Developments in Global Trade Controls: October–December 2025

Dear Clients and Friends,

We are pleased to share highlights of key regulatory updates, proposed legislation, enforcement events, and court decisions pertaining to international trade regulation over the fourth quarter of 2025. These developments may affect compliance requirements for companies operating in Israel and abroad. 

Regulatory Updates | Proposed Regulation | Enforcement Updates

Regulatory Updates

DECA Announces Product Registration Procedure Update

On October 15, 2025, Israel’s Defense Export Controls Agency (DECA) published an update regarding the registration of off-the-shelf products manufactured abroad. As per the new process, an off-the-shelf foreign-manufactured product that is “AS-IS” and without modification may be registered with DECA via email. While obtaining export licenses from DECA typically requires several preliminary steps, including registration of the product subject to the export request, the update provides for a streamlining of the export approval process for the aforementioned products.

EU Announces 19^th Russia Sanctions Package

On October 23, 2025, the EU announced its 19^th sanctions package against Russia. The package further sanctions an additional 69 individuals and numerous entities and introduces a wide array of measures targeting Russia’s energy, finance, military-industrial, and cryptocurrency sectors.

• In the financial sector, the package further aims to restrict the ability to conduct financial engagements in Russia by imposing restrictions on additional Russian banks and third-country banks facilitating sanctions evasion, payment systems such as the Russian National Payment Card System (‘Mir’) or the Fast Payments System (‘SBP’), and crypto-asset platforms used to circumvent existing EU restrictions.
• The sanctions package also expanded existing export bans on certain electronic components and designated entities supporting Russia’s military-industrial complex, including by circumventing export restrictions on certain high-priority items such as CNC machines, microelectronics, and UAVs. These entities include close to twenty entities from third countries, including more than half from China.
• The sanctions package expanded the prohibition against providing certain services to Russia, restricting the provision of AI services, high-computing services, and commercial space-based services to Russian entities.

The package also includes measures against Belarus, mirroring Russia-related sanctions, including by imposing restrictions on the prohibition of crypto-related payment services and expanding prohibitions on providing certain software, including for banking, finance, commercial space-based services, technical testing and analysis, AI, and quantum computing.

The package also codifies the EU’s approach to restrictions based on sanctioned ownership or control, previously provided in guidance by the EU.

UK Lifts Arms Embargo on Armenia and Azerbaijan

On October 29, 2025, the UK Export Control Joint Unit (ECJU) announced that as of October 13, 2025, the UK has lifted its arms embargo on Armenia and Azerbaijan. Exports to the two countries will continue to be governed under the relevant UK export controls and licensing criteria.

US BIS Suspends Newly Issued Affiliates Rule:

As mentioned in previous client updates, on September 29, 2025, the US Department of Commerce’s Bureau of Industry and Security (BIS) published an Interim Final Rule (“Affiliates Rule”) expanding the Entity List and Military End-User (MEU) List to automatically include foreign entities owned 50% or more, directly or indirectly, by one or more listed parties, imposing the same licensing requirements and presumptions of denial. Following President Trump’s meeting with Chinese President Xi, the White House announced on November 1, 2025, a one-year suspension of the Affiliates Rule until November 9, 2026. Given their relationship to Entity List and MEU List entities, as well as diversion and circumvention concerns, it remains important to cautiously manage any engagements with foreign entities owned by designated entities.

US Lifts Arms Embargo on Cambodia

On November 7, 2025, the US amended the International Traffic in Arms Regulations (ITAR) to remove its embargo on Cambodia for all US defense articles and services. The move followed a White House announcement as part of the peace accords and trade deals brokered in the region. The change does not remove all regulations or restrictions from the export or provision of defense articles and services to Cambodia, or the transfer of ITAR-controlled technology to Cambodian nationals but rather places Cambodia within the standard framework of ITAR approval and compliance requirements.

Israeli MOE Publishes Guidance on Non-Physical Exports

On November 10, 2025, the Dual-Use Export Control Division at the Ministry of Economy and Industry (MOE) published guidance calling attention to non-physical exports, or deemed exports, of dual-use items. The publication emphasizes that an export can include the transmission of controlled source code, documents containing controlled technical know-how, and even the transfer of controlled knowledge to a foreign entity within Israel. This can take place in emails, video or telephone calls, or even in conversations. The guidance serves to raise awareness of less obvious forms of export and as a reminder of the importance of compliance processes protecting controlled information, including technology control plans.

