Changes on the Horizon: Proposed New UK Sanctions Enforcement Framework Poses Increased Dangers for Businesses

Client Alert  |  October 20, 2025

If carried out, the modifications might materially improve penalties, cut back reductions for voluntary disclosure, and introduce new methods of resolving instances involving breaches, resembling settlement choices.

The UK Office of Financial Sanctions Implementation (OFSI)—the UK authorities entity accountable for monetary sanctions implementation and enforcement—is contemplating substantial reforms to its enforcement practices for monetary sanctions breaches.  If carried out, these modifications might materially improve penalties, cut back reductions for voluntary disclosure, and introduce new methods of resolving instances involving breaches, resembling settlement choices.  These proposed modifications would transfer OFSI even nearer to the enforcement mannequin utilized by its U.S. analog—the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC)—with which it has had an more and more complete partnership since 2022.  OFSI—which celebrates its tenth anniversary in 2026—can be drawing inspiration from different more-established UK regulators, such because the Financial Conduct Authority (FCA), with which it’s collaborating extensively.  OFSI is evolving, and with it are the UK sanctions dangers confronted by banks and firms inside UK enforcement jurisdiction.

Background: OFSI’s Expanding Enforcement Activity

Much like sanctions enforcers all through the G7, the inflection level for OFSI’s growth as a consequential enforcer will be traced to Russia’s invasion of Ukraine in 2022.  Since then, OFSI has greater than doubled its workers—with a specific deal with licensing and enforcement—to 135 present staff and created a devoted Compliance Enforcement staff in 2024-2025 to raised establish and implement towards breaches of license phrases.  During the 2023-2024 monetary yr, OFSI opened a document 396 investigations, greater than double the earlier yr’s determine. This development continued into 2024-2025, throughout which OFSI opened 394 investigations.  This elevated exercise has introduced rising recognition that OFSI’s enforcement procedures, largely unchanged since OFSI’s institution in 2016, want updating to deal with the quantity and complexity of present sanctions instances.

The UK enforcement panorama essentially shifted in June 2022 when the UK moved to implement monetary sanctions breaches on a strict legal responsibility foundation, i.e. utilizing the identical customary that OFAC makes use of.  This signifies that OFSI not must exhibit that an individual knew or suspected they had been breaching sanctions to impose a penalty.  While OFSI could select to not pursue such instances, even a de minimis misstep could be a violation.  Similarly (and in addition in step with OFAC observe), OFSI now has the ability to publicize breaches even when it chooses to not impose a financial penalty.  These modifications, mixed with the unprecedented enlargement of the UK sanctions record, which now contains over 4,700 designated individuals and entities, the rise in scope and class of the UK’s sanctions packages, and the more and more extraterritorial attain of UK sanctions, results in a cloth improve in compliance challenges and enforcement threat for these topic to UK jurisdiction.

OFSI has already demonstrated its willingness to make use of this expanded toolkit.  For the primary time in August 2023, OFSI publicized particulars of sanctions breaches with out imposing a financial penalty.  It used this energy once more in March 2025, indicating that this can seemingly be frequent observe for OFSI in instances of non-serious breaches.  In August 2024, OFSI issued its first penalty associated to the 2022 Russia sanctions, and has indicated that a number of extra Russia-related enforcement actions are in its pipeline.  In April 2025, OFSI issued a penalty to an organization solely for the failure to reply to an data request, and in September 2025 it reduced voluntary disclosure credit score from 50% to 35%, having deemed {that a} 4 month delay between detection of breaches and preliminary notification to OFSI mitigated the optimistic results of cooperation.

Proposed Changes to OFSI’s Enforcement Approach

Material modifications to OFSI’s enforcement practices are into account.  As a part of the assessment, OFSI revealed a consultation paper, on which it invited remark, setting out 5 primary areas of reform.  This means of session can be much like how OFAC proceeded when it proposed its present enforcement tips.

