UK financial sanctions general guidance

Question 1

1.  Overview of financial sanctions

Accepted Answer

1.1 Why do we have financial sanctions?

Financial sanctions are restrictions put in place by the UN or UK to achieve a specific foreign policy or national security objective. They can:

limit the provision of certain financial services
restrict access to financial markets, funds and economic resources

Financial sanctions are generally imposed to:

coerce a regime, or individuals within a regime, into changing their behaviour (or aspects of it) by increasing the cost on them to such an extent that they decide to cease the offending behaviour
constrain a target by denying them access to key resources needed to continue their offending behaviour, including the financing of terrorism or nuclear proliferation
signal disapproval, stigmatising and potentially isolating a regime or individual, or as a way of sending broader political messages nationally or internationally
protect the value of assets that have been misappropriated from a country until these assets can be repatriated

1.2 Who is involved in creating and implementing sanctions?

The United Nations (UN) imposes financial sanctions and requires member states to implement them through Resolutions passed by the UN Security Council.

You can read more about the UN’s work on financial sanctions on their website.

The United Kingdom (UK) imposes financial sanctions. These are implemented through a combination of statutory instruments and primary legislation:

Sanctions and Anti-Money Laundering Act 2018 (Sanctions Act)
Counter Terrorism Act 2008 (CTA 2008)
Anti-Terrorism, Crime and Security Act 2001 (ATCSA 2001)

UK government departments and agencies involved in sanctions

Department	Role
Foreign, Commonwealth and Development Office (FCDO)	Responsible for the UK’s international sanctions policy, including all international sanctions regimes and designations. Negotiates all international sanctions
HM Treasury (Office of Financial Sanctions Implementation - OFSI)	OFSI is the authority responsible for implementing the UK’s financial sanctions on behalf of HM Treasury. Undertakes investigations and enforcement of civil breaches of financial sanctions
Department for Business and Trade (including the Export Control Joint Unit (ECJU), and the Office of Trade Sanctions Implementation (OTSI))	The authority with overall responsibility for the implementation of trade sanctions. The Office of Trade Sanctions Implementation (OTSI) is responsible for civil enforcement of breaches of trade sanctions in respect of services and the movement of goods between third countries. Through OTSI, the Export Control Joint Unit, and Import Licensing Branch, DBT is responsible for trade sanctions licensing
Department for Transport (DfT)	Implements transport sanctions, including controlling movement of ships and aircraft in UK waters and airspace
Home Office	Implements travel bans
HM Revenue & Customs (HMRC)	The authority responsible for the enforcement of customs-related trade sanctions measures
National Crime Agency (NCA)	Undertakes investigations and enforcement of criminal breaches of financial sanctions

1.3 Types of financial sanctions

Financial sanctions come in many forms as they are developed in response to a given situation. The most common types of financial sanctions used in recent years are:

Targeted asset freezes: these apply to named individuals and entities restricting access to funds and economic resources. Someone subject to an asset freeze in the UK will be listed on OFSI’s Consolidated list
Restrictions on a wide variety of financial markets and services: these can apply to named individuals and entities, specified groups, or entire sectors. To date these have taken the form of: investment bans; restrictions on access to capital markets; and directions to cease banking relationships and activities.
Directions to cease all business: these will specify the type of business and can apply to a specific person, group, sector or country

1.4 Who needs to comply with financial sanctions?

UK financial sanctions apply to all persons within the territory and territorial sea of the UK and to all UK persons, wherever they are in the world. This means that:

All individuals and legal entities who are within or undertake activities within the UK’s territory must comply with UK financial sanctions that are in force
All UK nationals and legal entities established under UK law, including their branches, must also comply with UK financial sanctions that are in force, irrespective of where their activities take place

‘Without delay’ implementation of UN listings

Under an autonomous UK sanctions regime, where listings are made under a new UN Security Council resolution or sanctions committee, they will have effect in UK law via regulations made under the Sanctions Act 2018. The FCDO will publicise UN listings. OFSI will add all those subject to an asset freeze to the Consolidated list.

Question 2

2.  Who is subject to financial sanctions

Accepted Answer

OFSI maintains two lists of those subject to financial sanctions. The lists are published to help organisations and individuals comply with financial sanctions.

The consolidated list of asset freeze targets

The consolidated list details all asset freeze targets listed under UK autonomous financial sanctions legislation and UN sanctions (“the Consolidated List”). The individuals, entities and ships listed are known as “designated persons”.

OFSI aims to update the Consolidated List within one working day for all new UN and UK listings coming into force in the UK, and within three working days for all other amendments.

List of persons named in relation to financial and investment restrictions

OFSI maintains a separate list of persons subject to specific financial and investment restrictions. These persons may also be contained on the Consolidated list.

For more information on the restrictions that apply to these persons please see the Russia regime page on GOV.UK.

2.2 Using the OFSI Lists

Both OFSI lists contain a range of information to aid the identification of persons subject to financial sanctions. For an individual this can include their:

aliases
date of birth
place of birth
nationality
passport details
national ID details addresses
addresses
position (such as employment or an official role)

You may find that the name of an individual, entity or ship you are dealing with matches one or more entries on the OFSI Lists. This is known as a name match. However, it does not necessarily mean that the individual, entity or ship you are dealing with is the same one as is on the list.

If the individual, entity or ship you are dealing with matches all the information on the OFSI Lists, this is likely to be a target match.

If you are satisfied that the person, entity or ship is not the same as the one on the list, you do not need to take further action.

If having consulted the OFSI Lists you are still unsure on whether you have a target match, you can contact OFSI for assistance.

Examples of name and target matches

Situation	Assessment
You have a name match for a person who is listed as a Syrian General, commanding troops in Syria at the start of the civil war. However, the person you are dealing with is aged 15 and was born in the UK.	Name match
You have a name match for an official from the government of Democratic People’s Republic of Korea. However, the man you are dealing with is a retired teacher with a different date of birth. You’ve also carried out business with him over the last ten years.	Name match
You have a close name match for a person subject to an asset freeze and they have a similar date of birth but a different address.	Potential target match. You may have identified a new alias being used to circumvent financial sanctions. You should contact OFSI immediately.

What you are required to do next if you have a target match will depend on the specific sanctions that apply. For asset freezes, this is outlined in Section 3 of this guide.

OFSI maintains a format guide for both the Consolidated list and the list of persons named in relation to financial and investment restrictions to help users. The format guide can be found on GOV.UK.

If you appear on the OFSI lists and wish to request a reassessment of your listing, please see Chapter 8 of this guidance for information on next steps. If you have been delisted but your name still appears on the OFSI lists, you should email OFSI with evidence of your delisting.

2.2.1 Getting updates

OFSI publishes notices describing changes to financial sanctions on GOV.UK.

OFSI notifies its subscribers by email whenever a new notice is published. Use this link to subscribe to our e-alerts.

2.2.2 Proscription under the Terrorism Act 2000

An organisation may be proscribed (‘banned’) under the Terrorism Act 2000 if the Home Secretary believes it is involved in terrorism and it is proportionate to do so. The list of proscribed organisations is not included in OFSI’s consolidated list because proscription involves different restrictions, and not all proscribed organisations are subject to financial sanctions.

The list of proscribed organisations is maintained by the Home Office and can be found on GOV.UK.

2.3 The UK Sanctions List

The FCDO publishes the UK Sanctions List, which provides details of those designated or specified under regulations made under the Sanctions Act. The list also details which sanctions measures apply (for instance financial, immigration, trade or transport sanctions) to these persons, entities or ships. OFSI works closely with the FCDO to ensure the respective lists are aligned.

The UK Sanctions List, maintained by the FCDO, can be found on GOV.UK.

Question 3

3.  What financial sanctions restrict

Accepted Answer

You are prohibited from carrying out certain activities or behaving in a certain way if financial sanctions apply. You should always refer to the up-to-date version of the legislation imposing the specific financial sanctions which apply in your case to understand exactly what is prohibited.

OFSI interprets prohibitions widely. This means that while we will not seek to draw in activities that clearly fall outside of a prohibition, OFSI will consider a wide range of actions when assessing if a breach of financial sanctions has taken place.

This section provides an overview of asset freezing, which is the most common form of financial sanction.

3.1 Asset freezes

3.1.1 What they do

Where the financial sanction is an asset freeze, it is generally prohibited to:

deal with the frozen funds or economic resources, belonging to or owned, held or controlled by a designated person or to a person who is owned or controlled directly or indirectly by the designated person
make funds or economic resources available, directly or indirectly, to, or for the benefit of, a designated person or to a person who is owned or controlled directly or indirectly by the designated person
engage in actions that, directly or indirectly, circumvent the financial sanctions prohibitions

The funds and economic resources are to be frozen immediately by the person in possession or control of them. An asset freeze does not involve a change in ownership of the frozen funds or economic resources, nor are they confiscated or transferred to OFSI for safekeeping.

