Sanctions tracker: new designations, amendments to Iran sanctions, plan to double OFSI maximum penalty, OFSI enforcement and more

LEGISLATIVE AND GOVERNMENT UPDATES

1. Iran: Amendment to Iran sanctions regulations, updated General Licences and new licensing guidance 

The UK has introduced new regulations imposing new financial, trade, and transport restrictions.

The Iran (Sanctions) (Amendment) Regulations 2026 (the "Amendment Regulations") amend the Iran (Sanctions) (Nuclear) (EU Exit) Regulations 2019 and the Iran (Sanctions) Regulations 2023 alongside new Schedules (1A and 1I) setting out controlled goods and technology. 

The Government announced that the measures are designed to "introduce sectoral measures which are broadly those lifted as part of the Joint Comprehensive Plan of Action [JCPOA]". 

• The JCPOA was an agreement reached in 2015 between Iran, the permanent members of the UN Security Council (plus Germany) and the European Union, which relaxed restrictions on Iran's nuclear programme in exchange for sanctions relief — albeit a residual set of sanctions remained. The US withdrew from the JCPOA in 2018 and ‘snapped back’ its sanctions at that time, with further escalation in recent years.
• On 28 August 2025, the Foreign Ministers of the UK, France and Germany (the E3) notified the UN Security Council that they would trigger the mechanism to reimpose UN sanctions on Iran due to significant Iranian non-performance of its JCPOA commitments, which triggered a ‘snapback’ process at UN level.
• In October 2025, the UK reimposed a suite of sanctions, including the reimposition of 121 designations on individuals and entities involved in Iran’s nuclear and ballistic missiles programme. However, the changes made in October 2025 were principally those financial sanctions designations, and many of the trade and financial sanctions that had been in place pre-2015 were not reimposed.
• In 2015, the UK was still part of the EU, and the sanctions which have now been reimposed do not map exactly to the pre-2015 position. Instead, there is a suite of new measures which align with the approach taken to post-Brexit sanctions.

The Amendment Regulations introduce new financial restrictions targeting the Government of Iran’s ability to access the UK financial system and raise funds in support of its nuclear programme. These sanctions include restrictions on:

• investment in Iran – prohibiting the provision of loans or credit to, acquisition or extension of participations in, or the formation of joint ventures with, entities operating in certain Iranian sectors;
• UK credit and financial institutions on opening accounts with, establishing correspondent banking relationships with, or establishing a joint venture with Iranian and Iranian-owned banks. There are also prohibitions on opening branches or offices in Iran, or Iranian banks doing so in the UK;
• providing certain re/insurance services to Iranian-connected parties, with an exception to grandfathering pre-8 September 2026 re/insurance contracts; and
• selling or buying Iranian government bonds issued after 8 September 2026 where the counterparty is the Government of Iran, an Iranian bank, or certain connected parties.

The Amendment Regulations also:

• expand the existing trade restrictions to include additional goods, technology and services, including those key to significant industries contributing to Iranian nuclear escalation, such as energy-related goods and technology, sectoral software and technology, gold, precious metals and diamonds. The export of banknotes and coinage to or for the benefit of the Central Bank is also prohibited. As usual, the sanctions generally come with ancillary ‘services’ restrictions — for example, restricting the provision of funds or financial services in relation to the supply (or purchase, as the case may be) of specified goods;
• prohibit the provision of “relevant energy services” which are certain services relevant to oil or gas exploration or production projects in Iran; 
• prohibit the import or acquisition, sale or supply of “oil and petroleum products”, “petrochemicals” or “natural gas” which originate in or are consigned from Iran, and the provision of ancillary services;
• further expand UK powers to sanction ships, as well as prohibit Iranian cargo aircraft in the UK; and
• enhance existing nuclear controls by updating definitions of nuclear-list goods and technology in line with International Atomic Energy Agency lists and expanding the range of relevant dual-use items. The nuclear-related measures are also extended to technical assistance, financial services and brokering.

Two General Licences, one issued by the Office of Trade Sanctions Implementation ("OTSI") and one by the Office of Financial Sanctions Implementation ("OFSI") have also been amended to permit certain trade and financial activities relating to the Shah Deniz gas field in Azerbaijan. 

The Amendment Regulations entered into force on 29 September 2026.

