OFAC’s Pegasus Settlement: Lessons for Logistics Providers on Screening and Subpoena Responses
On October 9, 2026, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced a $175,015 settlement with California-based freight forwarder Pegasus Worldwide Logistics (Pegasus) for apparent violations of U.S. counter-narcotics sanctions and OFAC reporting requirements. The enforcement action arose from Pegasus’s involvement in shipping a $5,950 machine supplied by a sanctioned Chinese company that had changed its name following its designation. Despite the relatively modest transaction value, OFAC imposed a substantial penalty, citing deficiencies in Pegasus’s sanctions screening, failure to investigate red flags, and incomplete response to an administrative subpoena.
OFAC found that Pegasus failed to conduct sanctions screening at the outset of the transaction and subsequently screened only the supplier’s new name, overlooking email and telephone information that would have identified the company as a sanctioned party. Pegasus also continued processing payments after receiving a U.S. Customs and Border Protection detention notice referencing OFAC. Compounding these failures, Pegasus initially certified that it had no documents responsive to an OFAC subpoena, only to produce responsive records months later. OFAC treated the incomplete response as a separate basis for liability and an aggravating factor in calculating the settlement.
The action underscores OFAC’s heightened compliance expectations for logistics companies and other intermediaries, regardless of their size or the value of the underlying transaction. It also highlights the importance of screening all available identifying information before engaging in transactions, promptly escalating sanctions-related red flags, and ensuring complete and accurate responses to government inquiries. OFAC further emphasized the availability of financial incentives for sanctions whistleblowers, reinforcing the importance of effective internal reporting and escalation procedures. Click here for the full post.
EU Forced Labor Regulation Moves Toward Implementation: How Companies Should Prepare
On June 26, 2026, the European Commission (Commission) published its long-awaited guidelines on the Forced Labor Regulation (FLR). The FLR, which entered into force in December 2024 (see Sidley Update of December 2024) and will apply in full from December 14, 2027, introduces a broad ban on products made, wholly or partly, with forced labor at any stage of the supply chain, regardless of product type, sector, or origin.
China’s New Supply Chain Security Regulations: Key Takeaways for Companies With China Operations or China-Linked Supply Chains
China’s new Regulations on Industrial and Supply Chain Security, which took effect on April 7, 2026, add another significant layer to the country’s expanding countermeasures framework. The regulations give Chinese authorities broad powers to monitor activities that could be viewed as threatening China’s industrial or supply chain security, creating new compliance challenges for companies with China operations or China-linked supply chains.
From increased scrutiny of key sectors and supply chain due diligence to heightened risks around supplier transitions, customer terminations, and sanctions-driven business decisions, the regulations underscore a growing reality: actions taken to comply with foreign trade restrictions may carry legal consequences in China.
In this blog post, we examine the regulations’ key provisions, identify four principal risk areas for multinational companies, and discuss practical steps companies should consider as conflict-of-laws risks become increasingly difficult to avoid.
United States Announces New Cuba-Related Sanctions Program
President Donald Trump issued an Executive Order on May 1, 2026, establishing a new U.S. sanctions program targeting Cuba that supplements existing sanctions. The Order gives the U.S. Secretaries of State and Treasury the authority to impose sanctions on non-U.S. persons, including foreign financial institutions, for engaging in certain activities in Cuba or involving sanctioned Cuban persons. It thus creates significant new risks for non-U.S. persons with respect to dealings in or involving Cuba.
FinCEN, Office of Foreign Assets Control Propose Anti-Money-Laundering Program and Sanctions Requirements for Stablecoin Issuers
The U.S. Department of the Treasury, through the Financial Crimes Enforcement Network (FinCEN) and the Office of Foreign Assets Control (OFAC) (collectively Treasury) issued a joint notice of proposed rulemaking on April 8, 2026, to implement the anti-money-laundering (AML) and sanctions compliance provisions of the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act), establishing a regulatory framework for permitted payment stablecoin issuers (PPSIs), hereinafter collectively “the proposed rule.”[1] The proposed rule does not address the GENIUS Act’s customer identification program (CIP) requirements, which are expected to be the subject of a separate rulemaking.
Five Key Takeaways From 2025 U.S. Sanctions Enforcement
U.S. sanctions enforcement activity in 2025 underscored the U.S. government’s continued commitment to robust enforcement of the various sanctions programs primarily administered and enforced by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC). OFAC’s 2025 enforcement actions also signaled the agency’s substantive priorities and, perhaps most important, highlighted its compliance expectations.