3.1.2 What you must do

If you know or have ‘reasonable cause to suspect’ that you are in possession or control of, or are otherwise dealing with, the funds or economic resources of a designated person you must:

freeze them
not deal with them or make them available to, or for the benefit of, the designated person, unless there is an exception in the legislation that you can rely on or you have a licence from OFSI
report them to OFSI (see Chapter 5 of this guidance)

Reasonable cause to suspect refers to an objective test that asks whether there were factual circumstances from which an honest and reasonable person should have inferred knowledge or formed the suspicion.

A breach of these requirements may result in a criminal prosecution or a monetary penalty.

3.1.3 Asset freezing terminology

Funds

Funds generally means financial assets and benefits of every kind, including but not limited to:

cash, cheques, claims on money, drafts, money orders and other payment instruments
deposits with financial institutions or other entities, balances on accounts, debts and debt obligations
publicly- and privately-traded securities and debt instruments, including stocks and shares, certificates representing securities, bonds, notes, warrants, debentures and derivatives contracts
interest, dividends or other income on or value accruing from or generated by assets
credit, right of set-off, guarantees, performance bonds or other financial commitments
letters of credit, bills of lading, bills of sale
documents showing evidence of an interest in funds or financial resources
any other instrument of export financing

Economic Resources

Economic resources generally means assets of every kind – tangible or intangible, movable or immovable – which are not funds, but may be used to obtain funds, goods or services. This includes but is not limited to:

precious metals or stones
antiques
vehicles
property

Goods

Goods generally means items, materials and equipment.

Cryptoassets

Cryptoassets – Statutory definitions of “funds” and “economic resources” are wide, as referenced above. Cryptoassets are considered to be covered by these definitions and are therefore caught by the financial sanctions restrictions.

Dealing with funds

Dealing with funds generally means moving, transferring, altering, using, accessing, or otherwise dealing with them in any way which would result in any change to their volume, amount, location, ownership, possession, character, destination or other change that would enable the funds to be used, including portfolio management.

Dealing with economic resources

Dealing with economic resources generally means using the economic resources to obtain funds, goods, or services in any way, including, but not limited to, by selling, hiring or mortgaging them. The everyday use by a designated person of their own economic resources for personal consumption is not prohibited.

Making available funds or economic resources

Making available funds or economic resources, directly or indirectly, to a designated person - If funds are made available (directly or indirectly) to a designated person, or economic resources are made available (directly or indirectly) that would likely be exchanged, or used in exchange, for funds, goods, or services, this may constitute a criminal offence. Making available funds or economic resources, directly or indirectly, to a designated person includes making available funds or economic resources to a person who is owned or controlled directly or indirectly by a designated person.

Making available funds or economic resources for the benefit of a designated person - If funds or economic resources are made available for the benefit of a designated person and they obtain, or are able to obtain, a ‘significant financial benefit’, this may constitute a criminal offence. In this case, ‘financial benefit’ includes the discharge, in whole or in part, of a financial obligation for which the designated person is wholly or partly responsible. Making available funds or economic resources for the benefit of a designated person includes making available funds or economic resources for the benefit of a person who is owned or controlled directly or indirectly by a designated person.

3.2 Other financial restrictions

Financial sanctions regimes may include other restrictions in addition to asset freezes. Where these exist, they will be listed on the individual regime pages on GOV.UK

Financial assistance, financial services and processing payments

For sanctions made under the Sanctions Act, the definition of financial assistance differs from the definition in regimes operating under EU law. Under the Sanctions Act, financial services covers the previously used ‘financial assistance’, and this does include processing payments.

Financial services means any service of a financial nature, including (but not limited to) payment and money transmission services, charge and debit cards, travellers’ cheques and bankers’ drafts.

Section 61 of the Sanctions Act gives further examples of the meaning of ‘financial services” and “financial products”.

Question 4

4.  Ownership and control

Accepted Answer

If a person, entity, or ship is designated, their name will be recorded on the Consolidated List. An asset freeze and some financial services restrictions will apply to entities (meaning a body of persons corporate or unincorporated, or any organisation or association, or combination of persons) that are owned or controlled, directly or indirectly, by a designated person. Those entities may not be designated in their own right, so their names may not appear on the Consolidated List. However, those entities are similarly subject to financial sanctions.

4.1 Ownership and Control

An entity is owned or controlled directly or indirectly by another person in any of the following circumstances:

the person holds (directly or indirectly) more than 50% of the shares or voting rights in an entity
the person has the right (directly or indirectly) to appoint or remove a majority of the board of directors of the entity
it is reasonable to expect that the person would be able to ensure the affairs of the entity are conducted in accordance with the person’s wishes

This could, for example, include:

appointing, solely by exercising one’s voting rights, a majority of the members of the administrative, management or supervisory bodies of an entity, who have held office during the present and previous financial year
controlling alone, pursuant to an agreement with other shareholders in, or members of an entity, a majority of shareholders’ or members’ voting rights in that entity
having the right to exercise a dominant influence over an entity, pursuant to an agreement entered into with that entity, or to a provision in its Memorandum or Articles of Association, where the law governing that entity permits its being subject to such agreement or provision
having the right to exercise a dominant influence referred to in the point above, without being the holder of that right (including by means of a front company)
having the ability to direct another entity in accordance with one’s wishes. This can be through any means, directly or indirectly. For example, it is possible that a designated person may have control or use of another person’s bank accounts or economic resources and may be using them to circumvent financial sanctions

If any of the above criteria are met, and the person who owns or controls the entity is also a designated person, then financial sanctions will also apply to that entity in its entirety (meaning these assets should also be frozen). The prohibitions on making funds or economic resources available directly or indirectly to a designated person, also prohibit making them available to an entity who is owned or controlled, directly or indirectly, by the designated person. The UK government will look to designate owned or controlled entities or individuals in their own right where possible.

Example: Ownership and control relating to entities

For example, Entity X is not listed on OFSI’s Consolidated List. However, your research shows that the majority owner of Entity X is designated Entity Y.

As the ownership and control criterion has been met, Entity X is also subject to the same restrictions as designated Entity Y.

Example: Ownership and control relating to individuals

For example, Person A (an individual) is not listed on OFSI’s Consolidated List. However, your research shows that Person A is a family member or friend of designated Person B and there is evidence that Person B is using Person A to enter into transactions.

As Person B is exercising control through Person A, Person A is also subject to the same restrictions as designated Person B.

4.1.2 Minority interests

If a designated person has a minority interest in another entity, this does not necessarily mean that financial sanctions also apply to them as the ownership and control criteria may not have been met. It will be necessary to consider whether a designated person is in control - for example, because the affairs of the entity are conducted in accordance with the designated person’s wishes. If they are, then the ownership and control criteria will be met.

You should remain vigilant to any changes in the stake held by the designated person in case it increases to greater than 50% (or they obtain a majority interest), at which point financial sanctions will also apply to that entity.

4.1.3 Joint Interests

For the purposes of the asset freeze a designated person will be taken to own funds or economic resources even if they are owned jointly with another person, or where the designated person only owns part of them. Additionally, a designated person is taken to own funds or economic resources where the designated person’s ownership consists of any interest (whether legal or equitable).

If two or more persons hold shares or rights jointly, each of them will be treated as owning those shares or rights. This also applies to joint arrangements where all holders of shares or rights exercise their rights jointly. In this case, all parties subject to the joint arrangement are considered as owning those shares or rights.

You should consider the above when evaluating the shares or voting rights an individual may have in an entity.

Where the wording above applies, the jointly owned funds or economic resources should be frozen in their entirety.

4.1.4 Aggregation

When making an assessment on ownership and control, OFSI would not simply aggregate different designated persons’ holdings in a company, unless, for example, the shares or rights are subject to a joint arrangement between the designated parties or one party controls the rights of another. Consequently, if each of the designated person’s holdings falls below the 50% threshold in respect of share ownership and there is no evidence of a joint arrangement or that the shares are held jointly, the company would not be directly or indirectly owned by a designated person.

It should be noted that ownership and control also relates to holding more than 50% of voting rights, the right to appoint or remove a majority of the board of directors and it being reasonable to expect that a designated person would be able in significant respects to ensure that the affairs of a company are conducted in accordance with their wishes. If any of these apply, the company could be controlled by a designated person.

Question 5

5.  Reporting to OFSI

Accepted Answer

5.1 UK financial sanctions regimes made under the Sanctions Act

Under UK financial sanctions regimes, there are reporting obligations that apply to relevant firms and institutions in specific sectors.

5.1.1 Reporting Obligations for relevant firms

Reporting obligations apply to relevant firms (as defined in the UK regulations under the Sanctions Act (“UK regulations”) and referred to below), who are required to inform OFSI as soon as practicable if they know or reasonably suspect a person is a designated person or has breached a prohibition or failed to comply with an obligation under specified provisions of the UK regulations, where that information is received in the course of carrying on their business.

This requirement applies to relevant firms in the UK or under UK jurisdiction including individuals working for them.

When reporting to OFSI you must include:

the information or other matter on which the knowledge or suspicion is based
any information you hold about the person or designated person by which they can be identified

If you know or have reasonable cause to suspect that a person is a designated person and that person is a customer of your relevant firm, you must also state the nature and amount or quantity of any funds or economic resources held by you for that customer.

