Guidance

Financial sanctions guidance for charities and non-governmental organisations (NGOs)

Updated 21 June 2024

This guidance is produced by the Office of Financial Sanctions Implementation (OFSI), part of HM Treasury, the authority for the implementation of financial sanctions in the UK. 

It provides financial sanctions guidance for entities and individuals which operate, or interact with, charities and non-governmental organisations, especially those who are involved in work that may include activity with those subject to UK financial sanctions.

This should be considered supplementary to, and not a replacement for, OFSI’s general guidance. Further sources of information that may prove helpful can be found at the end of this guidance.

This guidance does not represent legal advice.

If you are unsure about your obligations in a given case, you should consider seeking independent legal advice.

1. What are financial sanctions?

Financial sanctions help the UK meet its foreign policy and national security aims, as well as protect the integrity of its financial system. Financial sanctions include restrictions on designated persons, such as freezing financial assets, as well as wider restrictions on investment and financial services.

Financial sanctions are organised into geographic and thematic regimes. You should consider your exposure to thematic regimes, even if you are operating in a jurisdiction not subject to a geographic regime.  

For general information on financial sanctions, your obligations, and licensing, OFSI provides general guidance available here.

2. The scope of UK financial sanctions

The global nature of the work undertaken by charities and NGOs means it is important to be aware of the wide-reaching scope of UK 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 and territorial sea 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 your activities take place

3. Charities and NGOs

Charities and NGOs must comply with financial sanctions. It is a criminal offence to breach financial sanctions. This applies to all charities and NGOs, including individual members of staff, regardless of whether they are government-funded.

However, charities and NGOs can:

• rely on exceptions in the law which permit certain activities
• apply for a licence to work with or through a sanctioned individual or organisation

For more information, please review the licensing section of this guidance, and OFSI’s general guidance

4. Dealing with a designated person

An individual or entity who is the subject of sanctions is referred to as a ‘Designated Person’ (DP). If you think you are dealing with a DP, review the information you have about the individual or organisation, checking OFSI’s ‘consolidated list’ of those subject to financial sanctions on GOV.UK.

If you are unsure and there is no risk to yourself or others connected to your charity or NGO in doing so, consider asking them for more information.

You should also consider if they are ‘owned’ or ‘controlled’ by individuals or organisations subject to financial sanctions, either directly or indirectly.

OFSI’s general guidance also includes more information on ‘ownership and control’.

If you establish that you are dealing with a sanctioned individual or organisation, take these steps:

1. Contact OFSI immediately

2. Freeze their funds and economic resources in your possession

3. Do not make funds or economic resources available to them.

It is against the law to receive money, goods or economic resources from, or send these to – an individual or organisation subject to financial sanctions, unless you have a licence from OFSI or can rely on an exception in the legislation.

5. Financial sanctions imposed by other countries

As a member of the UN Security Council, the UK imposes all financial sanctions created by this body as well as some of its own financial sanctions.

Financial sanctions imposed by other governments may also impact your ability to operate where:

• your operations are within their jurisdiction
• goods originate from that country (if exporting goods)
• you are dealing in their currency

If you operate in (or through) another country, check:

1. what financial sanctions are in place in that country

2. if you need a licence with the relevant licensing body

For example, if you plan to transact in US dollars or work with US persons or companies, check that you comply with US sanctions.

6. Due diligence

You should assess your risks and put due diligence measures in place to manage these risks. OFSI does not mandate specific measures to be taken, but you may use the following good practice recommendations to guide your compliance efforts.

6.1 Due diligence practices

If you are conducting activity in, or around, high-risk countries or territories you should seek to have a strong understanding of the sanctions regulations in place, including the relevant obligations.

You should always seek independent legal advice where necessary and operate a risk-based approach, conducting enhanced due diligence where appropriate. You should also ensure you maintain a strong compliance programme.

