UK Enforcement
The enforcement of sanctions compliance is the responsibility of a number of different agencies and authorities. Below is an overview of the sanctions enforcement landscape in the UK.
Financial Sanctions Enforcement – OFSI
Overview
OFSI categorises sanctions breach cases as being of lesser severity, moderate severity or serious enough to justify a civil monetary penalty. OFSI can respond to a sanctions breach in 5 ways: (a) issue a warning; (b) refer regulated professionals or bodies to their relevant professional body; (c) publish information pertaining to a breach; (d) impose a monetary penalty; (e) refer the case to law enforcement agencies for criminal investigation and potential prosecution.
Guidance
OFSI – Enforcement of financial sanctions
OFSI enforcement and monetary penalties for breaches of financial sanctions
Compliance and enforcement in UK financial sanctions general guidance
Memorandum of understanding between the UK Financial Conduct Authority (FCA) and OFSI
OFSI Legal Services Threat Assessment Report
OFSI blog post: Enforcement and engagement
OFSI blog post: New enforcement powers – a message from Giles Thomson, Director of OFSI
OFSI blog post: HSF Moscow Penalty: Key Lessons for Industry
OFSI blog post: Svarog Penalty: A Lesson in Information Offences
OFSI Case factors
OFSI takes various factors into account that will aggravate or mitigate the severity of the penalty imposed, including:
(a) whether the breach constitutes circumvention; (b) value of the breach; (c) harm or risk of harm to the objectives of the sanctions regime; (d) intent, knowledge, reasonable cause to suspect; (e) knowledge of sanctions and compliance systems; (f) appropriateness of due diligence when assessing ownership and control; (g) failure to apply for a licence; (h) professional facilitation; (i) repeated breaches; (j) whether the breach was voluntarily disclosed; (k) cooperation with OFSI; (l) failure to provide relevant information; (m) other relevant factors, for example whether the sector affected requires specialist knowledge of sanctions.
OFSI will also consider the public interest in pursuing an enforcement action and in determining the type of enforcement action to pursue.
OFSI civil enforcement
S.146 of the Policing and Crime Act 2017 as amended by the Sanctions and Anti-Money Laundering Act 2018 authorises HM Treasury to impose monetary penalties on individuals and entities for breaches of financial sanctions.
If the “penalty threshold” has been met, OFSI has a discretion to impose a penalty. OFSI will consider the threshold for imposing a penalty as met if one or more of the following can be demonstrated: (a) on the balance of probabilities, there has been a breach; (b) the breach has involved funds or economic resources being made available to a designated person; (c) the breach has involved a person dealing with the funds or economic resources of a designated person or entity in breach of an asset freeze; (d) there is evidence of circumvention; (e) a person has not complied with a requirement to provide information; (f) OFSI considers that a monetary penalty is appropriate and proportionate.
For breaches occurring on or after 15 June 2022, a penalty may be imposed regardless of whether the individual or entity had knowledge or reasonable cause to suspect that their actions would result in a sanctions breach. However, this is still taken into account as a factor for OFSI’s “case assessment”.
The statutory maximum monetary penalty is the greater of £1 million or 50% of the value of the breach. OFSI will make up to a 50% reduction to a person who gives prompt and complete voluntary disclosure. Otherwise, OFSI will impose a monetary penalty that “seems reasonable and proportionate to the facts of the case”.
Before imposing a monetary penalty, OFSI must inform the individual or entity of its intention to impose a monetary penalty on them, outlining the reason for the penalty, the amount, and explaining that they are entitled to make representations.
Challenging a monetary penalty:
Individuals and entities have a right to seek a ministerial review of the decision to impose a penalty and its quantum under s.147 of the Policing & Crime Act 2017. The Minister may delegate the review to senior civil servants (pursuant to amendments made by the Economic Crime (Transparency and Enforcement Act 2022).