I. Increased Statutory Maximum Penalties

OFSI has proposed elevating the utmost penalties that it may impose.  The present statutory most is the higher of £1 million or 50% of the breach worth.  OFSI proposes rising this to the higher of £2 million or 100% of the breach worth.

It is necessary to notice that these modifications wouldn’t robotically end in increased penalties throughout the board.  OFSI would nonetheless assess what penalty is affordable and proportionate throughout the new most.  Indeed, eight of OFSI’s twelve penalties so far have solely been 5% or much less of the utmost obtainable.  However, the upper ceiling would give OFSI extra scope to impose substantial penalties in essentially the most severe instances.

OFSI can be in search of suggestions on different approaches to calculating most penalties, resembling basing them on a proportion of firm turnover or setting a most penalty per breach slightly than per case.  The thought of basing breaches on percentages of turnover resembles the practices of the UK’s Competition and Markets Authority.  The European Union has lately additionally lately adopted this concept, and issued EU-wide legislation requiring Member States to set most company fines of at the least 1–5% of worldwide turnover, or €8–€40 million, relying on the violation’s gravity.

II. Clearer Assessment Framework and Adjusted Discounts

OFSI has proposed publishing a extra clear matrix exhibiting the way it combines severity and conduct elements to succeed in an total case evaluation.  This additionally mirrors the OFAC mannequin which is predicated on a matrix.  The proposed OFSI matrix would information companies on seemingly outcomes: much less extreme instances would sometimes obtain warning letters, reasonably extreme instances could be publicly disclosed with out penalties, whereas severe instances would face financial penalties.

Importantly, OFSI has proposed to extend not solely the utmost potential penalty, but additionally the baseline penalty ranges for severe instances.  Currently, severe instances appeal to baseline penalties of 0-50% of the statutory most, whereas most severe instances vary from 50-100%.  Under the proposals, severe instances would appeal to as much as 75% of the utmost, and most severe instances would vary from 75-100%.

OFSI has additionally proposed altering the way it rewards voluntary disclosure.  The present system provides as much as 50% low cost for severe instances and as much as 30% for many severe instances.  The proposal would cap the disclosure profit at 30% for each classes, and would make the low cost conditional on extra stringent necessities: as a way to profit a respondent must exhibit immediate reporting, the supply of a whole account of the info, and absolutely cooperate with OFSI all through the investigation.  Where OFSI considers that the necessities are solely partially met, a reduction of decrease than 30% might nonetheless be utilized.  These modifications replicate OFSI’s view that the present 50% low cost for a voluntary self-disclosure can typically undermine the penalty’s deterrent impact.

III. Streamlined Resolution Through Settlement

Drawing inspiration from the FCA’s strategy (and OFAC’s course of), OFSI has proposed introducing a proper settlement scheme.  Under this mannequin, as soon as OFSI completes its investigation and determines a penalty is warranted, it might supply corporations a possibility to settle the case inside 30 enterprise days.

The proposed settlement course of would proceed as follows: OFSI would offer a draft penalty discover to a celebration discovered to have violated sanctions and would permit without-prejudice discussions concerning the phrases.  If OFSI and the get together attain settlement throughout the timeframe, the get together below investigation would obtain a 20% low cost on high of any voluntary disclosure low cost already utilized.  In change, the corporate would settle for OFSI’s findings and waive their rights to ministerial assessment and tribunal enchantment.

OFSI has indicated it might not supply settlement in instances involving realizing or intentional breaches, suspected circumvention, or the place the corporate has didn’t cooperate in good religion.  During settlement discussions, corporations might be able to negotiate the wording of the general public penalty discover, doubtlessly avoiding express admissions of legal responsibility (although OFSI has talked about that such an strategy might cut back the importance and deterrent impact of its enforcement notices).  This course of permitting for the negotiation of language in public notices can be parallel to the OFAC strategy.

