On December 2, 2025, OFAC announced an ~$11 million penalty settlement with IPI Partners, LLC (“IPI”), a Chicago-based U.S. private equity fund, to settle its civil liability for 51 potential violations of OFAC’s Russia sanctions. The enforcement action underscores the importance of diligence to guard against potential sanctions violations.  In brief, OFAC found that IPI solicited and received investments from a Russian oligarch, Suleiman Kerimov (“Kerimov”), via his representative, and should’ve blocked those funds following OFAC’s designation of Kerimov to its Specially Designated Nationals and Blocked Persons List (“SDN List”).

Facts: In September 2017, a Kerimov family trust signed an agreement to invest $25M in an IPI fund, which then led to a meeting between IPI and Kerimov and his representative, and an additional investment of $25M.  In April 2018, OFAC added Kerimov to the SDN List, which meant that all of his property and “interest in property” became “blocked”.  IPI’s legal counsel advised IPI that it did not have to block the funds in the family trust, based upon what seemed to be rationale grounds at the time; however, OFAC found that IPI never disclosed to its legal counsel the full role of the representative or the fact that IPI met with Kerimov, and IPI knew that its prior attestations weren’t accurate.  OFAC determined that Kerminov had an interest in the funds, and that IPI should have blocked them.

Penalties: IPI did not voluntarily disclose the transaction to OFAC, though OFAC settled with IPI for ~$11 million penalty, a reduction from the ~$14 million maximum penalty, noting the following aggravating factors: (i) IPI knew (or should have known) about Kerimov’s involvement, regardless of the legal guidance; (ii) the violations were against U.S. foreign policy interests; and (iii) IPI is a sophisticated PE fund.  OFAC highlighted two mitigating factors: (i) IPI did not have any penalties in the last five years; and (ii) IPI ultimately cooperated with OFAC.

Takeaways:

  • U.S. Sanctions Obligations Cannot Be Contractually Modified: Written attestations that a party is not violating sanctions or subject to sanctions do not absolve any of the parties’ obligations to ensure there are no sanctioned dealings. In the enforcement action, OFAC explained that “individuals and companies with reason to know of such circumstances cannot later claim ignorance even if a blocked person has no nominal ownership or overt role.”  Accordingly, if a company has knowledge that any party with which it is dealing has direct or indirect ties to a sanctioned person, additional diligence should be performed.
  • Diligence Should Be Calibrated on Perceived Risk: Screening and contractual controls can be sufficient mitigation measures when there is no identifiable risk. However, OFAC notes that “situations involving opaque legal structures or the use of proxies that may obscure a party’s interest in an entity or property—a more exhaustive analysis may be appropriate.”
    • Importance of Disclosure of All Relevant Facts and Cooperation with OFAC: IPI did not provide all relevant information to its counsel, including critical information about the relationship between Kerimov and his representative, which ultimately led to guidance not tailored to the facts and an inability to adequately assess sanctions risks. Though the violation was not voluntarily disclosed, OFAC took into account IPI’s ultimate cooperation with the agency when exacting the penalty. A voluntary disclosure would have further reduced the penalty.

    Dominican Republic-based aluminum extrusions exporter, Kingtom Aluminio SRL (Kingtom) defended a decision issued by the Court of International Trade (CIT) to vacate a forced labor Finding against Kingtom issued by U.S. Customs and Border Protection (CBP). On October 31, 2025, Kingtom filed in opposition to the U.S. government’s motion for a reconsideration of the decision to vacate the Finding.

    For background, CBP issued a forced labor Finding against Kingtom in December 2024. Following an investigation, CBP determined that certain aluminum extrusions, profile products and derivatives from Kingtom were manufactured or produced in whole or in part with forced labor. CBP further determined that these products are being, or likely to be, imported into the U.S.

    CBP’s Finding against Kingtom is significant because it is the first direct Finding issued by CBP. Typically, CBP issues a Withhold Release Order (WRO) prior to the issuance of a Finding, since the threshold to issue a WRO is lower. The threshold for a WRO is met when CBP has reasonable suspicion to believe that the manufacturing or production process for certain goods involved forced labor. When there is probable cause that the goods are manufactured or produced by forced labor, CBP typically elevates the status of a WRO to a Finding. A Finding allows CBP to seize the imported goods at all U.S. ports of entry.