OFSI has also issued new guidance on its licensing approach to certain designated banks operating in the UK, indicating that with immediate effect it will apply a presumption of denial to licence applications made by Bank Sepah, Melli Bank plc, Bank Saderat, Persia International Bank and Bank Tejarat. Each application will continue to be considered on its individual facts and OFSI’s FAQs provide a further indication of the types of activity which might be licensed.

2. Russia: New designations

On 6 August 2026, the UK Government announced 19 new sanctions targets against Russia including:

• six newly acquired shadow fleet tankers;
• six Russian banks were designated with correspondent banking prohibitions applying in respect of those entities; and
• four Russian companies importing rare metals critical for producing military equipment used on the battlefield in Ukraine.

The UK Government has now sanctioned over 3,400 individuals, entities, and vessels under the Russia (Sanctions) (EU Exit) Regulations 2019 since Russia's full-scale invasion of Ukraine in February 2022 (almost 500 this year to date alone). 

3. Government announcement that OFSI maximum penalties will be doubled

On 31 August 2026, the UK Chancellor of the Exchequer, John Healey, announced that the maximum fine available to OFSI would double from 50% to 100% of the value of a sanctions breach.

Currently, section 146 of the Policing and Crime Act 2017 ("PCA 2017") allows OFSI to impose a penalty of up to the greater of £1,000,000 or 50% of the estimated value of the funds or economic resources involved in the breach, whichever is higher. The announcement would mean that the second limb of that test would increase from 50% to 100%. 

The UK Government announced that the intended change is aimed at strengthening the deterrent effect of the UK's sanctions regime and driving better enforcement. The proposal would require a legislative amendment to section 146 of the PCA 2017. It is not yet clear when the proposal would come into force.

4. General Licence amendments

OFSI's General Licence INT/2025/8031092, which allows for the continuation of business operations with Lukoil International Entities, was amended on 12 August 2026 as follows:

• the definition of a Lukoil International Subsidiary has been expanded to include any person who is not an individual and who is owned or controlled, directly or indirectly, by Lukoil International within the meaning of Regulation 7 of the Russia Regulations;
• the amendment introduced a new notification requirement for any entity (i.e. a person who is not an individual, or a relevant UK institution) using the amended licence; and
• the expiry date has been extended to 26 February 2027.

OFSI also amended General Licence INT/2025/7895596 to include business operations with four Lukoil Bulgaria entities, and to extend the term of the General Licence to 29 October 2026. 

5. Government announces West Bank sanctions

On 8 September 2026, the UK Foreign Secretary, Ed Miliband, announced plans by the UK Government to impose sanctions and new trade restrictions on the purchase of goods produced by illegal settlements in the West Bank. According to Miliband's statement to Parliament, the UK Government plans to enact:

• an import ban on goods from illegal settlements in the occupied Palestinian territories;
• a comprehensive sanctions regime against providing services such as construction or financing for Israeli settlements;
• a ban on the advertising in the UK of illegal settlement properties;
• personal sanctions against key individuals accused of promoting settler violence; and
• a new ban on arms licences and other exports that materially contribute to the occupation.

The Foreign Secretary said that the legislation would take six to nine months to come into effect. 

In June 2026, the UK Government sanctioned a number of Israeli individuals and organisations under the Global Anti-Corruption Sanctions Regulations 2021 ("GAC Regulations") in relation to settlement expansion and rising settler violence.

ENFORCEMENT AND JUDICIAL UPDATES 

6. OFSI imposes £4.7m penalty on bank

Summary

On 11 August 2026, OFSI imposed a civil monetary penalty of £4,732,830.58 on a bank for inadvertent breaches of the Russia Regulations and the GAC Regulations in 2022 (during the unprecedented escalation of the Russian sanctions). 

The penalty, imposed under section 146 of the PCA 2017, related to 970 payments totalling approximately £19.7 million. The penalty quantum was said to reflect the high aggregate value of the breaches, their nature and the importance of the Russia sanctions regime to UK foreign policy objectives.

