OFSI’s Enforcement Overhaul – What the July 2025 Consultation Means for UK Sanctions Compliance

By: Michael Ruck, Rosie Naylor, Petr Bartoš, and Laura Scott

On 22 July 2025, the UK Office of Financial Sanctions Implementation (OFSI) launched a significant consultation on proposed reforms to its civil enforcement framework (the Consultation). These reforms – currently open for consultation until 13 October 2025 – could reshape how sanctions breaches are investigated, penalised and resolved. This marks a decisive shift away from OFSI’s traditionally cautious approach, and signals that the UK is moving toward a more assertive, US-style sanctions enforcement model.

The following is a summary of the Consultation, which is discussed in greater detail in our client alert found here.

Why Now?

The shift comes amidst broader efforts by OFSI to crack down more vigorously on sanctions breaches. Combined with several sector-specific threat assessments, particularly in the wake of the Russia-Ukraine conflict, these reforms point towards a more interventionist strategy.

Key Reform Proposals

Capped Discounts for Voluntary Self-Disclosure

Currently, firms disclosing sanctions breaches can receive up to 50% discount on penalties on “serious cases”. OFSI proposes capping this discount at 30%, regardless of case severity.

Formal Settlement Scheme

A proposed settlement process would allow firms to resolve investigations earlier, potentially saving time and legal costs. This settlement scheme would be offered at OFSI’s discretion in what it considers appropriate cases and would not replace OFSI’s usual decision-making process.

Early Account Scheme (EAS)

Linked to the settlement scheme, EAS would let investigated entities submit a full factual account early in the process – along with supporting evidence. Should the EAS be used, and should OFSI consider it appropriate, OFSI proposes the maximum settlement discount would be increased from 20% to 40%.

Fixed and Indicative Penalties for Administrative Offences

OFSI is considering two alterations to penalty processes for information, reporting, and licensing offences which are (a) the possible pursuit of indicative penalties for certain offences, and (b) the introduction of statutory fixed penalties. Under the indicative penalty proposal, OFSI may set baseline penalties or use a fixed-rate model per offence, allowing faster resolutions. Alternatively, OFSI has also proposed a simplified process streamlining civil penalties using a fixed penalty in which lower-severity breaches would receive standardised fines.

Increased Statutory Maximum Penalties

The current maximum penalty is either £1 million or 50% of the breaches value. OFSI now proposes doubling the financial cap to £2 million and allowing penalties up to 100% of the transaction value. OFSI would retain a process to assess what level of monetary penalty within that maximum is reasonable and proportionate, which could be any amount between zero and the maximum.

Conclusion

This Consultation reflects a turning point in OFSI’s enforcement philosophy where voluntary cooperation is no longer seen as a generous act but it’s the baseline expectation to cooperation. Compliance with reporting obligations, engaging in RFIs, and voluntary disclosure remain a key focus area for OFSI in its enforcement efforts. However, the ultimate test will be whether we see increased enforcement action by OFSI, particularly given the somewhat limited number of cases we have seen over the past few years.