The UK government is signalling a sharper, more assertive approach to sanctions enforcement. Businesses need to pay attention

 

On July 22, 2025, the Office of Financial Sanctions Implementation (OFSI) published a major consultation paper proposing reforms that could transform how civil breaches of financial sanctions are investigated and penalised in the UK. The changes aim to increase the transparency, effectiveness and deterrent impact of OFSI’s enforcement regime. This follows a trend of increasing regulatory scrutiny and high-profile warnings about compliance failings in the wake of geopolitical instability.

 

For UK businesses, this represents a critical turning point. Whether you operate in shipping, financial services, legal, professional services, or technology, sanctions compliance can no longer be seen as a back-office function or a low-risk concern.

 

From a “soft touch” to serious enforcement

 

Until recently, OFSI’s civil enforcement activity had been limited in scope and scale. But things are changing. A recent £5K fine for failure to respond to an information request signals that OFSI is prepared to act, even on lower-level breaches.

 

The new proposals go further. They suggest a move toward a US-style model of sanctions enforcement, characterised by:

 

• Higher penalties

• Less discretion around cooperation

• Greater procedural formality

• Public naming of offenders

This shift will affect how companies conduct internal investigations, respond to OFSI enquiries, and decide whether to disclose breaches.

 

Key proposals and what they mean for you

 

Here’s a breakdown of the headline reforms and how they could impact your compliance strategy:

 

New case assessment matrix

OFSI plans to publish a case matrix to clarify how it evaluates the seriousness of breaches and determines enforcement outcomes.

 

What this means: Businesses can expect more transparency but also greater accountability. If your breach is deemed serious, OFSI will now have a clearer, public rationale for applying significant penalties.

 

Formal settlement scheme

Firms may be offered the option to settle a case early in exchange for reduced penalties.

 

What this means: This offers a potential route to faster resolution and lower costs but only if your systems are capable of mounting a rapid and accurate internal investigation.

 

Early account scheme (EAS)

Companies could get up to a 40% discount if they voluntarily provide a detailed report within six months of OFSI opening a case.

 

What this means: While attractive in terms of potential discounts, EAS will demand significant internal compliance resources. Businesses must be ready to self-investigate quickly and credibly.

 

Technical breach penalties

OFSI proposes standardised or fixed penalties for lower-severity issues like delayed reporting or licence notifications.

 

What this means: Administrative lapses may now carry real financial consequences. Routine tasks, like submitting licence reports, must be treated with the same diligence as substantive sanctions controls.

 

Increased civil Penalties

The statutory maximum fine could double—from £1 million to £2 million—and OFSI could claim up to 100% of a breach’s value.

 

What this means: This significantly raises the financial stakes. For larger transactions or sanctions-sensitive sectors such as energy, maritime and fintech, the cost of a mistake could be devastating.

 

Reduced discounts for voluntary disclosure

Voluntary cooperation may now be capped at a 30% discount, down from a current maximum of 50%.

 

What this means: Voluntary disclosure will still matter but it’s no longer a get-out-of-jail-free card. OFSI wants cooperation to be the baseline, not a bonus.

 

What should businesses do now?

These proposals aren’t just procedural tweaks but rather a clear warning that enforcement is intensifying. Here’s what you can do now:

 

1. Audit your sanctions compliance programme

Ensure that your screening tools, reporting lines, and staff training are up to date. This includes understanding exposure to high-risk jurisdictions and sanctioned entities.

2. Be ready to investigate internally

Build internal capabilities or retain external experts to run swift, scoped investigations in response to OFSI enquiries.

3. Strengthen reporting procedures

OFSI’s new online forms make it easier and faster to submit breach reports and licence requests. But this also increases OFSI’s expectations that you act promptly.

4. Prepare for reputational risk

With OFSI reaffirming its commitment to name firms subject to enforcement action, public exposure is now part of the penalty. Make sure your board and communications teams are looped into sanctions compliance issues.

5. Watch for legal changes in 2026

If implemented, these reforms will likely result in legislative updates. Businesses should monitor the outcomes of the consultation, which is closing on October 13, 2025, and any draft legislation that follows.

 

Sanctions compliance as strategy?

OFSI’s consultation marks a turning point. Sanctions enforcement in the UK is no longer just about avoiding egregious wrongdoing. I’s about ensuring operational excellence, legal foresight, and cultural accountability across your organisation.

 

Firms that invest now in robust systems, proactive engagement with OFSI and early internal action will not only reduce their risk but will also strengthen their standing with regulators, clients and the public. The future of sanctions compliance in the UK is clear: It’s getting tougher, faster, and more public. Make sure your business is ready.

The field of economic sanctions has been growing increasingly complicated in recent years. As events in Russia, Iran, China and other countries grab global headlines, businesses are struggling to stay on top of changes. Vinciworks’ sanctions compliance courses give your staff the tools they need to understand and comply with sanctions requirements in these volatile times. Try it now.