    In September 2025, the CIT found that CBP’s Finding against Kingtom was arbitrary and capricious, in part because the public record did not provide substantial evidence supporting the Finding. The CIT then issued a decision to vacate and remand the Finding. In response, the U.S. government filed a motion requesting the CIT to reconsider its decision. The U.S. government argued, among other points, that the confidential record adequately supports the Finding.

    Kingtom responded to the motion, defending the CIT’s decision and stating that CBP did not provide Kingtom advance notice of the investigation and “skipped over the normal regulatory progression” of beginning with a WRO, then proceeding to a conclusive Finding. The ongoing litigation in this case highlights the likelihood that CBP will need to provide more substantive justification for any direct Findings, and raises doubts about whether CBP will continue to issue direct Findings in the future without first issuing a WRO.

    Crowell continues to monitor developments in the Forced Labor space and their impact on industry.

    On November 14, 2025, President Trump signed an executive order modifying the scope of reciprocal tariffs originally imposed under Executive Order 14257 of April 2, 2025, which declared a national emergency based on large and persistent U.S. goods trade deficits. The November 14 order exempts certain agricultural products from the reciprocal tariff regime, effective for goods entered for consumption on or after 12:01 a.m. EST on November 13, 2025.

    The exempted agricultural products include coffee and tea, tropical fruits and fruit juices, cocoa and spices, bananas, oranges, tomatoes, beef, and additional fertilizers, covering goods of HTSUS chapters 02, 07, 08, 09, 10, 11, 12, 15, 16, 18, 19, 20, 21, 22, and 31. The products have been added to Annex II of Executive Order 14257 under existing subheading 9903.01.32. Additionally, order established new partial exemptions for agricultural products covered by 11 other subheadings from Chapters 08, 14, 19, 20, 21, and 33 under new subheading 9903.02.78, including tropical fruit, communion wafers, acai, citrus juice, and coconut water, among other items. The full list of exemptions can be viewed here.

    The order directs the Secretary of Commerce and the United States Trade Representative to continue monitoring the circumstances involving the declared national emergency and to consult regularly on potential needs for further presidential action. The order also mentions that, “to the extent implementation requires refunds of duties already collected, such refunds will be processed pursuant to applicable law and standard procedures of U.S. Customs and Border Protection.” Crowell and Moring continues to monitor developments in presidential tariff actions and their impact on industry.

    On November 15, 2025, the implementing regulation updating the EU’s Dual-Use Regulation (Regulation (EU) 2021/821) came into force. The update incorporates editorial refinements for greater clarity and coherence, introduces new entries, and further clarifies some existing ones.

    These updates reflect the EU’s efforts to harmonize its export controls with recent decisions and commitments under multilateral export control regimes, such as the Wassenaar Arrangement (WA), Missile Technology Control Regime (MTCR), Australia Group (AG) and Nuclear Suppliers Group (NSG). The update also further aligns the EU position with the United States, which has already implemented many of these developments.

    The EU has amended and expanded export controls over critical and emerging technologies, in particular quantum computing, semiconductor manufacturing, biosecurity, and advanced materials.

    Below is a non-exhaustive list of the changes and key industries affected:

    Category 1: Special Materials and Related Equipment

    • 1C002.c.1.a: Nickel alloys for gas turbine engines
    • 1C002.c.2: Ultrasonic atomization
    • 1C513: High-entropy alloy or refractory metal powders 

    Industries affected: Aerospace, maritime, advanced materials manufacturing.

    Category 2: Materials Processing

    • 2B352.j: Peptide synthesizers
    • 2B510: Metal alloyadditive manufacturing equipment
    • 2E503: Corrosion-resistant coating systems technology

    Industries affected: Pharma, biotech, defense, aerospace, automotive.

    Category 3: Electronics

    • 3A501.a.15: Cryogenic Complementary Metal-Oxide-Semiconductor (CMOS)
    • 3A501.a.16: Integrated circuits
    • 3A501.b.13: Quantum-limited amplifiers (QLAs)
    • 3A502.i: User-configurable Field Programmable Logic Devices (FPLDs)
    • 3A504: Cryogenic cooling systems and components
    • 3B501.a: Epitaxial growth (silicon or silicon-germanium) and Atomic Layer Epitaxy (ALE) equipment
    • 3B501.f: Extreme Ultraviolet (EUV) lithography equipment
    • 3B501.k: Dry etching equipment
    • 3B501.l: EUV masks and reticles
    • 3B501.m: EUV lithography pellicles
    • 3B501.n: Deposition equipment
    • 3B503: Specialized Scanning Electron Microscopes (SEM)
    • 3B504: Cryogenic wafer probing tools
    • 3C507 and 3C509: Epitaxial materials and certain silicon and germanium materials

    Industries affected: Semiconductor manufacturing, defense, consumer electronics, information security.

