Syed Rahman of Rahman Ravelli assess the UK sanctions body’s latest statistics.
Strong signs of progress in a number of areas are highlighted in the annual report of the Office of Financial Sanctions Implementation (OFSI). That is to OFSI’s credit, given that it is an organisation whose workload has expanded greatly since Russia’s 2022 invasion of Ukraine.
OFSI has made it known that assets with a total value of over £37 billion were reported as frozen in the 2024-25 financial year. This represents a more than 50% increase on the previous year and is the result of OFSI taking an increasingly proactive approach when it comes to the enforcement of financial penalties.
Unsurprisingly, the enforcement of sanctions relating to Russia remains a priority and accounts for the bulk of the assets frozen by OFSI; which is part of the Treasury. Its annual report states that Russian assets totalling £28.7 billion have been frozen. This represents a large increase on the £25.03 billion reported for the previous year and is a clear result of OFSI hitting its proactive stride, as Russia-related designations have also remained high in 2024-25, with 191 new designations being imposed. Another positive sign is that more OFSI compliance-related cases are the result of its own investigations rather than self-reporting. The figure for such cases is up from 108 in the previous year to 151; indicating the increased intelligence and capabilities that OFSI has developed.
It is, therefore, understandable that OFSI sees itself as making headway when it comes to its core goal of holding those to account who ignore or abuse UK sanctions. Treasury director of economic crime and sanctions, Giles Thomson, called it “"a year marked by significant progress in our mission to enhance the effectiveness of the UK's financial sanctions regime’’. But he insisted more will be done to ensure the UK’s sanctions framework remains “world-leading and fit for future challenges."
For many companies, OFSI’s latest report is a detailed, lengthy reminder of the need to understand both sanctions risk exposure and how to manage that risk. OFSI appears to be increasingly on the front foot when it comes to identifying and penalising those not meeting their sanctions compliance obligations. For many firms, that can mean an increased likelihood of their sanctions failings being recognised; particularly those operating in higher risk sectors, such as natural resources, energy, shipping and a wide range of export and cash-intensive businesses.
The statistics released by OFSI represent action taken against those falling short when it comes to sanctions. They show there is no excuse for not fully meeting sanctions obligations. Having a poor compliance process in place, relying on third parties to conduct sanctions screening, incomplete sanctions screening, a failure to identify the limits of a licence (permission to carry out an act that would otherwise be in breach of financial sanctions), and not disclosing any possible breaches quickly may all indicate at least some effort towards meeting sanctions obligations. But such half-hearted or misguided efforts will count for very little if a company has breached sanctions.
OFSI is an organisation transformed since Russia invaded Ukraine. It was given much-needed extra resources to carry out its functions. It now appears to be achieving increasingly impressive results. This is due, in part, to its more proactive approach. And this makes it imperative that those that OFSI scrutinise take an equally proactive course of action when it comes to sanctions.
It is worth noting that OFSI is currently considering significant reforms to its enforcement practices. If these were adopted, it could mean higher financial penalties, less scope for lenient treatment for voluntary disclosure and the introduction of new ways of resolving cases of sanctions breaches, including settlement options.
Such changes, should they be introduced, could be viewed as the latest part of OFSI’s post-2022 timeline. It is a line that has seen its staff numbers more than doubled, its powers strengthened, the creation of an OFSI compliance enforcement team to enhance identification and enforcement of licence breaches, and an upward trend in investigation numbers.
OFSI has moved with the times when it comes to sanctions. Those it scrutinises have to ensure they do the same.
