OFSI's Enforcement Playbook Is Being Redrafted: What This Potential Reform Means for You

On 22 July 2025, the UK’s Office of Financial Sanctions Implementation (OFSI) launched a major consultation proposing wide-ranging enhancements to its civil enforcement framework (the Consultation). The Consultation is open until 13 October 2015. 

Why Now?

There has been a broader trend of more assertive OFSI sanctions enforcement indicated by the monetary penalty of £5,000 in April 2025 imposed by OFSI on Svarog Shipping for failing to respond to a Request for Information (RFI). OFSI has also published a series of sector-specific threat assessments warning firms about professional enabler networks, vulnerabilities, and jurisdictional risks following the Russia-Ukraine conflict. Taken together, OFSI’s strategy signals a shift from a “soft-touch” regime to a more assertive one, mirroring that of the United States. However, the proposals found within the Consultation, whilst attempting to balance certainty and transparency with proportionality, may create more ambiguity around what is expected of individuals and firms when faced with sanctions enforcement.

What Is Being Proposed?

Set Penalty Discounts for Cooperation 

Voluntarily disclosing breaches affects whether a voluntary self-disclosure discount can be applied in monetary penalty cases. Currently, OFSI can make reductions which range from 50% for voluntary self-disclosure in a “serious case” to 30% in a case assessed to be “most serious”. OFSI is of the opinion that this current range may fail to reflect the overall severity of the breach, thus the Consultation suggests capping voluntary cooperation discounts at 30%. However, reducing the maximum discount could counterproductively dampen the self-reporting ethos crucial to OFSI’s compliance strategy, leading potentially to more costs, drawn-out investigations, and firms being inhibited from coming forward voluntarily. 

A Formal Settlement Scheme

Under the proposals, firms may choose to seek to agree to a settlement with OFSI early in monetary penalty cases, simplifying processes and potentially reducing legal costs. This settlement scheme would be offered at OFSI’s discretion in what it considers appropriate cases and would not replace OFSI’s usual decision-making process. Under this proposed settlement scheme, OFSI would continue to send formal RFIs to the subject of an investigation, and subject to the responses received, OFSI would consider whether to offer the opportunity of engaging in the settlement process. 

Early Account Scheme (EAS)

OFSI proposes to introduce an EAS in which the subject of an investigation would agree to provide a detailed factual account of the potential breaches together with all relevant materials and evidence. The EAS is dependent on the settlement scheme being introduced and would not be introduced in isolation. Should the EAS be used, and should OFSI consider it appropriate, OFSI proposes the maximum settlement discount would be increased from 20% to 40%. Whilst a good incentive for those identified by OFSI as potentially failing to comply with UK sanctions, those under investigation will likely need to invest more time and money to complete their internal investigations. This may offer greater control to those subject to such investigations, the potential challenge for them is ensuring that such investigations are carefully defined and scoped to remove the risk of ‘scope creep’ by OFSI.

Penalty Process for Information, Reporting, and Licensing Offences

OFSI is considering two alterations to penalty processes for information, reporting, and licensing offences which are (a) the possible pursuit of indicative penalties for certain offences, and (b) the introduction of statutory fixed penalties. Under the indicative penalty proposal, OFSI may set baseline penalties or use a fixed-rate model per offence, allowing faster resolutions. Alternatively, OFSI has also proposed a simplified process streamlining civil penalties using a fixed penalty in which lower-severity breaches would receive standardised fines. The concern for firms is that they may be fined for minor administrative lapses, such as delays in submitting a licence report. Standardized penalties may also not reflect context and as such lack the proportionality which OFSI is hoping to achieve. This proposal also gives minimal room to challenge or appeal the outcome which may appear to lack fairness and enable OFSI to claim ”successes” despite not increasing their enforcement action in relation to substantive sanctions breaches.

Changes to Statutory Penalty Maximums

The current permitted maximum civil financial penalty which can be imposed by OFSI is the greater of £1 million and 50% of the estimated value of the funds or resources. OFSI is proposing changing this amount to £2 million, with the option for fines up to 100% of the value of the fund or resources involved. OFSI would retain a process to assess what level of monetary penalty within that maximum is reasonable and proportionate, which could be any amount between zero and the maximum. Although this increases the potential for financial penalties to have a significant deterrent effect, OFSI still applies penalties on a case-by-case basis which, without strict criteria, may mean decision-making remains opaque and unpredictable. 

Conclusion 

These proposals signal that the United Kingdom is aligning more with the US-style sanctions enforcement model by introducing higher penalties, formal settlement schemes, and capping voluntary disclosure discounts. OFSI is seeking to send a clear message: cooperation is now an expected baseline rather than a route to significant leniency. Compliance with reporting obligations, engaging in RFIs, and voluntary disclosure remain a key focus area for OFSI in its enforcement efforts. However, the ultimate test will be whether we see increased enforcement action by OFSI, particularly given the somewhat limited number of cases we have seen over the past few years. 

If you would like to discuss any of the aforementioned proposals and what this means for you, please do not hesitate to contact Michael E. Ruck, Rosie Naylor, Petr Bartos and Laura Scott.