This article sets out developments within the evolving sanctions framework in England & Wales and, importantly, what they mean in practice for organisations seeking to remain compliant.
Enforcement: Changes to the penalty framework
On 9 February 2026 the Office of Financial Sanctions Implementation (OFSI) issued revised sanctions enforcement and monetary penalties guidance, which represents a significant shift in how financial penalties are structured and discounted.
Key features of the new discount framework are:
- A new case assessment framework, reducing the maximum discount for self-disclosure and cooperation from 50% to 30%.
- An “early account scheme” for corporates, offering up to an additional 20% discount where an internal investigation is conducted in line with OFSI’s expectations. This is designed for complex or novel cases which would be difficult or resource-intensive for OFSI to investigate.
- A settlement mechanism providing a further 20% discount where agreement is reached within 30 business days and the person concerned waives their right to seek either a ministerial or judicial review.
In addition, OFSI introduced a separate fixed penalty route for certain types of breaches, including first-time failures relating to information requests, reporting obligations and licence conditions. These penalties will typically fall within the £5,000 to £10,000 range and are intended to be imposed within a three-week enforcement process. Alternative outcomes, such as taking no further action, issuing warnings, or public notices, remain available.
Organisations should prioritise early internal investigation and a structured approach for engagement with OFSI. Reduced discounts and tighter settlement timelines mean that acting quickly is increasingly important.
Ownership and control: ongoing uncertainty
The following week, on 16 February 2026, OFSI launched a call for evidence on industry’s views of the implementation of the ownership and control tests which are central to operation of its numerous financial sanctions regimes. Whilst that consultation is now closed and we await its outcome, the consultation document still provides useful insight into the government’s thinking on the matter.
While often referred to together, ownership and control are distinct legal tests:
- Ownership is established where a person holds more than 50% of the shares or voting rights in an entity, or has the right to appoint or remove a majority of the board of directors.
- Control, by contrast, is a broader concept. It is met where it is reasonable to expect that a designated person could, if they chose to do so, direct the affairs of an entity so that they are conducted in accordance with their wishes – whether in most cases or in significant respects. This assessment requires a fact-specific analysis.
The government has signalled that it is considering whether to align with the EU and US sanctions framework by moving to a “50% or more” test for ownership, rather than the current “more than 50%” test. It is also considering moving to an aggregation model for calculating whether the ownership threshold is met.
On control, the government is clearly alive to the difficulties of implementing the open-ended control test, which is why the review is being carried out. However, it used the consultation paper to emphasise its view of the control test as a critical anti-circumvention measure and make clear that there would be no significant drafting changes to it. It also noted that the difficulty with implementing the control test may have led to de-risking, where industry actors seek to avoid the potential risk of sanctions breaches. If this is correct, and the regulated private sector is no longer prepared to provide lawful services to designated persons, then the government will be deprived of an important information stream in the form of reports made by the private sector as a result of the reporting obligations imposed on it.
Organisations will need to continue to adopt a careful and well-documented approach to ownership and control assessments.
Enforcement trends
On the civil enforcement side, there has been a significant increase in enforcement investigations, particularly since the war in Ukraine began in 2022. As of April 2025, OFSI had 240 active cases under investigation, up from 172 in April 2023. However there have still been relatively few penalties imposed, and OFSI is trying to manage its caseload by prioritising cases which have the greatest deterrent or compliance impact.
Nonetheless the increase in investigations indicates a more active enforcement environment. Organisations should ensure their compliance frameworks are robust and capable of withstanding scrutiny, particularly as penalties are imposed on strict liability basis.
Conclusion
The UK sanctions landscape continues to evolve, with increasing scrutiny and changing expectations for organisations. A proactive, risk-based approach that is supported by clear policies, training and regular review are the key for maintaining compliance in this fast-moving area.
If you would like advice on sanctions-related issues, please get in touch with Alun Milford in our Criminal Litigation team.
