European Union toughens stance on Iran, reimposing sanctions

2025-10-06T10:06:00
European Union

Implications and scope of new measures taken by European Union on Iran

European Union toughens stance on Iran, reimposing sanctions
October 6, 2025

The European Union (“EU”) has recently reimposed wide-ranging sanctions against Iran after activating the “snapback” mechanism established in Resolution 2231/2015 of the United Nations (“UN”) Security Council, which sustained the nuclear agreement known as the “Joint Comprehensive Plan of Action” (“JCPoA”).

This reintroduction of sanctions means reversing relief measures that the EU had adopted under the JCPoA since 2015. The new restrictions—in force since the end of September 2025—immediately affect assets, trade, investments, financial transfers, insurance and transport linked to both Iranian individuals and companies and those controlled by Iranian interests outside the country.

The scope of the sanctions is substantial. Over 250 designations of individuals and legal entities have been reinstated, including banks, energy companies and shipping companies. Exemptions are very limited, and there is a high risk that funds or resources may be considered indirectly available to sanctioned subjects. The regulatory basis for these measures is Regulation (EU) 267/2012, recently amended by regulations 2025/1980, 2025/1982 and 2025/1975, to reintroduce both UN-based sanctions and EU autonomous measures.

Also, the EU has expanded the list of individuals and entities subject to asset freezes, covering players in and outside of Iran that are directly or indirectly controlled by Iranian interests.

Regarding trade, export and import restrictions have been reactivated on dual-use items, sensitive technology and goods related to the energy, naval, industrial software, graphite and metal sectors. Therefore, selling, supplying and transferring equipment and technology for (i) oil and gas exploration, production and refinement; and (ii) the petrochemical and naval industries, is prohibited. Bans have also been reinstated on exporting certain industrial software and on selling metals such as aluminum and steel. Importing, buying and transporting crude oil, natural gas, and petrochemical products of Iranian origin is prohibited, alongside exchanging natural gas with Iran. However, there will be a wind-down period until January 1, 2026, for contracts signed before September 30, 2025, and there will also be some limited exemptions for humanitarian and essential operations.

Investments, loans, and joint ventures with Iranian counterparties in strategic sectors such as defense, energy, liquefied natural gas, and petrochemicals are also prohibited, as is cooperation with entities engaged in natural gas transmission. Participation in energy infrastructure projects and in financing activities related to nuclear proliferation and developing arms delivery systems is also banned.

Regarding finance, transferring funds to or from Iranian institutions is subject to strict authorization controls and thresholds, depending on the size of the transfer and its purpose. For example, transactions related to food and healthcare and those for humanitarian purposes can be authorized under certain conditions, while others require prior notification or express authorization depending on the transaction amount. Due diligence obligations have been strengthened for banks, including continuous vigilance over account activity and the obligation to report suspicious transactions. Restrictions have also been imposed on insurance and reinsurance transactions and on acquiring Iranian public debt issued after September 30, 2025.

From January 1, 2026, prohibitions will target technical, inspection, certification and repair services to Iranian oil tankers and cargo, and there will be a prohibition on making vessels available to transport or store Iranian oil and petrochemical products. Provision of services for classifying and documenting vessels flying the Iranian flag or those controlled by Iranian interests will also be banned.

We highlight that personal sanctions broaden to entities outside of Iran that are directly or indirectly controlled by Iranian persons. Therefore, it is essential to pay special attention to the ownership and control structure in international transactions, since sanctions can be applied to transactions that, on the surface, do not seem to have a direct link to Iran.

Ahead of this new scenario, we recommend:

  • Revising the screening process of counterparties and final beneficiaries to identify possible links with sanctioned subjects, paying special attention to indirect ownership structures or control from outside of Iran;
  • analyzing current contracts to determine if they are eligible for the established wind-down periods and adapt sanction clauses, including safeguards and suspension mechanisms in the event of regulatory changes; and
  • strengthening controls on financial flows, insurance coverage and financial messaging, ensuring compliance with new thresholds and authorization requirements, as well as adequate documentation and reporting to the competent authorities.

To conclude, the EU’s reimposing of sanctions on Iran requires a comprehensive review of business and financial relationships that are potentially linked to Iran. Consequently, it is also necessary to review internal regulations to face the new global scenario with full guarantees and in compliance with the new applicable regulation.

 

October 6, 2025