Examples of the kind of information that is required can be found in the table below.

If you are unsure of your reporting obligations, you should seek independent legal advice.

5.1.2 Relevant firm

Relevant firms that are subject to specific reporting obligations as set out in UK regulations made under the Sanctions Act include:

a person that has permission under Part 4A of the Financial Services and Markets Act 2000 (FSMA 2000) (Permission to carry on regulated activities)
an undertaking that, by way of business operates a currency exchange office, transmits money (or any representations of monetary value) by any means, or cashes cheques which are made payable to customers
a firm or sole practitioner that is a statutory auditor or local auditor
a firm or sole practitioner that provides, by way of business, accountancy services, legal or notarial services, advice about tax affairs or certain trust or company services
a firm or sole practitioner that carries out, or whose employees carry out, estate agency work
the holder of a casino operating licence
a person engaged in the business of making, supplying, selling (including selling by auction) or exchanging articles made from gold, silver, platinum, palladium or precious stones or pearls
a cryptoasset exchange provider
a custodian wallet provider
a high value dealer [from 14 May 2025]
an art market participant [from 14 May 2025]
a firm or individual who acts as an insolvency practitioner [from 14 May 2025]
a firm or sole practitioner that carries our, or whose employees carry out, letting agency work [from 14 May 2025]

•All UK sanctions regulations apply to United Kingdom individuals or entities regardless of where they are in the world.

Definitions of relevant firms can be found in the ‘Information and records’ part of the statutory instrument for each sanctions regime. The regimes can be found on our UK sanctions regimes page.

5.1.3 Relevant Institutions

Relevant institutions that are subject to specific reporting obligations, as set out in UK regulations made under the Sanctions Act, are persons that have permission under Part 4A of FSMA 2000 (Permission to carry on regulated activities).

There is an obligation for relevant institutions to inform OFSI without delay if that institution:

credits a frozen account or relevant account (as defined in the applicable UK regulations) where it receives funds transferred to that institution for crediting that account
transfers funds from a frozen account or relevant account with a relevant institution conducting excluded activity (within the meaning of section 142D of the Financial Services and Markets Act 2000) to an account with a ring-fenced body (within the meaning of section 142A of the Financial Services and Markets Act 2000) when both accounts are held or controlled (directly or indirectly) by the same designated person in relation to whom the exception permitting this transfer under the application regulation applies

Definitions of ‘relevant institution’ can be found in the ‘Exceptions and Licences’ part of the statutory instrument for each sanctions regime. The regimes can be found on our UK sanctions regimes page.

5.1.4 Reporting obligations for required payments

Reporting obligations apply to persons who make required payments or receive a reimbursement payment, as set out in UK regulations made under the Sanctions Act. Specifically, there is an obligation to inform OFSI without delay:

if a designated person makes a required payment;
if a person makes a required payment on behalf of a designated person;
if a person receives a reimbursement payment.

5.1.5 Additional Reporting Obligations (Russia Regime)

In addition to relevant firms existing reporting obligations in relation to frozen assets, in December 2023, the UK government introduced an additional reporting requirement for relevant firms under The Russia (Sanctions) (EU Exit) Regulations 2019 (the “Russia Regulations”).

A relevant firm is required to inform OFSI as soon as practicable if it knows, or has reasonable cause to suspect, that it holds funds or economic resources for a person to whom financial services must not be provided to under regulation 18A(1) (a “prohibited person”).

A prohibited person means the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, the Ministry of Finance of the Russian Federation, a person owned or controlled directly or indirectly by these entities, or a person acting on behalf of or at the direction of these entities.

Relevant firms that hold funds or economic resources for a prohibited person must complete a reporting form template and submit it to OFSI.

This form must be submitted when making the initial report and, thereafter, by no later than 30 November in each calendar year, providing a report to OFSI as to the nature and amount or quantity of those funds or economic resources held by that firm as of 30 September in that calendar year. ¹

Reporting obligations for this regime can be found in Part 8 of the Russia Regulations (Information and Records).

^{1 The Sanctions (EU Exit) (Miscellaneous Amendments) (No. 2) Regulations 2024 changed the deadline for the annual report from 31 October to 30 November. This change will apply from 2025 onwards.}

5.2 UK financial sanctions regimes under the Anti-Terrorism, Crime and Security Act 2001 (ATCSA 2001)

The UK can also implement financial sanctions through ATCSA 2001. The reporting obligations under ATCSA 2001 can be found in the Schedule to the Orders made under that act. These can be found on our UK freezing orders page.

Persons subject to an asset freeze under ATCSA 2001 can be found in ’UK Freezing Orders’ regime in the Consolidated List.

If you are unsure of your reporting obligations, you should seek independent legal advice.

Examples of information to be reported

A designated person	A customer of yours is a known or suspected designated person. You should provide OFSI with any information you hold about the designated person by which they can be identified. If the designated person is a customer you must also inform OFSI of the nature and amount or quantity of any funds or economic resources held on behalf of the customer, at the time this knowledge or suspicion arose.
Offences	Exact offences will depend on the relevant legislation but can include: • making funds or economic resources available to a designated person or to a person who is owned or controlled directly or indirectly by the designated person (except where an exception applies or under licence) • dealing with frozen funds or economic resources (except where an exception applies or under licence) • activities that circumvent financial sanctions prohibitions • providing false information or documents for the purpose of obtaining a licence • breaching licence conditions while purporting to act under the authority of the licence
Funds and economic resources	You must include details of the nature and amount of quantity of any funds and economic resources held. Types of funds or economic resources can include but are not limited to: • antiques • bond futures • cash • cheques • cryptoassets • land • postal orders • precious metals or stones • vehicles • works of art
Credits to frozen accounts	A relevant institution must inform OFSI without delay whenever it credits a frozen account, where it receives funds transferred to it for the purpose of crediting that account. A relevant institution must also inform OFSI without delay whenever it transfers funds to an account with a ring-fenced body, where both accounts are held or controlled by a designated person. A relevant institution does not need to inform OFSI when it credits an account with interest or other earnings.
Required payments	If you have made a required payment or received a reimbursement payment, you should inform OFSI of this without delay. You may wish to provide information about the amount of the payment, the body to whom the payment was made, the purpose of the payment (e.g. a payment of Council Tax over a particular property) and when the payment was made or received.

5.3 How to report

Reports of a suspected designated person, frozen assets, credits to frozen accounts and suspected breaches should be emailed to OFSI.

Reports should be submitted to OFSI using the compliance reporting form on our reporting information to OFSI page.

If you are reporting a significant number of frozen accounts you may use the template provided for OFSI’s annual review of frozen assets.

OFSI will handle all information it receives in compliance with applicable data protection laws.

All reports to OFSI involving a designated person should include their ‘Group ID’ reference number. The group ID is a unique identifier for a designated person, which can be found in their entry on the OFSI Lists.

5.4 Legal professional privilege

All UK regulations make it clear that reporting obligations do not apply to information to which legal professional privilege is attached. However, OFSI expects legal professionals to carefully ascertain whether legal privilege applies, and which information it applies to. OFSI may challenge a blanket assertion of legal professional privilege where it is not satisfied that such careful consideration has been made.

5.5 Reporting offences

A relevant firm that fails to comply with its reporting obligations, as set out in the relevant legislation, will be committing an offence, which may result in a criminal prosecution or a monetary penalty.

5.6 OFSI’s powers to require information from you

OFSI has statutory powers to require you to produce specified documents and provide information for the purpose of:

establishing the nature and amount or quantity of funds or economic resources, owned, held or controlled by or on behalf of a designated person
establishing the nature and amount or quantity of funds or economic resources made available directly or indirectly to, or for the benefit of, a designated person
establishing the nature of any financial transactions entered into by a designated person
monitoring compliance with or detecting evasion of certain financial sanctions regulations (including prohibitions and reporting obligations) and conditions contained within an OFSI licence
detecting or obtaining evidence of the commission of an offence under certain provisions of financial sanctions regulations (including prohibitions and reporting obligations)

For a complete list of OFSI’s powers to request information, please refer to the legislation underpinning each particular financial sanctions regime.

When requesting information from you, OFSI will specify:

the legislative basis for the request
the time period within which the information is to be provided (although if no time period is specified, the information which has been requested must be provided within a reasonable time)

In some circumstances OFSI may specify the manner in which the information should be provided.

Failure to comply with a request for information, including by failing (without reasonable excuse) to provide the information within the specified time (or, if no time has been specified, within a reasonable time), knowingly or recklessly providing false information, destroying documents or otherwise intentionally obstructing OFSI when exercising these powers is a criminal offence and may result in a criminal prosecution or monetary penalty.

5.7 OFSI’s power to authorise the disclosure of information

OFSI has statutory powers to authorise the disclosure of relevant information to the Treasury if the disclosure is made for the purpose of enabling or assisting the Treasury to discharge any of its functions in connection with sanctions.

