Businesses affected by the Strait of Hormuz crisis are likely to be navigating both sides of the contractual liability equation: seeking to enforce protections while simultaneously trying to limit their own exposure. This balancing act will feel familiar to those who managed supply chain disruptions during the Covid pandemic or in response to Russian sanctions. But the scale of uncertainty and the severity of the current situation make it particularly challenging to chart a clear path forward. This note provides an overview of the English-law issues that have arisen in this current crisis and is relevant for companies and legal counsel seeking to understand and mitigate contractual risk in their supply chains, including for shipping, energy, commodities, and construction.

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Key Takeaway: ATF’s latest final rule closes a regulatory gap left by the Export Control Reform (“ECR”) initiative, acknowledging that the Department of Commerce now shares jurisdiction alongside the Department of State over items on ATF’s United States Munitions Import List (“USMIL”).

On May 6, 2026, the Bureau of Alcohol, Tobacco, Firearms and Explosives (“ATF”) published a final confirmatory rule updating its regulations to reflect changes stemming from the ECR initiative. The rule adds references to the U.S. Department of Commerce (“Commerce”) alongside existing references to the U.S. Department of State (“State”), acknowledging what has been true for several years: both agencies share jurisdiction over defense articles on ATF’s USMIL.

A central component of ECR was the transfer of certain items from Categories I–III of the U.S. Munitions List (“USML”) to the Commerce Control List (“CCL”), administered by Commerce’s Bureau of Industry and Security (“BIS”). As a result, beginning in March 2020, State and Commerce divided export and temporary import jurisdiction over items that also appear on ATF’s USMIL.

Background:  The Arms Export Control Act (“AECA”) authorizes State to regulate the export and temporary import of defense articles through the International Traffic in Arms Regulations (“ITAR”), 22 CFR Parts 120–130, with controlled items enumerated on the USML. The AECA separately grants ATF the authority to regulate the permanent import of defense articles, which ATF administers through the USMIL, 27 CFR Part 447.

Beginning in 2009, the ECR initiative sought to transfer less sensitive items from the USML to the CCL under the Export Administration Regulations (“EAR”). In March 2020, USML Categories I–III–covering Firearms, Guns and Armament, and Ammunition–were transferred to the CCL for export control purposes. These items, however, remained on the USMIL and subject to ATF’s permanent import regulations. ATF’s regulations had not been updated to reflect this restructured framework, referencing only State’s authority under the ITAR–a gap this final rule now closes.

Scope of ATF’s Final Rule: The rule amends key provisions in 27 CFR Part 447 to add references to Commerce alongside State. First, the articles-in-transit provision at § 447.46 now reflects that temporary import and export transactions involving USMIL articles may fall under the jurisdiction of either agency. Second, at §§ 447.53(a)(3) and 447.53(b), the rule clarifies that articles temporarily imported under a valid authorization from either State or Commerce are exempt from ATF’s permanent import permit requirements.

Importers of firearms, ammunition, and related articles on the USMIL should ensure that their compliance programs account for authorizations from both State under the ITAR and Commerce under the EAR when seeking exemptions from ATF’s permanent import permit requirements.

Crowell will continue to monitor rulemakings related to AECA defense articles and their impact on industry.

On April 30, 2026, the DOJ announced the launch of the Fraud Oversight through Careful Use of Statistics initiative (FOCUS) to increase coordination between the Department and the growing host of data miners who sift through publicly available government data to identify patterns of alleged fraud. The launch of FOCUS highlights a growing trend in False Claims Act (FCA) enforcement: civilian data miners with access to public data — but no other connection to the alleged defendants — are filing almost as many qui tam complaints as company insiders.

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A huge congratulations to our 15 International Trade attorneys who were named to the 2025 Capital Pro Bono Honor Roll for providing 50 or more hours of pro bono legal services last year. Of this number, five individuals achieved High Honor distinction for providing 100 hours or more. This accomplishment underscores our continued commitment to providing access to legal representation to those who would otherwise go without.

Below is a list of the International Trade attorneys who qualified for both the Honor Roll and High Honor Roll:

  • Rachel Richman nee Bogin*
  • Zhiwei Chen
  • Kelsey Clinton
  • Riley Delfeld
  • Rachel Ferns*
  • Sibilla Grenon
  • Jeremy Iloulian
  • Pierce Lee*
  • Chandler Leonard
  • Aaron Marx*
  • Jasmine Masri
  • Nimrah Najeeb
  • Laurel Saito
  • Neda Shaheen*
  • Simeon Yerokun

*Denotes High Honors

The EU has adopted its 20th package of sanctions in connection with Russia’s ongoing war against Ukraine, resolving a prolonged internal political deadlock that had been caused by vetoes from Hungary and Slovakia. The package amends Regulations 833/2014, 269/2014, and 765/2006 and the respective Council Decisions and Implementing Regulations. The texts entered into force on 24 April 2026.