    Category 4: Computers

    • 4A506: Quantum computers 

    Industries affected: Telecommunications, information security, finance, defense, advanced computing R&D.

    In parallel, the UK laid the Export Control (Amendment) (No.2) Regulations 2025 before Parliament on November 17, 2025 which are scheduled to come into force on December 16, 2025. The regulations will similarly update the UK’s export control framework to align with international commitments and recent EU regulatory changes. 

    Crowell & Moring will continue to monitor developments related to EU, UK and U.S. export controls and potential impact to industry.

    The U.S. Department of State (“State”) has decided to lift the defense trade embargo against Cambodia.  Accordingly, the Directorate of Defense Trade Controls (“DDTC”) will publish on November 7, 2025, a final rule amending the International Traffic in Arms Regulations (ITAR) at § 126.1 to remove Cambodia from the proscribed countries list. 

    For countries included on the proscribed countries list in § 126.1 (“126.1 countries”) DDTC’s policy is to generally prohibit all exports or imports of defense articles and defense services destined for or originating in these countries; certain exemptions are not available for 126.1 countries and any involvement of 126.1 countries in ITAR regulated activity without authorization trigger mandatory notification requirements to DDTC.   

    As a result of this rule, license requests for defense articles and defense services to Cambodia will now be evaluated individually, and exemptions previously unavailable under ITAR § 126.1 will be accessible for Cambodia (provided exemption criteria are met).   

    Justifying the shift in policy, State cited Cambodia’s “diligent pursuit of peace and security, including through renewed engagement with the United States on defense cooperation and combating transnational crime.”  The decision to remove prohibitions on Cambodia follows a series of meetings and trade deals President Trump made during his trip to the region at the end of October.  In a fact sheet, the White House explained that the United States and Cambodia agreed to provide U.S. exporters “unprecedented access” to Cambodia’s market, including ending the “competitive disadvantages” U.S. exporters face compared with other trading partners with Cambodia; though no specific mention was made about defense trade.  China has historically been the main supplier of arms to Cambodia, according to the Stockholm International Peace Research Institute (SIPRI).

    Crowell & Moring LLP will continue to monitor defense trade developments and the potential impact to industry.

    Yesterday, the Supreme Court of the United States heard oral argument in the consolidated case challenging the use of the International Emergency Economic Powers Act (“IEEPA”) to justify sweeping import tariffs. At issue is whether IEEPA authorizes the President, upon declaring a national emergency, to impose tariffs and, if so, whether that delegation is constitutionally permissible.

    Click here to continue reading the full version of this alert.

    Camel Energy, a Michigan-based importer of lead-acid batteries, has recently filed a complaint at the Court of International Trade (CIT) contesting U.S. Customs and Border Protection’s (CBP) two recent exclusions of its shipments. CBP excluded these entries due to “suspicion of being made with forced labor and subject to the UFLPA.” Camel Energy maintains that these exclusions were unlawful.

    The Uyghur Forced Labor Prevention Act (UFLPA) authorizes CBP to detain or exclude products made wholly or in part in Xinjiang or linked to entities included on the UFLPA Entity List. Camel Energy asserts that it is not on the Entity List, and its batteries are not produced with forced labor. Camel Energy’s parent, Camel Group, is included in the UFLPA Entity List and is challenging its designation at the Court of International Trade separately.

    In its complaint, Camel Energy notes that CBP:

    • Excluded Entries Without Proper Evidence: CBP excluded two shipments “on suspicion” of forced labor, however Camel Energy claims CBP did not substantiate this suspicion or provide evidence.
    • Provided No Admissibility Determination: Camel Energy states CBP never made a formal admissibility determination for its entries, causing its protests to be denied by default after months with no decision.
    • Failed to Observe Response Deadlines: CBP allegedly did not give Camel Energy the required 30-day window to respond and prove the goods weren’t linked to forced labor or the UFLPA Entity List.
    • Lacked Notice and Transparency: Notices of detention and exclusion were sent days apart, with no explanation for this timeline. Camel Energy maintains that CBP failed to respond to its repeated requests for the evidence used against it.

