On 29 January 2026, the UK Office of Financial Sanctions Implementation (OFSI) published its response to the recent consultation on reforming its enforcement process. The reforms, prompted by the increased volume and complexity of sanctions enforcement since 2022, aim to improve transparency, efficiency, and proportionality in OFSI’s approach to enforcement. Below, we discuss the key changes and what they mean for businesses subject to the UK financial sanctions regime.

Key CHanges

Case Assessment Matrix and Voluntary Disclosure Discounts 

A new case assessment matrix will clarify how cases are categorised and how conduct is assessed, by covering (1) severity and conduct and (2) case outcomes.

In addition, the current voluntary self-disclosure discount will be replaced by a ‘Voluntary Disclosure and Cooperation’ discount capped at 30% (down from 50% for serious cases). It will now be available in all penalty cases, with eligibility and the level of discount depending on the extent of disclosure and cooperation.

Settlement Scheme

OFSI will introduce a time-limited, negotiated settlement scheme. Its subjects would be required to waive their appeal rights in order to participate.

A 20% discount will be applied to the baseline penalty for settling within a 30-business day period, with all discounts now applied cumulatively. OFSI will consider eligibility on a case-by-case basis.

Whilst admission of liability will not be required, subjects must agree not to contest OFSI’s findings. The settlements will not be anonymised—OFSI intends the public notice to act as a deterrent. However, the subjects will be able to provide input into the notice.

Early Account Scheme (EAS)

The EAS will allow subjects to provide an early, comprehensive account of potential breaches, expediting investigations.

A separate discount of up to 20% will be available for EAS participants, regardless of whether the case proceeds to settlement or is contested.

Subjects can access cumulative discounts for each of the categories above: up to 30% under the Voluntary Disclosure and Cooperation discount, 20% for entering a settlement and a further 20% under the EAS, bringing the total to a maximum of 70%.

Fixed Penalties for Information, Reporting, and Licensing Offences 

OFSI will impose fixed monetary penalties of either £5,000 or £10,000 for specific information, reporting and licensing offences, in accordance with the criteria OFSI has published publicly.

Note that not all breaches will result in a penalty; OFSI retains discretion to issue warnings or take no further action. The period for making representations against the penalties will be reduced to 15 business days. All penalties will be made public.

Statutory Maximum Penalties

OFSI is aiming to increase the maximum penalty 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.

This change requires legislation and will not take effect until passed by the parliament. OFSI will not adopt turnover-based or breach-by-breach penalty models at this time.

Actions for Compliance 

The majority of the changes set out in the response will be implemented in the coming weeks. Accordingly, businesses should act promptly to familiarise themselves with the developments and consider if their procedures require updating. To comply with the new framework, businesses should take the following steps:

• Review internal sanctions screening and reporting procedures, particularly focusing on escalation processes. Existing investigation processes should be assessed in order to find out if they allow for prompt decision-making once a potential breach is discovered.
• Consider engaging with OFSI early on to benefit from the cumulative discounts. However, seek appropriate legal advice before making a voluntary disclosure.
• Update staff training to reflect the changes in the framework so that day-to-day processes can stand up to regulatory scrutiny.
• Become familiar with the implications of the EAS and settlement schemes for ongoing and potential enforcement matters—promptly entering into negotiations can allow access to substantial discounts.
• Regularly monitor OFSI’s guidance for further details and implementation timelines.

Concluding remarks

OFSI’s enforcement strategy is evolving, signified by increased enforcement and increased penalties. At the same time, introduction of the substantial cumulative discounts demonstrates that OFSI seeks to encourage and reward cooperation. 

If you have any questions or would like to discuss what the sanctions enforcement regime means for you, please do not hesitate to contact the authors.