Tightening the net: rising evasion risks and escalating penalties
TLT picks out the key points you shouldn't miss...
What’s this about?
It's back to work after the summer holidays, and sanctions enforcement has not eased off. The UK Government has combined a proposed doubling of OFSI’s maximum financial penalty, from 50% to 100% of the value of a breach, with the first nationwide alert targeting Russia’s A7 sanctions evasion network. Recent OFSI enforcement activity also reinforces the same message: firms need to be able to show that their sanctions programmes are not only documented, but effective in practice, including under operational pressure and during periods of heightened geopolitical activity.
Ben Cooper, Partner in Risk and Financial Crime, says...
“The combination of increased enforcement activity, the first industry-wide alert on sanctions evasion networks and the proposed increase in OFSI’s maximum penalties sends a clear message that sanctions remain a major enforcement priority. Firms should use this as an opportunity to assess whether their sanctions controls remain effective in practice and are capable of responding to rapidly evolving risks.”
The points not to miss...
NCA and Government update
Attending the G20 in North Carolina – his first international trip as Chancellor – John Healey has set out a series of new actions aimed at stopping Russia from evading sanctions to fund the war in Ukraine. The announcement builds on wider recent UK action against Russia, including a further sanctions package introduced early last month targeting 19 individuals and entities – including Russian banks, shadow fleet vessels and businesses deemed to be supporting Russia’s war effort.
A7 relies on third-country financial institutions and the illegal use of the international financial system to conduct cross-border transactions and circumvent sanctions. The nationwide alert issued against A7 aims to obstruct Kremlin-backed networks who have attempted to circumvent international financial and trade sanctions through a complex web of financial structures spanning multiple jurisdictions. The A7 network has also been linked to Iranian state-associated actors, reinforcing the need to tackle head-on the network's role in facilitating sanctions evasion and illicit financial activity. All firms – especially those with Russian-linked counterparties or complex cross-border structures – should urgently review their potential exposure to A7-connected entities.
The Chancellor’s announcement of a doubling of the maximum fine available to OFSI – from 50% to 100% of the value of a breach – is part of the Government’s overarching aim of strengthening the UK sanctions regime's preventative impact, driving better enforcement. Firms should maintain an ongoing review of their sanctions policies and procedures to ensure that they remain fully in line with regulatory requirements and adapt as the sanctions landscape continues to develop. With the consequences of non-compliance continuing to increase in severity, proactive compliance has never been more important.
Recent OFSI enforcement activity – lessons for the industry
Recent OFSI enforcement activity shows that systems and controls issues, staff errors and delays in alert handling can become particularly acute during periods of high sanctions activity. OFSI may take operational pressure into account, but it is unlikely to treat it as an answer to otherwise avoidable breaches. Firms should proactively identify their vulnerabilities and stress-test their processes before pressure exposes them.
Recent enforcement also highlights the risk of screening taking place too early in a payment process, before all relevant parties have entered the payment chain. Firms should ensure screening covers the full payment chain at every relevant stage, with sanctions lists and internal reference data sufficiently enriched to capture identifiers such as BICs where appropriate.
Alert backlogs can create significant pressure on compliance and operations teams, but temporary process changes that lower the standard of review or delay restrictions can create additional enforcement risk. Firms should make sure contingency arrangements are documented, risk-assessed and escalated appropriately, rather than relying on informal shortcuts during periods of pressure.
OFSI’s enforcement approach is not limited to customer-initiated payments or high-value transfers. Fees, tax charges, payment corrections, interest and other internally generated account activity can also fall within scope if they involve restricted accounts or designated persons. Firms should review whether their account restriction processes adequately capture all internal transaction types.
Recent OFSI activity continues to demonstrate the practical value of prompt escalation, voluntary disclosure, cooperation and remediation where a potential breach is identified. While self-reporting will not prevent enforcement action in all cases, it can materially affect the regulatory outcome and help demonstrate that the firm has responded credibly and constructively.
What firms should do now
The Government’s latest announcements, combined with recent OFSI enforcement activity, reinforce that sanctions compliance remains a significant area of regulatory focus. Firms should consider whether:
- End-to-end coverage: sanctions screening addresses the full customer and transaction lifecycle, including correspondent banking and payment-chain risks;
- Data quality: watchlists and reference data are sufficiently enriched and updated to reflect evolving sanctions requirements;
- Operational resilience: alert handling processes can cope with periods of heightened geopolitical activity and increased screening volumes;
- Governance: oversight arrangements support sound, documented sanctions decisions during periods of operational pressure;
- Restricted accounts: controls capture fees, interest, tax, corrections and other internally generated transactions; and
- Incident readiness: escalation, investigation, and self-reporting procedures are sufficiently developed before a potential breach is identified.
For many firms, the key question is no longer whether a sanctions framework exists, but whether it has been tested sufficiently to demonstrate that it will continue to operate effectively when conditions become more challenging.
Organisations looking for a practical starting point can use TLT's Sanctions and Export Controls Health Check, which provides an indicative assessment of sanctions and export controls exposure and helps identify whether existing compliance controls remain fit for purpose.
How we can help
Sanctions compliance is no longer limited to screening against sanctions lists. Firms increasingly need to demonstrate that their governance, operational processes, escalation arrangements and controls operate effectively in practice.
- Sanctions risk assessments and framework reviews: assessing whether policies, governance and controls are tailored to the firm’s business model and exposure.
- Systems and controls testing: reviewing screening architecture, payment-chain controls, reference data, alert calibration and restricted-account processes.
- Operational stress-testing: testing alert management, escalation and decision-making against designation surges and other high-volume scenarios.
- Incident response and investigations: supporting privileged investigations, immediate containment, licensing considerations and remediation.
- OFSI engagement: advising on voluntary disclosures, regulatory engagement and settlement strategy.
- Training and simulations: delivering role-specific training and scenario exercises for Legal, Compliance, Operations and senior management.
We regularly advise firms on the practical application of UK sanctions requirements and help organisations assess whether their controls remain fit for purpose as sanctions regimes continue to evolve.
At a glance...
Authors: Ben Cooper, Tamara Raoufi, Hannah Yeager
This publication is intended for general guidance and represents our understanding of the relevant law and practice as at September 2026. For more information see our terms & conditions.
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