Strong Compliance Programme

We recommend that, as appropriate, you should implement a strong sanctions compliance programme proportionate to the risk you face and provide training and resources to your personnel. As part of your programme, you may consider:  

• communicating compliance expectations with partners, subsidiaries, and affiliates in line with local regulations
• developing, implementing, and adhering to written, standardised operational compliance policies, procedures, standards of conduct, and safeguards
• implementing compliance programmes, which should specify that engagement in sanctionable conduct may result in immediate termination of business or employment, or alternatively, confirm the adoption of controls to mitigate associated risks
• protecting employees that disclose illicit behaviour from retaliation and establish a confidential mechanism for reporting suspected, actual illicit or sanctionable activity
• ensuring that your sanctions compliance programme is routinely audited by qualified third parties to ensure both continuous improvement and effectiveness of your measures and controls
• routinely checking the UK Sanctions List, and the OFSI Consolidated List

Sanctions information sharing

For effective sanctions compliance, it’s important to create awareness within the sector about challenges, threats, and ways to reduce risks. OFSI suggests industry groups take proactive steps to raise awareness of financial sanctions and encourage the sharing of best practices.

Charities and NGOs are encouraged to collaborate with the financial industry. This may be with their bank or other financial services provider, involving competent authorities if necessary. This collaborative approach establishes a strong network for sharing crucial information and collectively enhancing sanctions compliance efforts in the sector.

Any person who engages in prohibited activity in relation to transport or trade restrictions should immediately contact the Department for Transport and the Department for Business and Trade respectively.

6.2 Informal Value Transfer Systems (IVTS)

It is important to consider due diligence when using IVTS. IVTS is also known as ‘Alternative Remittance Systems’, ‘money service businesses’, or ‘non- traditional banking methods’. IVTS are alternative non-formal banking systems for moving funds to a third party in another geographic location. The movement may involve funds themselves or their equivalent value. IVTS are sometimes used where there may be no formal banking facilities available, or where there are, there is limited access to them.

If charities or NGOs use IVTS to transfer and move funds, The Charity Commission advises that charity trustees must be able to show that this is a reasonable decision in the circumstances, and the risks have been appropriately managed.

Common IVTS include ‘hawala’ banking (used in Muslim communities), ‘chiti’ banking (used in Hindu communities), ‘chop-shop’ (used in Chinese communities), and ‘fei-ch’ien’ and ‘hui kun’ (used in Southeast Asia).

In the UK, Hawala banking is not illegal, and many are regulated by HMRC. As with any financial institution, IVTS must comply with the regulations of England and Wales. If you have concerns that the IVTS you are using is not compliant, you should cease business immediately and report to HMRC using the contact details at the end of this guidance.

Where a charity or NGO decides to use an IVTS within a project or programme you should assess all aspects of your proposed payment route to identify if any partners, contractors or financial institutions appear on the consolidated list of asset freeze targets prior to making any transaction.

7. Licensing

If a certain activity is prohibited under a financial sanctions regime, and there is no relevant exception in the law which permits it, you need to apply for a licence.

Activity is not necessarily permitted just because it is for a charitable or humanitarian purpose.

An OFSI licence allows financial activity with individuals or organisations, subject to financial sanctions, which would normally be prohibited.

Licences can only be granted where there are specific and relevant licensing grounds. There is often – but not always – a licensing ground that specifically relates to humanitarian activities. This will be set out in the relevant piece of legislation.

It is important to be aware of the relevant licensing grounds which vary for each regime and can include constraints. There are also usually attached reporting requirements.

Applicable licensing grounds are covered in the regulations for each financial sanctions regime.

Information about what financial sanctions are in place for each regime is available on OFSI’s pages on GOV.UK.

7.1 Applying for a licence

The charity or NGO – as opposed to the grant-maker or donor – that is dealing with the individual or organisation subject to financial sanctions applies for the licence.

The humanitarian licence is the most common licence issued to charities and NGOs, but you should review the full list of licences before applying. It is also important to note that an application cannot be made retrospectively.

You do not need a licence for most humanitarian work. However, you do need a licence if, for instance, there is no exception, and you are:

• dealing directly or indirectly with a sanctioned individual or organisation in a way that is prohibited under the relevant financial sanctions regulations
• sending funds or providing goods or services to the Democratic People’s Republic of Korea

This list of indicative instances is not exhaustive, and as new financial sanctions regimes can be introduced at any time and existing ones are subject to change, please check that you are following current regulations and contact OFSI if you are unsure of anything.