US Publishes Report on Chinese Facilitation of Sanctions and Export Control Evasion

On November 14, 2025, the US published a report under the US-China Economic and Security Review Commission entitled China’s Facilitation of Sanctions and Export Control Evasion. The report outlines known tactics that China deploys for sanctions and export control evasion, such as transshipment, technology transfers and local production, alternative payment and clearing networks, and the utilization of Hong Kong’s global status to facilitate evasion activities. While the report is intended for lawmakers, it raises key red flags for sanctions and export control evasion for companies operating in China.

EU and UK Updates Dual-Use List

On November 15, 2025, the EU’s updated Dual-Use Regulation (Regulation (EU) 2021/821) came into force. As mentioned in the previous client update, the updates provide changes to keep in line 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). In addition, the updates also include unilateral controls not part of the multilateral regimes, targeting emerging technologies such as specialized equipment for quantum computing and quantum technology, materials and equipment used in advanced semiconductor manufacturing and testing, and advanced computing electronic assemblies and integrated circuits. An overview of the changes can be found here.

In turn, following advance notice issued earlier that month, on November 20, 2025, the UK similarly announced the amendment of its dual-use regulations, while also adopting EU unilateral additions.

Israel’s Export Control Agency at the Ministry of Economy and Industry has noted and highlighted the changes in control lists to Israeli exporters.

Israel Revokes Encryption Order

On November 18, 2025, Israel’s Minister of Defense signed an order to revoke the Order Governing the Control of Commodities and Services (Engagement in Encryption Items) – 1974 (“Encryption Order”), to take effect on March 21, 2026. The Encryption Order’s repeal introduces a significant regulatory change for companies exporting items with encryption and/or decryption capabilities. Once the revocation goes into effect, the export of many consumer products (B2C) is expected to be decontrolled, while the export of many commercial products (B2B) will now fall under the control of the Defense Export Controls Agency (“DECA”) within the Ministry of Defense or the Export Control Agency within the Ministry of Economy and Industry (“ECA”). For a more detailed review of the implications of the regulatory change, see our client update on the matter.

IMOD Calls on Defense Exporters to Develop Anti-Bribery Compliance Programs

On November 18, 2025, the Director General of the Ministry of Defense issued a letter to defense exporters calling on them to establish a compliance program to prevent bribery and corruption. The Ministry emphasizes the importance of anti-bribery policy in defense exports. The Director General also asked exporters who already have an anti-bribery procedure to revisit and update their procedures and ensure their effective implementation within the company’s activities.

US and UK Issue Guidance on Sanctions and Export Controls Relief for Syria

In November 2025, and then again updated in December, the US Department of State, the US Department of Commerce, and the US Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), issued a tri-seal advisory regarding sanctions and export controls relief for Syria. The advisory comes after the initial suspension and then repealing of US sanctions against Syria under the Caesar Act, as well as the continued easing of other sanctions and export control restrictions on Syria, as outlined in President Trump’s June Executive Order “Providing for the Revocation of Syria Sanctions”. In recent months, the US has lifted its comprehensive sanctions on Syria and eased some export controls on Syria, while still maintaining targeted restrictions on certain Syrian actors as well as export control licensing requirements on most controlled items.

Similarly, on December 2, 2025, the UK issued guidance regarding regulatory frameworks applying to commercial activities in Syria in light of changing sanctions and other restrictions. As restrictions on trade with Syria have been easing globally, it is essential to note that Israel’s Trading with Enemy Ordinance still lists Syria as an enemy state, and thereby still widely prohibits engagements with Syria absent a special permit.

DECA Updates Dual-Use Export Control Lists

In December 2025, the plenary of the Wassenaar Arrangement issued its annual updates of controlled dual-use goods lists. Under the Defense Export Control Order (Controlled Dual-Use Equipment), 2008, DECA oversees “Controlled Dual-Use Equipment” according to the list set by Wassenaar, a copy of which has been published on DECA’s website. The updated list is available via DECA’s website.

US Issues Restrictions on Foreign-Made Uncrewed Aircraft Systems (UAS) and Components.

