Overview
On January 29, 2026, the Office of Financial Sanctions Implementation (“OFSI”) published a response to the 2025 public consultation on proposed reforms to its enforcement processes. On the same date, the Director of OFSI, Giles Thomson, published a blog post outlining OFSI’s new and updated enforcement framework. Taken together, these documents outline the most significant revision to the framework for OFSI’s financial sanctions enforcement processes since its creation, which aims to strengthen deterrence, improve transparency and accelerate case resolution. The majority of the changes to OFSI’s enforcement processes will be implemented in February 2026 through updates to OFSI’s public enforcement guidance. Businesses required to comply with UK financial sanctions should familiarise themselves with the upcoming changes to OFSI’s enforcement powers and processes and consider whether they necessitate updates or enhancements to existing policies, procedures and controls addressing the investigation and reporting of potential violations of UK financial sanctions.
Context for the Changes to OFSI’s Enforcement Processes
OFSI obtained the ability to impose civil monetary penalties for violations of UK financial sanctions in 2017 under Part 8 of the Policing and Crime Act 2017. Since the introduction of those powers, OFSI has seen a significant increase in the volume and complexity of the investigations and enforcement it undertakes in response to violations of UK financial sanctions. In significant part, this trend has been fuelled by a substantial uptick in financial sanctions following Russia’s invasion of Ukraine in February 2022. By way of illustration, OFSI reports having 240 active cases under investigation in April 2025, which represents an increase of approximately 40 percent compared to the number of such cases two years earlier.
In 2025, a cross-government review of sanctions implementation and enforcement identified a number of measures to further strengthen UK sanctions and increase the deterrent effect of enforcement. As financial sanctions enforcement investigations can be resource intensive, following the review OFSI identified and consulted on several process improvements to make the resolution of enforcement actions quicker, simpler, and more transparent. In its response to the consultation, OFSI confirmed that it will pursue all the proposals for reform outlined in the consultation, making adjustments to incorporate feedback from consultation respondents when appropriate.
Overview of the Revised Financial Sanctions Enforcement Framework
OFSI will implement five key reforms to its civil enforcement framework, as follows:
1. Increase to Statutory Maximum Penalty Amounts
For the first time since it was granted civil monetary penalty powers in 2017, OFSI will seek to double the maximum civil monetary penalty for a breach of financial sanctions from the higher of £1,000,000 or 50 percent of the value of the breach to £2,000,000 or 100 percent of the value of the breach. Implementing this change will require legislative change that will be brought forward when parliamentary time allows. This change underscores the UK government’s commitment to robust financial sanctions enforcement and is intended to strengthen the deterrent effect of the civil monetary penalty regime for financial sanctions breaches, as well as ensure that OFSI can respond more effectively and proportionately to the most serious enforcement cases it is tasked to deal with.
2. Streamlining the Enforcement Process for Information, Reporting and Licensing Offences
OFSI will introduce fixed monetary penalties of £5,000 or £10,000 for information, reporting, and licensing offences under the UK’s financial sanctions regime. The framework for these penalties will be set out in an update to OFSI’s public enforcement guidance expected to be implemented in February 2026 and will be imposed under OFSI’s existing civil monetary penalty powers. These fixed penalties will have a shorter representations stage of 15 business days to reflect the nature of these offences typically exhibiting greater simplicity than other monetary penalties cases. As with all OFSI penalties, the imposition of fixed monetary penalties will be made public to promote transparency, accountability and deterrence.
The introduction of these fixed penalties is intended to support a more proportionate, consistent, and streamlined enforcement process for these types of violations that drives compliance with the information, reporting, and licensing requirements under UK financial sanctions. OFSI will retain discretion to impose penalties below or up to the statutory maximum for specified offences in appropriate cases. Additionally, to address concerns that these penalties could result in over-penalisation of technical breaches, OFSI has indicated that information, reporting, and licensing offences will not necessarily result in monetary penalties and may be disposed of using one of the other enforcement outcomes available to OFSI (e.g., no further action, warning letters, or enforcement disclosure).
3. Revisions to Enforcement Case Assessments and Discounts
OFSI will publish a new case assessment matrix in an update to its public enforcement guidance later this month. The matrix is intended to improve the transparency and predictability of OFSI’s penalty process by providing more guidance to businesses regarding how OFSI assesses enforcement cases.
OFSI will also revise the discounts offered for self-disclosure of financial sanctions breaches as part of its update to OFSI’s public enforcement guidance later this month. Specifically, OFSI will replace the existing two-tier voluntary self-disclosure discount with a new voluntary disclosure and co-operation discount across all civil monetary penalty cases with a maximum eligible discount rate of 30 percent of the baseline penalty. OFSI will also retain its discretion to determine the level of discount available to a subject based on the extent of its initial disclosure to, and subsequent co-operation with, OFSI. The total discount available under OFSI’s revised enforcement processes may exceed 30 percent when a subject is also able to avail itself of the other potential discounts discussed in points 4 and 5, below.