This power extends to ‘relevant public authorities’ as defined in the regulations. Examples of relevant public authorities include any:

person holding or acting in any office under or in the service of the Crown in the right of the Government of the United Kingdom
person holding or acting in any office under or in the service of the Crown in right of the Scottish Government, the Northern Ireland Executive or the Welsh Government
local authority
police officer
regulatory body
other person exercising functions of a public nature

5.8 Annual frozen assets review

Each year OFSI carries out a review of frozen assets to reflect any changes to these assets during the reporting period. The review makes use of OFSI’s powers to request information. Failure to comply with a request for information is an offence.

The 2024 review, as with previous reviews, was conducted using OFSI’s powers to request information. Failure to comply with a request for information is an offence. From 2025 onwards the review will no longer be conducted using OFSI’s powers to request information. Instead, there are now specific new obligations in sanctions regulations for UK persons to report this information. Persons that hold funds or economic resources owned, held or controlled by a designated person as of 30th September in a calendar year will have to provide OFSI with a report stating the nature and amount or quantity of these funds or economic resources by no later than 30th November in that calendar year.

A person will commit an offence if that person, without reasonable excuse, fails to comply with the new annual frozen asset review reporting obligations. Examples of the kind of scenarios that OFSI would potentially consider as a reasonable excuse can include but are not limited to the below:

There is an unprecedented number of new designations immediately prior to 30th September that may hinder or delay providing a report to OFSI.
An unforeseeable clerical error which may require resubmission of a report to OFSI.

As part of this review, OFSI requires all persons that hold funds or economic resources belonging to a designated person, to complete a reporting form template and submit it by emailing OFSI. OFSI notifies its subscribers of the template and deadline for submitting returns by email.

You will only be required to provide a nil report to OFSI if you submitted a report for the previous review (other than a nil return) and no longer hold those frozen assets. Submitting a nil return in such a scenario will be a legal requirement from 2025 onwards.

For more information, please see the annual frozen asset review page.

5.9 Other reporting obligations

Your obligation to report to OFSI is in addition to any other sanctions reporting obligations you may have. These could include reporting required by your regulator (if you have one), or submitting Suspicious Activity Reports (SARs) to the NCA under the Proceeds of Crime Act 2002.

In some cases, you may have specific obligations to report under section 19 of the Terrorism Act 2000.

Please note that reporting to your regulator or submitting a SAR does not meet your reporting obligations under financial sanctions. If you have information to report regarding financial sanctions, this must be emailed to OFSI.

If you are unsure of your reporting obligations, you should seek independent legal advice.

5.10 Onward disclosure

Information received by OFSI shall by disclosed to third parties in accordance with provisions set out in the Information and Records part of the regulations pursuant to the disclosure of information regulation. Any such disclosure must be in compliance with applicable data protection laws.

5.11 Additional Reporting Obligations for designated persons under the Russia and Belarus regimes

In December 2023, the UK government introduced an additional reporting requirement for designated persons under the Russia Regulations. In May 2024 these reporting requirements were extended to designated persons under the Belarus Regulations.

If you are a designated person (DP) under the Russia or Belarus Regulations and a ”United Kingdom person” within the meaning of s21(2) and (3) of SAMLA, you will be required under regulation 70A(1) of the Russia regulations or 38A(1) of the Belarus regulations to disclose any funds or economic resources you own, hold or control and the location of those funds or economic resources, regardless of where in the world they are located.

If you are a DP who is not a United Kingdom person, you are required to report under regulation 70A(2) of the Russia Regulations or 38A(2) of the Belarus regulations, the value, nature and location of your UK funds and economic resources.

Your initial report must be provided within 10 weeks of:

the date the legislation comes into force, or
the date of designation

whichever is later.

Any subsequent change in financial circumstances must be reported to OFSI as soon as practicable. It is an offence to not comply with this obligation, further information can be found in Chapter 7 of this guidance.

You must report any funds or economic resources if the value of those funds or economic resources exceeds the value of £10,000. If multiple funds or economic resources of the same type (for example, jewellery, art, bank accounts), taken together exceed £10,000, this must also be reported.

Further information on this reporting obligation can be found in the Russia Sanctions Guidance. The substance of this further guidance, adjusted as appropriate, also applies to the Belarus DP asset reporting requirement. If you are unsure of your reporting obligations, you should seek independent legal advice.

Question 6

6.  Exceptions and licensing

Accepted Answer

Specific exceptions and licensing powers are contained in the sanctions regulations made under the Sanctions Act and can allow otherwise prohibited transactions and prohibited activity to take place in some circumstances.

A licence is a written permission from OFSI allowing an act that would otherwise breach prohibitions imposed by financial sanctions.

An exception to a prohibition applies automatically in certain defined circumstances as set out in the regulations and does not require you to obtain a licence from OFSI.

The following sections provide a general overview of the standard exceptions and licensing grounds found in financial sanctions legislation. The grounds may vary from regime to regime, so it is important that you check the relevant, up-to-date legislation. This guidance will be updated in due course to reflect the position for some of the sectoral regimes where additional provisions can apply.

6.1 Crediting frozen accounts

Asset freezing legislation permits without a licence:

a relevant institution to credit a frozen account with interest or other earnings due on the frozen account, so long as those funds are frozen immediately
a person to transfer funds to a relevant institution for crediting a frozen account where those funds are transferred in discharge (or partial discharge) of obligations that were concluded or arose before the date the person became a designated person
a relevant institution to credit a frozen account with payments from a third party, provided that the incoming funds are also frozen and that it informs OFSI of the transaction without delay (see Chapter 5 of this guidance)

6.2 Independent person holding legal or equitable interest in frozen funds or economic resources

The legislation creates an exception to allow independent persons to transfer their legal or equitable interests in frozen funds or economic resources to another person, where immediately before the transfer all the provisions in 1-4 below are present:

the independent person is not a designated person
the independent person holds the interest in the funds or economic resources
the independent person doesn’t hold the interest jointly with a designated person
the independent person isn’t owned or controlled, directly or indirectly by a designated person (see Chapter 4 for meaning of owned or controlled)

6.3 Ring-fencing

From 1 January 2019, each large bank must separate core retail banking from the rest of its business, known as ring-fencing, to comply with the Financial Services (Banking Reform) Act 2013. UK sanctions regimes contain an exception permitting banks subject to the ring-fencing legislation to transfer funds from account A in a non ring-fenced body to account B in a ringfenced body (as defined in the legislation) where accounts A and B are held or controlled (directly or indirectly) by a designated person.

6.4 Required Payments

From 5 December 2024, for non-UN designated persons only, it is permitted without a licence for various payments to be made from or on behalf of designated persons to the following UK public bodies: Companies House, HMRC, the Welsh Revenue Authority, Revenue Scotland, the Financial Conduct Authority, local authorities, and the Department of Finance in Northern Ireland. Where a required payment is made by a person other than a designated person, the designated person is permitted to make a reimbursement payment to that person. Persons who use the exception will be obliged to make a report to OFSI.

Please see OFSI FAQs for further detail on what specific required payments are in scope of this exception.

6.5 Licensing overview

It is important to note that OFSI can only issue licences where there are specific and relevant licensing grounds enabling us to do so, and where the conditions in those grounds have been met. The available grounds can be found in the legislation underpinning each particular financial sanctions regime.

OFSI will only consider licensing activities that fall within the licensing grounds set out in the legislation. When considering making an application, you may wish to seek legal advice.

See the table below for more information on OFSI’s approach to licensing grounds.

Licences cannot be issued retrospectively. If you have carried out an act that required a licence, without having obtained one beforehand, you may have breached financial sanctions and you should consult Chapter 5 and Chapter 7 of this guide immediately.

It is important to note that OFSI only issues licences in relation to its areas of competence. An OFSI licence does not confirm that a particular transaction as a whole is lawful under financial sanctions regulations (for example, in some cases a further licence, such as an export control licence, may be required).

A licence is a written permission from OFSI allowing an act that would otherwise breach prohibitions imposed by financial sanctions. It does not compel any party, including the financial institutions involved in the payment route, to take any action. It confirms, solely, that the act(s) specified in the licence are allowed by OFSI.

6.6 Licensing grounds: UK regimes

The following table sets out the licensing grounds commonly found in UK regulations as well as OFSI’s approach to them. Some licensing grounds cannot be applied to persons designated by the United Nations. As noted above, the exact grounds available can be found in the legislation underpinning each particular financial sanctions regime. OFSI carefully scrutinises all applications made to assess whether they fall under the relevant licensing grounds.

