United Kingdom — Sanctions & Embargoes

The United Kingdom operates an autonomous sanctions framework under the Sanctions and Anti-Money Laundering Act 2018 (SAMLA), which received Royal Assent on 23 May 2018 and established the UK's independent sanctions regime following Brexit. SAMLA enables UK Ministers to make regulations imposing sanctions for compliance with UN or international obligations, for autonomous UK purposes (including foreign policy, national security, international peace and security, prevention of terrorism, and accountability for gross violations of human rights), or a combination of both (mixed UK/UN regimes).

Section 1 of SAMLA grants "appropriate Ministers" the power to make regulations imposing sanctions where the Minister considers it appropriate to do so for one or more purposes specified in section 1(2). This delegation structure permits the UK to create UN-only regimes (implementing UN Security Council Resolutions), autonomous regimes (implementing UK-specific objectives), and mixed UK/UN regimes (implementing both UN obligations and additional UK purposes). Section 3A of SAMLA, added by amendment, provides for director disqualification sanctions, rendering it unlawful for a designated person to act as a director of a company once implemented via secondary legislation.

OFSI enforcement authority and structure

The Office of Financial Sanctions Implementation (OFSI) is the competent authority responsible for ensuring that UK financial sanctions are properly understood, implemented, and enforced. OFSI is part of HM Treasury and leads civil enforcement of financial sanctions and the Oil Price Cap on Russian oil.

OFSI's remit covers:

• Financial sanctions under SAMLA regulations, including asset freezes, investment bans, financial-services prohibitions, and the ownership-and-control test that extends asset-freeze obligations to entities owned or controlled directly or indirectly by designated persons (for example, Regulation 7(4) of The Russia (Sanctions) (EU Exit) Regulations 2019, S.I. 2019/855).
• The Oil Price Cap on Russian oil and oil products, including prohibitions on the supply, delivery, and related services for Russian-origin crude oil and petroleum products above a specified price ceiling.
• Licensing: OFSI administers general licences and issues specific licences permitting otherwise-prohibited transactions where statutory grounds (for example, basic-needs payments, legal-services fees, or humanitarian assistance) are met.
• Guidance and compliance support: OFSI publishes general financial sanctions guidance, regime-specific statutory guidance (for example, Russia sanctions guidance), and sector-specific threat assessments.

OFSI does not enforce trade sanctions on goods, immigration sanctions (travel bans), or director-disqualification sanctions. Those fall respectively to the Office of Trade Sanctions Implementation (OTSI) / HMRC, the Home Office, and the Insolvency Service.

UK Sanctions List

OFSI maintains the UK Sanctions List, which since 28 January 2026 is the sole authoritative source for all UK sanctions designations; the legacy OFSI Consolidated List of Asset Freeze Targets was closed on that date. Entities and individuals on the UK Sanctions List are subject to asset freezes, and the ownership-and-control test extends asset-freeze obligations to any entity owned or controlled by a designated person even if not explicitly named on the List. The control limb of the ownership-and-control test has been the subject of litigation (for example, NBT v Mints [2023] EWCA Civ 1132) and an OFSI call for evidence launched in February 2026 to address industry concerns about uncertainty in implementing the control test.

Territorial scope

UK financial sanctions apply to any conduct in the United Kingdom and to all UK persons (including UK legal entities and individuals ordinarily resident in the UK) anywhere in the world, meaning extraterritorial jurisdiction attaches to UK nationals and companies operating outside the UK.

Civil enforcement tools

OFSI may impose civil monetary penalties for breaches of financial sanctions. The statutory maximum civil penalty is the higher of £1 million or 50% of the value of the breach for financial sanctions, and the higher of £1 million or 50% of the estimated value of the ship or aircraft used in connection with the breach for transport sanctions. OFSI's enforcement toolkit includes monetary penalties, warning letters (including warning letters with referral to a regulator such as the Financial Conduct Authority or professional bodies), disclosure notices (public naming of a firm that committed a confirmed breach, without a monetary penalty), and referral to criminal enforcement partners (the National Crime Agency, HMRC, or regional police forces) for serious or deliberate breaches.

The UK Government published a cross-government strategic approach to sanctions enforcement in March 2026, which frames enforcement as a coordinated, risk-based framework across OFSI, NCA, OTSI, HMRC, and regulators such as OFCOM and the Financial Conduct Authority, and confirms that the UK will use its toughest measures in response to the most serious and deliberate breaches while supporting compliance and proportionate consequences for technical or lower-severity violations.

Reporting obligations

SAMLA regulations impose reporting obligations on "relevant firms"—persons with permission under Part 4A of the Financial Services and Markets Act 2000 to carry on regulated activities. Relevant firms must inform OFSI "as soon as practicable" if they know or reasonably suspect that a person is a designated person or has breached a prohibition, where that information is received in the course of carrying on business. Additional regime-specific reporting obligations apply; for example, the Russia (Sanctions) (EU Exit) Regulations 2019 require relevant firms to report annually (by 30 November, as amended in 2024) on the nature and amount of funds or economic resources held for prohibited persons (including the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation) as of 30 September each year.

Relevant institutions must also inform OFSI without delay when they credit a frozen account or receive funds transferred for crediting such an account. Designated persons themselves are subject to disclosure obligations under section 21 of SAMLA: UK persons who are designated must disclose to OFSI the nature, value, and location of any funds or economic resources they own, hold, or control, regardless of where in the world those assets are located. The initial report must be provided within 10 weeks, and any later change in financial circumstances must be reported as soon as practicable. Designated persons must report any funds or economic resources exceeding £10,000 in value.

