For businesses operating internationally, sanctions compliance has become one of the most complex areas of corporate governance. Now, the US Office of Foreign Assets Control (OFAC) and the UK’s Office of Financial Sanctions Implementation (OFSI) have taken a significant step toward helping businesses navigate that complexity by publishing their first comprehensive side-by-side comparison of the US and UK financial sanctions regimes.
The recently released guidance is part of the continuing OFAC-OFSI Enhanced Partnership. It provides companies with a practical comparison of the two systems and is a demonstration of unprecedented cooperation between the world’s two leading sanctions authorities. But the alignment does not mean harmonisation.
A closer partnership but not a single rulebook
The guidance follows the latest strategic exchange between OFAC and OFSI in London in January 2026, where the agencies discussed everything from sanctions enforcement and emerging geopolitical threats to AI and technology that could improve sanctions administration.
The Enhanced Partnership, launched in 2022, has steadily deepened cooperation between the two regulators through joint guidance, information sharing and coordinated engagement with industry. During this latest exchange, both authorities also committed to expanding their collaboration on issues including sanctions targeting, the shadow fleet supporting Russia, dismantling sanctions regimes when geopolitical conditions change, and using AI to modernise licensing, reporting and enforcement processes.
The publication of joint guidance demonstrates just how closely the two authorities are working together. But the guidance makes clear that businesses cannot assume compliance with one jurisdiction automatically satisfies the requirements of the other.
Similar objectives, different legal obligations
The guidance compares virtually every major aspect of the two financial sanctions systems, including sanctions lists, licensing, reporting, recordkeeping, ownership rules, jurisdiction and enforcement.
While many of the policy objectives are shared, the legal frameworks often differ in important ways.
Perhaps the most significant divergence concerns ownership and control.
Under OFAC’s well-known 50 percent rule, ownership interests held by multiple sanctioned individuals are aggregated. If sanctioned persons collectively own 50% or more of an entity, that entity is itself treated as blocked.
The UK takes a different approach. OFSI generally does not aggregate ownership held by multiple designated persons. Instead, it applies a standalone control test that can capture entities even where ownership thresholds have not been met, provided a designated person is capable of directing the organisation’s affairs.
This means that exactly the same corporate structure could be considered sanctioned under one regime but not the other. For multinational businesses, that creates a significant compliance challenge that cannot be solved through a single ownership analysis.
The US still casts a much wider net
The guidance also reinforces another critical distinction that many UK businesses continue to underestimate, the reach of US sanctions.
OFAC retains extensive extraterritorial powers through secondary sanctions, meaning non-US companies may face consequences even where there is little or no direct US connection.
UK sanctions are generally narrower in scope, relying primarily on territorial jurisdiction and UK nationality. Although UK enforcement has become increasingly assertive, OFSI does not operate the same broad secondary sanctions framework seen in the US.
For organisations trading internationally, particularly those with US customers, suppliers, banks or investors, understanding where US jurisdiction may arise remains essential.
Enforcement expectations continue to rise
Although OFAC and OFSI have different reporting and enforcement mechanisms, both regulators now operate strict liability civil enforcement regimes.
The guidance also compares how each authority treats voluntary self-disclosure. OFAC may reduce penalties by up to 50% following a qualifying disclosure, while OFSI can reduce penalties by up to 30%, with additional reductions potentially available through its settlement processes.
Another important difference is reporting. OFAC requires rejected transactions to be reported, while OFSI does not impose an equivalent legal obligation. Nevertheless, the guidance suggests that organisations operating across both jurisdictions should consider whether voluntary reporting to OFSI may still be appropriate.
Businesses should also note that OFSI has no statutory limitation period for civil enforcement, unlike OFAC’s ten-year limitation period, meaning historical sanctions issues may remain relevant for much longer in the UK.
Technology and AI are becoming part of sanctions enforcement
One of the more forward-looking elements of the Enhanced Partnership is its focus on technology.
Both authorities announced they are modernising their licensing, reporting and disclosure systems while exploring how artificial intelligence can support sanctions implementation.
Rather than replacing human decision-making, AI is expected to assist with analysing large datasets, identifying emerging sanctions risks, processing licence applications and improving guidance for regulated organisations.
For compliance teams already investing in AI-powered screening and monitoring tools, this represents another signal that regulators themselves are embracing technology as sanctions become increasingly data-driven.
What does this mean for sanctions compliance?
For sanctions professionals, the new guidance is more than simply a useful reference document.
It indicates that regulators increasingly expect organisations to understand the differences between jurisdictions rather than relying on broad assumptions that UK and US sanctions operate in the same way.
Compliance programmes therefore need to be built around jurisdiction-specific legal analysis rather than a “one-size-fits-all” approach. Screening systems, ownership assessments, reporting procedures and governance frameworks should all reflect the specific requirements of each sanctions regime.
The guidance also reinforces that sanctions enforcement is becoming increasingly coordinated internationally, even where legal requirements continue to differ. Businesses should expect more information sharing between regulators and greater scrutiny of multinational compliance programmes.
What should UK businesses do?
For UK businesses, particularly those with international operations or exposure to the US financial system, the guidance offers some clarity but also a warning.
The publication demonstrates that OFSI and OFAC are working more closely than ever, sharing intelligence, developing joint guidance and exploring common technological solutions. That cooperation is likely to continue as geopolitical risks evolve.
At the same time, the guidance makes clear that there is no such thing as “global sanctions compliance.” Organisations cannot simply comply with one regime and assume they are protected under another.
For many UK companies, particularly those trading internationally, that means reviewing sanctions policies, ownership and control assessments, due diligence procedures, screening technology and reporting processes to ensure they reflect both UK and US requirements.
As sanctions continue to expand in scope, become increasingly technology-enabled and involve closer cooperation between regulators, organisations that invest in robust, jurisdiction-specific compliance programmes will be far better placed to manage both legal risk and regulatory scrutiny.