OFSI’s approach to licensing grounds

Licensing Ground	OFSI’s approach
Basic needs	The legislation confirms that the ground is present to enable the basic needs of a designated person, or (in the case of an individual) any financial dependent family member of such a person, to be met. Expenditure to meet basic needs of an individual should be expenses which are necessary to ensure designated persons or financially dependent family members are not imperilled. In respect of a person other than an individual (e.g. an entity), the legislation confirms that basic needs includes: • payment of insurance premiums • payment of reasonable fees for the provision of property management services • payment of remuneration, allowances or pensions of employees • payment of tax • rent or mortgage payments • utility charges The list of basic needs detailed above is not exhaustive but is indicative of the type of basic needs intended to be caught. Therefore, expenditure to meet the basic needs of an entity should be expenses strictly necessary to ensure the continued existence of the designated entity. Basic needs licences do not necessarily enable a designated person to continue the lifestyle or business activities they had before they were designated.
Fees for the provision of legal services	Legal fees and disbursements must be reasonable. It is for the applicant to demonstrate to OFSI that the legal fees and disbursements are reasonable. In most cases, you can provide legal advice to or act for a designated person without an OFSI licence. However, you cannot receive any payment for that advice without first obtaining an OFSI licence. OFSI can only authorise payment of reasonable legal fees and disbursements in relation to legal services provided to a designated person. You are strongly encouraged to apply for a licence in advance of providing substantive legal services so you have certainty as to the fees that will be recoverable whilst the designated person remains listed. In support of your application, you should: • provide an estimate of the anticipated fees and/or fees that have already been incurred • provide a breakdown of how the fees will be charged and/or have been charged • identify any disbursements, such as payments for counsel or expert witnesses OFSI considers that the Supreme Court Cost Guides or the sums that could be expected to be recouped if costs were awarded, provide a useful starting point for assessing the reasonableness of legal fees and disbursements. If you are seeking fees of a level in excess of those, you need to demonstrate why those increased fees are reasonable in the given case. Fees and disbursements must relate specifically to the provision of legal advice, involvement in litigation or in dispute resolution.
Routine maintenance of frozen funds and economic resources	The fees or service charges must be reasonable and result in the routine holding or maintenance of frozen funds or economic resources. The re-design, refurbishment or redevelopment in order to improve the value of a frozen economic resource is generally not covered, although each application will be considered on a case by case basis.
Extraordinary expenses	This must be extraordinary in nature (including, but not limited to, unexpected, unavoidable and/or non-recurring). It cannot be used where other licensing grounds are more suitable or as a way of avoiding the clear limitations of those other grounds.
Judicial decisions	For UN designated persons. This enables the use of frozen funds or economic resources subject of a judicial decision or lien which was established before the date of designation and enforceable in the UK. The use of the funds or economic resources must be to implement or satisfy in whole or in part the pre-existing judicial decision or lien. It cannot be for the direct or indirect benefit of a designated person. For non-UN designated persons only: •This enables payments to implement or satisfy, in whole or in part, a judicial decision or lien that is enforceable in the UK. •That decision or lien can have been made pre or post the date of a designation. •A designated person may make a payment to another designated person under this derogation. However if funds or economic resources are made available to a designated person under this derogation they must be frozen in a UK bank account or otherwise subject to the relevant asset freeze provisions and no other designated person can benefit from that.
Humanitarian assistance activity	This enables payments to facilitate: • any humanitarian activity • where applicable, any activity where its purposes are consistent with the objectives of UN Security Council Resolutions - these will be set out in the applicable Sanctions Act regulations Humanitarian assistance includes the work of international and non-governmental organisations carrying out relief activities for the benefit of the applicable civilian population, which may include the delivery of humanitarian aid or peace-building programmes. A licence may still be required even if this activity is using government funds.
Diplomatic missions	This enables anything to be done in order that the proper functions of a diplomatic mission or consular post or an international organisation enjoying immunities in accordance with international law, may be carried out.
Extraordinary situations	This must be extraordinary in nature (including, but not limited to, being unexpected, unavoidable and/or non-recurring). This applies to non-UN designated persons and enables anything to be done to deal with an extraordinary situation. This will enable a licence to be issued to deal with a situation which is extraordinary in nature but does not necessarily involve an expense. There is a high threshold for a situation to meet the standard of being extraordinary, and even where a situation may seem extraordinary to the parties concerned (i.e. outside their normal day to day business) it does not necessarily mean it will meet the threshold for this licensing ground. It cannot be used where other grounds are more suitable or as a way of avoiding the clear limitations of other licensing grounds/ purposes.
Prior obligations	The obligation must have arisen prior to the date of designation and cannot relate to trade provisions (specified in the regulations). In addition, it cannot result in funds or economic resources being made available (directly or indirectly) to the designated person.
Divestment	The licensing grounds give OFSI the authority to issue licences to enable UK entities as set out below. Wholly (fully) divest funds and economic resources they own, hold or control located within Russia and/or enable the facilitation of another person (UK or non-UK) to fully divest funds and economic resources owned, held or controlled by that person located within Russia. • Full divestment for the purposes of licensing requests under these grounds constitutes the transfer by a person or UK entity (‘A’) of funds and/or economic resources located in Russia (‘the Relevant Asset’), to either a DP or the Russian government, resulting in A having no remaining interests in the Relevant Asset. It does not mean that A is required to transfer all of the funds and/or economic resources they own, hold or control in Russia, but they do need to divest their entire interest in the Relevant Asset. • OFSI will not treat activity it considers to be business-as-usual as full divestment. This may include, but is not limited to, activity: which restructures A’s ownership of the Relevant Asset so that A still owns or controls it via a different entity which A owns or controls; or the object of which is to fulfil A’s contractual obligations, but which is not aimed at the full divestment of the Relevant Asset. Partially divest funds and economic resources they own, hold or control located within Russia and/or enable the facilitation of another person (UK or non-UK) to partially divest funds and economic resources that person owns, holds or controls located within Russia • Partial divestment for the purposes of licensing requests under these grounds is a situation where a person or UK entity (‘A’) has a decided to divest itself of particular funds and/or economic resources located in Russia (‘the Relevant Asset’) as opposed to all of its funds and/or economic resources located in Russia to either a DP or the Russian government but wishes to only divest itself of a proportion of the Relevant Asset instead of all of it. • The applicant must provide evidence to demonstrate that this is part of a strategy to ultimately fully divest the Relevant Asset being partially divested, or a sufficient explanation as to why that is not possible. • OFSI will not treat activity it considers to be business-as-usual as partial divestment. This may include, but is not limited to activity: that restructures A’s ownership of the Relevant Asset being partially divested so that A still owns or controls it via a different entity which A owns or controls; or the object of which is to fulfil A’s contractual obligations, but which is not aimed at the partial divestment of the Relevant Asset. In cases of both full and partial divestment, OFSI will be very unlikely to license any activity where there is evidence that there is a potential for assets to be used in support of Russia’s war effort. Divest investors who are designated under the Russia Regulations (“DP”) or the Russian government and/or enable the facilitation of another person (UK or non-UK) to divest themselves of investors who are DPs or the Russian government. • This divestment is only licensable where: the sole consideration for the divestment is a transfer of funds to a DP or the Russian government; and those funds are transferred to a frozen account at a relevant institution, or an account held by a non UK credit or financial institution in a jurisdiction outside the UK, the law of which provides for equivalent prohibitions, exceptions and licensing grounds.
Insolvency	This licensing ground permits OFSI to license various payments and other activity in relation to insolvency, restructuring and related proceedings, provided that any payments made directly or indirectly to a DP are credited to a frozen UK bank account. For the insolvency and restructuring proceedings specifically, these must also relate to an insolvent person.

6.7 Further details

6.7.1 Legal advice

Generally, you won’t be prohibited from providing legal advice under an asset freeze. However, the payment for legal services and the provision of legal services on credit do require an OFSI licence.

Also, where sanctions prohibit specific actions, for example, restructuring of finance, you need to carefully consider whether your advice and support for the client is helping them comply with sanctions or is participating in or facilitating a breach. For example, if it is prohibited to raise capital on financial markets, providing advice on how this affects a business will be permitted. However, preparing documents to raise such capital may amount to an attempt to circumvent sanctions.

6.7.2 Court fees

OFSI’s view is that both court fees and payments into court, for security or costs, can be licenced under the reasonable legal fees licensing ground. However, OFSI is of the view that a separate licensing ground needs to be identified to pay security for damages into court, depending on the specific circumstances of the case. Court fees which will be invoiced to a designated person client as a disbursement can be paid without a licence only if they are not ‘significant’. Whether a court fee is ‘significant’ is to be considered on the facts.

6.7.3 Investments

Generally you cannot invest your frozen funds, the profits from frozen funds, or move frozen funds from one account to another. The exceptions or existing licensing grounds found in UK regulations are unlikely to allow such activity to be permitted but OFSI will consider each application on a case-by-case basis.

Applications for licences in relation to asset freezes imposed by UK law will need to demonstrate that such activity is in line with the licensing policy for that regime.

OFSI’s view is that, in a small number of circumstances, some asset management may be permitted, under the ‘basic needs’ licensing ground, to ensure that the existence of the business or the frozen assets is not imperilled. When considering licensing requests for asset management, OFSI will consider the nature and state of the assets at the time of any relevant designation. It is highly unlikely that requests for new or expanded activity will be permitted but OFSI deals with every application on a case-by-case basis.

6.8 Licensing grounds: other domestic regimes

The UK’s other domestic financial sanctions regimes do not have specific licensing grounds and instead contain a general power to issue licences.

OFSI will exercise these powers according to the provisions of the domestic regime in question, taking into account any relevant law and the stated policy objectives of each regime.