On December 22, 2025, the Federal Communications Commission’s (FCC) Public Safety and Homeland Security Bureau added foreign-produced uncrewed aircraft systems (UAS) and their critical components to the “Covered List” of equipment and services that pose an unacceptable risk to US national security. This designation effectively prohibits the FCC from granting equipment authorizations for any new drone models or critical components produced in foreign countries. While the restriction does not retroactively ban the use of existing models authorized prior to December 21, 2025, it prevents the future import, marketing, or sale of new foreign-origin drone technology within the United States.

On January 7, 2026, the FCC issued certain clarifications and guidance, which effectively exempts two categories of UAS and components through January 1, 2027:  (a) Platforms and components included on the Defense Contract Management Agency’s Blue UAS Cleared List; and (b) UAS and UAS critical components that qualify as “domestic end products” under the Buy American Standard. The FCC also outlined a process for requesting individual “Conditional Approvals” for systems or components not otherwise exempt.  Updated FCC guidance on the new restrictions can be found here.

Proposed Regulation

EU Publishes European Defense-Readiness 2030 Roadmap

Following the publication of the White Paper for European Defense-Readiness 2030, on October 16, 2025, the European Commission adopted a roadmap for its objectives and milestones for defense readiness by 2030. The roadmap prioritizes certain technology and defense sectors, such as drone defense, air and missile defense, and space capabilities. In addition, the roadmap seeks to enhance European industrial production capacity, establish multiannual procurement programs, and increase financial investment in supporting the defense industry. The roadmap set as a goal an EU-wide market for defense equipment, and identifies a harmonized and simplified set of EU-wide legislation and regulations as a necessary prerequisite to the unimpeded functioning of such a framework.

US DoD Announces Strategic Overhaul to Transforming Defense Acquisition

On November 7, 2025, the US Department of Defense (DoD) released a series of  memoranda outlining a comprehensive transformation of the federal procurement framework to take place in the next months, shifting from the traditional “Defense Acquisition System” to a more agile and speedy “Warfighting Acquisition System.” The directive prioritizes the rapid fielding of capabilities by streamlining bureaucratic hurdles and affects the defense acquisition process, the joint requirements process, and the Foreign Military Sales and Direct Commercial sales programs. The memo emphasizes rapid and incremental delivery, expanded use of flexible acquisition pathways, prioritizes readily available solutions over custom requirements, reinforces supply‑chain diversification, prioritize multi-year procurements, and favors Modular Open System Architecture (MOSA) to encourage competition. The new framework presents opportunities to defense suppliers and aims to lower barriers of entry, but may require adjustment to compressed timelines, earlier prototyping and demonstrations, and closer collaboration with US primes and DoD components.

US Releases National Security Strategy

In November 2025, the White House released its 2025 National Security Strategy, establishing an “America First” framework that explicitly links economic security with national defense. The strategy emphasizes the aggressive use of tariffs and reciprocal trade agreements to rebalance global trade and “re-shore” critical industrial production, particularly in the sectors of AI, quantum computing, and biotechnology. Notably for international partners, the administration signaled that the United States will offer more favorable commercial treatment, technology-sharing, and defense procurement to countries that align their national export controls with US standards.

IMOD Procedural Reforms to Increase Israeli Defense Exports

On November 18, 2025, the Ministry of Defense announced its decision to promote a comprehensive reform aimed at increasing Israeli defense exports while reducing bureaucratic obstacles. In particular, an IMOD expert committee  (the ‘Shani Committee’) examined defense export and supervision processes, the regulatory bodies involved, and the evolving challenges against the backdrop of changes in the global defense market.

Among its recommendations were:

• Significantly expanding the list of “permitted countries” for which a marketing license exemption exists for unclassified products and, in turn, reducing the number of products excluded from such an exemption.
• Allowing for a marketing license exemption even for products classified as “Restricted” when in the context of a defined list of authorized countries.
• Expanding the single-stage licensing process to simplify and streamline marketing processes.
• Establishing an inter-ministerial committee for technological registration of products through a unified and centralized process with set timelines.
• Increasing the frequency of advisory committee meetings and shortening license processing times.

While some of the recommendations require legislative amendments, most involve internal organizational and procedural changes within the Ministry of Defense.