Relationship to criminal enforcement

OFSI's civil enforcement remit is complemented by criminal enforcement led by the National Crime Agency (NCA), which investigates and prosecutes criminal breaches of financial and transport sanctions. The NCA's Serious Organised Crime and State Threat Unit (the Combatting Kleptocracy Cell) targets corrupt elites, proxies, and enablers linked to serious organised crime and hostile states. HMRC has criminal enforcement responsibility for all trade sanctions measures and enforces trade sanctions on goods crossing the UK border. The Serious Fraud Office may investigate and prosecute sanctions-related fraud cases.

The Foreign, Commonwealth and Development Office (FCDO) is responsible for the UK's overall foreign policy, including high-level policy objectives, sanctions regimes design, and strategy, and leads designations (decisions to apply sanctions measures to specific individuals or entities) and ship specifications. OFSI leads on designations under the UK's domestic counter-terrorism sanctions regimes.

Source: Sanctions and Anti-Money Laundering Act 2018 Source: Post-Legislative Scrutiny Memorandum: Sanctions and Anti-Money Laundering Act 2018 — GOV.UK Source: Office of Financial Sanctions Implementation — GOV.UK Source: UK Sanctions — GOV.UK collection Source: UK Government's strategic approach to sanctions enforcement — GOV.UK (March 2026) Source: UK financial sanctions general guidance — GOV.UK Source: The UK Sanctions List — GOV.UK

UK financial sanctions impose three core asset-freeze prohibitions on any person who knows, or has reasonable cause to suspect, that they are dealing with a designated person's assets. These prohibitions apply to all UK persons worldwide and to any person acting in the United Kingdom, regardless of nationality. The prohibitions appear in every UK sanctions regime made under the Sanctions and Anti-Money Laundering Act 2018 (SAMLA); the Russia (Sanctions) (EU Exit) Regulations 2019, S.I. 2019/855, serve as the template and most heavily litigated example.

Prohibition 1: Dealing with frozen funds or economic resources (regulation 11)

A person must not deal with funds or economic resources owned, held or controlled by a designated person if the person knows, or has reasonable cause to suspect, that they are dealing with such funds or economic resources. "Funds" include cash, deposits, securities, debt instruments, interest, dividends, credit, set-off rights, guarantees, and other financial commitments (SAMLA 2018, section 60(2)). "Economic resources" means assets of every kind—tangible or intangible, movable or immovable—which are not funds but can be used to obtain funds, goods, or services (SAMLA 2018, section 60(3)). Economic resources include real property, vehicles, machinery, intellectual property, and inventory.

For the purposes of regulation 11, a person "deals with" funds if they use, alter, move, transfer, or allow access to the funds; deal with the funds in any other way that results in any change in volume, amount, location, ownership, possession, character, or destination; or make any other change (including portfolio management) that would enable use of the funds. A person "deals with" economic resources if they exchange or use the resources in exchange for funds, goods, or services (Russia Regulations 2019, regulation 11(4)–(5)).

The prohibition extends to entities owned or controlled by a designated person even if the entity is not explicitly named on the UK Sanctions List. Regulation 7 of the Russia Regulations (and corresponding provisions in other regimes) defines ownership and control: an entity is "owned or controlled" if the designated person holds more than 50% of shares or voting rights, or has the right to appoint or remove a majority of the board, or otherwise has the right to direct the entity's affairs. OFSI's February 2026 call for evidence acknowledged industry concern over the application of the control limb, particularly after the Court of Appeal's decision in NBT v Mints [2023] EWCA Civ 1132.

Prohibition 2: Making funds available to a designated person (regulation 12)

A person ("P") must not make funds available directly or indirectly to a designated person if P knows, or has reasonable cause to suspect, that P is making the funds so available. The "directly or indirectly" formulation captures transfers routed through intermediaries or nominees. A defence exists: it is a defence for a person charged with an offence of contravening this prohibition to show that the person did not know and had no reasonable cause to suspect that the funds were being made available to a designated person.

Prohibition 3: Making funds available for the benefit of a designated person (regulation 13)

A person ("P") must not make funds available to any person for the benefit of a designated person if P knows, or has reasonable cause to suspect, that P is making the funds so available. Funds are made available for the benefit of a designated person only if that person thereby obtains, or is able to obtain, a significant financial benefit. "Financial benefit" includes the discharge (in whole or in part) of a financial obligation for which the designated person is wholly or partly responsible (Russia Regulations 2019, regulation 13(2)).

This prohibition captures payments to third parties that relieve a designated person's obligation—for example, paying a supplier on behalf of a designated person, or paying rent for premises occupied by a designated person.

Prohibitions 4 and 5: Making economic resources available (regulations 14–15)

Parallel prohibitions apply to economic resources. A person must not make economic resources available directly or indirectly to a designated person (regulation 14) or for the benefit of a designated person (regulation 15), if the person knows or has reasonable cause to suspect that the economic resources would or may be exchanged or used in exchange for funds, goods, or services. These prohibitions cover, for example, providing office space, vehicles, or equipment to a designated person or for their benefit.

