The Office of Financial Sanctions Implementation published its consultation response on reforming its enforcement processes, confirming it intends to proceed with all the proposals from the original consultation (with adjustments based on feedback).
For UK businesses, the direction of travel is clear: more structured enforcement decisions, more formal resolution routes, and a recalibration of incentives around disclosure, co-operation and early investigation.
What OFSI is changing
A simpler case assessment approach
On 9 February 2026, OFSI updated its enforcement and monetary penalties guidance, including a revised case assessment framework with a four-level seriousness model.
New features in the updated guidance
OFSI’s updated guidance also introduces two practical changes that compliance teams should note:
- Fixed monetary penalties: OFSI can issue fixed penalties of £5,000 or £10,000 for certain information, reporting and licensing offences. This creates a faster route to enforcement in defined circumstances.
- Financial hardship policy: OFSI has set out how it will consider claims of financial hardship, including the limited circumstances where it may reduce or adjust a penalty.
The voluntary disclosure discount is being reset
The current voluntary self-disclosure discount has been replaced with a “Voluntary Disclosure and Co-operation” discount, capped at 30% in all penalty cases. That is a reduction from the previous maximum 50% available in serious cases.
OFSI also flags that, in a revised framework, firms may be able to access multiple discounts (see below), with the combined effect potentially reaching up to 70% in some scenarios.
Settlement becomes a formal route (with strings attached)
OFSI has introduced a time-limited, negotiated settlement option to resolve monetary penalty cases. Under the revised scheme:
- the subject must waive the right to a Ministerial Review and to appeal to the Upper Tribunal as a condition of settlement
- the subject can receive a 20% settlement discount
- the subject may have an opportunity to input into the public penalty notice
OFSI also clarifies that discounts will be applied concurrently to the same baseline penalty (rather than sequentially), to keep the mechanics simpler and preserve the “value” of each discount.
The early account scheme is now live (with a revised discount)
OFSI has introduced an Early Account Scheme (EAS), a voluntary route that can reduce the length and complexity of an OFSI investigation. Where OFSI agrees that EAS is suitable, the subject provides, within an agreed timeframe, a comprehensive early factual account of the potential breaches, supported by relevant evidence. Where a monetary penalty is imposed, EAS can reduce the baseline penalty by up to 20%. The scheme is informed by the Bank of England’s Early Account Scheme introduced in 2024.
The key change versus earlier proposals is the discount structure:
- EAS provides a separate discount of up to 20%
- the EAS discount is applied to the baseline penalty and can be used alongside other discounts
- it is independent of whether the subject later settles or contests the case
Statutory maximum penalties are set to double, but need legislation
OFSI has said it intends to seek legislation to raise the statutory maximum monetary penalty from the higher of £1 million and 50% of the value of the breach to the higher of £2 million and 100% of the value of the breach.
This change requires legislation and will not take effect until it is passed. Until that happens, the existing statutory maximum continues to apply.
What’s the timeline?
Most changes that do not require legislation are now in effect through OFSI’s updated enforcement and monetary penalties guidance, published on 9 February 2026. Legislative changes, including the higher statutory maximum, will follow when parliamentary time allows.
What this means for compliance teams
1) Your “do we disclose?” decision gets more complex
A lower headline disclosure discount (30%) matters, but so does the broader package. With settlement (20%) and EAS (up to 20%) on the table, organisations will need a clearer playbook for:
- triage and escalation
- preserving evidence and scoping potential breaches
- deciding whether to pursue EAS, settlement, or a contested route
2) Investigation readiness becomes a control, not an admin task
EAS is effectively a bet on speed and quality. If your internal investigation capability is slow, fragmented, or under-resourced, you may not be able to use EAS credibly, even if it would be valuable in theory.
3) Data quality failures will keep driving real-world breaches
A practical illustration of why OFSI focuses on ‘systems and controls’ is the Bank of Scotland case, where a spelling variant and escalation gaps contributed to a breach and a £160,000 penalty.
Practical actions to take now
- Update your sanctions incident response plan: who decides on disclosure, who runs investigations, and what “good evidence” looks like in the first 30 days
- Pre-build an investigation pack: transaction logs, screening outputs, audit trails, customer and counterparty identifiers, decision records, and communications hold steps.
- Stress test screening and escalation: transliteration and spelling variants, fuzzy matching thresholds, PEP-to-sanctions escalation rules, and “near miss” workflows.
- Board and senior ownership: the combined effect of higher maximums and more formal enforcement routes makes governance and documented oversight more important.