The domestic regimes are set out in the following pieces of legislation:

Anti-Terrorism Crime and Security Act 2001 (ATCSA 2001)
Counter-Terrorism Act 2008 (CTA 2008)

6.9 General licences

A general licence, issued by OFSI on behalf of HM Treasury, allows multiple parties to undertake specified activities which would otherwise be prohibited by sanctions legislation, without the need for a specific licence.

Details of active general licences and accompanying guidance are available on OFSI’s website and the FAQ page. Where a general licence is in place to permit an activity, OFSI expects that applicants will make use of this licence. A specific licence will not be issued for the same activity unless the applicant can demonstrate that they are unable to use the general licence or that it is deficient in some way.

OFSI does not accept applications for general licences. General licences are issued by OFSI under such conditions as HM Treasury deems appropriate and will usually be considered in response to unforeseen circumstances where it has been decided that issuing a general licence will best support the Government’s policy priorities.

For example, a general licence could be used to respond to a situation where it may be necessary for persons to undertake otherwise prohibited financial activity because the UK government has introduced an unrelated financial services policy that would otherwise be hindered by sanctions law, provided that it does not contradict the policy intent of the relevant sanctions regime.

A general licence is not limited to the derogations (licensing grounds) set out in the relevant legislation (except for UN sanctions regimes, in relation to which a general licence would be limited to the derogations set out in the relevant UN resolution).

A general licence can be issued under the counter-terrorism regimes.

HM Treasury can vary, suspend or revoke general licences at any time. OFSI aims to engage with relevant stakeholders before taking such action unless revocation takes place because the activity or designated person specified in the general licence is no longer subject to sanctions. General licences may also be revoked when their permitted activities are provided for on a permanent basis by new exceptions added into the sanctions regulations. Where there is a specific and urgent need to revoke a general licence, OFSI will aim to give notice to its users by, for example, amending the licence first to include a new expiry date to give time for users to reassess their licensing needs. Applicants may wish to sign up to OFSI’s e-alerts to ensure that they are notified of any upcoming changes to general licences.

Each general licence will include any requirements for prior notification of use, record-keeping and reporting. Prior notification is a one-time administrative exercise only, whereby users provide OFSI with contact information with their first use of the general licence. Prior notification does not constitute any verification by OFSI of correct or incorrect usage of a general licence. Data collected under a general licence as a result of prior notification would be handled in accordance with applicable data protection law. In addition to these standard requirements, general licences may be subject to further requirements. These are determined on a case-by-case basis.

Requirements will be stated in each general licence. It is the responsibility of any party using a general licence to ensure the activities they undertake fall within the terms of the licence and that they comply with any conditions of the licence.

Breaching the terms of a general licence is a serious offence punishable by a maximum of:

7 years’ imprisonment on conviction on indictment, or a fine, or both (applying to all of the UK)
12 months’ imprisonment in England and Wales on summary conviction (or, in relation to offences committed before section 154(1) of the Criminal Justice Act 2003 (general limit on magistrates’ court’s power to impose imprisonment) comes into force, 6 months) or a fine, or both
12 months’ imprisonment in Scotland, or a fine, or both
6 months’ imprisonment in Northern Ireland, or a fine, or both

Counter-terrorism general licences

Available on the counter-terrorism licensing policy page.

Financial sanctions regime	Area Licenced
• ISIL (Da’esh) and Al-Qaida (United Nations Sanctions) (EU Exit) regime • Counter-Terrorism (International Sanctions) (EU Exit) regime • Counter-Terrorism (Sanctions) (EU Exit) regime	Legal aid

6.10 Applying for a specific licence

Applicants must provide evidence to support an application and demonstrate that all criteria of the relevant licensing grounds have been met. Any application that does not demonstrate that the criteria of the licensing grounds have been met and provide sufficient evidence will be deemed to be incomplete and returned to the applicant for resubmission.

Applications will be prioritised where there is a genuine and evidenced need for urgency, such as for humanitarian purposes or where there may be a risk to life. Applications that have been resubmitted for any reason will not be treated with any differing priority unless they meet this criterion.

OFSI will endeavour to assist applicants who contact us to understand the licensing process as well as our evidentiary requirements. However, we cannot provide legal advice and applicants should consider taking independent legal advice before applying, especially for complicated matters.

OFSI expects legal and professional advisers will have fully considered the relevant law and formed a view about an application before approaching OFSI for guidance or submitting an application.

OFSI does not charge for licences.

6.10.1 Submitting an application

To apply for a licence from OFSI, applicants should use the application form available on our GOV.UK page.

Applicants will generally be required to provide:

the licensing grounds being relied upon in the application including supporting arguments
full information on the parties involved in the proposed transaction - for example, the designated person, any financial institution involved and the ultimate beneficiary of the transaction
the complete payment route including account details
the amount (or estimated amount) of the proposed transaction

You should always refer to the up-to-date version of the legislation for the relevant sanction regime. Links to the legislation can be found on the relevant financial sanctions regime pages.

Tips for applicants

read this guide and the up-to-date version of the relevant legislation
identify the appropriate licensing ground
use the licence application form on our website -you may wish to seek legal advice to support this process.
provide a clear description of the payment chain and all parties involved
ensure all relevant information and supporting evidence is included with the application
be available to fully engage with OFSI on your application
where applicable, make sure your bank is aware of the situation

6.10.2 Specificity in licensing

In line with international best practice, OFSI’s view is that compliance with financial sanctions is generally best served through specificity in licensing about the transactions authorised. Licence applicants should therefore be prepared to provide full details of transactions relevant to their application(s), including all parties, sums and payment routes involved directly or indirectly in the proposed transaction(s) as well as any other relevant information which will assist OFSI in considering an application.

6.10.3 Counter-terrorism regimes

If you are seeking a licence under either the ISIL (Da’esh) and Al-Qaida (United Nations Sanctions) (EU Exit) regime, the Counter-Terrorism (International Sanctions) (EU Exit) regime, or 36 UK financial sanctions: general guidance (August 2022) the Counter-Terrorism (Sanctions) (EU Exit) regime, you should email OFSI setting out the full details of the proposed transaction.

For further details, consult the Counter-Terrorism licensing policy page on GOV.UK.

Knowingly or recklessly providing false or misleading information in any licence application is taken very seriously. Doing so may result in a criminal prosecution or a monetary penalty.

6.11 Licensing timeframes

We aim to review all new licensing applications as soon as practicable. We will prioritise cases at times of high demand, and in particular where there are issues of personal basic needs or wider humanitarian issues at stake, which are of material impact or urgency, or which are deemed to be of particular strategic, economic or administrative importance.

If there are particular aspects of your application that you believe make your case especially urgent, please set these out clearly in your application for our consideration.

You will receive an acknowledgement with a case reference number, and we will contact you again when we have begun the formal process of review. Given the high volume of applications we receive, we will not be able to provide regular updates or respond to requests for further information during the course of our review, unless we have specifically requested further information from you.

Once you have submitted your application, please do not contact us to seek updates or discuss the status of the application unless you are directly asked to provide further information, or there has been a material change of circumstances that may require more immediate review.

Licence applications should be submitted to OFSI well in advance of the date from which the licence is required, with comprehensive supporting information. Applicants should ensure OFSI has received all the information required to enable us to make a decision about whether there is a legal basis to grant a licence.

We will send back incomplete applications or ask you for additional information where this has not been provided. Complex cases may also require further information from, or dialogue with, other parties including the United Nations and OFSI equivalents where necessary. Please note that failure to submit all the necessary information requested by OFSI will result in delays to your application being processed and may result in your application being rejected. You should not assume that a licence will be granted or engage in any activities prohibited by financial sanctions until you have received an appropriate licence from OFSI or you have been informed by OFSI that no licence is required under your application.

Where applicable general licences are in place, you should ensure any relevant transactions take place before the general licence expires rather than submitting an application for a specific licence after this date. Specific applications submitted after such an expiry date are unlikely to be prioritised.

6.11.1 Urgent and humanitarian cases

OFSI will prioritise urgent and humanitarian cases - i.e. cases that involve a risk of harm or a threat to life.

If a request is urgent, please say so when submitting your application and explain why.

6.11.2 Notification and approvals

Please note OFSI may need to notify, or in some cases seek approval from, the relevant United Nations Sanctions Committee before issuing a licence. These requirements are set out in the relevant UN Security Council Resolutions.

These requirements will lengthen the processing time for such licence applications and may in some cases prevent a licence from being issued.

6.12 Amending licences

Requests for an amendment, variation or extension of a licence should be emailed to OFSI as soon as it is apparent that a change is required.

Applicants should complete an application form, providing supporting information and arguments. Where multiple amendments need to be made to a single licence, applicants should group these together into a single request to OFSI.

OFSI cannot guarantee that last-minute requests for amendments, variations or extensions of a licence will be authorised within the requested timeframe.

You must not carry out any actions that are not authorised by a valid licence. For example, if a licence has expired or you have reached a cap on permitted spending, further activity may not be lawful.

Any such actions will be considered a breach of financial sanctions and may result in a criminal prosecution or monetary penalty.