Always check the relevant regulations to ensure you are compliant. Certain regimes have ‘blanket conditions’ that apply even if there is not a sanctioned individual or organisation involved in the activities.

7.2 Government-funded projects

Even if you are receiving government funding, you need a licence if you plan to make funds or economic resources available to individuals or organisations subject to financial sanctions. There may also be additional provisions which are outlined in the regulations.

You must discuss any potential licensing requirements as early in the process as possible as licences need to be approved by the UK government, and potentially by the UN.

7.3 Cash couriering

Although entire countries are not usually subject to financial sanctions, some activities in certain countries are restricted.

Normally, individuals and organisations subject to financial sanctions are listed under a country or terrorist ‘regime’.

These financial sanctions are not necessarily asset freezes. For instance, certain financial sanctions regimes place restrictions on making financial transfers to (including taking cash into) countries.

Even if you are dealing in cash, or anything that could be exchanged for it, the same rules apply; you are not permitted to make funds or any economic resources available – directly or indirectly – to individuals or organisations subject to financial sanctions without a relevant exception that covers your activity, or a licence from OFSI.

7.4 Timeframes for humanitarian licences

OFSI treats applications for licences for humanitarian purposes – where there are genuine life-threatening circumstances – as high priority.

Although we can’t provide timeframes as each case will vary, we’ll ensure that you’re kept up to date on urgent requests.

There may be some activities that are prohibited and cannot be licensed. These vary from regime to regime and depend on the relevant regulation.      

For example, OFSI is not able to licence payments, such as taxes or fees paid to those subject to an asset freeze, where there is no exception, and no licensing ground exists.

Sometimes fees or taxes you are asked to pay could constitute a payment of a bribe to a government official or a terrorist group, for instance, in exchange for being able to operate in an area. Charities and NGOs should equally consider their obligations under the Bribery Act 2010 and report to the NCA.

Further information on Bribery and Corruption is available on the NCA’s website.

There are humanitarian exceptions under certain regimes. Asset freeze exceptions may also exist. More information on exceptions is available in the relevant regulations.

Please check the relevant regulations for the financial sanctions regime for up-to-date information, including the terrorist financing sanctions regimes as certain exceptions do not apply under these regimes.

8. Higher risk countries and territories

Certain countries and territories pose a higher risk to effective compliance with UK financial sanctions and your compliance efforts should be proportionate. This section provides further information on these countries and territories.

The guidance provided in this chapter is to support your compliance programme and is not exhaustive.

8.1 Syria

The UK’s Syria sanctions regime provides for restrictive measures (including asset freezes) to be imposed on those identified as:

• leading businesspeople operating in Syria
• members of Assad or Makhlouf families
• Syria Government ministers after May 2011
• members of Syria armed forces of the rank colonel or higher after May 2011
• members of Syria security and intelligence services in post after May 2011
• members of regime-affiliated militias; and persons operating in the chemical weapon proliferation sector

There are several financial restrictions including in relation to:

• making funds or economic resources directly or indirectly available to designated persons
• sale or purchase of certain Syrian public or guaranteed bonds
• establishment of new banking relationships
• provision of certain insurance and reinsurance products
• engagement or investment in the Syrian oil industry sectors of exploration, production or refining; and construction of new power plants for the production of electricity in Syria

There are further restrictions, including on:

• the import and/or export of certain goods from/to Syria (those which might be used for internal repression, jet fuel, luxury goods, key equipment for the oil and gas industry, and telecommunications monitoring and interception equipment)
• the import, export, or transfer of certain cultural property and precious metals
• the import of arms, and crude oil and petroleum products
• the delivery of Syrian denominated banknotes and coinage to the Central Bank of Syria

The above lists are not exhaustive and do not give full details of what the restrictions are in each case. The relevant regulations should be consulted for a complete picture of the relevant restrictions.