Mental element: "knows, or has reasonable cause to suspect"

Each prohibition is triggered only if the person knows, or has reasonable cause to suspect the relevant fact (that the asset is owned by a designated person, that funds are being made available to or for the benefit of a designated person, etc.). This is an objective test: a person has reasonable cause to suspect if a reasonable person in the same position and with the same information would suspect. OFSI's enforcement guidance emphasises that firms must conduct adequate due diligence; a failure to check the UK Sanctions List or to investigate red flags may itself give rise to reasonable cause to suspect. The mental element applies at the time of the transaction; retrospective knowledge does not create a breach, but it triggers an obligation to freeze the asset going forward and to report to OFSI.

Territorial scope

The asset-freeze prohibitions apply to any conduct in the United Kingdom by any person, and to any conduct anywhere in the world by UK persons. A "UK person" includes UK nationals, individuals ordinarily resident in the UK, and bodies incorporated or constituted under UK law (Russia Regulations 2019, regulation 3). This extraterritorial reach means that a UK company's overseas subsidiary (if incorporated under foreign law) is not automatically a UK person, but a UK national employed overseas remains subject to UK asset-freeze obligations worldwide.

Exceptions

Narrow automatic exceptions permit, without a licence, crediting a frozen account with interest or other earnings (so long as the interest is immediately frozen), and transferring funds to a frozen account in discharge of obligations that arose before the person was designated (Russia Regulations 2019, regulation 58(3)–(5), as amended by S.I. 2024/1157). A relevant institution (a person with FCA permission to carry on regulated activities) must inform OFSI without delay when it credits a frozen account under these exceptions. All other dealings require an OFSI licence under one of the statutory licensing grounds in Schedule 5 to the Russia Regulations (or the corresponding schedule in other regimes).

Criminal and civil liability

A breach of any of the five core prohibitions is a criminal offence. On summary conviction, the maximum penalty is 12 months' imprisonment or a fine (or both); on indictment, the maximum is 7 years' imprisonment or an unlimited fine (or both). OFSI may also impose civil monetary penalties of up to the higher of £1 million or 50% of the value of the breach, without needing to prove knowledge or reasonable cause to suspect—strict liability applies for civil enforcement, though OFSI's published guidance confirms that it will consider the presence or absence of knowledge and the adequacy of compliance systems when setting the penalty amount.

Source: Sanctions and Anti-Money Laundering Act 2018, section 60 Source: The Russia (Sanctions) (EU Exit) Regulations 2019, S.I. 2019/855, regulations 11–15 Source: UK financial sanctions general guidance — GOV.UK Source: The Sanctions (EU Exit) (Miscellaneous Amendments) (No. 2) Regulations 2024, S.I. 2024/1157

UK financial sanctions regulations impose strict prohibitions by default, but OFSI may issue licences permitting otherwise-prohibited activity where one or more statutory licensing grounds is met. A licence is written permission to carry out an act that would otherwise breach financial sanctions; it does not compel any party to take action, and third parties (such as banks) may decline to execute a licensed transaction on commercial or risk grounds.

General licences vs. specific licences

UK sanctions regulations provide for two categories of licences. General licences are published by OFSI and permit multiple parties to undertake specified activities without the need for individual application; applicants should check whether a relevant general licence already covers the intended activity before applying for a specific licence. OFSI does not accept applications for general licences. A list of active general licences is published on GOV.UK.

Specific licences are issued on a case-by-case basis in response to an application. OFSI's online licence application form (launched 17 July 2025) is the sole submission route. Applications are triaged by OFSI's licensing team and assessed against the statutory licensing grounds in the relevant sanctions regime. OFSI recommends applying as early as possible before a licence is needed, especially for legally or commercially complex transactions or where UN approval may be required, which can extend turnaround time.

Statutory licensing grounds

Each UK sanctions regime made under the Sanctions and Anti-Money Laundering Act 2018 includes a schedule of licensing grounds. The Russia (Sanctions) (EU Exit) Regulations 2019, Schedule 5, serves as the template and the most extensively developed example. Schedule 5 is divided into multiple Parts, with Parts 1, 1A, 1B, and 1C setting out licensing grounds for financial sanctions (asset-freeze-related activity), and other Parts addressing trade, transport, and services prohibitions.

Common licensing grounds across UK financial sanctions regimes include:

• Basic needs (paragraph 6 of Schedule 5 in the Russia Regulations): to enable a designated person to meet basic needs, such as payments for foodstuffs, rent or mortgage, medicines and medical treatment, taxes, insurance premiums, and public utility charges. OFSI's February 2026 Designated Individuals Licensing Principles clarify that basic needs are assessed by reference to the designated person's circumstances, location, and family dependents, and OFSI will generally not license luxury expenditure even if the designated person habitually incurred such costs before designation.

• Legal services (paragraph 7): to enable payment of reasonable professional fees and reimbursement of reasonable expenses in connection with the provision of legal services, or to enable payment for or provision of legal services. OFSI issued a Legal Services General Licence permitting payments for legal fees within specified monetary limits (currently reviewed annually) and under specified conditions; amounts exceeding the general licence cap require a specific licence. OFSI applies a reasonableness test to all legal fees, assessing whether the fee is proportionate to the service provided; updated guidance published 13 March 2026 addresses fee structures including percentage uplifts and costs data preparatory reports (CDPRs).

• Maintenance of frozen funds or economic resources (paragraph 9): to enable a designated person or a person acting on behalf of a designated person to maintain frozen funds or economic resources, including payment of reasonable fees for the provision of property management services or for routine holding or maintenance of frozen funds or economic resources. OFSI's licensing principles indicate that OFSI will generally license only essential maintenance (for example, structural repairs to prevent deterioration of real property) and will not license improvement works that enhance the asset's value.

