Sanctions and export control | UK Regulatory Outlook January 2026

OTSI publishes first Annual Review 

The Office of Trade Sanctions Implementation (OTSI), part of the Department for Business and Trade (DBT), was launched in October 2024 with the aim of strengthening the implementation and enforcement of trade sanctions in the UK. 

OTSI has published its first annual review, detailing its activities in its first year of operation (10 October 2024 to 9 October 2025) as well as its priorities for the future. 

Licensing 

OTSI received 60 licence applications as of 9 October 2025, mainly concerning the provision of professional and business services prohibited under the Russia sanctions regime. Of the applications processed, 12 were granted in full or partially granted, three were refused, and seven were withdrawn by applicants.  

The average timeframe for receiving an outcome is 82 working days for cases submitted directly to OTSI, which includes time taken by applicants to reply to requests for information. Businesses should therefore ensure submissions are comprehensive to avoid unnecessary delays. 

Enforcement activity 

In its first year, OTSI's Compliance and Enforcement unit received reports or referrals relating to 146 potential breaches of trade sanction, with the majority submitted by the financial services sector in compliance with their mandatory reporting obligations.  

While OTSI yet to impose any civil monetary penalties, it revealed that it currently has a number of investigations under way and has referred a significant number of cases to HMRC and other government partners: a clear indicator that OTSI is committed to using its powers to deter non-compliance and that enforcement action is coming. 

Expanded licensing remit 

In early 2026, OTSI will take on responsibility for all export sanctions licensing, with the exception of activities that involve goods and technology subject to strategic export controls, which will remain with the Export Control Joint Unit (ECJU). This represents a significant expansion of OTSI's remit and exporters will be informed of when this change will happen and the impact it may have on businesses using this service. 

Looking ahead 

OTSI committed to developing its capabilities to use actionable intelligence to support proactive compliance monitoring and to "more proactive enforcement". Businesses should leverage the insights from the guidance published by OTSI, including how to identify common tactics in Russian sanctions evasion and ensure proactive engagement with compliance requirements. 

Read more about OTSI's enforcement powers in this Insight. OTSI expects to publish a detailed annual review setting out its activities to the end of financial year 25-26 later this year.  

UK Sanctions List consolidation 

As previously reported, from 28 January 2026, the UK Sanctions List will be the only sanctions list which details sanctions designations published by the UK government. The list is currently live, and businesses are encouraged to move to the list as soon as possible and ensure that sanctions screening is conducted against the UK Sanctions List in future. 

Businesses should use this period to prepare any systems before the Consolidated List of Asset Freeze Targets and its associated search tool closes on 28 January 2026, after which it will cease to be updated.  

The government has published guidance to help businesses and industry to prepare and a format guide which includes mappings to the fields on the OFSI consolidated list. 

Businesses should take note of the two significant regulatory changes that will shape the sanctions and landscape in 2026. As mentioned above, from 28 January 2026, the UK Sanctions List becomes the single consolidated source for all UK government sanctions designations. Businesses should update their screening systems and compliance processes now to ensure they are drawing from the correct source post-consolidation.  

OTSI's expanded licensing remit will also take effect early this year, transferring across responsibility for export sanctions licensing. It remains to be seen how OTSI will balance this substantial expansion of responsibility while simultaneously delivering on its commitments to enforcement activity.  

OTSI guidance on breach reporting best practices  

OTSI has published a blog post which details best practices for individuals and businesses who wish to report breaches of trade sanctions. 

The blog sets out the information that reports should include, such as the date and details of the parties involved in the suspected breach, the specific good or services provided, alongside supporting documents that help explain the situation. 

While providers of legal and financial services and money service business are required to report suspected breaches of trade sanctions, those in other sectors are also encouraged to voluntary submit reports of suspected breaches. Reports should be made using OTSI’s online form. 

HMRC compound settlement for breaches of export controls 

HM Revenue and Customs (HMRC) has concluded a £620,000 compound settlement from September 2025 with an unnamed UK business. The penalty related to unlicensed exports of military goods controlled by the Export Control Order 2008.  

A reminder that HMRC may consider offering compound settlements on a case-by-case basis where an exporter has committed a breach that was inadvertent or due to inadequate internal controls, and where they have voluntarily reported the breach to HMRC. 

Read more on the case study involving HMRC's previous compound settlement.  

OFSI general licences and FAQs 

OFSI has issued the following new general licence:  

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

OFSI has also amended the following general licences:  

• General Licence INT/2025/7323088, which permits a UK legal firm or counsel who has provided legal advice to a person designated under the UK Autonomous Sanctions Regimes to receive payment without an OFSI specific licence. The general licence has been extended to cover most UK Autonomous Sanctions, and clarify that the definition of "legal services” includes legal advice and representation in dispute resolution. FAQ 175 has been added explaining the amendments.
• General Licence INT/2022/2349952, which permits transactions related to agricultural commodities including the provision of insurance and other services. The definition of fertiliser has been updated. The general licence took effect from 4 November 2022 and is of indefinite duration.  

OFSI has published FAQs 177-183, covering general licence INT/2025/5787748 on arbitration costs. 

UK Strategic Export Control List updates  

The UK has formally acceded to the Agreement on Defence Export Controls, which is designed to support defence businesses exporting to European countries including France, Germany and Spain. The agreement will reduce the administrative burden on granting export licences, providing more certainty for businesses and supply chains involved in multinational defence programmes. 

See the government press release and written ministerial statement from the Ministry of Defence. 

The UK Strategic Export Control Lists has been updated. Exporters should use the list to assess whether their goods, software and technology require a licence to export. 

The ECJU has updated its open general export licences (OGELs):  

• OGEL export of dual-use items to EU member states.
• OGEL technology for dual-use items.
• OGEL export after exhibition: dual-use items.
• OGEL export for repair/replacement under warranty: dual-use items.
• OGEL export after repair/replacement under warranty: dual-use items.
• OGEL A400M collaborative programme has been amended to remove a reference to contacting Airbus export control managers for help with licensing issues.
• OGEL printed circuit boards (PCBs) and components for military goods, has been updated to permit the export of O-Rings for gas systems to any of the countries within its scope. 

Export Control Joint Unit training and webinars 

The ECJU provides training for exporting and trading individuals and companies, with the aim of increasing understanding of the UK’s strategic export controls. See details on events and register for training.  

Free webinars also provide helpful guidance on strategic export control licences and compliance with UK export control laws. The ECJU is currently reviewing its strategic export control learning path and expects to publish further guidance in due course.