A View from the Exchange: The UK's sanctions review: a significant reshaping of the law?

The UK government has published the outcome of its review into the implementation and enforcement of UK sanctions. The review received input from across government departments, and from external experts. It details a series of planned policy and legislative actions for financial year 2025 to 2026, aimed at improving and facilitating compliance with, and increasing the deterrent effect of enforcement of, UK sanctions.

There is plenty in the review which will be welcomed by business, including a commitment to provide clearer and more accessible guidance. Further clarity on the ever-challenging question of what constitutes "ownership and control" in financial sanctions is also coming. But amongst these more routine announcements, there are a number of proposed actions that have the potential to significantly reshape the UK's sanctions and export control regime. We comment on four of these below.

1. Early Settlement Scheme for Sanctions Violations

Beyond HMRC's power to "compound" penalties, the main sanctions enforcement agencies in the UK - OFSI and OTSI - do not currently have the authority to enter into early civil settlements relating to apparent violations of sanctions. In contrast, settlements form a key part of the OFAC sanctions enforcement strategy in the US. The UK government plans to launch a public consultation on an early civil settlement scheme with a view to a "quicker resolution of civil financial sanctions cases aiding deterrence and ensuring that enforcement action is delivered more efficiently, without imposing undue burdens on UK firms". Businesses will be keen to understand the details of this proposal, when the government publishes its consultation. But if adopted, early settlement is likely to lead to more flexibility in sanctions enforcement.

2. Fast-Track Civil Penalties

The UK government also promises a public consultation on developing an "accelerated civil penalty process" for certain financial sanctions breaches. The aim is to free up OFSI resources so they can focus on "complex, serious and deliberate breaches and reduce the administrative burden on industry".

3. Enhanced Whistleblower Protections 

The UK government intends to amend existing whistleblowing legislation to ensure that employees who report suspected sanctions breaches to the main sanctions enforcement agencies qualify for whistleblowing protection. The relevant amending legislation was laid before parliament on 21 May 2025. It will enter into force on 26 June 2025. This has the potential to encourage employees to raise sanctions breaches to government thereby supporting sanctions implementation and enforcement. The Office of Trade Sanctions has already updated its guidance to incorporate whistleblowing. As we have noted previously, encouraging whistleblowing is an area of focus in the UK as part of a broader strategy for countering financial crime.

4. New End-Use Controls

The UK government is considering the introduction of sanctions end-use licensing controls for exports with a high risk of sanctions diversion. While the review indicates that the government is only "exploring" this option, rather than committing to it, it will be interesting to see whether any new controls will include the targeting of specific persons in third countries. Unlike the US and (to a more limited extent) the EU, the UK does not currently maintain export controls targeting specific third-country end-users of concern. Given the focus on preventing circumvention of UK sanctions, such controls could reduce the compliance burden for business.