• Extraordinary expenses (paragraph 10): to meet extraordinary expenses of a designated person, provided HM Treasury is satisfied that the payment is appropriate.

• Prior obligations (paragraph 11): to enable payment of reasonable fees or service charges arising from the routine holding or maintenance of frozen funds or economic resources, where the obligation to pay arose before the person was designated.

• Diplomatic missions and international organisations (paragraph 12): to enable payments to or for the benefit of diplomatic missions, consular posts, or international organisations enjoying immunities under international law.

• Humanitarian assistance (paragraph 5): to enable anything to be done in connection with the performance of a humanitarian assistance activity conducted by or on behalf of the United Nations or an impartial international humanitarian organisation, or to enable anything to be done for the purpose of preventing or alleviating serious harm to individuals or communities. The Russia Regulations contain a narrower humanitarian-assistance ground in Part 1 and a broader one in Part 1A.

• Insolvency and restructuring proceedings (paragraph 9DD, added by S.I. 2024/1157): to enable anything to be done in connection with insolvency and restructuring proceedings relating to an insolvent person, other relevant proceedings, or foreign insolvency proceedings, provided that payments to a designated person are credited to a frozen account.

• Divestment from Russia (paragraph 9DB, added by S.I. 2023/1364 and amended): to enable a UK entity to divest itself of funds or economic resources located in Russia, or to enable a UK entity to acquire from a designated person an interest in the UK entity previously held by the designated person, where the transaction supports exit from Russia. This ground was introduced in December 2023 to facilitate wind-down and divestment by UK businesses following Russia's invasion of Ukraine.

Licensing grounds vary by regime; for example, counter-terrorism regimes include distinct grounds reflecting different policy objectives. Applicants must identify the applicable ground and explain in the application how all its requirements are met.

The application process and OFSI prioritisation framework

Applicants must complete OFSI's online application form, providing:

1. A detailed explanation of which licensing ground applies and how all elements of that ground are satisfied.
2. A detailed explanation of the sanctions regime, the prohibitions engaged, and the designated person(s) or other nexus to the sanctions.
3. Detailed transaction information: value, parties, contract dates, payment amounts, currency, payment route(s), all intermediaries, beneficiaries, and sender/receiver details.
4. The intended purpose of the transaction or activity.
5. An explanation of the reasonableness of any proposed payment, where relevant (especially for frozen-asset payments and legal fees).
6. Bank details, payment method, and account details.
7. Evidence supporting the application.

OFSI published a licence application prioritisation framework on 27 February 2026. In the financial year 2024–2025, OFSI took over 900 licensing decisions. OFSI assesses each application against seven criteria and categorises applications as high, medium, or low priority:

1. Humanitarian considerations: applications concerning basic needs, humanitarian assistance, or access to justice (where court dates must be met) are generally treated as high priority.
2. Materiality to the applicant or affected parties: the significance of the application in real terms, the size of the transaction relative to the applicant's means, and whether delay would cause economic loss.
3. Time sensitivity and urgency: whether the decision is genuinely time-sensitive, whether delays would cause harm, or whether the application has been outstanding for a significant period.
4. Economic impact: whether the application may affect UK jobs, business continuity, or wider economic welfare.
5. Operational dependencies: whether the case affects OFSI's ability to progress other related applications (for example, forming part of a series).
6. Wider policy or reputational considerations: whether delay could undermine confidence in the UK sanctions regime or affect international relations.
7. Legal services: payment for legal advice is generally not prohibited under an asset freeze (only payment for legal services and provision of legal services on credit require a licence). OFSI recommends checking the Legal Services General Licence before applying; legal-services applications may not immediately be high priority unless tied to imminent court proceedings.

Even high-priority applications may take time to complete if legally or commercially complex; applicants should submit well in advance of when permission is needed.

OFSI Designated Individuals Licensing Principles

On 27 February 2024, OFSI published Designated Individuals Licensing Principles applicable to licence applications relating to designated natural persons (as opposed to legal entities) across all UK financial sanctions regimes. The principles are listed in hierarchical order (the first principle takes precedence over the second, and so on). Although OFSI considers each application case-by-case and may depart from the principles in exceptional circumstances, applicants should expect refusal if the licence would require OFSI to deviate from the principles without clear and compelling justification. The principles address, inter alia, what constitutes a "basic need," what maintenance works OFSI will license, and the circumstances in which OFSI may refuse to license activity even where a statutory ground is met (for example, OFSI will not license activity that would enable a designated person to maintain or enhance lifestyle or asset value beyond essential preservation).

Outcome and conditions

If OFSI grants a licence, it will include specific permissions and conditions setting the parameters of the written permission. Licence conditions are binding; breach of a licence condition is a criminal offence under the relevant regulations (for example, regulation 68 of the Russia Regulations 2019). OFSI does not provide legal advice; applicants may wish to seek independent legal advice before applying.

Relationship to trade and transport licences

Financial sanctions licences issued by OFSI permit otherwise-prohibited financial activity (dealing with frozen assets, making funds or economic resources available to or for the benefit of designated persons). They are distinct from trade licences (issued by the Office of Trade Sanctions Implementation, OTSI, or by the Export Control Joint Unit, ECJU, depending on the measure) and export control licences. Even where an export control licence or a trade licence has been granted, a separate OFSI financial sanctions licence may still be required if the transaction involves a designated person or frozen assets, and vice versa. It is the applicant's responsibility to ensure compliance with all applicable regulations and to apply to the relevant authority for each type of licence needed.

