Overview
On 23 June 2026, the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) and the UK's Office of Financial Sanctions Implementation (OFSI) published their first comprehensive joint sanctions guidance under the OFAC–OFSI Enhanced Partnership, established in 2022. The publication follows a January 2026 meeting between OFAC and OFSI in London and represents an important step toward closer transatlantic sanctions coordination.
While the guidance does not create new legal obligations, it provides a detailed comparison of U.S. and UK sanctions frameworks and serves as a practical resource for companies exposed to both regimes. The central message is straightforward: compliance with one sanctions regime does not provide a safe harbor under the other. Companies with international operations must assess U.S. and UK sanctions requirements independently, even where the underlying policy objectives of particular regimes or measures are closely aligned.
A Practical Comparison of Two Major Sanctions Regimes
The guidance provides a side-by-side overview of:
- Regulatory authorities, responsibilities, and legal frameworks
- Sanctions terminology and concepts
- Types of sanctions and sanctions programs
- Jurisdictional scope
- Prohibited activity and permitted activity (licensing, exemptions, and exceptions)
- Reporting and recordkeeping requirements
- Guidance resources and compliance support
- Enforcement frameworks
- Voluntary self-disclosure mechanisms
- Penalty calculations and limitation periods
Although much of the content will be familiar to sanctions practitioners, the value of the document lies in highlighting where the regimes diverge and where compliance teams may face hidden risks.
No Safe Harbor Between U.S. and UK Sanctions
A recurring theme throughout the guidance is that U.S. and UK sanctions operate independently. A transaction permitted under UK law may still violate U.S. sanctions, and vice versa. Businesses therefore need to assess not only who they are dealing with, but also:
- Where the activity takes place
- Which entities are involved
- Whether U.S. or UK persons participate
- Which currencies are used
- Whether transactions are cleared through U.S. or UK financial systems
- Whether any territorial or extraterritorial nexus exists
This point is particularly important for multinational companies that may assume alignment between the two jurisdictions. It also underscores the importance of ensuring that sanctions compliance policies, procedures, and controls are appropriately calibrated to address the distinct requirements of both jurisdictions sanctions regimes, where applicable. This is a theme recently emphasized in OFSI’s enforcement action against Sabre Global Technologies Limited, in which OFSI criticized the company’s compliance documentation at the time of the identified breaches of UK financial sanctions for emphasizing general procedures and U.S. sanctions requirements rather than UK-specific sanctions regimes.
Different Approaches to Sanctions Design
One of the most significant differences highlighted by the guidance concerns the structure of sanctions programs. The UK financial sanctions framework for which OFSI is responsible is generally focused on targeted asset freezes and activity-specific restrictions. The UK may also impose "directions," requiring certain actions or prohibiting specific activities within a sector, industry, or class of persons. Additional targeted sanctions measures focused on trade and transportation, which can significantly expand the scope and reach of UK sanctions regimes, are administered by other UK sanctions authorities and fall outside the scope of the OFAC–OFSI Enhanced Partnership.
By contrast, the United States maintains a broader sanctions architecture that includes:
- Comprehensive embargoes
- Government-wide blocking programs
- Targeted blocking sanctions
- Sectoral sanctions
- Secondary sanctions
The guidance indeed notes that OFSI does not administer broad jurisdiction-based sanctions comparable to certain U.S. embargo programs.
Sanctions Lists: Similar Objectives, Different Structures
The UK maintains a single UK Sanctions List that, among other things, contains individuals and entities subject to asset freezes falling within OFSI’s purview. It should be borne in mind that other lists can exist under specific sanctions regimes. This includes, for example, the Russia list of entities named in relation to financial and investment restrictions maintained by the Foreign, Commonwealth and Development Office in relation to certain narrower sectoral financial sanctions restrictions.
OFAC, by contrast, maintains multiple sanctions lists, including:
- Specially Designated Nationals and Blocked Persons (SDN List)
- Sectoral Sanctions Identifications (SSI List)
- Non-SDN sanctions lists (e.g., Foreign Sanctions Evaders (FSE) list; CAPTA List, Non-SDN Menu-Based Sanctions List (NS-MBS List))
- Other program-specific list (e.g. Non-SDN Chinese Military-Industrial Complex Companies (NS-CMIC List)
Importantly, only the SDN List contains broad prohibitions of dealing with sanctioned entities like the UK Sanctions List. Other OFAC lists target individuals and entities with narrower restrictions.
Both OFAC and OFSI recognize that an entity may be subject to sanctions restrictions even if it is not expressly listed, where it is owned by a sanctioned person. However, important differences exist between the two regimes. OFAC applies aggregation principles under its 50 Percent Rule, meaning that ownership interests held by multiple blocked persons are aggregated when determining whether an entity is itself blocked. By contrast, OFSI generally does not aggregate ownership interests held by different designated persons for the purpose of its ownership test. The trigger for the application of these ownership tests is also slightly different, with OFAC setting a threshold of 50 percent or more, while OFSI works to a threshold of more than 50 percent.