Background

According to OFSI's penalty notice, between February and November 2022 the bank processed 970 payments valued at £19,720,127.43 in breach of the prohibitions on dealing with frozen funds (regulation 11 of the Russia Regulations), making funds available (regulation 12) and making funds available for the benefit of designated persons (regulation 13). The breaches arose across several areas of the bank’s London operations, including corporate banking, correspondent banking, account management and its role as Principal Paying Agent. OFSI categorised the breaches into eight matters. The principal matters concerned:

• In relation to corporate clients, the bank reportedly failed to promptly restrict 24 commercial bank accounts held by 11 companies owned or controlled by a designated Russian individual, resulting in 242 payments totalling approximately £5.9 million being processed in breach of the Russia Regulations. Notably, £4.3 million of these transactions occurred within 24 hours of designation. The delays were attributable to a backlog in alert-handling queues caused by the high volume of sanctions matches requiring manual review. Separately, the screening system failed to identify 29 entities owned or controlled by PJSC Sovcomflot as connected to a designated person, owing to a calibration issue whereby the system did not reconcile the Russian corporate prefix "PAO" with the name appearing on OFSI's consolidated list. 
• The bank deducted its own fees and tax charges from frozen accounts in 177 low-value transactions totalling approximately £135,000. 
• In the correspondent banking matter, the bank reportedly processed payments to or through designated Russian financial institutions as a result of automated payment routing systems that were not configured to screen correspondent banks against sanctions lists after they were added to the payment chain. 

The breaches were self-identified by the bank and reported to OFSI, albeit with some further issues identified during the course of the investigation. OFSI accepted that the breaches were inadvertent.

Penalty assessment

The permitted statutory maximum penalty was calculated at £9,860,063.72, being 50% of the total breach value of £19,720,127.43. OFSI applied a baseline penalty of 75% of the statutory maximum, amounting to £7,888,050.97. The bank received a 20% voluntary disclosure and co-operation discount. A further 20% settlement discount was applied following the conclusion of settlement discussions within the prescribed 30-business-day period, resulting in a total discount of 40% and a final penalty of £4,732,830.58.

In assessing its baseline 75% penalty, OFSI accepted that this was an inadvertent breach. However, it did not consider the absence of intent to be a mitigating factor. Indeed, OFSI determined that the overall severity of the case was high, warranting a Level 4 assessment (the highest within its seriousness framework). The fact that the value of the breaches is already a component of the calculation (as the value of the breach sets the starting point in respect of breaches over £1 million) does not appear to have prevented OFSI from regarding the high aggregate value of the breaches as aggravating (on one view, a form of double-counting). Other aggravating factors identified by OFSI included the strategic priority of the Russia sanctions regime.

In perhaps its most surprising observation, OFSI concluded that many of the controls issues underlying the breaches were reasonably foreseeable, given the bank’s prior knowledge and/or the design or configuration of relevant systems and controls. In particular, OFSI stated that it would have expected a greater level of detailed analysis specific to the bank’s UK operations in the period leading up to the invasion of Ukraine, despite the fact that OFSI accepted that significant work to prepare for the onset of sanctions was undertaken, and notwithstanding that the scale of sanctions imposed at that time was entirely unprecedented. It therefore appears that failure to prepare sufficiently for sanctions on a scale and in a form that no one expected may be regarded as an aggravating factor if sanctions are later enacted and accidentally breached.

Compliance Lessons

The penalty notice includes a number of ‘compliance lessons’ for financial institutions and other firms with exposure to financial sanctions risks. First, firms should assess their exposure to significant sanctions risks in advance. OFSI's stated expectation is that where a firm has elevated exposure to specific sanctions risks, there should be evidence of sufficiently detailed prior analysis of potential vulnerabilities.

Secondly, the penalty notes the importance of properly understanding and applying general licences. Wind-down general licences permit the orderly divestment from transactions involving designated persons; they do not authorise all payments related to a designated person irrespective of purpose or duration. OFSI stated that it expects parties to take reasonable steps in advance to satisfy themselves that a general licence applies to a given transaction and to retain appropriate records of those efforts.

Thirdly, the penalty is stated to highlight the value of voluntary disclosure and co-operation with OFSI. The notice states that co-operation is expected to go above and beyond what the law requires, including the proactive provision of information not explicitly requested. 

7. HMRC fines biotech company £7.4m for export of restricted goods to Russia and other destinations 

On 8 September 2026, HMRC announced that it had entered into a compound settlement with Illumina Cambridge Limited ("Illumina"), the Cambridge arm of a US-based biotech company, under which Illumina agreed to pay £7,438,840.13 for offences under the Russia Regulations. 