Source: The Russia (Sanctions) (EU Exit) Regulations 2019, Schedule 5 — Licences Source: How to apply for a financial sanctions licence — GOV.UK Source: OFSI Designated Individuals Licensing Principles — GOV.UK Source: An update on OFSI's licensing process and policies — OFSI Blog, 27 February 2024 Source: How OFSI Prioritises Licence Applications — OFSI Blog, 27 February 2026 Source: OFSI launches online forms for reporting and licences — OFSI Blog, 17 July 2025 Source: Reasonableness in licensing – updated approach — OFSI Blog, 13 March 2026

OFSI may impose civil monetary penalties for breaches of UK financial sanctions under section 146 of the Policing and Crime Act 2017, as amended by the Economic Crime (Transparency and Enforcement) Act 2022. The civil penalty regime operates in parallel to criminal enforcement; a person may face a civil penalty, criminal prosecution, or both (though double jeopardy protections prevent conviction and penalty for the same conduct). Civil penalties provide a flexible enforcement tool for cases where criminal prosecution is disproportionate but deterrence and accountability are required.

## Strict liability for civil penalties (effective 15 June 2022)

Strict liability applies to OFSI's civil enforcement powers. Section 54 of the Economic Crime (Transparency and Enforcement) Act 2022, which came into force on 15 June 2022, amended section 146(1) of the Policing and Crime Act 2017 to remove the requirement that OFSI prove the person "knew or had reasonable cause to suspect" they were breaching sanctions. Section 146(1A) provides that in determining whether a person has breached a prohibition or failed to comply with an obligation imposed by financial sanctions legislation, "any requirement imposed by or under that legislation for the person to have known, suspected or believed any matter is to be ignored" for the purposes of civil enforcement.

OFSI need only satisfy itself, on the balance of probabilities, that a breach occurred. Knowledge, intention, and reasonable cause to suspect remain relevant to criminal liability under the sanctions regulations themselves, and OFSI considers them as case factors when deciding whether to impose a penalty and in what amount — but they are not elements OFSI must prove to establish that a breach occurred for civil enforcement purposes. This means a firm that processes a payment for a designated person without knowledge or reasonable grounds to suspect may still face a civil penalty, though OFSI's published guidance indicates that lack of knowledge is a mitigating factor that will reduce the penalty amount and may, in cases of genuine inadvertence with strong compliance systems, result in a warning letter or no enforcement action rather than a monetary penalty.

## Statutory maximum penalties (current law)

The permitted maximum civil penalty is set by section 146(3)–(4) of the Policing and Crime Act 2017. Where the breach relates to particular funds or economic resources and it is possible to estimate the value, the permitted maximum is the greater of:

• £1 million, or
• 50% of the estimated value of the funds or economic resources.

In any other case (for example, breaches of information obligations, licensing requirements, or prohibitions on making funds available where the value cannot be estimated), the permitted maximum is £1 million (section 146(4)).

On 29 January 2026, HM Treasury published a consultation response confirming its intention to legislate to double the statutory maximum to the greater of £2 million or the total value (100%) of the breach. This increase requires primary or secondary legislation and will be brought forward when parliamentary time allows. The increase had not been enacted as of 1 June 2026; the £1 million / 50% cap remains in force until amended by statute.

## Baseline penalty and case-assessment factors

OFSI applies a structured methodology to calculate the penalty amount, set out in its Enforcement and Monetary Penalties Guidance (most recently updated February 2026). OFSI first establishes a baseline penalty by assessing the breach against case factors including:

1. Revenue, profit, and size of the organisation (or income and assets for individuals): larger organisations face higher baselines.
2. Nature and severity of the breach: whether the breach was a one-off payment or a systemic failure; the duration; whether it involved circumvention or concealment.
3. Knowledge, intention, and reasonable cause to suspect: deliberate breaches attract higher penalties; inadvertent breaches with reasonable compliance systems attract lower penalties.
4. Individual characteristics (for natural persons): personal financial circumstances, though OFSI will not reduce penalties below a level that maintains deterrence.
5. Sanctions compliance measures: quality and adequacy of the person's compliance systems, screening procedures, training, and governance.
6. Cooperation: the extent and timeliness of cooperation with OFSI's investigation.
7. Whether the breach has been voluntarily disclosed: early and complete voluntary disclosure is rewarded with a discount (see below).

OFSI applies these factors to arrive at a baseline penalty figure, which may be adjusted upward for aggravating factors (for example, previous breaches, obstruction of the investigation, senior management involvement) or downward for mitigating factors (for example, self-reporting, remedial action, genuine mistake with otherwise strong controls).

## Penalty discounts for voluntary disclosure, settlement, and early account (policy effective February 2026)

OFSI's Enforcement and Monetary Penalties Guidance, updated and published in February 2026, introduced three stackable discounts that may reduce the baseline penalty. These discounts are policy commitments set out in OFSI guidance, not statutory requirements; they reflect how OFSI exercises its discretion under section 146(2) of the Policing and Crime Act 2017 when determining the amount of a penalty.

Voluntary disclosure and cooperation discount (up to 30%)

A person who voluntarily discloses a breach to OFSI before OFSI becomes aware of it from another source, and who provides complete and timely cooperation throughout the investigation, may receive a discount of up to 30% on the baseline penalty. OFSI's guidance defines complete voluntary disclosure as disclosure that is made proactively (not in response to an OFSI enquiry), includes all relevant facts and supporting evidence, is made as soon as practicable after the person becomes aware of the breach, and is accompanied by a clear explanation of what occurred, why, and what steps have been taken to prevent recurrence.

