Ruxandra Murariu Summarises the Main Points of the Office of Financial Sanctions’ Review of 2023-24.
The Office of Financial Sanctions (OFSI) has published its annual report for 2023/2024, detailing a period of substantial growth, enhanced enforcement activity and increased international engagement.
The report highlights a significant expansion in designations, a sharp rise in enforcement outcomes and major investments in operational capability, including advanced analytics and cross-border collaboration. It also suggests a shift in OFSI’s approach to licensing, intelligence sharing and industry engagement, although it remains to be seen whether these changes will genuinely enhance the effectiveness and agility of the UK’s sanctions regime in a rapidly-changing global landscape
The main points of the report include:
Designations and Frozen Assets
- 564 new designated persons added in 2023–24, bringing the total to 4,331 entries across 35 sanctions regimes.
- Russia-related designations make up 46% of the Consolidated List.
- Since February 2022, the UK and its allies have frozen $400 billion in Russian-linked assets - equivalent to four years of Russia’s military spending.
- As of December 2024, £25.03 billion in Russian-linked assets were reported frozen in the UK.
- The report indicates that the economic impact on Russia includes:
- Gazprom’s report of a $7 billion loss in 2023 (its first in 25 years).
- Rising inflation, rouble depreciation and skilled worker outflow.
- A 30% drop in oil tax revenues in 2023 due to G7+ sanctions and the UK’s oil price cap.
Licensing Activity
- 16 general licences issued in 2023–24.
- 1,401 licensing decisions made in total.
Investigations and Enforcement
- 396 investigations opened in 2023–24, with 242 of these cases closed (triple the number from the previous year).
- 288 cases were self-reported and 108 were non-self-reported.
- Most investigations related to suspected breaches of Russia sanctions, particularly in the financial and legal sectors.
- OFSI is shifting to a proactive, intelligence-led enforcement model and plans to publish further enforcement outcomes.
Operational Expansion
- OFSI increased staffing to 135 employees.
- Resources for licensing and enforcement teams expanded approximately four-fold.
- OFSI invested in:
- Advanced data analytics.
- Cryptocurrency investigation capabilities.
- Access to specialist platforms for corporate records and datasets.
Engagement and Intelligence Sharing
- 245 international engagements conducted in 2023–24.
- Continued close collaboration with G7+ partners.
- New secondment programme launched with the US Office of Foreign Assets Control (OFAC) in February 2023.
- Participated in 20 conferences and regular industry forums.
- Contributed to the Joint Money Laundering Intelligence Taskforce (JMLIT), an initiative of the National Economic Crime Centre aimed at exchanging and analysing information relating to money laundering and wider economic threats.
- Collaborated with the National Crime Agency (NCA) and Foreign, Commonwealth and Development Office (FCDO) to provide financial institutions with guidance and a list of red flags related to exports of high-risk goods.
- Partnered with the Department for Transport (DfT) and Ministry of Defence (MoD) to establish the Sanctions Assessment Team (SAT) within the Joint Maritime Security Centre, monitoring Russian oil shipping behaviours.
Conclusion
This report reflects a positive trajectory in terms of meeting the outcomes that the government expects from OFSI. It is evident that there has been a substantial investment in resources and OFSI appears to be responding to an increasingly complex political, legal and economic environment by modernising its capabilities, enhancing international cooperation and leveraging domestic intelligence tools.
Whether these developments sufficiently demonstrate the effectiveness of sanctions against Russia – bearing in mind the principal objective of them is to influence a change in Russia’s actions towards Ukraine - remains open to debate. Sanctions are, by design, intended to impose pressure that is significant enough to prompt behavioural change by the targeted state. Added to this, there remains limited transparency regarding the proportionality assessments undertaken by OFSI.
While the licensing regime is intended to mitigate the broader impact of sanctions on affected persons, both the recent High Court decision in the case of R (on the application of Mikhail Fridman) v HM Treasury [2023] EWHC 2657 (Admin) and OFSI’s subsequent guidance on Designated Individuals Licensing Principles confirm that OFSI retains broad discretion in its licensing decisions.