Proposed Israeli Regulatory Reforms for Streamlining Defense Export Control Procedures   

On November 21, 2025, a draft of the Economic Arrangements Law (the Economic Plan) for 2026 was published. Among other proposals, an amendment to the Defense Export Control Law was proposed to improve the competitiveness of the defense and defense-tech industries in the international market. Subsequently, on December 4, 2025, the government approved advancing streamlining measures for defense export controls in line with the proposed amendments. The decision includes, among others, the following steps:

• Shortening timelines for registration and licensing decisions: Within 120 days, the Minister of Defense will present a regulatory amendment to shorten processing times for registration in the defense export registry from 60 to 40 days, for license applications from 40 to 30 days, and in certain tracks from 120 to 80 days.
• Licensing considerations: The competent authority will be instructed to now also weigh in licensing decisions the impact on innovation and development, promotion of international production and marketing capabilities, and potential harm to the company’s competitiveness.
• Transparency and processes: Within 45 days, provisions will be set to integrate digital submissions (subject to information security), and within 120 days, procedures will be set and published for registry, licensing, suspension, and appeals processes.
• Targeted easements: An amendment will be advanced to exempt licenses for marketing and/or use in countries on a designated list, where the item is equipment/know-how/service with a “Classified—Protected” designation, subject to exceptions.
• Alignment with foreign policy: The authority will conduct periodic reviews with the Ministry of Foreign Affairs when there is a change in export policy toward a country.

Israel State Comptroller Recommends Tightening Oversight of Marketing Agents in Defense Export Transactions

On December 2, 2025, the State Comptroller published the annual audit report on the defense establishment. Among the subjects addressed was the Israeli Ministry of Defense’s (IMOD) oversight of defense companies’ use of agents providing marketing services in defense export transactions. The State Comptroller’s key recommendations for IMOD include:

• Formulating recommendations delineating the extent of the Ministry’s involvement in overseeing defense companies’ use of marketing agents, including regarding commissions.
• Considering introducing minimum compliance rules on bribery and corruption that small and medium-sized defense companies must adopt and implement, including with respect to due diligence processes regarding marketing agents.
• Determining whether and how to supervise the compliance programs of small and medium-sized defense companies, alongside establishing a database for managing information on compliance programs.
• Considering requiring detailed statements regarding marketing agents within agreements related to defense exports.
• Defining specific criteria for requiring personal statements from defense company personnel concerning the use of marketing agents.
• Building a complete database on those acting as marketing agents for defense companies, both Israeli and foreign, including marketing licenses they have received or marketing and export licenses in which their names were mentioned.
• Determining the required level of board involvement in approving engagements with marketing agents, especially where the identity of the agent or the commission amount is unusual (according to criteria to be set).
• Addressing conflicts of interest of marketing agents, particularly former senior officials in IMOD, and requiring disclosure regarding compliance with cooling-off laws.
• Regulating commissions for marketing agents in defense export transactions by defense companies.
• Regulating the interface of IMOD employees with defense companies’ marketing agents and prohibiting participation of marketing agents in activities organized by IMOD departments.
• Regulating IMOD’s activities to ensure defense companies’ compliance with OECD guidelines, including anchoring in the Ministry’s directives all required anti-bribery and anti-corruption measures in defense export transactions and the officials responsible for their implementation, including a coordinating authority.

Bank of Israel Publishes a Draft Update to Guidance on Transacting with Financial Entities in the UAE

On December 3, 2025, the Bank of Israel published draft guidance regarding bank transfers with financial entities in the United Arab Emirates, taking into account the  expanding ties with the UAE and other developments since the Bank’s last publication on the topic in 2021. The update emphasizes that despite the expansion of financial ties with the UAE and the removal of the UAE from the FATF “grey list,” there still exist risks, including concern that bank transfers may be used as a channel for sanctions evasion. Accordingly, the draft still calls for certain enhanced compliance mechanisms, as well as familiarity with the parties involved, ongoing monitoring, and an overall analysis of the transactions, as proposed in the letter.

The new due diligence compliance standards proposed by the Bank of Israel may translate into updated requirements for companies operating in the UAE.

EU Publishes Strategy Document for Strengthening EU Economic Security

On December 3, 2025, the European Commission published a Joint Communication titled “Strengthening EU Economic Security,” which includes a comprehensive strategy designed to address the Union’s overdependence on overseas suppliers for critical raw materials and semiconductors while mitigating risks of technology leakage and supply chain disruptions. The communication outlines proposed steps to legally require industries in critical sectors to diversify their sourcing and reduce reliance on single-country suppliers—specifically targeting dependencies on China. The framework also emphasizes a more assertive use of export controls for dual-use technologies and the creation of an “Industrial Accelerator Act” to bolster domestic manufacturing and technological sovereignty.