The 30% figure is a cap; the actual discount depends on the completeness and timeliness of the disclosure and the quality of cooperation. Disclosure after OFSI has contacted the person, or incomplete disclosure that requires OFSI to expend significant investigative resource, will attract a lower or no discount.

Settlement Scheme discount (20%)

OFSI introduced a Settlement Scheme in its February 2026 guidance. Where OFSI has completed its investigation and is satisfied that a breach occurred and that a monetary penalty is appropriate, it may offer the subject the opportunity to settle the case by agreeing to the penalty without proceeding through the full Notice of Intent and representations process. A person who accepts a settlement offer within the time specified (typically 14 days) receives a 20% discount on the penalty that would otherwise have been imposed. Settlement is voluntary; a person may decline and proceed through the standard procedural-rights process under section 147 of the Policing and Crime Act 2017.

Early Account Scheme discount (up to 20%)

The Early Account Scheme (EAS), also introduced in OFSI's February 2026 guidance, permits subjects of an OFSI investigation to provide a comprehensive written account of the breach at an early stage of the investigation, significantly reducing the investigative burden on OFSI. Where OFSI invites participation in the EAS and the subject provides a complete, accurate, and timely account (including full supporting documentation and a clear narrative of events), OFSI may apply an EAS discount of up to 20% on the baseline penalty. The EAS is available only in cases where OFSI considers it appropriate; OFSI will not offer EAS participation in cases involving deliberate circumvention, concealment, or complex multi-party arrangements where OFSI requires independent investigation.

Stacking of discounts

The three discounts are cumulative. A person who voluntarily discloses (30%), participates in the EAS (20%), and accepts settlement (20%) may receive a combined discount of up to 70% on the baseline penalty, though OFSI retains discretion to apply lower percentages within each band based on the quality and timeliness of the disclosure, cooperation, account, and settlement acceptance.

## Penalties on individual officers

Section 148 of the Policing and Crime Act 2017 permits OFSI to impose a separate monetary penalty on an officer of a body (director, manager, secretary, or similar officer of a body corporate; partner in a partnership; or person concerned in management of an unincorporated body) if OFSI is satisfied, on the balance of probabilities, that the breach by the body took place with the consent or connivance of the officer, or was attributable to any neglect on the part of the officer. The officer's penalty is subject to the same maximum and procedural rights as the body's penalty. OFSI's published enforcement decisions to date have imposed officer penalties in cases where the officer had direct oversight of the sanctioned transaction and failed to act on red flags or compliance alerts.

## Financial hardship and public interest

OFSI's February 2026 guidance includes a policy on financial hardship. Where a person claims that payment of the penalty would cause exceptional financial hardship, OFSI may reduce the penalty if satisfied that hardship is demonstrated and that a reduction would not be contrary to the public interest. The burden of proof lies with the subject; OFSI requires detailed financial evidence (audited accounts, cash-flow forecasts, evidence of inability to borrow or raise capital). OFSI will not reduce penalties below a level that maintains the deterrent effect of the regime or where the breach was deliberate, involved senior management, or demonstrated systemic compliance failures. OFSI has published guidance confirming that it will consider whether the person has taken steps to dispose of assets or restructure to avoid the penalty, and may refuse a reduction if it considers the financial position was engineered.

## Disclosure notices (public naming without penalty)

Section 56 of the Economic Crime (Transparency and Enforcement) Act 2022 amended section 149 of the Policing and Crime Act 2017 to permit OFSI to publish Disclosure notices — public statements that OFSI is satisfied, on the balance of probabilities, that a person breached financial sanctions, even in cases where OFSI decides not to impose a monetary penalty. OFSI may issue a Disclosure notice where a breach occurred but mitigating factors (for example, voluntary disclosure, immediate remediation, minor value, strong compliance culture) make a monetary penalty disproportionate, yet public accountability and deterrence are served by naming the breach. The Disclosure notice includes a summary of the breach and OFSI's findings but does not include a monetary penalty. The person has procedural rights equivalent to those for a penalty (Notice of Intent, right to make representations) before the Disclosure notice is published.

## Procedural rights and appeals

A person subject to a proposed penalty has rights under section 147 of the Policing and Crime Act 2017. OFSI must issue a Notice of Intent setting out the proposed penalty and the reasons; the person has 28 days to make written representations. OFSI must consider the representations before making a final decision. If OFSI decides to impose the penalty, it issues a Final Notice specifying the amount, the reasons, and the payment deadline (typically 28 days). The person may appeal to the Upper Tribunal (Tax and Chancery Chamber) within 28 days of the Final Notice. The Tribunal may quash the penalty or substitute a different amount. The penalty is not payable while an appeal is pending. Payment is recovered as a civil debt if not paid voluntarily.

Source: Policing and Crime Act 2017, section 146 Source: Policing and Crime Act 2017, sections 147–148 Source: Economic Crime (Transparency and Enforcement) Act 2022, sections 54–56 Source: Financial sanctions enforcement and monetary penalties guidance — GOV.UK Source: New and updated enforcement framework – OFSI Blog, 29 January 2026

UK sanctions enforcement is divided by subject matter. The Office of Financial Sanctions Implementation (OFSI) enforces financial sanctions — the asset-freeze prohibitions in regulations 11–15 of the Russia (Sanctions) (EU Exit) Regulations 2019 and equivalent provisions in other UK sanctions regimes. Trade sanctions — prohibitions on the import, export, supply, delivery, and making available of sanctioned goods and technology, and the provision or procurement of sanctioned services — are enforced by HM Revenue & Customs (HMRC) and the Office of Trade Sanctions Implementation (OTSI), which share responsibility depending on the nature of the activity and whether goods cross the UK border.

