Sanctions and export control | UK Regulatory Outlook February 2026

OFSI publishes response to consultation on sanctions enforcement 

The Office of Financial Sanctions Implementation (OFSI) has published its response to the 2025 consultation on improving civil enforcement processes for financial sanctions (as reported in this previous Regulatory Outlook). After analysis of the responses received, OFSI has confirmed that it will implement all five reforms proposed in the original consultation, using feedback from consultation respondents to improve these proposals. 

The following changes will apply to breaches of financial sanctions (including Russia-related designated person asset reporting) and the UK maritime services ban and oil price cap: 

• Case assessment matrix and voluntary disclosure discount: OFSI will publish a new case assessment matrix and replace the current voluntary self-disclosure discount with a voluntary disclosure and co-operation discount. The new maximum discount available in all penalty cases will be 30%. Under the revised framework, firms will also be able to access an Early Account Scheme (maximum 20%) and a settlement discount (20%), which may be applied in combination to reduce a penalty by up to 70%.
• Settlement scheme: OFSI will introduce a settlement scheme under which subjects will be eligible to receive a 20% discount on a baseline penalty (which will apply concurrently with all applicable discounts, for example, voluntary disclosure and co-operation or early account scheme) and the opportunity to input into the public penalty notice (which will not be anonymised as OFSI does not consider anonymisation to be an appropriate incentive). To be eligible for the 30 business day negotiated settlement, subjects must waive their rights to a ministerial review and to appeal OFSI's decision. OFSI will consider, on a case-by-case basis, whether cases that involve an element of circumvention are appropriate for settlement (see below).
• Early account scheme: OFSI will introduce an early account scheme (EAS), which will allow subjects of an investigation to provide a comprehensive account of potential breaches with all relevant materials and evidence as early as possible. Where OFSI decides to take enforcement action, subjects will receive an EAS discount of up to 20% on the baseline penalty (to be applied at the same time as any applicable discounts, as with the settlement discount).
• Information, reporting and licensing offences: OFSI will introduce a 15 business day, streamlined enforcement process for information, reporting and licensing offences with penalties set out in public guidance. The penalty amounts for these offences will be fixed at either £5,000 or £10,000. Where necessary, OFSI will be able to impose penalties below or up to the statutory maximum for specified offences.
• Statutory maximum penalty amounts: The maximum penalty that OFSI can impose for a breach of financial sanctions will be doubled from the higher of £1 million, or half of the total value of the breach, to the higher of £2 million or the total value of the breach. OFSI may, at its discretion, impose penalties of a higher value in future where appropriate and proportionate. 

All proposals, except for changes to the statutory maximum penalty amount, will be implemented in the coming weeks through updates to OFSI’s public enforcement guidance (see below). The increase to the statutory maximum penalty amount will not come into effect until legislation is passed, which will be subject to parliamentary time. 

Alongside the above changes, OFSI has also committed to adopting a model involving greater dialogue with the subjects of enforcement action in more serious cases, including meetings to discuss case details or information that may assist an investigation. Although its primary means of gathering information from subjects will remain in writing, it intends to give subjects the opportunity to provide relevant information in the most effective way possible.  

Businesses may expect greater transparency through the case assessment matrix, faster resolution via settlement options, and significant financial incentives for self-disclosure and co-operation, thereby mitigating the risk of increased penalties. 

For further commentary on these developments, see the related blog post by Giles Thomson, director of OFSI. 

OFSI updates financial sanctions enforcement and monetary penalties guidance 

OFSI has updated its guidance on UK financial sanctions enforcement and monetary penalties to reflect the outcome of the government's 2025 consultation on improving civil enforcement processes (see above). 

The updated guidance explains how the upcoming changes to its enforcement processes will operate in practice. Key points include: 

Early account scheme – chapter 4  

OFSI will introduce a new EAS, with a penalty discount of up to 20%. Subjects must provide an early, comprehensive factual account of a breach in eligible cases. The EAS is available only to legal persons (entities) and not to natural persons (individuals). 

Subjects must inform OFSI within 15 business days of being notified that they are under investigation if they wish to provide an early account; extensions are subject to OFSI's discretion. Requests to access the EAS after significant investigative progress has been made by OFSI are unlikely to be granted. 

Factors that OFSI will consider when determining access to the EAS include the potential complexity and scope of the investigation, and the level of confidence in the subject's ability to provide a truthful and comprehensive account. The guidance explains that it takes circumvention very seriously and views facilitation of a breach as a form of circumvention. Professional facilitators whose actions may amount to collusion in a breach may be held liable. 

Penalty calculation and settlement scheme – chapter 6  

The updated guidance now specifies that the baseline penalty for Level 4 cases (the most serious) should be at or above 75% of the statutory maximum, while Level 3 cases should be up to 75% of the statutory maximum.  