8.2.1 Petroleum products / crude oil in Syria

Crude oil or petroleum products exported from or that originated in Syria are restricted goods. The import, purchase or transport of such restricted goods requires a licence from the Export Control Joint Unit (ECJU), part of the Department for Business and Trade (DBT) (see contact details at the end of this guidance). It is also prohibited to provide financing, financial assistance, insurance and re-insurance for such restricted goods.

If the trade or related financing of these restricted goods involves the release of frozen funds, or funds or economic resources being made available to a designated person, a license from both DBT and OFSI would be required. You should check if the humanitarian exceptions and/or licences could apply to your activities.

8.2.2 Exceptions in relation to Syria

There are specific exceptions which apply to certain activities, which are set out in the relevant regulations.

For example, organisations providing humanitarian assistance to the civilian population in Syria are exempt from the prohibitions relating to purchase and transfer of petroleum products (where these are purchased or transported for the sole purposes of providing humanitarian relief in Syria or assistance to the civilian population) if they have received funds from the UK Government. If you rely on this exception, you must notify its use to the Export Control Joint Unit (ECJU).

Those who don’t receive such public funds will need to apply for a licence. The relevant regulations should be consulted for a complete picture of the relevant exceptions.

8.3 Afghanistan

The Afghanistan (Sanctions) (EU Exit) Regulations 2020 put in place sanctions measures to ensure the UK continues to meet its obligations under the United Nations sanctions regime relating to Afghanistan.

The Afghanistan (Sanctions) (EU Exit) (Amendment) Regulations 2022 came into force on 28 January 2022, reflecting United Nations Security Council Resolution (UNSCR) 2615 (2021) on humanitarian assistance and other activities that support basic human needs in Afghanistan (see Exceptions below)

The Taliban is not designated as an entity but specific individuals who are members of, or are associated with, the Taliban are designated.  Since the Taliban takeover of Kabul, certain designated persons have been appointed to positions of authority in Afghanistan.

Individuals and entities listed under these sanctions regulations can be found on the UK sanctions list. For ease of access, all those designated under the Afghanistan Sanctions regime or a Counter Terrorism regime, can be found on OFSI’s sanctions by regime page.

8.3.1 Hawala banking in Afghanistan

There are a large number of Hawaladars in Afghanistan (see IVTS section above). The money remittance services that IVTS and MSBs provide are often vital to those that receive them and in some cases, it may be the only access to funds they have. However as with any non-formal routes, you should be aware of the potential for increased risk and therefore conduct enhanced due diligence in line with your charities’ or NGOs’ exposure.

Banks and other financial services providers will make commercial decisions on who and where their services are provided to, independently of government.

If the only option is to facilitate a payment through Hawala banking:

• obtain as much information as possible about the Hawala provider and the parties involved prior to making the transaction
• discuss the payment route with your bank in advance

8.3.2 Exceptions in relation to Afghanistan

The Afghanistan (Sanctions) (EU Exit) (Amendment) Regulations 2022 provides an exception to the asset freeze. This exception means the prohibitions of the asset freeze are not contravened by carrying out relevant activity which is necessary to ensure the timely delivery of humanitarian assistance in Afghanistan, or to carry out other activities that support basic human needs in Afghanistan. 

The processing and payment of funds, other financial assets or economic resources, and the provision of goods and services necessary to ensure the timely delivery of such assistance or to support such activities are permitted. 

In addition, the UNSCR strongly encourages providers relying on this provision to use reasonable efforts to minimise the accrual of any benefits, whether as a result of direct provision or diversion, to individuals or entities designated on the 1988 Sanctions List.

When adopting this resolution on 22 December 2021, the UN Security Council committed to reviewing the implementation of this provision after a period of one year.

9. The UN humanitarian exception

The Sanctions (Humanitarian Exception) (Amendment) Regulations 2023 came into force on 09 February 2023, reflecting United Nations Security Council Resolution (UNSCR) 2664 (2022) on humanitarian assistance and other activities that support basic human needs. UNSCR 2664 provides an exception to the asset freeze and making available provisions which applies to all UN sanctions regimes, except for the Afghanistan (Sanctions) (EU Exit) Regulations (2020) which already contains provisions.