6.13 Refusal of a licence

If OFSI refuses to issue a licence, the proposed transaction or activities may not be lawful. OFSI will write to you giving reasons for refusing your application. We may also refuse your application if you do not require a licence for the proposed transaction or activities.

If you have had an application for a licence refused you have the following options:

re-apply with new or supplementary evidence or new supporting arguments
re-apply under a different derogation (where applicable)
seek to challenge the decision in court

Under the Sanctions Act, there is a specific provision that means if you intend to challenge the decision in the courts, you need to apply to the High Court, or Court of Session in Scotland, for a review of the decision (Section 38 of the Sanctions Act). You may wish to seek independent legal advice before taking the matter further.

6.14 Other jurisdictions

Licences issued by OFSI only apply to actions subject to UK jurisdiction. If the prohibited activity engages another jurisdiction you should consider what provisions you may need to comply with within their requirements. For instance, if a payment will pass through several jurisdictions, you may need to apply for a licence from each of those countries’ competent authorities.

When considering licensing requests, OFSI will conduct whatever investigation it deems appropriate in the circumstances, which may include consulting with international partners with an interest.

6.15 Complying with a licence

Specific licences issued by OFSI are not published. However, OFSI expects licence holders to share licences with other parties to the transaction. If you are unsure whether the action you propose to undertake is within the terms of a licence, or if you wish to check whether a licence remains valid, you can seek clarification from OFSI. We aim to respond to such queries within two weeks of receipt.

Where necessary, licence applicants are expected to communicate any licence issuances, changes, revocations or amendments to all relevant third-parties.

If you are unsure about the validity of a licence that a designated person or their representative has shown to you, you should email a copy of the licence.

You should not assume OFSI agrees with your interpretation of the licence until you receive a response from us.

Any conduct outside the terms of the licence, such as use of a different payment route or payments in excess of a specific payment cap, is a breach of financial sanctions, and may result in a criminal prosecution or monetary penalty.

6.16 Reporting conditions

Licences issued by OFSI come with conditions that often require information to be reported to OFSI within a specific time frame. A failure to comply with these reporting requirements may result in the revocation, suspension or termination of a licence or further restrictions being included in it. It may also result in a criminal prosecution or monetary penalty.

OFSI’s monetary penalty powers were further clarified on 15 November 2023 when amendments (inserted by the Economic Crime and Corporate Transparency Act 2023) to the Policing and Crime Act 2017 came into force. This made it clear that OFSI can impose penalties under the 2017 Act for breaches of provisions which are supplemental to financial sanctions such as breaches of licence reporting conditions.

Legal advisors should proactively engage with their clients about the need to provide information to meet the reporting requirements in licences.

6.17 Existing licences issued under previous regimes

Specific licences issued by OFSI which were in effect immediately prior to the entry into force of Regulations made under the Sanctions Act (“Sanctions Act Regulations”) will continue to have effect after the entry into force of the Sanctions Act Regulations. Such existing licences will be treated as if they had been issued under the relevant Sanctions Act Regulations. This means that you can continue to rely on existing licences issued by OFSI, until they expire.

Any applications for new specific licences and for amendments to existing specific licences which have been validly made before the entry into force of Sanctions Act Regulations, but which have not been determined by OFSI by that date, will be treated as applications made under the relevant Sanctions Act Regulations. This means that you will not be required to submit a new application.

6.18 Travel to the UK

Designated persons who are not subject to a travel ban and who are planning to visit the UK should apply to OFSI for an appropriate licence authorising any proposed use of funds or economic resources to support themselves while in the country.

If a visa application is also required, the licence application should include a request for permission to pay any visa application fees. The granting of a licence does not guarantee that the person will be granted a visa.

The requirement to obtain a licence before travelling also applies to non-designated persons visiting the UK who are funded, in whole or in part, by a designated person.

Anyone dealing with funds that should be frozen, or who makes economic resources available to a designated person without an appropriate licence will be committing an offence, which may result in a criminal prosecution or a monetary penalty.

If you are a designated person, you must hold a valid licence for the duration of your stay to allow the use of or access to funds or economic resources while in the UK.

If no valid licence is held, you may be in breach of sanctions regulations.

6.19 Directions

Directions can be issued by OFSI in respect of a statutory requirement and can provide an exception to the requirements.

For example, if the regulations require a UK credit or financial institution to close a bank account it has with a finance institution domiciled in the Democratic People’s Republic of Korea, a valid direction from OFSI could provide an exception to this requirement.

Directions can contain certain conditions as OFSI deems appropriate. They may be of definite or indefinite duration, and can be varied, suspended or revoked at any time. Directions are applied for using the licence application form on the OFSI website. Applications for directions are subject to the same timeframes as licence applications. OFSI also makes the same considerations when assessing a licence application.

Directions do not apply to all regimes. The relevant regulations detail in which regimes directions are applicable. You may wish to seek legal advice to support the application process.

6.20 Export licences

If you import or export goods, you need to consider if financial sanctions apply to you. You may need a licence from OFSI as well as from the UK’s Export Control Joint Unit (ECJU).

Question 7

7.  Compliance and enforcement

Accepted Answer

OFSI is responsible for monitoring compliance with financial sanctions and for assessing suspected breaches. It also has the power to impose monetary penalties for breaches of financial sanctions and to refer cases to law enforcement agencies for investigation and potential prosecution.

OFSI works with other parts of government, supervisory bodies and regulators to consider all cases reported to it, sharing relevant information accordingly.

OFSI may share information as prescribed by the relevant sanctions legislation and wider UK legislation, including the Data Protection Act 2018.

7.1 OFSI’s approach to compliance

OFSI’s assessment of breaches is informed by our overall approach to financial sanctions compliance. This approach covers the whole lifecycle of compliance in respect of financial sanctions. We take a holistic approach to ensure compliance rather than simply waiting until the law is broken and responding to the breach.

Our compliance and enforcement model

Our approach is summarised by our compliance and enforcement model: promote, enable, respond, and change.

we will promote compliance, publicising financial sanctions and engaging with the private sector. An effective compliance approach promotes compliance by reaching the right audiences, through multiple channels, with messages they respond to
we will enable compliance by making it easier to comply, and providing customers with guidance and alerts to help them fulfil their own compliance responsibilities. An effective compliance approach enables cost-effective compliance, makes it easy to comply and minimises by design the opportunities for non-compliance
we will respond to non-compliance by intervening to disrupt attempted breaches and by tackling breaches effectively. An effective compliance approach responds to non-compliance consistently, proportionately, transparently and effectively, taking into account the full facts of the case, and learning from experience to continuously improve our response

We do these things to change behaviour, directly preventing future non-compliance by the individual and more widely through the impact of compliance and enforcement action.

While a decision to pursue a criminal prosecution for breaches of financial sanctions ultimately lies with the prosecuting authorities, OFSI will consider the following when initially considering the course of action to take:

whether the breach was self-disclosed fully and promptly
the level of cooperation with any inquiries
action being taken to improve future compliance

7.2 Reporting a suspected breach of financial sanctions

Your reporting obligations to OFSI are set out in Chapter 5 of this guidance. Where you know or have reasonable cause to suspect that a breach has occurred this must be reported to OFSI as soon as practicable.

A form is available on GOV.UK to report suspected breaches to OFSI.

7.3 Penalties for breaches of financial sanctions

The level of penalties for breaches of financial sanctions have been expanded and, for custodial sentences, uplifted by the Policing and Crime Act 2017.

Breaches of financial sanctions are a serious criminal offence.

7.3.1 Custodial sentences

Offences relating to the principal prohibitions under UK financial sanctions carry a maximum of:

7 years’ imprisonment on conviction on indictment (applying to all of the UK)
12 months’ imprisonment in England and Wales on summary conviction (or, in relation to offences committed before section 154(1) of the Criminal Justice Act 2003 comes into force, 6 months)
12 months’ imprisonment in Scotland
6 months’ imprisonment in Northern Ireland

Custodial sentences for ATCSA 2001 and CTA 2008 have been similarly uplifted.

For exact penalties, particularly those relating to different parts of the UK, please consult the relevant legislation.

7.3.2 Deferred Prosecution Agreements (DPAs)

Breaches of financial sanctions legislation are included on the list of offences for which a Deferred Prosecution Agreement (DPA) can be made. DPAs are court-approved agreements between an organisation (a corporate body or unincorporated association, but not an individual person) and a prosecutor who is considering prosecuting the organisation for an offence. They only apply to persons in England and Wales.

In order for a DPA to be entered into, the prosecutor must be satisfied that there is sufficient evidence to prove beyond reasonable doubt that a criminal offence has been committed by the organisation. A DPA can be entered into once the organisation is charged with that offence, with the effect that proceedings are automatically suspended subject to certain conditions. If the conditions of the DPA are breached, the prosecution may resume.

7.3.3 Serious Crime Prevention Orders (SCPOs)

Breaches of financial sanctions are included on the list of offences for which a Serious Crime Prevention Order (SCPO) may be imposed.

SCPOs are imposed by a court on the civil standard of proof and are designed to prevent an individual or organisation from further engaging in serious crime.