Three separate discounts may also be applied to a penalty:  

• a voluntary disclosure and co-operation discount (up to 30%) for prompt, voluntarily self-reported breaches, accompanied by a complete account of the circumstances and co-operation with OFSI's investigation. OFSI will apply a lower discount if the above criteria are only partially met;
• an EAS discount (up to 20%) based on the provision of a clear, comprehensive and accurate account of breaches with all relevant documents, completion within the agreed timeframe, and whether OFSI was required to take significant additional investigative steps; and
• a settlement discount (20%) for subjects who settle before the expiry of the 30-business-day settlement discussion period (plus any extension). 

OFSI will aggregate the applicable discounts before applying them to the baseline penalty. 

Monetary penalties and financial hardship policy – Chapter 7 

In exceptional circumstances, OFSI may reduce a monetary penalty where a subject is unable to pay due to financial hardship.  

Subjects must demonstrate that they merit such a reduction by providing objective evidence that the penalty would cause severe financial hardship and that imposing the full penalty would not be in the public interest. OFSI expects subjects to disclose verifiable evidence of their financial position in a full, frank and timely manner and to co-operate fully in responding to any questions regarding their financial position. 

Fixed monetary penalties (information and licensing) – chapter 13 

New fixed penalties of £5,000 and £10,000 will apply to relevant offences, including: 

• a £5,000 penalty for failure to respond to a request for information without reasonable excuse, non-compliance with a licence condition or permission, repeated poor conduct, or the transfer of funds not following correct payment routes;
• a £10,000 penalty for the above examples of non-compliance where aggravating factors are present, repeated poor conduct where a £5,000 penalty has already been imposed, and recklessly providing materially false or incomplete information in response to a request. 

All fixed penalties will be published on the gov.uk website, with the subject named. Settlement is not available for fixed penalty cases. 

OFSI intends to host an online webinar in March 2026 to explain these changes in further detail. Information regarding registration will be published in due course. 

OFSI collaborates with law enforcement and regulatory partners to target cryptoasset abuse 

OFSI has published a blog post detailing its collaboration with the Crypto Cash Fusion Cell (CCFC) to combat the abuse of cryptoassets and associated money laundering activities. 

The CCFC is a pilot multi-agency initiative comprising the National Crime Agency, the Metropolitan Police Service, His Majesty’s Revenue and Customs, the Financial Conduct Authority and City of London Police. The pilot aims to improve how the UK agencies to identify, understand and respond to the criminal abuse of cryptoassets. 

OFSI shared detailed intelligence in real time with the CCFC and private sector partners, including blockchain analytics provider Elliptic. This collaboration led to enforcement action against potential breaches of financial sanctions involving cryptoassets by UK-based individuals. 

OFSI recognises that financial sanctions enablers are increasingly using cryptoassets to move and hide illicit funds, including those linked to sanctions evasion. However, every transaction leaves a traceable record. It has emphasised that the use of cryptoassets to evade financial sanctions is treated in the same manner as the use of traditional currencies, and has indicated its commitment to investigating and pursuing sanctions offences involving cryptoassets in collaboration with partners across government, law enforcement and industry. 

See also the NCA press release. For further information on OFSI's work addressing the abuse of cryptoassets, refer to our previous Regulatory Outlook discussing the cryptoassets threat assessment report. 

OFSI general licences and FAQs 

OFSI has amended the following: 

• General Licence INT/2025/7895596, which allows for the continuation of business operations with the Lukoil Bulgaria entities. The general licence took effect from 14 November 2025 and now expires on 13 August 2026. FAQ 173 has been amended to reflect the new expiry date.
• General Licence INT/2025/7328184, which allows a revenue authority to make permitted payments to frozen UK bank accounts of UK designated persons. The definition of "revenue authority" was amended to include the Welsh Revenue Authority and Revenue Scotland. The general licence took effect from 26 September 2025 and is of indefinite duration.
• FAQ 133, which was amended to provide further clarity around the reporting requirements for relevant firms when refusing business to a designated person. The FAQ now contains four example scenarios of where OFSI does and does not expect firms to report. In particular, it expects firms to report when they identify a designated person in the course of carrying on business (such as onboarding or client due diligence), when they obtain materially useful information about a designated person, when they know or suspect there have been breaches of sanctions or have information in relation to aliases. Reporting may not be expected when a refusal occurred at an early stage, such as during initial screening, where contact with the designated person was minimal and no materially useful information was obtained. 

The following general licences have been withdrawn: 

• General Licence INT/2025/8202932, which permits wind down transactions involving Russneft, Tatneft, Rusneftegaz and NNK. The general licence came into effect on 18 December 2025 and expired on 31 January 2026. 

Notice to exporters: updated guidance on open licence returns  

The Export Control Joint Unit (ECJU) which is part of the Department for Business and Trade, has updated its guidance to clarify which licences require returns (the information that must be provided by exporters in return submissions), and the process for reporting under revised compliance expectations. 

A notice has also been published to help exporters sign up for e-alert subscriptions and stay updated on future changes to UK strategic export controls.