For the UNSCR 1267/1989/2253 ISIL (Da’esh) and Al-Qaida sanctions regime, the exception will be in force for a period of two years from the adoption of the UNSCR. The UN Security Council will consider whether to renew the exception before its expiry.

This humanitarian exception means that the prohibitions imposed by the asset freeze provisions are not contravened by a person carrying out “relevant activity” which is necessary to ensure the timely delivery of humanitarian assistance or to carry out other activities that support basic human needs.

“Relevant activity” is defined as any activity which would, in the absence of this exception, contravene the asset freeze and making available prohibitions. This would include the provision, processing and payment of funds or economic resources and the provision of goods and services necessary to ensure the timely delivery of such assistance or to support such activities.

The exception states that Condition A and Condition B must be met.

Condition A requires that the humanitarian assistance or other activities are carried out by:  

• the United Nations, including its Programmes, Funds and Other Entities and Bodies, and its Specialized Agencies and Related Organizations,
• international organisations, (c) humanitarian organisations having observer status with the United Nations General Assembly and members of those humanitarian organisations,
• bilaterally or multilaterally funded non-governmental organisations participating in the United Nations Humanitarian Response Plans, Refugee Response Plans, other United Nations appeals, or humanitarian clusters coordinated by the United Nations Office for the Coordination of Humanitarian Affairs
• any employee, grantee, subsidiary, or implementing partner of any organisation falling within paragraph (a) – (d) while and to the extent that they are acting in those capacities
• any other persons authorised by the Committee for the purposes of UNSCR 2664 (2022) 

Condition B is that the person undertaking the “relevant activity” believes that carrying out the “relevant activity” is necessary to ensure the timely delivery of humanitarian assistance, or to carry out other activities that support basic human needs and there is no reasonable cause for them to suspect otherwise.

In addition, UNSCR 2664 (2022) requests that providers relying on this exception use reasonable efforts to minimize the accrual of any benefits prohibited by sanctions, whether as a result of direct or indirect provision or diversion, to individuals or entities designated by the UN Security Council or any of its Committees, including by strengthening risk management and due diligence strategies and processes.

10. Breaching financial sanctions

Any person carrying out or involved with activities involving charities or NGOs should be aware of the risks posed and the consequences of failure to ensure compliance.

Breaches of financial sanctions are a serious criminal offence.

OFSI is responsible for monitoring compliance with financial sanctions applicable in the UK and for assessing suspected breaches of the regulations. OFSI has powers under the Policing and Crime Act 2017 to impose monetary penalties of up to 50% of the value of the breach or up to £1 million, whichever is higher, for breaches of financial sanctions.

OFSI can also refer cases to law enforcement agencies for investigation and potential prosecution. Breaches of financial sanctions are considered a serious criminal offence and may be subject to 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

 For exact penalties, please refer to the relevant legislation. 

Financial sanctions are part of a wider sanctions framework targeting illicit activity. As such, OFSI works with other parts of government, supervisory bodies and regulators to consider all reported noncompliance, and shares relevant information accordingly in line with the relevant sanctions and data protection legislation.

For further information on enforcement and compliance, you should consult OFSI’s general guidance and its enforcement and monetary penalty guidance.

11. Further support

For further support with UK financial sanctions, you can:

• Consult OFSI’s general, geographic and sectoral guidance
• Explore OFSI’s webinars and events
• Subscribe to E-Alerts from OFSI
• Email OFSI

OFSI works closely with the Export Control Joint Unit, which sits in the Department for Business and Trade. OFSI deals with financial sanctions and the Export Control Joint Unit with export-related trade sanctions.

You may also find the following links useful:

• The Home Office has published guidance for NGOs about operating within counter- terrorism legislation.

• The Charity Commission for England and Wales has published a compliance toolkit to help charity trustees manage risks and safeguard their charities from terrorism, fraud and other forms of abuse.

• For more information on export controls, contact the Export Control Joint Unit in the Department for International Trade, on +44 (0)20 7215 4594 exportcontrol.help@trade.gov.uk

• To report concerns over an IVTS or a suspected breach by an IVTS of the regulations, contact HMRC on 0800 595 000 or report online

• The Financial Action Task Force has published a best practice paper on combating the abuse of non-profit organisations