OFSI Publishes Consultation Response and Updated Enforcement Guidance: Key Changes for UK Sanctions Enforcement

On January 29, 2026, HM Treasury’s Office of Financial Sanctions Implementation (OFSI) published its response to the consultation on “Improving civil enforcement processes for financial sanctions” (“Consultation Response”), confirming that OFSI intends to proceed with all proposals consulted on in July 2025, subject to limited legislative dependencies. The majority of the changes have now been operationalized through updated guidance published on February 9, 2026.

The changes will introduce new procedural enforcement pathways and timelines, more structured (and cumulative) discount mechanisms, and a higher prospective statutory ceiling once legislation is implemented.

Background: Why OFSI Is Updating Its Approach
OFSI situates these reforms within a wider push to strengthen UK sanctions enforcement following the 2025 cross-government review of sanctions implementation and enforcement, which we discussed in our earlier article. That strategic direction was reinforced on March 10, 2026, when the government published its cross-departmental “Strategic Approach to Sanctions Enforcement,” confirming a coordinated, risk-based framework across all enforcement bodies.

At a high level, the UK government frames the reforms as intended to: (i) accelerate investigations and case resolution; (ii) reduce burdens on OFSI and those subject to UK financial sanctions; and (iii) improve transparency in case assessment.

In parallel messaging published the same day as the Consultation Response, OFSI Director Giles Thomson stated that the changes being introduced are designed to support compliance and provide greater certainty, while ensuring financial sanctions enforcement remains “fair, effective and robust.” Thomson also stressed that these reforms, most notably the Early Account Scheme (EAS) (discussed below), will help OFSI to reduce its significant case backlog and prioritize cases which have the greatest deterrent or compliance impact.

The changes are limited to OFSI’s civil enforcement remit in relation to financial sanctions and the Oil Price Cap under sanctions against Russia. Trade sanctions and criminal enforcement are unaffected by these changes.

Key changes to UK sanctions enforcement
The package of reforms represents a practical retooling of OFSI’s civil enforcement capacity and processes. The key changes are summarized below:

I. Revised case assessment framework and seriousness classification
The updated guidance introduces a case assessment matrix intended to make OFSI outcomes more transparent and predictable. OFSI assesses (i) the severity of the breach (low/medium/high); and (ii) the subject’s conduct (mitigating/neutral/aggravating) to assign an overall seriousness level (from Level 1 for low seriousness to Level 4 for the most serious cases).

The overall seriousness of a case in turn drives the likely outcome (from those likely to be dealt with via a private warning letter or public disclosure to the imposition of a monetary penalty and, in the most serious cases, potential referral for criminal investigation). The guidance also provides clearer direction on baseline penalty calculation for the highest levels (Level 3 up to 75% of the statutory maximum; Level 4 typically 75–100% if pursued through civil enforcement).

Alongside the matrix, OFSI has also refreshed the case factors to place greater weight on the strategic priority of the specific sanctions regime, culpability and governance factors, the adequacy of systems and controls, and whether the breach reflects systemic weaknesses versus an isolated incident.

II. Fixed monetary penalties
For certain information, reporting and licensing offenses, OFSI has introduced a fixed-penalty track with penalties of £5,000 or £10,000, depending on severity and any aggravating or mitigating features. The intention is for such offenses to be dealt with more efficiently and proportionately.

Not every applicable offense will lead to a fixed penalty. Many first-time or isolated breaches may be addressed privately, depending on the conduct and severity. Repeat or more serious violations, on the other hand, are more likely to attract a full monetary penalty.

Critically, timelines are compressed: Representations must be submitted within 15 business days after a notice of intention, OFSI then has 15 business days to make a decision, and any review must be requested within a further 15 business days. Settlement is not available for fixed-penalty cases, and such cases will be published with the subject named (resulting in additional reputational damage).

III. Early Account Scheme (EAS)
The new EAS enables eligible subjects to provide a comprehensive factual early account of the circumstances of the potential breach to OFSI in exchange for a discount of up to 20% on any monetary penalty which OFSI decides to impose. This is intended to streamline investigations and reduce iterative information requests.

