UK imposes a new wave of sanctions against Iran

Background

On 1 October 2025, the UK implemented the “snapback” of UN sanctions measures on Iran that were effectively lifted by the E3 (UK, France and Germany), Russia, China and the US in accordance with the Joint Comprehensive Plan of Action (“JCPOA”). (Please see here our previous briefing in relation to the E3’s initiation of the snapback procedure.) In initiating the “snapback”, the UK Government had announced that new legislation would be laid down to impose further sectoral sanctions against Iran.

The Regulations are the next step in this process, targeting industries such as energy, software, metals, gold, insurance and banking.

Summary of the new measures

Financial restrictions

The Regulations introduce a range of financial restrictions (albeit not ones which are identical to the pre-JCPOA period).

The measures include:

• broad restrictions on granting loans or credit to, and on investments in, persons who are connected with Iran that are engaged in: (i) the manufacture of certain restricted goods; or (ii) certain nuclear- or oil and gas-related activities;

• a ban on insurance or reinsurance services provided to persons who are connected with Iran;

• restrictions on the sale or purchase of Iranian bonds, or bonds guaranteed by the Iranian Government, together with prohibitions on providing brokering services, advertising services or any other service where this would assist with the issue of such bonds; and

• a prohibition on UK credit and financial institutions from opening accounts or establishing correspondent banking relationships with Iranian financial institutions (including their branches or subsidiaries).

In addition, on 23 September 2026, the Office of Financial Sanctions Implementation (“OFSI”) published guidance confirming that it will now apply a presumption of denial for licence applications made by certain designated Iranian banks which operate in the UK. OFSI will only grant licences to these banks where it is required by law to do so, or where there are demonstrable exceptional and urgent circumstances involved. The accompanying FAQ #204 makes it clear that licence applications will be assessed on a case-by-case basis. The existing general licence granted to cover necessities for these Iranian banks (including salary and pension payments, IT, telephony, email and accountancy related costs) will expire on 22 October 2026 and will not be renewed. As such, any financial institution processing payments pursuant to this licence must take note and cease such payments at the expiry of the licence. 

Trade restrictions

The existing UK import and export restrictions regarding Iran have been expanded to include a wide range of items related to key industries contributing to the Iranian nuclear escalation.

In terms of exports, the Regulations expand the categories of restricted goods to include:

• gold, precious metals and diamonds;

• energy-related goods; and

• sectoral software and technology (including business enterprise software and industrial design software), although there is a limited wind-down period for contracts concluded before 8 September 2026.

For imports, the Restrictions include Iranian:

• gold, precious metals and diamonds;

• oil and petroleum products;

• petrochemicals; and

• natural gas.

The measures are not limited to the physical movement of controlled items. They also extend to the provision of related technical assistance, as well as financial services, funds and brokering services.

Shipping restrictions

The Regulations strengthen the UK’s ability to target ships that enable or facilitate Iran’s nuclear programme.

General restrictions prohibit making vessels designed or modified for oil and petroleum products available to persons connected with Iran, or for use in Iran. Prohibitions also apply to registering a ship or providing technical assistance relating to tankers or cargo vessels toa person connected with Iran.

The UK Government may also specify ships used in connection with nuclear activities, the supply of restricted goods and technologies or dual-use goods and technologies from Iran, or the circumvention of the UK’s Iranian sanctions regime. Once a ship is specified, restrictions may apply to its operation and related services, including prohibitions on granting port access, chartering or operating the ship. 

Aircraft restrictions

Certain Iranian aircraft (i.e. Iranian registered aircraft or aircraft owned, chartered or operated by Iranian designated persons or persons connected with Iran) used for air cargo services are prohibited from landing in the UK.

Exceptions and General Trade Licences

The prohibitions introduced by the Regulations are subject to certain exceptions. For example, the new trade restrictions in relation to energy-related goods and energy-related technology or sectoral software and technology do not apply where the supply is necessary for the purposes of a UK petroleum project.

Furthermore, the UK Government has issued a General Trade Licence for specified energy-related activities necessary for the continued operation of the Shah Deniz gas field and related pipeline projects in Azerbaijan. The licence applies only to activities connected with essential operations.

Commentary

The breadth of the Regulations means that businesses engaged in Iran-related trade must reassess their sanctions risk exposure, including supply chain arrangements and the extension of prohibitions to ancillary services.

The expanded UK Iran sanctions regime now demands the same rigorous compliance efforts that businesses have been needing to apply to Russia since February 2022. Accordingly, businesses with Iran exposure should:

• Review the new controlled-goods schedules;

• Refresh counterparty screening - including supply chain intermediaries - for connections to Iran or Iranian designated persons;

• Review financial arrangements connected to Iranian related activity;

• Review existing contracts to ensure they include robust sanctions clauses;

• Review insurance arrangements - the new prohibition on insurance services to persons connected with Iran may require policy updates or notifications to insurers;

• Consider licensing requirements carefully as licences will only be granted in exceptional circumstances;

• Where relying on the Shah Deniz General Trade Licence, confirm the activity is genuinely within scope and comply with notification and record-keeping requirements; and

• For existing Iran activities now prohibited, plan wind-down steps, update internal compliance policies and training, and monitor for further OFSI guidance.