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Three recent Department of Justice cases involving exports to Russia highlight a recurring enforcement theme: U.S. companies cannot assess diversion risk based only on the customer and destination named on an order. The cases arose from efforts to evade export controls and sanctions imposed or tightened after Russia’s full-scale invasion of Ukraine in February 2022. In each case, the defendant used a third-country buyer, consignee or transshipment route that concealed the Russian destination or end user from U.S. suppliers.

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In just a three-week period starting in September, the State Department’s Directorate of Defense Trade Controls (DDTC) published six rulemakings that make or propose notable changes to the International Traffic in Arms Regulations (ITAR). These include the following:

  • A broad omnibus proposed rule that would remove items from the U.S. Munitions List (USML), revise core definitions and add a new license exemption;
  • An interim final rule refining the USML to remove certain uncrewed underwater vehicles (UUVs);
  • Revisions to country policies, which, among other things: (1) remove Syria from the list of countries subject to a policy of denial; (2) clarify the policy-of-denial framework and update the major non-NATO ally list; and (3) continue the suspension of Cyprus’s status as a proscribed destination for another year;

Taken together, these actions show a consistent push to focus ITAR controls on the most sensitive and sophisticated technologies. They also aim to improve regulatory clarity and reduce burdens on industry. Below, we summarize the key takeaways from each rulemaking based on potential impact to defense trade.

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On October 7, 2026, the U.S. Department of Treasury announced its first civil enforcement penalty imposed under the Outbound Investment Security Program (OISP). For U.S. investment funds, U.S. managers of funds abroad, and U.S. companies with controlled subsidiaries abroad, this enforcement action is a practical reminder that OISP diligence and documentation should extend across controlled foreign entities, including for small and follow-on investments. This is especially relevant to funds investing in Chinese companies in the semiconductor, quantum and artificial intelligence (AI) sectors and U.S. companies with controlled foreign subsidiaries involved with these sectors.

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On September 8, 2026, the U.S. Department of the Treasury announced a series of Iran sanctions actions under “Operation Economic Outcast” that target Iran’s aviation sector to date and are unusual due to their breadth and targeting of civilian airlines. The actions were taken pursuant to Executive Order 13224 (counterterrorism authority), and Executive Order 13902 (targeting sectors of the Iranian economy)

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On August 24, 2026, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced “Operation Economic Outcast,” a series of economic sanctions measures targeting Iran and persons that continue to maintain economic ties with Iran or facilitate the Iranian government’s access to financial resources despite already-robust U.S. primary and secondary sanctions. The measures expand the categories of Iran-related conduct that may expose non-U.S. persons to secondary sanctions and signal an increased U.S. enforcement focus on foreign parties continuing to do business with Iran.

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On August 28, 2026, the Directorate of Defense Trade Controls (DDTC) published an interim final rule (IFR) easing export controls on certain survivability-enhanced aircraft under the International Traffic in Arms Regulations (ITAR). This action substantially relaxes ITAR controls on aircraft that have been modified to incorporate aircraft survivability equipment (ASE), and to exclude from ITAR authorization requirements certain reexports and temporary imports of ASE. This rule intends to both reduce unnecessary compliance burdens on international partners using secured ASE to protect dignitaries and commercial passengers, and remove the competitive disadvantage for U.S. manufacturers relative to foreign manufacturers whose products are not subject to ITAR jurisdiction.

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On August 13, 2026, the Administration took two significant and complementary actions reshaping the regulatory landscape for unmanned aerial vehicles (UAVs) to increase U.S. domestic production.

First, the Bureau of Industry and Security (BIS) published a final rule further easing export controls on certain UAVs and related hardware, technology and software under the Export Administration Regulations (EAR). This action substantially relaxes EAR controls on ordinary civilian and commercial drones, while retaining controls for military-designed systems, long-range missile-capable UAVs, drones incorporating sensitive equipment, and drones destined for prohibited end users or end uses. This will make it easier for U.S. UAVs to compete abroad and has the potential of lowering their costs to both the domestic and international markets by increasing sales opportunities.

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On August 13, 2026, the White House published a Proclamation imposing duties under Section 232 of the Trade Expansion Act of 1962 (“Section 232”) on imports of unmanned aircraft systems (UAS) and their parts and components. Following the Commerce Department’s recommendation, the President unveiled a staggered system of tariffs to address the national security threat posed by U.S. reliance on foreign-sourced UAS, strengthen America’s UAS industry and supply chain, and bolster the domestic defense industrial base. The President further authorized the Secretary of Commerce to establish an onshoring incentive program for companies making new investments in manufacturing UAS and UAS components in the U.S. This action builds substantially on previous actions by the Federal Communications Commission (FCC) and Department of War (DoW) regulating the use of foreign-produced UAS and UAS components in the United States (summarized here).

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On July 23, 2026, the Council of the European Union adopted its 21st sanctions package against Russia and parallel measures concerning Belarus. Across the two asset-freeze regimes, the package added 48 individuals and 170 entities. Beyond the new listings, the package also amends Regulation (EU) No 833/2014 and the corresponding Belarus sectoral regime, introducing new transaction bans, trade controls and other restrictions. The new asset-freeze listings and amendments to Regulation (EU) No 269/2014 took effect on July 23, 2026, and many of the principal sectoral amendments took effect on July 24, 2026, although several measures have later application dates.

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Effective immediately, the United Arab Emirates (UAE) has been removed from Country Groups D:3 and D:4 and added to Country Group A:5. This new country group designation allows exports of items controlled for chemical, biological or missile technology reasons to qualify for license exceptions that were previously unavailable to the UAE under its former Country Group classification. In addition, the end-use restrictions in EAR 744.3—including restrictions applicable when an exporter knows an item will be used in the design, development, production, operation, installation (including on-site installation), maintenance, repair, overhaul, or refurbishing of rocket systems (including ballistic missiles, space launch vehicles and sounding rockets) or unmanned aerial vehicles capable of traveling at least 300 kilometers—no longer apply to exports to the UAE.

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