Sanctions tracker – UK trade sanctions enforcement updates

HMRC enters into compound settlement re Russia sanctions breach

HMRC has announced a compound settlement of £569,157.07 with Petrofac Facilities Management Limited (PFML) in relation to the making available of sanctioned goods to a person connected with Russia (PCWR) and for use in Rusia, together with the provision of associated technical assistance. The goods in question were industrial goods, defined as G7 Dependency and Further Goods under the Russian (Sanctions) (EU Exit) Regulations 2019 (the Russia Regulations). The breaches in question occurred when PFML was divesting its operations in Russia following the invasion of Ukraine.

This represents the first time that HMRC has named the party to a compound settlement although, in common with previous compound settlement announcements, there is limited information on the circumstances of the breach or potential compliance lessons for other firms. However, according to HMRC’s notice, the case was brought to its attention following a voluntary disclosure, and PFML fully cooperated with HMRC’s investigation.

HMRC publishes technical note on sanctions enforcement

HMRC has published a technical note on sanctions enforcement. This sets out HMRC’s enforcement role (within its remit as UK Customs Authority) and provides detail of its interaction with other authorities including the Office of Trade Sanctions Implementation (OTSI) and Border Force.

The note also summarises trade sanctions enforcement activity undertaken by HMRC during the year 2025-2026, which included:

• 58 seizures of sanctioned goods destined for import or export;
• one compound settlement for breach of the Russia Regulations;
• 18 warning letters issued as a result of voluntary disclosure; and
• three positive charging decisions by prosecuting authorities in respect of two cases that are pending trial.

The note confirms that a total of 22 criminal investigations are ongoing in relation to suspected breaches of UK trade sanctions. A total of 29 voluntary disclosures were received by HMRC in relation to potential breaches. The 18 warning letters mentioned above were issued in response to these, with a further seven resolved by way of “no further action” letters. (The remainder of the 29 were dealt with via compound settlement offer (in one case) or are still under review (in the remaining three cases)). 

HMRC also received 44 referrals from OTSI during the prior year. Of these, 21 remain under review, 10 resulted in no further action, and 13 were used to support existing HMRC investigations.

UK Crown Court grants application to dismiss charges relating to Russia trade sanctions

The UK Crown Court has granted an application to dismiss prosecution charges of trade sanctions breaches in respect of two defendants: Hauser & Wirth Gallery Limited (H&W), an art gallery, and Artay Rauchweger Solomons Limited (ARS), a fine art logistics company.  Prosecutors alleged that the defendants made available a luxury good (in the form of a work of art) to a PCWR, contrary to the Russia Regulations. Although fact-specific, the case may be of assistance to UK companies who may need to consider whether a given counterparty should be regarded as a PCWR for the purposes of compliance with the Russia Regulations. It also provides some further guidance on the concept of “making available” in trade sanctions restrictions.

The case (R v Hauser & Wirth Gallery Limited [2026] EWCR 7) involved the sale of an artwork to an individual; the sale had been agreed and an invoice issued to the buyer before the invasion of Ukraine but the artwork was in the process of being shipped in 2022 when it was seized by Border Force while en route to Armenia.

The court considered two key issues: (i) whether the artwork had been “made available” to the buyer (the relevant prohibition being on the making available of luxury goods to a PCWR); and (ii) whether there was sufficient evidence that the buyer was in fact a PCWR (defined for these purposes as an individual who is “ordinarily resident in” Russia).

In relation to the first issue, the court concluded that “making available” did not require the delivery of the goods in question to the recipient. On the facts of the case, it was unnecessary to determine whether the passing of title in the artwork to the buyer was by itself a “making available”; in any event, the combination of title passing, payment and the release of the artwork into the custody and control of those acting on the buyer’s instructions for onward shipment was sufficient to constitute a “making available” of the artwork. This was the case both in respect of H&W (which had released the artwork to the buyer following the sale) and ARS (which collected and transferred the artwork pursuant to his instructions).

As regards the question of whether the buyer was a PCWR, the court found that where an individual has left a country and made substantial efforts to cut his ties with that country for the foreseeable future, he is no longer “ordinarily resident” in that country. Although the prosecution had identified certain ongoing connections between the buyer and Russia, the court found that he had (among other things) sought to renounce his Russian citizenship, registered as a taxpayer and commenced the process of obtaining citizenship in Bosnia & Herzegovina, leased separate property in Italy, and shipped several existing artworks from Russia to Kyrgyzstan and Armenia. On the available evidence, it would not be possible for a properly directed jury to draw the conclusion that the buyer was ordinarily resident in Russia at the time of the sale. Charges against the defendants were therefore quashed.

New UK designations

The UK has recently announced two further rounds of Russia-related designations.

• A package of 24 designations in respect of cyberattacks, including an attempted attach on Poland’s energy grid. These designations were made jointly with the EU.
• Seven individuals and two research institutes involved in Russia’s chemical weapons programme, as described in more detail here.

OFSI publishes insights from ownership and control call for evidence

Following its call for evidence (the CfE) on the application of the ownership and control test in UK financial sanctions (discussed in our previous post), the Office of Financial Sanctions Implementation (OFSI) has published what it describes as insights from the CfE.

OFSI has confirmed that it received 42 responses to the CfE, clearly communicating where the issue of “hypothetical control” appears most often in practice. According to OFSI, the insights provided have helped to expand OFSI’s understanding of how frequently firms encounter these scenarios and the impact on their business operations.

It is unclear whether any further guidance or other action will follow the CfE; OFSI’s publication simply states that the responses will play an important role in informing ongoing work and, where differing views have been addressed, the evidence provided will help support potential next steps.