## HMRC: trade sanctions at the border and strategic exports

HMRC is responsible for enforcing all trade sanctions on goods crossing the UK border, in line with its role as the UK's customs authority. HMRC enforces the import and export prohibitions in Part 5 (Trade) of the Russia Regulations and other sanctions regimes for goods entering or leaving the United Kingdom. This includes prohibitions on:

• Military goods and military technology (as specified in Schedule 2 to the Export Control Order 2008 and items within Chapter 93 of the Goods Classification Table other than military goods);
• Defence and security goods and defence and security technology (Schedule 3C to the Russia Regulations 2019, including interception and monitoring goods);
• Dual-use goods and dual-use technology (Annex I to Council Regulation 428/2009 as retained EU law under the European Union (Withdrawal) Act 2018);
• Critical-industry goods and critical-industry technology (Schedule 2A to the Russia Regulations);
• Quantum computing and advanced materials goods and technology (Schedule 2E);
• Oil and oil products, iron and steel products, luxury goods, gold jewellery and relevant processed gold, and other commodity-specific import or export bans set out in the Russia Regulations and in regimes covering Iran, North Korea, Belarus, and other sanctioned jurisdictions.

HMRC also has enforcement responsibility for strategic export controls — measures relating to military and dual-use goods governed by the Export Control Order 2008 and the Trade in Goods (Control) Order 2003, which overlap with but are distinct from sanctions. HMRC enforces the provision or procurement of services that are ancillary to the import or export of goods — for example, freight forwarding, customs brokerage, and transport services directly related to the physical movement of sanctioned goods across the border.

HMRC enforces trade sanctions at the border using its powers under the Customs and Excise Management Act 1979 (CEMA), as applied by regulation 85 of the Russia Regulations 2019 (and corresponding provisions in other regimes). HMRC officers may examine goods, require production of documents, detain or seize goods, and arrest persons suspected of committing trade-sanctions offences. HMRC has criminal enforcement responsibility for all trade sanctions measures; breaches are prosecuted as criminal offences with penalties on summary conviction of up to 12 months' imprisonment or a fine (or both), and on indictment up to 7 years' imprisonment or an unlimited fine (or both), or in the case of certain CEMA-applied offences up to 10 years on indictment.

HMRC encourages voluntary disclosure of suspected breaches. Persons who discover they have imported or exported goods, or transferred controlled technology, without an appropriate licence should consider reporting the irregularity to HMRC using the voluntary disclosure process; details are published on the Export Controls: military goods, software and technology page on GOV.UK. HMRC may offer compound settlements (administrative settlements in lieu of prosecution) for certain trade-sanctions offences; as of May 2025, HMRC concluded a £1,160,725.67 compound settlement relating to the export of goods in breach of the Russia Regulations 2019, the largest Russia-sanctions compound settlement to date.

## OTSI: trade sanctions on services and cross-border goods movements not crossing the UK border

The Office of Trade Sanctions Implementation (OTSI), which launched on 10 October 2024 when the Trade, Aircraft and Shipping Sanctions (Civil Enforcement) Regulations 2024 (S.I. 2024/948, "TASSCER") came into force, is the UK's civil enforcement body for trade sanctions. OTSI is part of the Department for Business and Trade. OTSI is responsible for enforcing sanctions relating to:

1. The provision or procurement of sanctioned services — so-called "standalone services" including professional and business services (accounting, auditing, business and management consulting, public relations, architecture, engineering, legal advisory services in certain circumstances) prohibited under regulation 54B–54D of the Russia Regulations and equivalent provisions in other regimes;
2. The movement, making available, or acquisition of sanctioned goods or technology outside the UK where a UK person is involved — for example, a UK company arranging the export of dual-use goods from Germany to Russia, or a UK national facilitating the supply of critical-industry goods from a third country to a person connected with Russia;
3. Ancillary services associated with the movement, making available, acquisition, or transfer of sanctioned goods or technology outside the UK — services related to goods that do not cross the UK border but are subject to UK sanctions by virtue of UK-person involvement.

OTSI does not enforce trade sanctions on goods crossing the UK border; those remain HMRC's responsibility. OTSI also does not enforce strategic export controls subject to licensing by the Export Control Joint Unit (ECJU); HMRC retains enforcement responsibility for strategic exports even when the goods do not physically cross the UK border but are subject to UK jurisdiction (for example, deemed exports or extra-territorial application of the Export Control Order 2008).

The division of labour is therefore:

• HMRC: goods and ancillary services crossing the UK border; strategic export controls (military, dual-use, and other controlled goods and technology under the Export Control Order 2008 and Trade in Goods (Control) Order 2003); criminal enforcement for all trade sanctions.
• OTSI: standalone services; cross-border goods movements and ancillary services where goods do not cross the UK border but UK persons are involved; civil enforcement (monetary penalties, warning letters, disclosure notices).

Where OTSI's investigations indicate that a breach merits consideration for criminal enforcement, OTSI may refer the case to HMRC. HMRC has criminal enforcement responsibility for all trade sanctions measures, including those primarily within OTSI's civil enforcement remit.