Another significant distinction is that the UK regime extends beyond ownership and also captures entities that are controlled by a designated person. The control assessment is highly fact-specific and requires a case-by-case analysis of the relevant circumstances. No equivalent standalone “control” test exists under U.S. sanctions, where the analysis is primarily focused on ownership, though OFAC has recently issued guidance stressing the need to be attuned to potential “sham transactions,” and noting the need to look beyond a simple ownership calculation.
Extraterritorial Reach Remains a U.S. Hallmark
The guidance also underscores a fundamental difference between the two systems: the extra-territorial reach of U.S. sanctions. While UK sanctions primarily rely on territorial and nationality-based jurisdiction, U.S. sanctions can affect non-U.S. persons in several ways. For example, non-U.S. persons may face exposure where they cause a U.S. person to violate sanctions; conspire to violate U.S. sanctions; engage in conduct that evades U.S. sanctions; or are targeted by secondary sanctions. While the UK does not impose secondary sanctions, under a number of UK sanctions regimes the grounds upon which a person not subject to UK sanctions jurisdiction can be designated for the purpose of asset freeze and other measures are framed broadly and can have a secondary sanctions-like effect in practice.
Licensing, Exemptions, and Authorized Conduct
In the United States, many sanctions programs incorporate statutory exemptions established under the International Emergency Economic Powers Act (IEEPA), including certain protections for personal communications and travel-related activities. The exemptions apply almost horizontally across the different programs. In the UK, exceptions are usually built into individual sanctions regulations.
Although both regulators issue general and specific licenses, practical differences remain. OFSI general licenses may require notification, reporting, or recordkeeping before or after use. OFAC general licenses are less likely to involve similar notification requirements. In addition, OFAC's position is that non-U.S. persons generally do not face sanctions exposure merely for engaging in activity that a U.S. person could undertake pursuant to a general license.
With respect to specific licenses, OFSI can only grant specific licenses where a particular statutory licensing ground exists under individual sanctions regulations. With a few exceptions (such as the Cuba regime where there are statutory restrictions on OFAC’s ability to authorize certain activities), OFAC has much broader discretion in determining whether to grant a license. Consequently, companies can tailor the rationale in their applications for a specific license to the particular facts and circumstances of their proposed activities.
Reporting and Recordkeeping: Similar Goals, Different Rules
OFAC generally requires records relating to sanctions-regulated transactions to be maintained for at least ten years. The UK financial sanctions framework does not impose a single equivalent sanctions-specific retention period. Nevertheless, businesses remain subject to various recordkeeping obligations in connection with the use of sanctions licensing, as well as arising under other applicable UK laws and regulations. The UK also imposes certain reporting obligations that differ from the U.S. approach. For example, relevant firms must report to OFSI as soon as practicable where they know or reasonably suspect that a person is a designated person (under the ownership and control analysis) or a sanctions prohibition has been breached.
Annual Reporting Deadlines Differ
The timing of annual frozen asset reporting also varies.
OFAC:
- Annual Report of Blocked Property due by 30 September
- Covers blocked property held as of 30 June
OFSI:
- Annual Frozen Asset Review due by 30 November
- Covers frozen assets held as of 30 September
For organizations managing blocked or frozen assets across multiple jurisdictions, these differing deadlines require careful compliance planning.
Enforcement: Increasing Convergence, Important Differences
The guidance also compares enforcement powers and penalty frameworks.
A notable difference concerns voluntary self-disclosures. OFAC treats a qualifying voluntary self-disclosure as a mitigating factor under its Economic Sanctions Enforcement Guidelines and may reduce the base civil penalty amount by up to 50%.
OFSI similarly considers voluntary disclosure as a potential mitigating factor but generally has discretion regarding the weight given to such disclosures. The guidance notes that OFSI may reduce the final monetary penalty by up to 30%, although use of OFSI’s new early account and settlement schemes can further increase the overall monetary penalty discount potentially available. The liability standards have also evolved. For breaches occurring before 15 June 2022, OFSI generally needed to establish that a person knew, or had reasonable cause to suspect, that sanctions had been breached. Since 15 June 2022, OFSI has operated under a strict liability civil penalties framework, bringing its approach closer to OFAC's enforcement model. In addition, OFSI may refer regulated firms and professionals to their supervisory authorities or professional bodies to improve sanctions compliance.
The Missing Piece: OTSI
One notable omission from the joint guidance is the UK's Office of Trade Sanctions Implementation (OTSI). OTSI's enforcement powers came into force in October 2024. Its responsibilities include guidance and industry engagement, licensing, and civil enforcement of trade sanctions.
Given the increasing importance of trade sanctions and export controls in the UK sanctions framework, businesses should not assume that OFSI is the only UK sanctions regulator relevant to their activities.
Key Compliance Takeaway
The joint OFAC-OFSI guidance reflects growing coordination between the United States and the United Kingdom, but it also highlights that important legal and operational differences remain. As sanctions enforcement continues to expand on both sides of the Atlantic, organizations should ensure that their compliance frameworks are designed to address the requirements of both regimes.