Enforcement Updates

DOJ Arrests Individuals for Illicitly Exporting AI Technology to China

On November 20, 2025, the US Department of Justice announced the arrest of US citizens and Chinese nationals for their roles in a conspiracy to illegally export advanced AI technology to China. According to the indictment, the defendants utilized a Florida-based company to acquire NVIDIA high-end graphics processing units (GPUs) and AI-related hardware, intentionally misrepresenting the end-users to circumvent US export controls and the “Entity List.” The scheme was described as a major China-linked AI tech smuggling network, and involved routing shipments through intermediate countries to mask the final destination, with the hardware allegedly intended for China-based entities involved in state-sponsored AI research. This enforcement action, led by the Disruptive Technology Strike Force, highlights the government’s aggressive focus on preventing the unauthorized transfer of critical dual-use technologies, specifically those relating to AI, to China.

OFAC Issues $11M Penalty for Sanctions Violations Beyond the 50% Ownership Rule in Complex Sanctioned Ownership Case

On December 2, 2025, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced an $11,485,352 settlement with Chicago-based private equity firm IPI Partners, LLC (IPI) for managing property interests linked to a sanctioned Russian oligarch. Notably, the enforcement action did not hinge on the standard “50% Rule” regarding majority ownership. Instead, IPI had engaged with an entity that had acted on behalf of the sanctioned individual and provided funds that originated from a sanctioned individual. As such, even though this entity was not 50% or more owned by a sanctioned person, it was necessary for IPI to consider whether the sanctioned party’s property interests were obscured by proxies or complex legal structures, and conduct a more exhaustive analysis, even absent nominal ownership by a sanctioned person. OFAC highlighted that while IPI had taken steps such as employing software screening and seeking advice from outside counsel, at the same time IPI had sufficient knowledge to identify the risk and failed to provide its attorneys with the complete underlying facts and ownership details. This case serves as a stark example that OFAC restrictions extend beyond simple ownership tests. and the importance of complete and transparent compliance measures, especially given OFAC’s standard of strict liability.

OFAC Announces $1.1M Settlement Sanctions for Violations Resulting from Sanctioned Person’s Indirect Property Interests

On December 9, 2025, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced a $1,092,000 settlement with a US individual to resolve apparent violations of Ukraine-/Russia-related sanctions. The charges stemmed from the individual’s role as a fiduciary for a trust established by a sanctioned Russian oligarch, where the individual continued to provide services and process transactions despite the oligarch’s designation. Critically, OFAC’s determination was not made based on a direct ownership test, but rather applied a broad approach to “property interest”. OFAC determined that the sanctioned oligarch retained an interest in the trust through family members acting as proxies on their behalf. This case highlights that OFAC’s definition of “interest” extends “beyond legal formalities to [the] underlying practical and economic realities” of control, and emphasizes the risk for gatekeepers who fail to identify indirect or contingent property interests held by blocked persons.

BIS Imposes $1.5M Penalty on German Company for Violations of US Export Controls

On January 7, 2026, the US Department of Commerce’s Bureau of Industry and Security (BIS) issued an order imposing a $1.5 million civil penalty on Exyte Management GmbH, a German company, for 13 violations of the Export Administration Regulations (EAR). The violations related to in-country transfers of US-controlled items without a license to Semiconductor Manufacturing International (Beijing) Corporation (SMIC Beijing), an entity on the US Entity List. Foreign companies should note that the violations involved the transfer to an Entity List entity by a non-US company of US controlled basic technology items, EAR 99-classified items, used in semiconductor fabrication.

UK OFSI Publishes its Annual Year in Review

On October 15, 2025, the UK’s Office of Foreign Sanctions Implementation published its annual review for 2024-2025. The review highlights key trends in UK sanctions enforcement, such as a continued focus on Russia-related sanctions, international collaborations with allies such as the US and EU, and continued enforcement actions.

This memorandum provides access to certain material developments in the field of international trade regulation. It contains only a summary and does not cover all updates that occurred in the fourth quarter of 2025. The information in this memorandum is provided as general information only and should not be relied upon in any specific case without additional legal advice.