit the Strait and whether any safe passage fees were or will be paid to Iran, or any services were accepted from Iran. The guidance further notes that OFAC authorizations do not supersede the authorities of other U.S. government agencies and departments, including measures implemented by U.S. Central Command or the Department of Defense, a reminder that compliance with OFAC requirements alone may not be sufficient to avoid legal or operational risk in connection with transit through the Strait of Hormuz.

OFAC further issued a final rule suspending five Iran-related GLs and issued a new wind-down GL for previously authorized activities.[9] Specifically, OFAC suspended the following licenses:

  • 31 C.F.R. § 560.544: § 560.544 authorized certain educational activities by U.S. academic institutions with undergraduate educational programs or undergraduate exchange programs in third countries, such as by authorizing the hiring and enrollment of students and staff who are “ordinarily resident” in Iran for programs in third countries.
  • 31 C.F.R. § 560.550: § 560.550 authorized certain noncommercial, personal remittances to or from Iran or on behalf of an individual “ordinarily resident” in Iran. Subject to certain conditions, this GL permitted individuals in the United States to send money to family members and other individuals in Iran (and vice versa) for personal, non-business purposes such as living expenses, medical costs, or other basic needs.  
  • 31 C.F.R. § 560.554: § 560.554 authorized the importation of Iranian-origin “services” into the United States for the purpose of participating in a conference, performance, exhibition or similar event. In practical terms, this authorization allowed Iranian nationals to provide certain services in the United States when appearing at events like academic conferences, cultural performances, or art exhibitions.
  • GL F: GL F authorized certain services in support of professional and amateur sports activities and exchanges between the United States and Iran. For example, GL F permitted U.S. sports teams to participate in exhibition matches and events, as well as ancillary activities such as player sponsorship, coaching, refereeing, and training.
  • GL G: GL G authorized U.S. academic institutions to enter into student exchange agreements with Iranian universities, process applications and tuition payments from Iranian-resident individuals, recruit and employ Iranian-based teaching personnel, and offer certain online educational courses to individuals in Iran. GL G enabled U.S. universities to maintain direct academic relationships with Iranian universities. Its suspension effectively severs formal academic ties between U.S. and Iranian higher education institutions and means that U.S. universities cannot enroll or receive payment from Iranian-resident students absent a specific license or other authorization from OFAC.

The suspension of these GLs represents a notable departure from longstanding U.S. policy, which historically sought to preserve educational and cultural channels with Iran. In connection with these suspensions, OFAC issued GL BB, which authorizes otherwise-prohibited transactions related to the wind down of activities previously authorized by one or more of the above GLs until September 8, 2026, subject to certain conditions. U.S. academic institutions, individuals, and other parties that relied on these authorizations should consult with counsel to assess the scope of the suspensions and any applicable wind-down periods.

IV. New SDN Designations Targeting Missile and Nuclear Procurement, Cyber Crime, and Oil Networks

OFAC designated nearly 60 entities, individuals, and vessels in countries across the Middle East and Asia on the SDN List. The designations target three principal categories of Iranian activity: nuclear and missile procurement, cyber threat actors, and Iran’s “shadow fleet.”  

In particular, OFAC sanctioned more than 20 entities and individuals for allegedly supporting sanctioned Iranian entities’ procurement of proliferation-sensitive technology and equipment. OFAC also sanctioned a cyber crime group responsible for attacks on U.S. critical infrastructure and financially motivated cyber theft, allegedly at the direction of Iran’s Ministry of Intelligence and Security (MOIS). In addition, OFAC designated numerous individuals, vessels, and entities engaged in Iran’s “shadow fleet” and oil revenue network, including vessel brokers, bunkering service providers, financial intermediaries, and shadow fleet vessels involved in the transport of and payment for Iranian-origin crude oil.

Taken together, these designations underscore OFAC’s willingness to pursue sanctions evasion networks across multiple continents and sectors. Companies operating in the shipping, commodities trading, financial services, digital asset, and technology sectors, particularly those with touchpoints in the UAE, Hong Kong, China, and Singapore, should promptly screen counterparties, vessel portfolios, and transaction flows against the current SDN List and assess whether any existing business relationships create direct or indirect exposure to the newly designated individuals, entities, or vessels.

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Cleary Gottlieb’s international trade team continues to monitor developments regarding ongoing sanctions and trade developments with respect to Iran and is available to offer guidance on managing the changing regulatory landscape.

[1] Press Release, Treasury Launches Unprecedented Campaign Against Iranian Regime on Economic D-Day (Aug. 24, 2026), available here.

[2] Id.

[3] E.O. 13902, Imposing Sanctions With Respect to Additional Sectors of Iran, 85 Fed. Reg. 9, Jan. 14, 2020, available here.

[5] Determination Pursuant to Section 1(a)(i) of Executive Order 13902 (Aug. 24, 2026), available here.

[6] Press Release, Treasury Launches Unprecedented Campaign Against Iranian Regime on Economic D-Day (Aug. 24, 2026), available here.

[7] OFAC, Sanctions Risks of Iranian Demands for Strait of Hormuz Passage (Aug. 24, 2026), available here.

[8] The PGSA, PGMIC, Hormuz Safe are each individually designated on the SDN List.  

[9] OFAC, Suspension of Certain Iranian Transactions and Sanctions Regulations General Licenses (Aug. 24, 2026), available here.

[10] These authorizations and exemptions are subject to stringent requirements and in some cases require a specific license from OFAC. Entities relying on these authorizations and exemptions should carefully review the language of the authorization and consult with sanctions counsel to reduce the risk of inadvertent violations. See, for example, 31 C.F.R. § 560.210, available here and 31 C.F.R. § 560.530, available here.