Review of UK Sanctions Suggestions Falls Short on Significance
Strengthening UK Sanctions Enforcement: A Comprehensive Approach
The UK Government has recently unveiled a comprehensive strategy to enhance the implementation and enforcement of its sanctions regime. The strategy, outlined in a cross-government review published on 15 May 2025, focuses on facilitating compliance, increasing deterrence, and invigorating the cross-government toolkit.
Facilitating Compliance
To improve compliance, legal and other service providers are urged to conduct enhanced due diligence beyond basic identity checks. This includes identifying beneficial owners, connected parties, and monitoring for red flags, particularly in intermediary jurisdictions. Every transaction must be screened against the Office of Financial Sanctions Implementation (OFSI) consolidated sanctions list. Tailored risk assessments should be completed, and all applicable licence requirements identified and complied with.
Increasing Deterrence
The UK government is introducing new sanctions designations and enforcement powers, including strengthened sanctions on Russia and a lowered oil price cap to curtail financial flows. The cryptoasset sector is recognised as a potential channel for sanctions evasion, and there will be increased enforcement focus on cryptocurrency-related sanctions breaches.
Invigorating the Cross-Government Toolkit
The review has led to enhanced coordination across government departments. Policy papers outlining findings and practical steps for government and regulated entities to improve sanctions enforcement effectiveness have been issued. There is an emphasis on harnessing intelligence and enforcement powers across government agencies to deter breaches and improve compliance facilitation.
The strategy follows HMRC's introduction of an informant incentive scheme in March 2025 and the Serious Fraud Office's commitment to "progress whistleblower incentivisation reform." Another option for increased engagement could be the creation of a UK sanctions compliance hotline to address queries regarding compliance with various sanctions regimes.
The review also suggests creating a public-private sanctions partnership, inspired by the Joint Money Laundering Intelligence Taskforce (JMLIT). However, it does not indicate which sectors have been identified as less familiar with sanctions or how it proposes to engage with those sectors.
The UK Government has taken legislative action to extend the existing UK whistleblowing regime to include reports of suspected sanction breaches. The Public Interest Disclosure (Prescribed Persons) (Amendment) Order 2025, which came into force at the end of June 2025, enables whistleblowers to make protected disclosures to relevant government departments in relation to financial, transport, and certain trade sanctions.
The review recommends clarifying reporting requirements and channels, including the possibility of a single reporting point for suspected sanctions breaches. Developing an early civil settlement scheme for breaches of financial sanctions will promote cooperation only if companies are sufficiently incentivized to engage with it.
The review raises concerns that an incentivisation scheme might result in a flood of "low grade" reports, but argues that awarding a percentage of the ultimate financial penalty to the whistleblower would discourage false, incomplete, or trivial reports.
The strategy concludes that its recommendations are unlikely to result in a meaningful improvement of the ability of the UK agencies to investigate and enforce against egregious sanctions breaches by companies acting in bad faith. However, it suggests updating the Public Interest Disclosure (Prescribed Persons) Order 2014 to enable whistleblowers to make protected disclosures to relevant government departments in relation to financial, transport, and certain trade sanctions.
The review cites the Royal United Services Institute (RUSI) report by Eliza Lockhart "The Inside Track: The Role of Financial Rewards for Whistleblowers in the Fight Against Economic Crime." It suggests that the UK Government could and should go further by creating a public-private sanctions partnership, increasing the funding for sanctions agencies, and developing a whistleblower incentivisation scheme for sanctions breaches.
It's worth noting that OFSI's enforcement data demonstrates neither regular nor vigorous enforcement activity. Since January 2022, OFSI has concluded seven enforcement actions, with an average of two per year. The review emphasises the need for regular and rigorous enforcement to deter potential non-compliance.
In summary, the UK Government's recent approach is to strengthen sanctions enforcement by improving compliance facilitation through enhanced due diligence, increasing deterrence via stronger sanctions and enforcement mechanisms (including tackling cryptoasset threats), and energizing cross-government collaboration to create a more effective sanctions regime.
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