OFSI sanctions enforcement update: February 2026

The UK’s Office of Financial Sanctions Implementation (‘OFSI’) has updated its financial sanctions enforcement and monetary penalties guidance. The updates took immediate effect on 6 February 2026, following a cross-government consultation.

A revised case assessment model

OFSI has revised its case assessment framework, including these key points:

Voluntary disclosure discount

OFSI has also made the rules around discounts and penalties clearer and more predictable. A single penalty discount of up to 30% now applies where parties cooperate promptly, voluntarily and fully with OFSI's investigation.

The guidance is strict on what counts as co-operation. Disclosure will not be deemed voluntary if it is in response to a request from OFSI for information, or if the party acts because OFSI has become aware of the case; in addition, OFSI expects an “initial disclosure” ahead of a fuller report.
Seriousness matrix

OFSI has implemented a new four-tier "seriousness matrix”.

OFSI will combine the severity of the breach and conduct of the breaching party. Level 3 cases (high seriousness) are likely to result in a civil monetary penalty with a baseline of 75% of the statutory maximum (i.e., the greater of £1 million or 50% of the estimated value of the funds involved in the breach). OFSI is, however, seeking to increase the statutory limit to £2 million or 100% of the value of the breach, but legislation will first need to be passed. Level 4 cases (very high seriousness) may be referred for criminal investigation in the first instance – where prosecution is unsuccessfully brought, this may mean a very long road ahead for a company where OFSI then reverts to the civil penalties as a second bite of the apple.
Severity and conduct

After OFSI determines there has been a breach of sanctions, OFSI then assesses the severity of the breach and the subject’s conduct.

There are a number of factors that OFSI assesses for severity; the "strategic priority of the sanctions regime" is one notable addition, where OFSI will take into account whether the breached sanctions regime is of “particular importance”.

Unhelpfully, OFSI does not explain which regimes are of particular importance. We expect Russia is one of them, but one could reasonably expect all regimes to be important; otherwise, why have them?
Financial Hardship

In exceptional cases, OFSI may now reduce a monetary penalty where payment would cause severe financial hardship and a reduction is in the public interest. Reductions may be refused even where hardship is demonstrated if the breach is particularly serious. In cases of extreme hardship, OFSI may consider instalment plans to address short term constraints.

Parties should have no expectation of reduction, and should remain realistic: serious breaches may preclude reduction despite hardship.

Overall, the updated guidance reflects a hardening of OFSI’s enforcement practice, particularly when (as expected) the statutory maximum penalty is increased.

The Early Account Scheme (‘EAS’)

OFSI has introduced a new EAS, to expedite an investigation in appropriate cases. Available to entities only (not individuals), a company may be permitted to provide an early, evidence supported account of its potential sanctions breaches. This could be by way of meetings between OFSI and the company, as opposed to dealing only in written correspondence, to facilitate transparency.

Participation does not automatically lead to enforcement, but in circumstances where a monetary penalty is imposed, an EAS participant may benefit from a discount of up to 20%.

Access must be requested and it is not guaranteed. OFSI will consider its confidence in the company’s willingness and ability to provide a full account; OFSI has indicated it is unlikely to permit EAS access where the company knowingly failed to report suspected breaches. OFSI may also require an independent third party to conduct the investigation if internal processes are deemed insufficient.

The Settlement Scheme

OFSI’s new formal Settlement Scheme offers a reduction of up to 20% on monetary penalties where the subject meets the scheme’s requirements: this includes the subject agrees not to contest OFSI's decision by waiving the right to a ministerial review and subsequent appeal to the Upper Tribunal.

If the agreement is signed within 30 days of discussions commencing, the subject is entitled to:

(i) input into the summary of the case as it will be published; and
(ii) a 20% discount on any baseline monetary penalty.

Although settlement was previously off the table where knowing circumvention was involved or co operation was lacking, OFSI may now consider settlement in circumvention cases where meaningful remedial action has been taken (for example, the dismissal of responsible individuals).

Given the importance of public perception, OFSI has clarified that it will not anonymise a subject's identity as part of any settlement. Parties considering the Settlement Scheme will therefore have to think very carefully: signing a settlement agreement will mean signing away the right to review, and to any prospect of anonymity.

Stacking up discounts

OFSI have clarified that, in cases where two or more of these discounts apply to a subject's case, the discounts are intended to be additive and are applied to the baseline monetary penalty. For example, EAS (20%) + Settlement Scheme (20%) = 40% total discount on a monetary penalty. This includes the pre-existing discount offered by the Voluntary Disclosure and Co-operation discount, which offers a maximum reduction of 30%.

In aggregate, co operating with OFSI could reduce the baseline penalty by as much as 70%. Whether OFSI will, in practice, stack discounts to the maximum remains to be seen.

Clarity on fixed monetary penalties

More information is now available on how fixed monetary penalties will operate. These penalties can be up to £10,000, in response to certain information, reporting and licensing breaches.

Late reporting and breaching a license, up to a value of £10,000, can trigger a fixed penalty. A minor breach may only result in a private warning letter from OFSI. By contrast, the guidance indicates a failure to respond to a request for information, with an aggravating factor, could lead to a £10,000 penalty, although OFSI has the right to impose a higher penalty up to the statutory maximum.

The period to make representations with regard to a fixed penalty has been halved, to 15 business days, with a further 15 business days to request a review after OFSI's decision.

Conclusion

OFSI has attempted to clarify and strengthen its guidance to reflect the continued drive for efficiency and transparency for UK parties, with a strong focus on public perception.

The updated framework strongly incentivises early, comprehensive self disclosure and constructive engagement at each stage. Parties should make prompt, realistic merits assessments and weigh the trade off between waiving certain review rights and materially reducing their financial exposure.

With thanks to Joseph Hearn and Rosie Mennis for their contributions to this article.

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