Compound settlements allow a business to avoid criminal prosecution for suspected sanctions or export controls-related offences, usually in exchange for paying a penalty and undertaking remedial steps.

The announcement stated that between July 2022 and January 2023, Illumina breached Regulation 25(1) of the Russia Regulations through its involvement in the supply of sanctioned goods from one overseas company within the Illumina group to another overseas company within the group for export to Russia and other destinations. Illumina had self-reported the breach and reportedly cooperated fully with HMRC's investigation and undertaken remedial actions.

This is the largest compound settlement to date and the third announcement in which the exporter has been named – the first two (£6.4m and £569,000) having been imposed earlier this year. 

HMRC's announcements regarding compound settlements have historically been anonymous, disclosing only the level of penalty and the export control law that was breached. This generated some criticism from transparency campaigners — although the main counter-argument was that anonymity was an important tool to encourage self-disclosure and settlements, and was in any event only used in cases of inadvertent breach. A change in approach was signalled in the UK’s May 2026 Strategic Approach to Sanctions Enforcement. In that publication, HMG indicated that, whilst in compound settlement cases HMRC already considered whether to name the company on a case-by-case basis, it was reviewing its approach on the basis that naming exporters “could strengthen deterrence and improve compliance”. The first cases under this new approach are now being seen: companies are being named, although the details of the breach (which on one view would be more interesting from a compliance perspective) remain limited. It will be interesting to assess in due course whether there is an impact on companies’ approach to compound settlement offers.

8. High Court finds loan repayment obligation not suspended by borrower's sanctions designation 

In West One Loan Limited v Okroyan [2026] EWHC 1428 (Ch), the High Court found that a designated borrower was in breach of its obligation to repay a mortgage loan, rejecting the borrower's argument that the repayment obligation was suspended during the period of designation. The effect of the designation was that, without a licence or applicable exemption, the borrower could not make any payments to the lender, and the lender could not receive those payments.

Further details of the judgment and its implications can be found in our standalone briefing here.

9. OTSI releases first annual review 

OTSI, which was established in October 2024 as the principal UK body responsible for the civil enforcement and implementation of UK trade sanctions, has published its first annual review. 

The OTSI Annual Review 2025-2026 revealed a number of key statistics, including the following:

• OTSI received 178 reports or referrals relating to potential breaches of trade sanctions;
• OTSI closed 104 enforcement cases during the review period. In 41 of these, no breach was identified, and a further 40 were referred to HMRC for a range of reasons, including criminal enforcement consideration or where potential breaches pre-dated OTSI's establishment;
• approximately 6% of the cases opened by OTSI were proactively initiated;
• 51 trade licence applications were received, 50 of which related to Russia and one to Iran. Of these, 17 were granted and two were refused. The remainder were either withdrawn, submitted in error, or it was determined that a licence was not required;
• the licence applications varied across sectors — 12 from medical and pharmaceutical, 11 from legal, and four from financial services; and
• OTSI took 96 working days, on average, to complete a closed licensing application. This included time taken by applicants to respond to requests for further information.

The Annual Review also noted the introduction of new and updated guidance to support businesses and other stakeholders, including guidance on countering Russian sanctions evasion. 

The Review outlined the agency's strategic policy objectives and steps to build domestic and international partnerships by formalising co-operation with a number of UK government departments and regulators through memoranda of understanding. 

OTSI has not imposed any civil penalty since its establishment.

10. Export controls licensing statistics

On 27 August 2026, the Export Control Joint Unit ("ECJU"), which is responsible for administering export controls and issuing licences in respect of strategic controlled items, published its statistics on export licensing decisions for the period 1 January to 31 March 2026. The following statistics were noted:

• ECJU made 10,291 licensing decisions, down 4% from the previous year. In 95% of cases, a licence was issued, with 5% (500 applications) being refused, which is above average;
• in Q1 2026, there were 2,705 licensing decisions for standard individual export licences ("SIELs"), an increase of 11% from the previous quarter;
• 51% of SIEL applications were closed within 20 working days, down from 60% in the previous year, and 72% were closed within 60 working days, down from 84% in the previous year; and
• the top five end-user destinations were the US, China, India, South Korea and Turkey.

According to the statistics, a number of factors have affected ECJU's ability to process licensing decisions, including growing complexity of casework, a challenging geopolitical environment and the ongoing impact of migrating the online licensing platform from SPIRE to LITE.