IV. Early Account Scheme for Expedited Investigations

While the suite of proposed modifications might show seismic, OFSI’s most modern proposal is the Early Account Scheme (EAS), which might permit investigation topics to successfully examine themselves and supply OFSI with a complete factual account.  The same scheme was launched by the Prudential Regulation Authority, a part of the Bank of England, in 2024.  This possibility could be significantly enticing for well-resourced organizations with sturdy compliance features.

Under the EAS, an organization would conduct an inside investigation (or have interaction a 3rd get together to take action) and supply OFSI with an in depth report protecting all suspected breaches, related supplies, and an evaluation towards OFSI’s case elements.  A senior officer would want to attest that the account is full and honest.  OFSI anticipates this course of would sometimes take six months.  The EAS won’t be obtainable in all instances.  For occasion, OFSI could not deem that it’s applicable when instances contain circumvention breaches, significantly severe breaches, or when the corporate has beforehand been investigated or penalized.  Similarly, OFSI considers it might be not possible to allow entry to the EAS to an organization that had didn’t report suspected breaches.

The incentive for utilizing the EAS is critical: if the case proceeds to a penalty and settles, the settlement low cost would improve from 20% to 40%.  However, OFSI would retain discretion to cut back this low cost if it determines the account was incomplete or required substantial further investigation.

OFSI has made clear it might be extremely unlikely to introduce the EAS with out additionally introducing the settlement scheme, as the 2 mechanisms are designed to work collectively.

V. Streamlined Process for Information and Licensing Breaches

Recognizing that not all breaches are equal, OFSI has proposed a simplified course of for sure classes of much less severe offences.  These extra minor breaches would come with failures to reply to data requests, non-compliance with license situations, and late reporting.

Under this proposal, OFSI would publish indicative penalty quantities: £5,000 for normal failures and £10,000 for aggravated failures (resembling repeated non-compliance or recklessly offering false data).  These instances would comply with a shortened timeline, with simply 15 enterprise days for representations at every stage slightly than the usual 30 days.

OFSI can be contemplating whether or not these penalties ought to be set out in laws as fastened penalties, which would offer higher authorized certainty however cut back OFSI’s flexibility to regulate quantities based mostly on circumstances.

What Happens Next: The Consultation Process

The session on OFSI’s paper closed on October 13, 2025.  OFSI will now analyze all enter obtained and publish a authorities response setting out its subsequent steps.  Some proposed modifications may very well be carried out comparatively rapidly via up to date OFSI steerage.  However, modifications to statutory most penalties would require secondary laws (rules), whereas modifications to the proportion of breach worth within the penalty calculation would require main laws (an Act of Parliament).

Practical Implications for Businesses

These proposed modifications replicate OFSI’s evolution right into a extra subtle and strong enforcement regulator.  In order put together for the seemingly modifications, companies might contemplate a number of actions:

1. Review compliance packages. With increased baseline penalties and extra stringent disclosure necessities proposed, the price of compliance failures is prone to improve.  This is an opportune second to conduct hole analyses of sanctions screening, due diligence, and reporting processes.  Businesses also can make sure that present insurance policies particularly cater for UK sanctions dangers, versus simply U.S. or EU sanctions dangers.  While the diploma of overlap between U.S., EU and UK sanctions stays important, materials variations exist.

2. Understand voluntary disclosure necessities. If the proposals are adopted, reaching the complete voluntary disclosure low cost would require not simply immediate reporting however full cooperation all through an investigation.  Businesses ought to guarantee they’ve processes in place to establish potential breaches rapidly and collect related data effectively.

3. Consider settlement and EAS implications. Well-resourced organizations could discover the EAS enticing, nevertheless it requires the flexibility to conduct thorough, unbiased, inside investigations.  Smaller companies could want the usual settlement route.  Businesses ought to perceive these choices and the way they could apply to potential instances.

4. Prepare for elevated enforcement. With 240 lively investigations as of April 2025 and a considerably expanded enforcement staff, OFSI has made clear that extra public enforcement actions are coming.  The mixture of expanded assets, enhanced instruments, and streamlined processes means companies ought to count on heightened scrutiny.

