On 9 February 2026, the UK Office of Financial Sanctions Implementation (“OFSI”) published updated financial sanctions enforcement and monetary penalties guidance. This guidance introduces several significant changes to OFSI’s civil enforcement framework, including how OFSI assesses and deals with financial sanctions breaches.
These updates to OFSI’s enforcement framework follow OFSI’s consultation on improving civil enforcement processes that took place last year. OFSI recently published a Consultation Response on this, accessible here. These reforms are intended to more broadly reflect the UK authorities continued focus on driving more efficient, transparent, and outcome‑oriented sanctions enforcement. OFSI has significantly ramped up its enforcement activity in recent years (with 240 active cases under investigation as of April 2025), and these changes reflect that ongoing trend.
We set out an overview of the key changes below, which include:
- A revised case assessment framework, including new approaches to penalty calculation, and reduced discounts for voluntary disclosure and co-operation
- A new settlement scheme
- A new Early Account Scheme through which businesses have the opportunity to provide a full account of a sanctions breach, in exchange for a reduction in the final penalty amount and
- Introducing fixed penalties for information and licensing offences
The guidance is available here.
OFSI also intends to double the statutory maximum monetary penalties, from the greater of £1m or 50% of the breach, to a maximum of £2m or 100% of the value of the breach. These changes are expected to be introduced via primary legislation shortly.
These changes do not impact the UK’s trade sanctions enforcement regime, which is separately administered by HM Revenue & Customs and the Office of Trade Sanctions Implementation.
Revised case assessment model
OFSI has updated and clarified its case assessment framework, with key updates including the following points:
- OFSI has reduced the baseline penalty discount for voluntary disclosure, and has introduced a new “co-operation” limb to be eligible for the full discount. Whilst voluntary disclosures could previously benefit from a discount of up to 50% for voluntary disclosure depending on the seriousness of the case, OFSI has now set the maximum discount at 30% of the baseline penalty. OFSI expects voluntary disclosure to be “prompt” and “as soon as practicable”. In many circumstances this could involve “an initial disclosure ahead of a fuller report to follow without unreasonable delay”. In order to benefit from the full 30% discount, firms must cooperate fully with OFSI’s investigation, “including providing voluntary responses in a prompt and complete manner, as well as proactively providing OFSI with additional information and documents to assist OFSI’s investigation”. This could include providing “technical briefings to OFSI, for example on the subject’s relevant business processes or financial sanctions control framework, to assist OFSI’s understanding on how the breach occurred and how the subject has remediated, or plans to remediate, any ongoing deficiencies”. This signals that OFSI now expects a higher degree of proactivity and co-operation in order to qualify for leniency.
- OFSI has introduced an updated four‑level seriousness matrix, mapping severity and conduct to likely enforcement outcomes, although OFSI retains ultimate discretion to take whatever action it considers most appropriate in any case. Level 3 cases (high seriousness) are “likely to result in a civil monetary penalty, with a baseline penalty to be set at up to 75% of the statutory maximum amount”, whilst Level 4 cases (very high seriousness) may be referred for criminal prosecution in the first instance, or will be subject to a baseline penalty of between 75% and 100% of the statutory maximum.
- OFSI has introduced a new severity assessment factor for the “strategic priority of the regime,” meaning breaches concerning sanctions regimes of particular importance for the UK and its foreign policy and national security will be seen as an aggravating factor.
- OFSI has expanded its guidance on its assessment of intent, knowledge, and reasonable cause to suspect. While considering whether a person had knowledge or reasonable cause to suspect is no longer part of the legal test for establishing a breach for civil enforcement, OFSI will continue to consider this in their case assessment. OFSI will also additionally assess whether there is evidence of recklessness, neglect, wilful ignorance and/or bad faith and take into account the seniority and/or role of person(s) whose actions led or contributed to the breach.
- OFSI will also assess “the sanctions risk controls, systems and processes an individual or entity had in place and whether this was proportionate and reasonable to the circumstances and risks the subject was exposed to”.
- OFSI also now provides a formal hardship policy, meaning that OFSI may reduce a monetary penalty where a subject is unable to pay the penalty due to their financial position. Reductions will only be available in exceptional circumstances backed by objective evidence that a penalty would cause severe financial hardship and be contrary to the public interest. Instalment plans may be considered as an alternative.