    The complaint highlights the broader issue of CBP’ s detention or exclusion of 95 separate shipments of Camel Energy’s batteries across multiple U.S. ports since August 21. Despite submitting responses and protests regarding most of these shipments, Camel Energy reportedly received no determination from the agency.

    Camel Energy emphasized in its complaint that it has a “history of successful protests” against forced labor accusations in the past. The current lack of transparency and timely action by CBP, the company says, is deeply troubling, particularly due to the sudden exclusion notices and the absence of meaningful opportunity to respond.

    This complaint highlights the challenges importers face under the UFLPA regime, especially pertaining to due process and evidence-sharing. Stakeholders in global supply chains, notably those dealing with products scrutinized under UFLPA, are watching the case closely for signals about future CBP enforcement practices and transparency.

    Crowell & Moring will continue to monitor Camel Energy’s challenge at the Court of International Trade (Camel Energy v. United States, CIT # 25-00230)

    On October 30, 2025, President Trump and Chinese President Xi Jinping met in Busan, South Korea – this marks the first time the two leaders have engaged in face-to-face talks since 2019, during Trump’s first term.

    According to a statement from China’s Ministry of Commerce (MOFCOM) issued during a press briefing following the meeting, the U.S. and China have reached an agreement in recent negotiations in Kuala Lumpur to suspend certain tariff and export control measures on both sides.

    Under the reported agreement, the U.S. will reduce the fentanyl-related tariffs imposed on Chinese goods (including those from Hong Kong and Macao) to 10 percent and suspend for one year the 24 percent reciprocal tariff on China. In turn, China will make corresponding adjustments to its countermeasures against these U.S. tariffs. China’s countermeasures included multiple rounds of retaliatory tariffs that went into effect February 10, 2025 and March 10, 2025 in response to the fentanyl-related tariffs. Both sides also agreed to extend certain tariff exclusion measures.

    Additionally, the U.S. will implement a one-year suspension of its recent expansion of export controls, which includes the BIS  “Affiliates Rule” announced on September 29, 2025. China will implement a one-year suspension of its new export control measures announced on October 9, 2025.

    The U.S. also agreed to suspend the Section 301 vessel fees targeting China’s maritime, logistics, and shipbuilding sectors for one year, and China agreed to suspend its special port charges on U.S.-owned, operated, built or flagged vessels related to the investigation.

    Other measures of the agreement include commitments to expand agricultural trade and cooperation efforts in fentanyl control.

    As of publication, neither the U.S. nor China has issued an official release confirming the details and effective dates of the measures.  Crowell & Moring, LLP will continue to monitor developments and the potential impact to businesses and consumers moving forward.

    The United States, European Union, and United Kingdom have significantly escalated Russia-related sanctions the past month, including the Trump Administration’s first sanctions directly imposed on Russia. These coordinated actions—which particularly target the Russian energy sector—indicate that Russia sanctions remain on the geopolitical agenda and require multinational companies to remain vigilant in their compliance with those sanctions.

    Click here to continue reading the full version of this alert.

    On 23 October 2025, the EU adopted a further sanctions package, its “19th Round”, against Russia in connection with its ongoing war in Ukraine. We summarise the key measures below.

    Energy

    • LNG Import Ban: The EU will prohibit the purchase, import, or transfer, directly or indirectly, of Russian liquified natural gas (LNG) from 25 April 2026, except for any contracts entered into before 17 June 2025 and lasting more than a year. For these historic contracts, the prohibition comes into effect on 1 January 2027 (provided the contract is not amended post-June 17, subject to certain limited exemptions).
    • Vessel Sanctions: An additional 117 vessels have been added to the list of vessels subject to an EU port access ban and other services restrictions.

