Sanctions Enforcement Shakeup: OFSI Consults on Doubling Penalties and Enforcement Changes

The UK’s sanctions watchdog is proposing to double the maximum penalty for breaches and introduce tougher rules on governance, disclosure and cooperation. With financial and reputational risks on the rise, is your sanctions framework ready for what’s next?

On 22nd July 2025, HM Treasury's Office of Financial Sanctions Implementation (OFSI) published a consultation proposing significant reforms to the enforcement of financial sanctions breaches in the UK. The consultation, which is open until 13th October 2025, indicates a stricter approach that could substantially increase the financial and reputational risks for firms that do not meet compliance expectations.

The main proposal is to raise OFSI's statutory maximum penalty. Currently, the cap is set at £1 million or 50% of the estimated value of the breach. Under the new consultation, this cap would be increased to a maximum of £2 million or 100% of the breach value.

Other proposals in the consultation include:

• The introduction of an ‘Early Account Scheme’, allowing the subject of an enforcement investigation to provide a full factual account of the matters under investigation.
• Alterations to penalty processes for information, reporting and licensing offences, including the possible pursuit of indicative penalties for certain offences and the introduction of statutory fixed penalties.
• A new two-step discount model for penalties (a ‘Voluntary Disclosure and Cooperation discount’), offering a 20% settlement discount with a potential increase to as much as 40% if the Early Account Scheme is utilised.

Key Implications for Firms

• Board-Level Accountability – OFSI expects senior management to oversee sanctions compliance, with documented governance and clear escalation processes embedded within a firm’s anti-financial crime framework. This ensures, for example, that firms are able to quickly and efficiently provide a full factual account of an OFSI investigation in alignment with requirements of the proposed Early Account Scheme.  
• Greater Financial Risk – for mid-sized firms, a £2m penalty could lead have significant impact, which reinforces the need for strong controls.
• Reputation – sanctions breaches are treated as governance failures, not just technical lapses.

Actions for Firms to Take Now

The potential for multi-million-pound penalties poses a significant threat to the financial stability of firms and highlights the importance of maintaining robust sanctions frameworks. To prepare for tougher enforcement, firms should:

• Review and test sanctions screening tools – regularly assess the effectiveness of a screening tool to ensure potential matches are correctly identified and resolved.
• Provide senior management training – Targeted sanctions training for senior management helps firms strengthen business decision-making and set ‘the tone from the top’.
• Conduct assurance reviews – Consider commissioning internal or external reviews of the sanctions screening procedures and control framework to promptly identify any weaknesses. Addressing these gaps reduces regulatory risk and strengthens operational resilience. 

Want to Hear More About Sanctions Screening?

Our upcoming webinar will explore how firms can test sanctions screening systems effectively, and why it matters more than ever.

Experts from Thistle Initiatives, Napier AI and FinCrime Dynamics will share practical insights on using synthetic data, building meaningful test scenarios, and working with vendors to embed ongoing assurance.

Register now

How Thistle Initiatives Can Help

At Thistle Initiatives, we help firms stay ahead of regulatory change by strengthening their sanctions compliance frameworks. Whether you're looking to assess your current controls or prepare for the proposed OFSI reforms, we offer tailored support that’s practical, proportionate and effective.

If you’d like to discuss how we can support your firm in light of OFSI’s proposals, get in touch at info@thistleinitiatives.co.uk or call 020 7436 0630 to speak with our team. 

Meet the Expert