Subjects will be notified that they are under investigation (unless doing so would result in the investigation being frustrated), and this notification will include the opportunity to indicate within 15 business days if the subject wishes to provide an early account.

Where a subject has knowingly failed to report suspected breaches, or where significant investigative process has been made by OFSI (e.g., a substantive request for information has been issued), access to the EAS is unlikely to be offered.

IV. Settlement scheme
OFSI’s new Settlement Scheme is a time-limited negotiation process to resolve monetary penalty cases in a timely and efficient manner.

Where OFSI considers it appropriate, it may invite subjects to enter into settlement discussions. If the subject agrees, OFSI will send a draft summary of the case it intends to publish. As part of the settlement, the subject can input into the published case summary (potentially mitigating reputational damage, although OFSI states it will not settle based on anonymizing the subject) and will be entitled to a 20% discount to the baseline monetary penalty. Settlements must generally be reached within 30 business days.

V. Voluntary disclosure and co-operation penalty discount
OFSI has replaced its prior voluntary self-disclosure discount structure with a new Voluntary Disclosure and Co-operation (VDC) discount. Under the old approach, the maximum discount could reach 50% in “Serious” cases; under the revised framework, the maximum VDC discount is capped at 30% in all monetary penalty cases, with discretion retained to award less than 30% depending on the completeness of the initial disclosure and the quality/timeliness of subsequent cooperation. The revised 30% discount is intended to enhance the deterrent impact of monetary penalties, while still aiming to encourage full and early disclosure.

VI. Increased statutory maximum penalties
In its Consultation Response, OFSI has also confirmed that it intends to increase maximum civil penalty caps from the higher of £1 million or 50% of the value of the breach to the higher of £2 million or 100% of the value of the breach. Legislation is needed to implement the change which will happen when Parliamentary time allows. This will be the first time OFSI has altered the cap since its introduction in 2017.

Ownership and Control
Separately, on February 16, 2026, OFSI launched a call for evidence on the operation of the UK financial sanctions “ownership and control” test.  Under current UK rules, an entity (Entity A) is deemed to be owned or controlled by another person (Entity B) where: (i) Entity B owns more than 50% of the shares or voting rights in Entity A; (ii) Entity B has the right to appoint or remove a majority of the board of directors of Entity A; or (iii) it is reasonable to expect that Entity B would be able to ensure the affairs of Entity A are conducted in accordance with Entity B’s wishes. Current UK guidance clarifies that, in relation to limb (i), OFSI would not simply aggregate different designated persons holding in a company absent a joint arrangement between the holders (e.g., if one sanctioned individual held 25% and another sanctioned person held 30%, this would not be aggregated to 55%).

The call for evidence is focused on how the test is being applied in practice and where firms are encountering interpretive uncertainty and operational friction. The call for evidence looks at areas such as ownership thresholds, aggregation, and the assessment of de facto control.

In the accompanying materials, the UK government confirmed that it “continues to actively explore options to respond to calls for greater alignment with international partners, including adopting an aggregation model and amending the 50% ownership rule to “50% or more,” in line with the EU and U.S. sanctions frameworks.” The consultation therefore has the potential to result in closer alignment with the U.S. and EU approaches to ownership thresholds and aggregation. Firms are able to respond to the call for evidence until April 13, 2026.

How Pillsbury Can Help
Under the revised enforcement framework, companies that face sanctions enforcement may be able to access multiple, cumulative reductions: up to 30% for VCD, 20% for EAS, and an additional 20% settlement discount. Combined, these could lower a penalty by as much as 70%. At the same time, HM Treasury has made clear its intention to increase the statutory maximum (once legislation is in place), meaning the “top end” exposure in the most serious matters may rise.

With OFSI’s enforcement posture tightening and procedural timelines compressing, companies should ensure they can identify, escalate and investigate issues quickly, preserve evidence, and make informed decisions on engagement pathways.

Pillsbury can assist with the full range of enforcement-response actions, including early breach triage and privileged internal investigations; disclosure/EAS/settlement strategy and drafting; managing OFSI engagement and representations; remediation and controls uplift aligned to OFSI’s revised case assessment factors; and before- and after-the-fact compliance training to improve governance and escalation processes.

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