The revised enforcement framework – more detail
Statutory maximum penalties double
OFSI will seek to double maximum penalties from the greater of GBP1 million or 50% of the value of a breach to GBP2 million or 100% of the value of a breach. The timeline for this change is currently uncertain (it requires legislation) but, if it goes ahead, it will be a very significant increase in baseline penalties.
Views were divided during the 2025 consultation process, with concerns about disproportionality for smaller firms and suggestions that higher caps would dilute the value of voluntary disclosure discounts. Some respondents floated alternative models, including turnover-based or breach-by-breach approaches, but OFSI has stated that it will not be pursuing these ideas at this time.
Case assessment matrix
OFSI’s new case assessment matrix is aimed at improving transparency and predictability in how it assesses breaches. The matrix maps severity against mitigating/aggravating conduct to reach a ‘level’ of seriousness. The level of seriousness determines the ‘likely’ enforcement response (e.g. from a private warning letter for ‘low’ level, to criminal investigation for a ‘very high’ level 4 breach). There is new guidance on penalty amounts for Level 3 and 4 cases: over 75% of the statutory maximum for Level 4, up to 75% for Level 3.
Hidden amongst the revised guidance, and less publicised, are some other interesting changes in the guidance on case assessment, including:
- The ‘strategic priority’ of the regime – a breach of a regime critical to UK foreign policy/national security is a new aggravating factor.
- A person’s state of mind – ‘intention, knowledge and reasonable cause to suspect’ – has been expanded to include recklessness, neglect, wilful ignorance and bad faith; and whether they ‘should have otherwise known or suspected’ that their actions would lead to a breach.
- The seniority and/or the role of the person or persons whose actions led to, or contributed to, the breach are expressly added as factors for assessment.
- There is a new reference to facilitation of sanctions breaches being regarded by OFSI as a form of circumvention. While discovering a breach when acting for a client does not make a 'professional facilitator' party to it, OFSI warns that ‘subsequent actions can amount to collusion’ in the breach.
- Whether systems and controls were proportionate and reasonable.
- An isolated or one-off event is now listed explicitly as a mitigating factor.
New Voluntary Disclosure and Co-operation discount
OFSI has replaced the previous voluntary self-reporting discount with a new ‘Voluntary Disclosure and Co-operation discount’, capped at 30% in all cases – down from up to 50% for serious breaches. This sparked significant concern during the 2025 consultation, with several respondents pointing to OFSI’s 2025 monetary penalty imposed against Colorcon Limited as evidence that OFSI already exercises discretion to apply lower discounts where appropriate. The concern was that reducing discounts while increasing base penalties could prove disproportionate and weaken incentives to self-report.
OFSI has sought to address this by clarifying that firms can now access combined discounts of up to 70% by combining voluntary disclosure, the new Early Account Scheme (see below), and participation in the settlement scheme.
New Settlement Scheme
A new Settlement Scheme offers a 20% penalty discount and an opportunity to provide input into OFSI’s case summary, where a company agrees to settlement within 30 days of settlement discussions commencing and waives its rights to appeal OFSI’s decision.
- The 30-day period for settlement discussions begins once OFSI provides a draft Notice of Intention – OFSI’s preliminary decision document setting out its findings, the suspected breaches, and the proposed penalty.
- Subjects have 10 business days to opt into the Settlement Scheme.
- The 30‑day settlement period runs in parallel with the statutory representations window, with short extensions granted only in exceptional circumstances.
All discussions take place on a without prejudice basis, and no formal admission of liability is required – only an agreement not to challenge OFSI’s findings or to exercise review/appeal rights.
Settlement will usually be considered once OFSI has completed its investigation (including any Early Account, which is discussed later) and decided a monetary penalty may be appropriate. Settlement may not be offered where breaches appear intentional, involve circumvention, or where the subject has not co‑operated, though OFSI may still settle where appropriate remedial action has been taken.
Some respondents to the consultation argued this compared unfavourably with discounts offered by the FCA and Bank of England, and there was scepticism about whether settlement would meaningfully shorten cases given that investigations themselves remain lengthy. Concerns were also raised about the proposed 30-business-day window within which the parties must seek to finalise a settlement, and the waiver of appeal rights.
OFSI will not agree to settle with businesses on an anonymous basis: it considers identifying the business receiving a monetary penalty to be in the public interest. However, the streamlined process, cumulative discount potential and opportunity to input into OFSI’s case summary may lead businesses to use this scheme where the imposition of a monetary penalty is anticipated.
Early Account Scheme
A new Early Account Scheme (EAS) will provide up to 20% off for businesses that provide a full breach account and relevant supporting materials and evidence early in the investigation. The EAS has similarities to the Early Account Scheme introduced by the Prudential Regulation Authority in early 2024.
Businesses must tell OFSI within 15 business days of being notified of an investigation if they wish to request the EAS. If OFSI agrees, the terms must be finalised within 20 business days, and the early account will usually be due within six months. OFSI may require an independent third party to conduct the investigation.
If a penalty follows, the EAS discount depends on the account being complete, accurate, evidenced, and timely.
OFSI has confirmed that the EAS discount is cumulative with settlement – a point of confusion during the consultation. However, OFSI does not expect the EAS to be used in most cases, given respondents’ concerns that the scheme is resource intensive, may require businesses to take positions before fully understanding their exposure, and could create legal risk through the required senior attestation.
Fixed monetary penalties
OFSI plans to introduce fixed monetary penalties of GBP5,000 or GBP10,000 for lower-level breaches involving:
- non‑compliance with reporting obligations (including late, incomplete, or unsupported reports)
- non‑compliant reporting under specific or general licences
- failure to respond, or late response, to an OFSI Request for Information
- breaches of specific or general licences involving funds or economic resources up to £10,000
First‑time or one‑off breaches may still be handled through a private warning letter. Repeated or more serious conduct is more likely to engage the full monetary penalty process (i.e. not a fixed penalty).
The representations period for cases involving fixed monetary penalties is halved to 15 business days. OFSI will then have 15 business days to issue its decision, and any review must also be requested within 15 business days. All fixed penalties will be published, and settlement is not available.
Key takeaways
The updated Guidance places greater emphasis on the value of co-operation. Businesses that combine voluntary disclosure with EAS participation and early settlement can access discounts of up to 70%. Those that do not risk higher penalties – but the new case assessment matrix provides an important framework for anticipating and challenging penalty calculations.
Businesses should consider reviewing the effectiveness and timelines of their processes for identifying and assessing potential sanctions breaches to reflect the tighter deadlines that will need to be met to be able to benefit from the new combined penalty discount structure, so that they are best positioned to take advantage of it should they wish to.
While the timing of the required legislative change is uncertain, the prospect of greater financial penalties for violations of UK financial sanctions should incentivise businesses to review the effectiveness of their sanctions compliance programmes.
Read more about UK sanctions enforcement and other geopolitically driven issues for in-house counsel in 2026 in our article Managing conflicting laws amid national security and geopolitical pressures, part of the 2026 A&O Shearman Cross-border White Collar Crime and Investigations Review.