A SCPO does not levy financial penalties but may contain targeted prohibitions, restrictions or requirements that the court considers appropriate for the purpose of restricting or disrupting further involvement in serious crime.

7.3.4 Monetary penalties

OFSI has the power to impose monetary penalties for breaches of financial sanctions under powers in the Policing and Crime Act 2017.

The maximum value of a monetary penalty may range from 50% of the total breach up to £1m – whichever is the greater value. OFSI takes several factors into account when considering a proportionate penalty value. The value will be based on the facts of each case, with reductions being applied particularly in cases that have been voluntarily disclosed to OFSI.

OFSI’s monetary penalty powers were further clarified on 15 November 2023 when amendments (inserted by the Economic Crime and Corporate Transparency Act 2023) to the Policing and Crime Act 2017 came into force. This made it clear that OFSI can impose penalties under the 2017 Act for breaches of provisions which are supplemental to financial sanctions, including reporting and information offences.

Please see our guidance on monetary penalties for more information.

7.3.5 Monetary penalties for breaches of Reporting Obligations for designated persons under the Russia or Belarus regimes

Regulation 88C(1A) of the Russia Regulations and Regulation 56C(1) of the Belarus Regulations makes provision for OFSI to impose monetary penalties for breaches of the DP asset reporting requirement (see paragraph 5.11). The maximum value of a monetary penalty is 50% of the value of the funds or economic resources which OFSI have not been informed of or £1m – whichever is the greater value.

OFSI is the part of the Treasury that applies these powers. More detail on what the powers are, how OFSI will use them, and a person’s rights if OFSI imposes a monetary penalty on them can be found in the Russia and Belarus Guidance.

The investment restrictions in the UK’s Russia sanctions regime prohibit UK persons from undertaking certain activities in relation to land in Russia or in non-government controlled Ukrainian territory. Although these prohibitions are technically trade sanctions under the Sanctions Act, OFSI is responsible for implementing them (as part of the implementation of wider investment restrictions). Regulation 88C of the Russia Regulations makes provision for OFSI to impose a monetary penalty if a person breaches these prohibitions (regulation 88C(1B) or provisions supplemental to them (regulation 88C(3A)).

Question 8

8.  Challenging designations

Accepted Answer

Those who are subject to financial sanctions can request a reassessment of their listing. The financial sanctions will remain in place while the reassessment is taking place.

8.1 UN listings

If you are a designated person who is named in a UN list, you, or a person acting on your behalf, have the right to request the UK government use its best endeavours to secure the removal of your name from the relevant UN list.

You may wish to request such an action if you believe that the reasons for your designation are incorrect.

8.2 UK listings

If you are a designated person (other than a person designated under a UN list), you, or a person acting on your behalf, have the right to request a revocation or variation of your designation.

You may wish to request a revocation, for instance, if you believe that the reasons for your designation are incorrect, or a variation if, for instance, particular information associated with your designation, such as your date of birth, is incorrect.

Other reasons for seeking a revocation could include if you believe your designation is inappropriate having regard to the purpose of the regime, or the likely significant effects of the designation, or it is incompatible with the Human Rights Act 1998.

For further information, including eligibility to apply for a variation or revocation of a designation, submitting a sanction challenge form and other information, consult the Foreign, Commonwealth and Development Office guidance.

8.3 Submitting a request

If you have been designated or listed and wish to request the revocation, variation or review of your designation or the removal of your listing, you should complete a review request form. This covers requests for reviews, revocations, variations or removals. There is also further guidance available on the process.

By properly and fully completing the form, you will ensure that you meet the requirements for a valid request. This form can also be completed by another person on the behalf of the designated or listed person, if confirmation of authority is provided.

Question 9

9.  Glossary

Accepted Answer

The following is a general description of terms used throughout this guidance. For exact terms used in context, please see the up-to-date version of the relevant legislation.

If you are in doubt about any of the terms listed below, please contact OFSI or seek independent legal advice.

Term	Definition
Asset freeze	A type of financial sanction. Under an asset freeze it is generally prohibited to: • deal with the frozen funds or economic resources, belonging to or owned, held or controlled by a designated person • make funds or economic resources available, directly or indirectly, to, or for the benefit of, a designated person • engage in actions that, directly or indirectly, circumvent the financial sanctions prohibitions
Consolidated list	A list maintained by OFSI containing designated persons subject to financial sanctions
Dealing with economic resources	Generally means using economic resources to obtain funds, goods, or services in any way, including (but not limited to) by selling, hiring or mortgaging them
Dealing with funds	Generally means moving, transferring, altering, using, accessing or otherwise dealing with funds in any way which would result in any change to their volume, amount, location, ownership, possession, character, destination or other change that would enable the funds to be used, including portfolio management
Designated person (DP)	A person subject to financial sanctions
Economic resources	Generally means assets of every kind – tangible or intangible, movable or immovable – which are not funds, but may be used to obtain funds, goods or services
Exception	Generally found in financial sanctions legislation
Funds	Generally means financial assets and benefits of every kind
Goods	Generally means items, materials and equipment
Licence	A written authorisation from OFSI permitting an otherwise prohibited act
Name match	The situation where a person you are dealing with partially matches the details of a person on the OFSI Lists. Unlikely to be a target match
OFSI	Office of Financial Sanctions Implementation, which is part of HM Treasury
Ownership	The possession of more than 50% of the proprietary rights of an entity or having a majority interest in it. Includes both direct and indirect ownership
Person	Can be a natural person (an individual), or a legal person, body or entity
Proscription	The Home Secretary’s power to proscribe (ban) an organisation under the Terrorism Act 2000
Reasonable cause to suspect	Refers to an objective test that asks whether there were factual circumstances from which an honest and reasonable person should have inferred knowledge or formed the suspicion
Statutory instruments (SIs)	A form of legislation which allows the provisions of an Act of Parliament to be subsequently brought into force or altered without Parliament having to pass a new Act. They are also referred to as secondary, delegated or subordinate legislation
Target match	The situation where the person you are dealing with matches the details of a person on the OFSI Lists. Likely to be a confirmed match for that person
UK sanctions list	A list maintained by the Foreign, Commonwealth and Development Office of all designated persons subject to sanctions by the UK under the Sanctions Act

Cookies on GOV.UK

1. Overview of financial sanctions

1.1 Why do we have financial sanctions?

1.2 Who is involved in creating and implementing sanctions?

UK government departments and agencies involved in sanctions

1.3 Types of financial sanctions

1.4 Who needs to comply with financial sanctions?

2. Who is subject to financial sanctions

The consolidated list of asset freeze targets

List of persons named in relation to financial and investment restrictions

2.2 Using the OFSI Lists

Examples of name and target matches

2.2.1 Getting updates

2.2.2 Proscription under the Terrorism Act 2000

2.3 The UK Sanctions List

3. What financial sanctions restrict

3.1 Asset freezes

3.1.1 What they do

3.1.2 What you must do

3.1.3 Asset freezing terminology

Funds

Economic Resources

Goods

Cryptoassets

Dealing with funds

Dealing with economic resources

Making available funds or economic resources

3.2 Other financial restrictions

Financial assistance, financial services and processing payments

4. Ownership and control

4.1 Ownership and Control

Example: Ownership and control relating to entities

Example: Ownership and control relating to individuals

4.1.2 Minority interests

4.1.3 Joint Interests

4.1.4 Aggregation

5. Reporting to OFSI

5.1 UK financial sanctions regimes made under the Sanctions Act

5.1.1 Reporting Obligations for relevant firms

5.1.2 Relevant firm

5.1.3 Relevant Institutions

5.1.4 Reporting obligations for required payments

5.1.5 Additional Reporting Obligations (Russia Regime)

5.2 UK financial sanctions regimes under the Anti-Terrorism, Crime and Security Act 2001 (ATCSA 2001)

Examples of information to be reported

5.3 How to report

5.4 Legal professional privilege

5.5 Reporting offences

5.6 OFSI’s powers to require information from you

5.7 OFSI’s power to authorise the disclosure of information

5.8 Annual frozen assets review

5.9 Other reporting obligations

5.10 Onward disclosure

5.11 Additional Reporting Obligations for designated persons under the Russia and Belarus regimes

6. Exceptions and licensing

6.1 Crediting frozen accounts

6.2 Independent person holding legal or equitable interest in frozen funds or economic resources

6.3 Ring-fencing

6.4 Required Payments

6.5 Licensing overview

6.6 Licensing grounds: UK regimes

OFSI’s approach to licensing grounds

6.7 Further details

6.7.1 Legal advice

6.7.2 Court fees

6.7.3 Investments

6.8 Licensing grounds: other domestic regimes

6.9 General licences

Counter-terrorism general licences

6.10 Applying for a specific licence

6.10.1 Submitting an application

Tips for applicants

6.10.2 Specificity in licensing

6.10.3 Counter-terrorism regimes

6.11 Licensing timeframes

6.11.1 Urgent and humanitarian cases

6.11.2 Notification and approvals

6.12 Amending licences

6.13 Refusal of a licence

6.14 Other jurisdictions