The following Gibson Dunn attorneys ready this replace: Irene Polieri, Adam M. Smith, Scott Toussaint, and Josephine Kroneberger*.

Gibson Dunn’s attorneys can be found to help in addressing any questions you’ll have concerning UK enforcement practices and advising on engagement with UK regulators. For further details about how we could help you, please contact the Gibson Dunn lawyer with whom you often work, the authors, or the next leaders and members of the agency’s International Trade Advisory & Enforcement observe teams:

United States:
Adam M. Smith – Co-Chair, Washington, D.C. (+1 202.887.3547, [email protected])
Ronald Kirk – Co-Chair, Dallas (+1 214.698.3295, [email protected])
Stephenie Gosnell Handler – Washington, D.C. (+1 202.955.8510, [email protected])
Donald Harrison – Washington, D.C. (+1 202.955.8560, [email protected])
Christopher T. Timura – Washington, D.C. (+1 202.887.3690, [email protected])
Matthew S. Axelrod – Washington, D.C. (+1 202.955.8517, [email protected])
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Courtney M. Brown – Washington, D.C. (+1 202.955.8685, [email protected])
Amanda H. Neely – Washington, D.C. (+1 202.777.9566, [email protected])
Samantha Sewall – Washington, D.C. (+1 202.887.3509, [email protected])
Michelle A. Weinbaum – Washington, D.C. (+1 202.955.8274, [email protected])
Roxana Akbari – Orange County (+1 949.475.4650, [email protected])
Karsten Ball – Washington, D.C. (+1 202.777.9341, [email protected])
Sarah Burns – Washington, D.C. (+1 202.777.9320, [email protected])
Hugh N. Danilack – Washington, D.C. (+1 202.777.9536, [email protected])
Justin duRivage – Palo Alto (+1 650.849.5323, [email protected])
Zach Kosbie – Washington, D.C. (+1 202.777.9425, [email protected])
Chris R. Mullen – Washington, D.C. (+1 202.955.8250, [email protected])
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Anna Searcey – Washington, D.C. (+1 202.887.3655, [email protected])
Erika Suh Holmberg – Washington, D.C. (+1 202.777.9539, [email protected])
Audi Okay. Syarief – Washington, D.C. (+1 202.955.8266, [email protected])
Scott R. Toussaint – Washington, D.C. (+1 202.887.3588, [email protected])
Lindsay Bernsen Wardlaw – Washington, D.C. (+1 202.777.9475, [email protected])
Shuo (Josh) Zhang – Washington, D.C. (+1 202.955.8270, [email protected])

Asia:
Kelly Austin – Denver/Hong Kong (+1 303.298.5980, [email protected])
David A. Wolber – Hong Kong (+852 2214 3764, [email protected])
Fang Xue – Beijing (+86 10 6502 8687, [email protected])
Qi Yue – Beijing (+86 10 6502 8534, [email protected])
Dharak Bhavsar – Hong Kong (+852 2214 3755, [email protected])
Hui Fang – Hong Kong (+852 2214 3805, [email protected])
Arnold Pun – Hong Kong (+852 2214 3838, [email protected])

Europe:
Attila Borsos – Brussels (+32 2 554 72 10, [email protected])
Patrick Doris – London (+44 207 071 4276, [email protected])
Michelle M. Kirschner – London (+44 20 7071 4212, [email protected])
Penny Madden KC – London (+44 20 7071 4226, [email protected])
Irene Polieri – London (+44 20 7071 4199, [email protected])
Benno Schwarz – Munich (+49 89 189 33 110, [email protected])
Nikita Malevanny – Munich (+49 89 189 33 224, [email protected])
Melina Kronester – Munich (+49 89 189 33 225, [email protected])
Vanessa Ludwig – Frankfurt (+49 69 247 411 531, [email protected])

*Josephine Kroneberger, a trainee solicitor within the London workplace, isn’t admitted to observe legislation.

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