Put together, these changes represent a toughening of OFSI’s enforcement approach. Businesses can expect greater scrutiny of their control framework, and will need to work harder to obtain the (now reduced) levels of leniency available. At the same time, OFSI has introduced further mechanisms for penalty reduction, as detailed further below.
Early Account Scheme
OFSI has also introduced a new Early Account Scheme (“EAS”), enabling entities (and not individuals) under investigation to provide a comprehensive factual account of the breach to OFSI, including supporting evidence, at an early stage of the investigation, with the aim of expediting the investigation. Key aspects of the EAS include the following points:
- Access to the EAS must be requested. OFSI “may make access to the EAS conditional on the appointment of a third party to conduct the investigation and prepare the early account”, such as in circumstances “where a company is unable to demonstrate to OFSI that they have sufficient internal expertise (e.g. in conducting internal investigations, or with sanctions or financial crime experience) to investigate and create an account with sufficient separation from the persons involved in the breach”. However, OFSI has indicated that it is unlikely to allow access to the EAS where the investigation subject knowingly failed to report suspected breaches. Access to the EAS is also not guaranteed and OFSI indicates that it does not consider that the EAS will be appropriate in all cases.
- Participation in the EAS will involve agreeing an investigation scope and timeframe with OFSI, which will typically be 6 months, as well as holding regular review meetings and notifying OFSI of any additional breaches discovered. OFSI’s guidance sets out supporting documents that must be provided with an early account, such as “a chronology of events, legal entity and personnel structure charts and organograms, contemporary policies and processes, internal communications relating to the suspected breaches, and a detailed account of the methodology used by the subject in producing the account”.
Settlement Scheme
OFSI has introduced a new Settlement Scheme, under which a person subject to an enforcement action agree not to contest OFSI’s findings, in exchange for a reduction in penalty of up to 20%, and an expedited resolution. Under this scheme:
- OFSI will consider settlement once it has completed its investigation. If settlement is offered, OFSI will likely invite an investigation subject to enter settlement discussions prior to issuing a notice of intention to impose a monetary penalty.
- If the subject agrees to proceed with settlement negotiations, any communications will be on a without prejudice basis. OFSI will then decide whether it is appropriate to enter into a settlement on the proposed terms, to change the proposed penalty amount, or whether another enforcement action would be more appropriate.
- If the parties agree to settle, this will be conditional on the investigated party agreeing to waive their rights to a ministerial review and to appeal OFSI’s decision to the Upper Tribunal.
- In return, the subject will have the opportunity to input into OFSI’s public case summary of the case, and can expect a discount of up to 20% discount on the baseline monetary penalty, provided they sign a settlement agreement within 30 business days of discussions commencing (or another agreed period). OFSI has explicitly ruled out agreeing to anonymise the subject’s identity, so any case summary would name the settling party.
The Settlement Scheme will not generally apply to cases where OFSI had already informed the subject of an intention to impose a monetary penalty before 9 February 2026, although OFSI is open to discussion on settling such cases under a transitional process.
Fixed penalties for information and licensing offences
The guidance provides a new, clarified process for OFSI’s treatment of information and licensing-related breaches. Notably:
- OFSI has introduced new £5,000 and £10,000 fixed penalties for certain information, reporting and licensing offences. These penalties are established by guidance, so in principle OFSI can deviate from these figures.
- These fixed penalties are designed for lower‑complexity breaches and are unlikely to apply to first time or “one-off” offences, which OFSI considers can be dealt with via private enforcement action. Penalties are more likely to be imposed for repeated failures to comply with reporting obligations, or for licence breaches and failures to respond to RFIs.
- Conversely, OFSI may also determine that some offences are so serious that it would be appropriate to impose the full monetary penalty process and consider a penalty up to the statutory maximum.
- While the fixed penalty process will mirror that of other OFSI penalties, including in particular with publishing details of all fixed penalty cases, representations and review timelines are shortened (to 15 business days for each phase compared to the typical 30 business days for other OFSI penalties). The Settlement Scheme will also not be available for fixed penalties.