A person/entity can then appeal to the Upper Tribunal using this form, see schedule 4 of the Tribunal Procedure (Upper Tribunal) Rules 2008. HM Courts & Tribunals Service provides guidance for applicants:
OFSI Published Sanctions Civil Enforcement Decisions:
- Raphaels Bank – £5,000 (21 January 2019)
- Travelex – £10,000 (8 March 2019)
- Telia Carrier UK – £146,341 (9 September 2019)
- Standard Chartered Bank – £7,693,233.50 and £12,778,576.33. Total: £20.47m (31 March 2020)
- TransferGo Limited – £50,000 (25 June 2021)
- Clear Junction Limited – £36,393.45 (25 June 2021)
- Tracerco Limited – £15,000 (19 May 2022)
- Wise Payments Limited – Disclosure (no fine) – (31 August 2023) (blog post)
- Integral Concierge Services – £15,000 – (27 September 2024) (blog post)
Criminal Enforcement
Where a case is considered too serious to be subject of a civil penalty, OFSI will refer the case to an investigative agency, typically the National Crime Agency (NCA) for investigation and potential prosecution by the Crown Prosecution Service (CPS).
On conviction, the maximum sentence for a sanctions breach or circumvention is 7 years’ imprisonment. For corporate defendants, the option of a deferred prosecution may be available, depending on the circumstances.
The first such referral to the NCA and prosecution by the CPS in the UK is of Dmitrii Ovsyannikov.
Trade sanctions enforcement
HMRC is the principal civil & criminal enforcement agency for trade sanctions, focusing on goods passing through UK borders. OTSI enforces trade sanctions in relation to: (1) the export of standalone services from the UK; and the movement of goods outside of the UK where there is a nexus with the UK. The work of the 2 organisations often overlaps.
Trade sanctions enforcement – HMRC:
HMRC is the UK’s customs authority. It is responsible for the investigation of trade sanctions breaches where goods pass UK borders. It will refer serious breaches of trade sanctions for prosecution.
HMRC is also responsible for enforcement of:
- trade sanctions that fall within its remit as the UK’s customs authority
- trade sanctions measures that relate to strategic goods and technology
- Regulations 46Z9B to 49Z9D (Maritime transportation of certain oil and oil products) of the Russia (Sanctions) (EU Exit) Regulations 2019
- Regulation 54A (Preventing provision of internet services to or for the benefit of designated persons) of the Russia (Sanctions) (EU Exit) Regulations 2019
- Regulation 27P (Preventing provision of internet services to or for the benefit of designated persons) of the Republic of Belarus (Sanctions) (EU Exit) Regulations 2019
- any supplemental provisions relating to the regulations above
OTSI can refer cases that fall under its remit to HMRC under Regulation 5 of the Trade, Aircraft and Shipping Sanctions (Civil Enforcement) Regulations 2024.
HMRC’s Enforcement Powers
Under Regulation 26 of the Trade, Aircraft and Shipping Sanctions (Civil Enforcement) Regulations, HMRC can investigate and apply penalties using its powers under the Customs and Excise Management Act 1979 (CEMA).
This includes a power to mitigate penalties through compound settlements under section 152 CEMA.
Trade sanctions enforcement – OTSI
OTSI has powers to enforce trade sanctions in relation to:
- providing or procuring sanctioned services
- moving, making available, or acquiring sanctioned goods outside the UK with a UK nexus
- transferring, making available or acquiring sanctioned technology outside the UK with a UK nexus
- providing ancillary services to the movement, making available or acquisition of sanctioned goods outside the UK with a UK nexus
- providing ancillary services to the transfer, making available or acquisition of sanctioned technology outside the UK with a UK nexus
OTSI’s powers are set out in the Trade, Aircraft and Shipping Sanctions (Civil Enforcement) Regulations 2024, which are made under the Sanctions and Anti-Money Laundering Act 2018. OTSI only investigates potential breaches that occurred after it was established on 10 October 2024. Breaches pre-dating this are investigated by HMRC (see below).
OTSI has published the following guidance on the exercise of its powers and the rights and obligations of a party when there may be a breach of trade sanctions.
Appealing a civil monetary penalty for a breach of trade sanctions
Information you must provide in response to a trade sanctions information request
Trade, aircraft and shipping sanctions, civil enforcement: guidance
Determining breach and severity:
OTSI may impose a monetary penalty on a person if satisfied, on the balance of probabilities, that the person has breached a prohibition, or failed to comply with an obligation, imposed by or under sanctions regulations.