4. Introduction of an Early Account Scheme (“EAS”)
OFSI will introduce an EAS that will allow subjects of investigation, in appropriate cases, to provide OFSI with a comprehensive account of a breach together with all relevant materials and evidence as early as possible in return for a discounted penalty. The EAS is intended to significantly expedite the investigation of potential financial sanctions breaches in a subset of cases, however, OFSI has acknowledged that the EAS likely would not be used in the majority of cases.
When OFSI decides to take enforcement action following use of the EAS, subjects will receive a discount of up to 20 percent of the baseline penalty. To increase the incentive for subjects to co-operate fully with OFSI at each stage of the enforcement process, this discount would be independent of any other penalty discounts to which the subject may be entitled (e.g., a voluntary disclosure and co-operation discount and/or settlement discount).
5. Introduction of a Settlement Scheme
OFSI will introduce a time-limited negotiated settlement scheme for the resolution of civil monetary penalty cases involving violations of financial sanctions. The scheme is intended to facilitate the accelerated resolution of appropriate cases and public circulation of compliance lessons arising from individual cases, as well as decrease the resource burden for both OFSI and industry associated with the investigation and enforcement of potential breaches of financial sanctions. The eligibility for the scheme of enforcement cases involving an element of sanctions circumvention will be assessed by OFSI on a case-by-case basis.
Subjects that are eligible and elect to participate in the settlement scheme would engage in a 30-business day settlement period, with settlement negotiations being conducted in parallel with OFSI’s issuance of its formal enforcement Notice of Intention. OFSI will retain discretion to grant short extensions to the negotiation period on a case-by-case basis.
To address concerns raised by industry during the consultation process about potential additional legal liability associated with the admission of any sanctions breaches as part of the settlement, subjects participating in the settlement scheme will only be required to agree not to contest OFSI’s findings by waiving their right to a ministerial review of the civil monetary penalty imposed by OFSI, as well as their right to appeal OFSI’s decision judicially.
Subjects participating in the settlement scheme will be eligible to receive a penalty discount of 20 percent of the baseline penalty, as well as the opportunity to input into the content of the penalty notice published by OFSI as part of its disposal of the enforcement action. This discount would be independent of any other penalty discounts to which the subject may be entitled (e.g., a voluntary disclosure and co-operation discount and/or EAS discount).
Other Trends to Watch Out for
A core theme of OFSI’s revised enforcement framework is prioritisation. The Director of OFSI has indicated that OFSI intends to reduce the number of cases being pursued simultaneously in order to concentrate its resources on matters that deliver the greatest deterrent or compliance impact. Importantly, this does not necessarily mean prioritising cases with the highest monetary value. Instead, OFSI will focus on matters involving the most serious conduct, those that support wider policy objectives, or those that expose systemic weaknesses within particular sectors. This approach reflects a shift toward outcome driven enforcement, where the broader compliance lessons arising from a case may be as significant as the financial penalty itself.
Beyond procedural reforms, OFSI has also signalled a shift toward greater dialogue with subjects of investigations, particularly in more complex cases. While written information requests will remain the primary means of gathering evidence, OFSI may offer meetings or technical discussions when these could assist in clarifying issues and improving the efficiency of investigations. This reflects an effort to balance regulatory authority with constructive engagement, recognising that many firms are seeking to comply in good faith amid an increasingly complex sanctions landscape.
OFSI has indicated that it will continue reviewing its enforcement guidance and policies to ensure they remain aligned with strategic objectives. Engagement with industry stakeholders will also remain a priority, with further webinars planned once OFSI’s updated enforcement guidance is published.
Key Takeaways for Business
The overarching message from OFSI in relation to the upcoming revisions to its enforcement processes is that its enforcement of UK financial sanctions is evolving. Affected businesses should promptly familiarise themselves with the changes that will shortly come into effect and assess whether their existing compliance framework remains fit for purpose in this evolving enforcement environment by adequately supporting early detection, robust internal investigation, and proactive engagement with sanctions authorities (as appropriate) when potential violations are identified.
Affected businesses may also wish to consider whether any enhancements or updates are needed to their sanctions risk management strategies and procedures in light of OFSI’s upcoming changes to financial sanctions enforcement processes. For example, OFSI’s emphasis on prioritising cases for enforcement based on their potential deterrent or compliance impact suggests that violations of sanctions arising from systemic controls weaknesses may attract particular scrutiny going forward, reinforcing the importance of robust screening systems, due diligence, escalation procedures, and governance structures. The introduction of streamlined penalties for breaches of information, reporting, and licensing requirements also signals that OFSI expects consistent adherence to these requirements (when applicable) and businesses should ensure that their existing compliance controls adequately address these areas. For more information on these developments and their impact, please contact the authors of this post, Alexandra Melia or Elliot Letts, in Steptoe’s Economic Sanctions team in London.