    Asset-Freezing Sanctions

    • Ownership and Control Test: The EU has codified in legislation the terms “owning” and “controlling” for the purposes of determining whether a non-designated entity is subject to EU asset freezing sanctions under Regulation (EU) No 269/2014. These terms were previously specified in guidance, but the EU has pulled them formally into the regulation to drive consistency in interpretation against the Union.  In particular, “owning” means being in possession of 50 % or more of the proprietary rights of a legal person, entity or body, or having a majority interest therein. “Controlling” includes, but is not limited to, a range of factors, all of which were previously included in the guidance (e.g., having the right to appoint or remove a majority of board members or having the right to exercise a dominant influence).
    • Expanded Criteria: The EU expanded its asset freezing designation criteria to include persons that are responsible for, supporting or implementing actions or policies contributing to the deportation, forced transfer, forced assimilation, including indoctrination, or militarised education of Ukrainian minors.
    • New designations: The EU designated an additional 22 persons and 42 entities as asset-freeze targets, including Litasco Middle East DMCC.  Despite an earlier action by the UK and U.S. sanctions issued on the 22nd, the EU did not designate either the Lukoil or Rosneft parent companies (it did, however, expand the scope of the “transaction” ban applicable to the latter).

    Military and industrial capabilities

    • Additional Goods Subject to Export and Import Restrictions: New items have been subject to export restrictions on Russia and Belarus, including electronic components, rangefinders, and additional chemicals, metals, oxides and alloys, salts and ores, and articles made of rubber, tubes, tyres, millstones and construction materials. Import-related prohibitions have been extended to cover all acyclic hydrocarbons.
    • Investment Prohibition: The package introduces a prohibition on acquiring any new or extending any existing participation in ownership or control, creating any new JV, branch, or representative office, entering into any new contract or arrangement for the supply of goods or services, or of related intellectual property rights or trade secrets to, from or for use in listed Russian special economic, innovation or preferential zones. Financing of companies located in these zones is also prohibited. As of 25 January 2026, it will be prohibited to maintain the same in the zones. The restriction provides for certain exemptions and derogations, e.g., for the purchase, import or transport of natural gas, titanium, aluminium, copper, nickel, palladium or iron ore to the EU or for humanitarian purposes.
    • Export Restricted Entities: An additional 45 entities are subject to a restriction on selling or exporting dual-use goods or other advanced goods and technologies, i.e., EU persons cannot export or sell such items to them. This list includes entities in Russia and third countries (China, Hong Kong, India, and Thailand).

    Financial services

    • Transaction Ban: The following banks and oil traders have been added to an EU transaction ban:
      • CJSC Alfa-Bank (Belarus), OJSC Sber Bank (Belarus), VTB Bank (Belarus) and VTB Bank (Kazakhstan) (effective 2 December 2025)
      • Payeer, CJSB JSCB Tolubay, OJSC Eurasian Savings Bank, CJSC Dushanbe City Bank, CJSC Spitamen Bank (Tajikistan), OJSC Commerce Bank of Tajikistan (effective 25 November 2025)
      • Blackford Corporation Limited and Fuel and Oil Dynamics FZE (effective 12 November 2025).
    • Russian Payment Systems: It will be prohibited, from 25 January 2026, to connect to any systems of the Central Bank of Russia or to systems provided by any other legal person, entity or body incorporated or constituted under the law of Russia that include a financial messaging functionality, including the Fast Payment System (SBP) and the Russian National Payment Card System (Mir).
    • Crypto: Existing crypto prohibitions have been expanded to prohibit directly or indirectly providing the following to Russian entities or residents: crypto-asset services; issuing of payment instruments, acquiring of payment transactions, or payment initiation services; and issuing of electronic money. EU persons are also prohibited from engaging in transactions involving A7A5 (a stablecoin created with Russian state support) as of 25 November 2025.

    Other services

    • Additional Services: The EU has restricted the provision of the following additional services to the Russian government or Russian entities: (i) commercial space-based services consisting of Earth observation or satellite navigation, (ii) artificial intelligence services consisting of access to models or platforms for their training, fine-tuning and inference, and (iii) high-performance computing, including access to graphic processing unit-accelerated computing, or quantum computing services. These restrictions are effective as from 25 November 2025.
    • Tourism: In addition, services directly related to tourism activities in Russia are prohibited (subject to a wind-down derogation until 1 January 2026 for contracts concluded before 24 October 2025).
    • Reinsurance: It will be prohibited to provide reinsurance for any aircraft or vessels operated by the Russian Government or Russian entities for a period of five years following the sale or lease arrangement of those aircraft or vessels.

    Diplomats

    Russian diplomatic or consular personnel, including administrative and technical staff, and their family members, will be obliged to provide a 24-hour prior notification of their arrival in or transit through the EU. An EU Member State may impose an authorisation requirement on the travel to or transit through its territory. The measures are applicable as from 25 January 2026.