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On April 14, 2026, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued Venezuela General License 56, “Authorizing Commercial-Related Negotiations of Contingent Contracts with the Government of Venezuela” (GL 56), and Venezuela General License 57, “Authorizing Financial Services Transactions Involving Certain Venezuelan Banks and Government of Venezuela Individuals” (GL 57). OFAC also issued one Venezuela-related Frequently Asked Question (FAQ), FAQ 1248. 

These actions represent the latest steps in a continuing U.S. policy of progressively opening channels for commercial and financial engagement with Venezuela, extending the series of general licenses that OFAC has issued since early 2026 across the energy, petrochemical, minerals, and infrastructure sectors.

General License 56

GL 56 broadens the authorization for U.S. persons to conduct commercial-related negotiations of contingent contracts directly with the Government of Venezuela, covering sectors and transaction types that extend beyond those addressed in earlier licenses. Like predecessor licenses such as GL 49A and GL 55, GL 56 permits the negotiation and entry into contingent contracts, but requires that the performance of any such contract remain expressly contingent upon separate authorization from OFAC. GL 56 also incorporates limitations that mirror those in other recently issued GLs (e.g., requirement for commercially reasonable terms, no dealings with foreign adversaries or other sanctioned persons).

General License 57

GL 57 addresses the financial services dimension of Venezuela-related transactions, authorizing “financial services” transactions involving (1) certain Venezuelan banks, and (2) individuals who are blocked only because they deemed to be part of the “Government of Venezuela” as defined in Executive Order 13884.

The Venezuelan banks with which transactions are authorized by GL 57 are: (1) Banco Central de Venezuela; (2) Banco de Venezuela, S.A. Banco Universal (Banco de Venezuela); (3) Banco Digital de los Trabajadores Banco Universal C.A.; and (4) Banco del Tesoro, C.A. Banco Universal (Banco del Tesoro). The authorization also applies to entities owned 50% or more by one or more of these banks.

OFAC provides a broad definition of “financial services,” including nearly all standard banking-related activities, in particular: “maintaining, operating, or closing of accounts; loans; transfers; transfers of funds; banking services; money transfer services; collection; presentment; promise; order; consignment; the acceptance of deposits; insurance; guarantees; cash withdrawals; check services; Automated Clearing House (ACH) transfers; wire transfers; debit card, prepaid card, Automated Teller Machine transactions, and any other payments as defined under the Uniform Commercial Code Article 3-602; the issuance and use of payment cards and digital wallets; currency exchange; U.S. dollar-denominated banking, payment, and correspondent account services; services in connection with the collection, forwarding, processing, or receipt of funds or remittances; services in connection with the processing or receipt of salary, pension, annuity, payroll, and other employment-related payments or benefits; transfers of funds sent through mobile money, mobile wallets, digital bank accounts, credit cards, debit cards, online payments, or other digital technology; related safety, fraud-prevention, screening, authentication, cybersecurity, and security services and technologies; investments; securities; and commodity futures or options.”

GL 57 contains a “Note 2” explaining that U.S. financial institutions that process GL 57-authorized transactions may rely on the originator or beneficiary of a funds transfer with regard to compliance with GL 57, provided that the processing financial institution does not know or have reason to know that the transaction is not in compliance with GL 57.  This appears to reduce compliance burden on correspondent and intermediary banks involved in transactions with these entities.

GL 57 also contains a “Note 3” explaining that nothing in GL 57 excuses compliance with obligations under the Bank Secrecy Act (BSA) and related FinCEN regulations, signaling that OFAC is aware of FinTech and other novel forms of payment activities in Venezuela, and seeks to ensure that such market participants are properly assessing whether such activities separately comply with the U.S. Bank Secrecy Act (BSA) and related laws, and perhaps in particular that BSA-regulated institutions continue to determine if any Venezuela-activity warrants the filing of a Suspicious Activity Report (SAR).

FAQ 1248

OFAC issued FAQ 1248 to clarify the reporting requirements in General Licenses 46B-48A, 50A-52, and 54 should be completed by the parties engaged in the primary authorized activity. Parties that are only indirectly involved or providing services ancillary to the primary authorized activity are not required to file reports. For example, a company providing services for the generation of electricity in Venezuela under GL 48A would need to report such activities pursuant to that license, but a bank processing payments related to those services does not also need to provide a report.