## OTSI civil enforcement powers under TASSCER

TASSCER grants OTSI the power to impose civil monetary penalties for breaches of trade sanctions regulations, aircraft sanctions regulations, and shipping sanctions regulations. The enforcement framework parallels OFSI's civil enforcement powers under the Policing and Crime Act 2017, with key features including:

• Strict liability: OTSI need not prove that the person knew or had reasonable cause to suspect they were breaching sanctions; OTSI need only satisfy itself, on the balance of probabilities, that a breach occurred (regulation 5(2) of TASSCER). Knowledge and intention remain relevant to penalty calculation and to criminal liability, but are not elements OTSI must prove to establish a breach for civil enforcement purposes.
• Permitted maximum penalty: For trade sanctions, the permitted maximum is the greater of £1 million or 50% of the estimated value of the goods, technology, or services to which the breach relates (regulation 9(2) of TASSCER). For aircraft and shipping sanctions, the maximum is the greater of £1 million or 50% of the estimated value of the ship or aircraft used in connection with the breach (regulation 10(2)).
• Case factors and discretion: OTSI applies case factors similar to OFSI's framework — including the size and revenue of the organisation, the nature and severity of the breach, knowledge and intent, the adequacy of compliance systems, cooperation with the investigation, and voluntary disclosure — to determine the penalty amount within the statutory maximum.
• Procedural rights: A person subject to a proposed penalty has the right to receive a Notice of Intent, to make written representations (28 days), to receive a Final Notice if OTSI decides to impose the penalty, and to appeal to the Upper Tribunal (Tax and Chancery Chamber) within 28 days of the Final Notice (regulations 11–15 of TASSCER, incorporating by reference the procedural-rights provisions of the Policing and Crime Act 2017, sections 147–149, as applied to trade sanctions).
• Officer liability: OTSI may impose a separate monetary penalty on an officer of a body (director, manager, secretary, partner, or person concerned in management) if the breach by the body took place with the consent or connivance of the officer, or was attributable to neglect on the part of the officer (regulation 8 of TASSCER).

## OTSI licensing for trade sanctions

OTSI is responsible for issuing licences for certain sanctioned trade activity — specifically the provision of standalone services, goods not subject to strategic export controls, and associated ancillary services. Applications for goods-related export sanctions licences where the goods are subject to strategic export controls remain via SPIRE (the Export Control Joint Unit's licensing system). OTSI launched a new online licence application service in October 2024 for services and non-strategic-export goods.

Between 10 October 2024 (when OTSI launched) and 9 October 2025, OTSI received 60 licence applications, the vast majority concerning the provision of professional and business services ordinarily prohibited under the Russia Regulations. The average timeframe for receiving an outcome on applications submitted directly to OTSI was 82 working days, including time taken by applicants to reply to requests for information. OTSI applies the same licensing considerations (statutory licensing grounds) set out in the Russia Regulations and other sanctions regimes — for example, prior obligations, humanitarian assistance, wind-down, divestment from Russia, basic needs, legal services, and extraordinary expenses. OTSI assesses each application against the applicable licensing consideration and the purposes of the sanctions regime as set out in the Sanctions and Anti-Money Laundering Act 2018.

## Enforcement coordination and the No-Russia Clause

HMRC and OTSI work together to enforce breaches of trade sanctions. The UK Government has published guidance on countering Russian sanctions evasion and circumvention, including the No-Russia Clause — a contractual tool exporters may insert in contracts to restrict the buyer/importer from re-exporting sanctioned items to Russia. While not required under the Russia Regulations, the No-Russia Clause is presented as a component of due diligence best practice to mitigate the risk of sanctioned items ending up in Russia via indirect routes and complex supply chains. The guidance acknowledges that "Russia has been seeking to procure goods and services via indirect routes and complex supply chains," heightening the risk of circumvention and diversion, and emphasises that it is the responsibility of businesses to adopt appropriate measures to mitigate the risk of unwittingly facilitating Russia's access to sanctioned goods and technologies. UK Russia sanctions prohibitions typically prohibit export "for use in" Russia, a formulation that extends the prohibition to goods exported to third countries if the exporter knows or has reasonable cause to suspect they are destined for Russia.

OTSI has published enforcement guidance on how it assesses suspected breaches, and regularly publishes blog posts and case studies to share trends, typologies, and compliance lessons. Between April and June 2025, OTSI received suspected-breach reports from the UK branch of a multinational bank concerning trade in a product sanctioned under the Russia Regulations from Russia to a third country; OTSI concluded there had not been a breach by the UK branch because the payments were not processed — the bank's due diligence stopped the payments that otherwise would have provided revenue for Russia. OTSI has powers to share information with international counterparts to enable them to investigate whether a breach of sanctions in their jurisdiction has occurred.

Businesses and individuals who suspect that they, or someone else, have breached trade sanctions within OTSI's remit should report it to OTSI as soon as possible using the online service: Report a suspected breach of trade sanctions. Relevant persons (providers of legal or financial services) have a legal obligation to report a suspected breach of trade sanctions enforced by OTSI. For all other enquiries, businesses may use the OTSI contact form published on GOV.UK.

Source: The Trade, Aircraft and Shipping Sanctions (Civil Enforcement) Regulations 2024, S.I. 2024/948 Source: No-Russia clause guidance — GOV.UK Source: One Year of the Office of Trade Sanctions Implementation (OTSI) — GOV.UK Source: Russia sanctions: statutory guidance — GOV.UK Source: Sanctions enforcement action — GOV.UK