OTSI’s guidance states that once satisfied there has been a breach, OTSI will determine its severity. To do so it will consider the following (non-exhaustive):
- Harm to the purposes of the sanctions regime
- Financial value
- Culpability
- Failures to prevent breaches
For most trade sanctions, OTSI does not need to prove that the person/entity acted knowingly or with intent. If raised as a defence, OTSI can disregard this when deciding to impose a penalty. However, some offences (e.g. circumventing prohibitions) still require OTSI to prove intent or knowledge.
Enforcement outcomes:
There are several possible outcomes once OTSI has determined the severity of the breach:
- Warning letter
- Referral to regulator
- Referral to other organisations
- Public disclosure
- Monetary penalty
- Referral to HMRC – where OTSI determines the breach merits criminal enforcement
OTSI civil monetary penalties:
OTSI can impose a monetary penalty up to the value of 50% of the estimated value of the breach or £1m, whichever is greater.
Mitigating factors (e.g. timely voluntary disclosure and compliance) may reduce the monetary penalty or mean one is not imposed.
Aggravating factors (e.g. failure to respond to warning letters) may increase the monetary penalty.
OTSI cannot impose a monetary penalty if:
- Criminal proceedings are ongoing/have taken place for the same breach; or
- The business/person has already been convicted for the breach
Prior to imposing a civil monetary penalty, OTSI must tell the person/business:
- That they intend to
- Why
- The amount
- That the person/business is entitled to make representations
- The date by which representations must be made
Once payable, OTSI will provide details of how to pay the monetary penalty.
Challenging a monetary penalty:
Individuals and entities have a right to seek a ministerial review of the decision to impose a penalty and its quantum under s.147 of the Policing & Crime Act 2017. The Minister may delegate the review to senior civil servants (pursuant to amendments made by the Economic Crime (Transparency and Enforcement Act 2022).
A person/entity can then appeal to the Upper Tribunal using this form, see schedule 4 of the Tribunal Procedure (Upper Tribunal) Rules 2008. HM Courts & Tribunals Service provides guidance for applicants:
Other Enforcement:
Financial Conduct Authority:
The FCA can impose financial penalties under s. 206 of the Financial Services and Markets Act 2000. Where a firm breaches one of the FCA’s 12 Principles or its rules under the FSMA Act, a financial penalty may be imposed.
Principle 3 requires a firm to take reasonable steps to ensure that it has organised its affairs responsibly and effectively, with adequate risk management systems. Where a firm fails to mitigate sanctions risks (for instance through improper screening), this has been found to be a breach of Principle 3.
Enforcement Decisions:
FCA
The FCA has published the following sanctions enforcement decisions:
- Starling Bank – £28,959,426 (3 October 2024)
HMRC
ECJU has published the following HMRC compound settlements for breaches of export controls:
- 7 settlements relating to unlicensed exports of Military listed goods, dual use goods and related activity controlled by The Export Control Order 2008 (1 May 2024) – £2.3 million
- 3 settlements relating to unlicensed exports of Military listed goods, Dual-Use goods and related activity controlled by The Export Control Order 2008 and Retained Regulation 428/2009 (published 4 November 2024) – £1.9 million
-
Compound settlement relating to unlicensed exports of dual-use goods and failure to declare a licence to customs, as required in the export licence conditions; contrary to Retained Regulation 428/2009 and Art 38(1)(a) of the Export Control Order 2008 (published 4 March 2025) – £374,326.07
- 3 settlements relating to unlicensed exports of military-listed goods and related activity prohibited by The Export Control Order 2008 and contrary to The Customs and Excise Management Act 1979 (published 9 April 2025) – £10,900.00 (January 2025); £431,232.20 (February 2025); £3,231,762.40 (February 2025)
ECJU has published the following HMRC fines for breaches of export controls:
- EDM Limited settlement relating to unlicensed exports of military goods requiring a licence under The Export Control Order 2008 (18 November 2024) – £89,359.80
ECJU has published the following HMRC compound settlements for breaches of Russia sanctions:
- settlement relating to the export of goods in breach of The Russia (Sanctions) (EU Exit) Regulations 2019 (published 4 November 2024) – £58,426.45
For UK judgments on sanctions, click here.