Practical Implications

The practical implications of these new actions are significant.

For commercial sector participants, including trading companies, logistics providers, and project developers, GL 56 widens the gateway for preliminary engagement with the Government of Venezuela, permitting structured negotiations and the entry into contingent investment or commercial arrangements without requiring a specific license at the outset.

For GL 57, this authorization is particularly significant for U.S. banks, FinTechs, digital asset companies, and other financial intermediaries that process payments, maintain correspondent accounts, or provide other financial services in connection with Venezuela-related activity authorized under the broader suite of Venezuela general licenses.

Additionally, many entities interested in new opportunities in Venezuela pursuant to the other OFAC-issued general licenses found themselves limited by which financial institutions would process their payments. OFAC’s issuance of GL 57 provides significantly more assurance to U.S. and other financial institutions that there are at least four banks in Venezuela with whom they can legally transact and it establishes a clearer legal basis needed to support the expanding scope of authorized commercial activity in Venezuela.

FAQ 1248 reinforces this distinction as well: parties conducting the primary authorized activity bear the reporting obligations under the applicable general license, while banks and other service providers processing related payments do not. This clarification reduces compliance friction for financial institutions supporting the growing range of permitted Venezuela dealings.

Crowell will continue to monitor for new and updated OFAC guidance on Venezuela.

Key Takeaways 

  • The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated six individuals and entities tied to Cartel del Noreste (CDN)—one of Mexico’s most violent drug trafficking organizations—including two CDN-affiliated casinos used for money laundering and drug operations near the U.S.-Mexico border. 
  • OFAC’s actions are the latest examples of a broader national security strategy to use sanctions, AML authorities, criminal prosecutions, and other tools to counter cartels on the U.S.-Mexico border. These efforts have targeted in particular non-traditional financial institutions such as casinos, public-facing professionals, and disinformation actors. 
  • The State Department designated CDN as a foreign terrorist organization (FTO) on February 20, 2026, and today’s designations were issued under both Executive Order 14059 (narcotics trafficking) and Executive Order 13224 (terrorism), underscoring the U.S. government’s treatment of major cartels as hybrid criminal-terrorist threats.

Overview of the Designations

On April 14, 2026, the U.S. Department of the Treasury announced OFAC sanctions targeting a money laundering and cash smuggling network operated by CDN, a U.S.-designated Foreign Terrorist Organization (FTO) with significant influence in Nuevo Laredo, located on the U.S.-Mexico border. Key designation targets include:

  • Casino Centenario and Diamante Casino, identified as vehicles for laundering illicit proceeds and facilitating cartel operations. The announcement notes that Casino Centenario is only two miles from the U.S. border and is known to have U.S. patrons;
  • Comercializadora y Arrendadora de Mexico (CAMSA), the operator of the casinos;
  • Senior cartel-linked individuals, including:
    • Eduardo Javier Islas Valdez (Islas), a coordinator of human smuggling operations along the Rio Grande;
    • Juan Pablo Penilla Rodriguez (Penilla), a defense attorney acting as an intermediary for imprisoned CDN member to current CDN leadership; and
    • Jesus Reymundo Ramos Vazquez (Ramos), a CDN associate purported who leads CDN disinformation campaigns supporting cartel interests while purporting to be a “human rights activist.” enTreasury also issued General License (GL) 35, authorizing wind-down transactions through May 13, 2026, involving Casino Centenario, Diamante Casino, or CAMSA, or any entity in which one or more of the foregoing three designated entities owns a 50 percent or greater interest.

While OFAC has long targeted cartel leadership and trafficking networks, this action is notable for its focus on professional enablers — an attorney and disinformation “influence” for the cartel — and on specific vehicles for the laundering of funds, in the form of the sanctioned casinos.

Broader Enforcement Trend

This action is the latest in a series of coordinated U.S. Government measures targeting cartels and their financial infrastructure. For example:

  • On November 13, 2025, FinCEN issued a finding and notice of proposed rulemaking (NPRM) that identified transactions involving ten identified Mexico-based gambling establishments to be of “primary money laundering concern. This action was taken concurrently with OFAC designations that sanctioned members of a criminal group that used the establishments to launder the proceeds of narcotics trafficking in collaboration with the Sinaloa Cartel.
  • On July 3, 2025, FinCEN issued orders pursuant to the Fentanyl Sanctions Act and FEND Off Fentanyl Act determining that three Mexican financial institutions are “of primary money laundering concern in connection with illicit opioid trafficking,” which orders effectively excluded the three financial institutions from the U.S. financial system.
  • On March 10, 2025, FinCEN issued an expanded Geographic Targeting Order (GTO) that requires money services businesses (MSBs) to file Currency Transaction Reports with FinCEN for cash transactions between $1,000 and $10,000 occurring in specific U.S. counties and ZIP codes located near the U.S-Mexico border, intended to help law enforcement identify efforts to structure transactions to evade existing currency reporting requirements
  • On February 20, 2025, the U.S. State Department designated eight international criminal organizations as Foreign Terrorist Organizations (FTOs), including several entities operating in Mexico. See more on this development from Crowell’s past client alert here. The State Department has identified several other cartels and international criminal organizations as FTOs since then. The use of terrorism authorities expands potential criminal liability associated with support for these groups, and also can give rise to civil liability in suits by private plaintiffs against persons that aid them.

Practical Considerations

Financial institutions, FinTechs, and companies with operations or transactions involving Mexico or with other cross-border exposure may wish to consider:

  • Enhanced screening and Customer Due Diligence (CDD) for gaming companies and non-traditional financial institution counterparties in Mexico, particularly near border regions.
  • Reviewing customer profiles tied to pro-cartel legal, media, or advocacy roles in high-risk jurisdictions, and conducting Enhanced Due Diligence (EDD) for high-risk customers.
  • Reassessing exposure to cash-intensive businesses that may serve as laundering conduits.

The UK’s Office of Financial Sanctions Implementation (OFSI) has published details of a £390,000 penalty it imposed on ADI, an Irish subsidiary of Apple Inc., on 19 March 2026. The penalty relates to two payments totalling approximately £635,000 made in 2022 to Okko LLC, a sanctioned Russian app developer, for App Store revenue. Although the underlying facts are relatively simple, there are several interesting takeaways from OFSI’s penalty notice.

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On 7 April 2026, the Commission published the first quarterly CBAM price at EUR 75.36 per certificate for the first quarter of 2026. The prices for the remaining quarters will be released on 6 July 2026, 5 October 2026, and 4 January 2027, respectively. Each quarterly price will apply to the sale of CBAM certificates for emissions from CBAM goods imported into the Union during that quarter. From 2027 onwards, the price will be published weekly.

How Many Certificates Must Be Surrendered?

The number of CBAM certificates to surrender is determined by the amount of imported CBAM goods and their specific embedded emissions. This amount is reduced by the emissions covered by EU ETS free allocation, and—where relevant—further reduced by emissions already covered by a carbon price that has been effectively paid in the country of origin or a third country. One CBAM certificate equals one tonne of CO₂ equivalent.

How and When Are Certificates Purchased?

There is no obligation to hold CBAM certificates during 2026. As certificate sales on the common central platform begin only from February 2027, there is no legal obligation to hold certificates during 2026.

From 1 February 2027, Member States will sell CBAM certificates to authorised CBAM declarants on a common central platform managed by the Commission. Certificates are sold at the applicable price, each has a unique identification number, and sale details are recorded daily in the CBAM Registry. Authorised CBAM declarants may purchase certificates at any time throughout the year.

The Quarterly Holding Obligation — From 2027

From 2027, authorised CBAM declarants must ensure that, by the end of each quarter, they hold CBAM certificates covering at least 50% of embedded emissions in all goods imported since the beginning of the calendar year. This is determined by either default values (without the mark-up) or by the number of certificates surrendered for the preceding year for the same goods by CN code and country of origin. The quarterly holding obligation takes account of the free allocation adjustment. This obligation is assessed at the end of each quarter: 31 March, 30 June, 30 September, and 31 December.

Annual Surrender and Key Deadlines The deadline for both the first CBAM declaration and the first certificate surrender is 30 September 2027, covering the year 2026. These two obligations must be met at the same time. After certificates are surrendered, any excess certificates may be repurchased at the original purchase price, provided a request is made by 31 October of the year of surrender. On 1 November 2027, any certificates purchased for 2026 embedded emissions that remain in accounts will be cancelled by the Commission without compensation. If the required certificates are not surrendered, a significant penalty applies. The penalty for uncompensated emissions is EUR 100 per tonne, indexed to the European consumer price index. Importantly, paying the penalty does not release the declarant from the obligation to surrender the outstanding certificates.

In March 2026, the Office of the United States Trade Representative (USTR) launched two parallel Section 301 investigations: one targeting manufacturing overcapacity across 16 countries (including China, the EU, Japan, India, Mexico, Vietnam, and other major manufactures), and one targeting forced labor enforcement failures across 60 countries. Here are the top seven questions Crowell & Moring’s International Trade team is getting regarding pending Section 301 comment deadlines from our clients and how to address them.

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