Key Takeaways

• OFSI has published updated enforcement guidance introducing a new case assessment matrix, discount structures, a settlement scheme, and fixed penalties for procedural breaches.
• The new framework allows for cumulative discounts for voluntary disclosure (up to 30%), settlement (20%), and the Early Account Scheme (up to 20%), which can reduce penalties by up to 70%.
• Fixed penalties of £5,000 or £10,000 will apply to information, reporting, and licensing breaches.
• OFSI plans to double maximum penalties to £2 million/100% of breach value.

Overview

On 9 February 2026, the Office of Financial Sanctions Implementation (OFSI) published updated guidance on its civil enforcement processes, following a 12-week public consultation process.

Key reforms include the introduction of settlement and early account schemes to encourage cooperation with OFSI; changes to the matrix for assessing seriousness of breach and restructuring of penalty discount regimes.

Key Developments

1. Monetary Penalty Discount Structure
OFSI has modified penalty mechanics to permit cumulative discounts of up to 70 % on baseline penalties. Discounts that may be applied concurrently include:

• Voluntary self-disclosure and cooperation discount: up to 30% (reduced from previous maximum of 50%);
• Early Account Scheme discount: 20 %; and
• Settlement Scheme discount: 20 %

This revised structure builds upon previous incentives for voluntary self-disclosure, to now include discounts for self-investigation and settlement. The new discount regimes are discussed in more detail below.

2. Updated Case Assessment Framework
The guidance updates OFSI’s penalty assessment framework to a four-level seriousness model, considering severity and conduct factors.

The four levels are:

Level	Seriousness	Indicative Outcome
1	Low	Private warning letter
2	Moderate	Public disclosure (no monetary penalty)
3	High	Civil monetary penalty (baseline up to 75% of statutory maximum)
4	Very High	Criminal referral or civil penalty (baseline 75–100% of statutory maximum)

Note: these outcomes are indicative only and OFSI retains enforcement discretion.

The framework for assessing seriousness includes new elements, including the strategic priority of the sanctions regime and whether a subject’s sanctions controls, systems and processes were proportionate to their level of risk.

Although strict liability for breaches of UK financial sanctions was introduced by the Economic Crime (Transparency and Enforcement) Act 2022, the guidance makes clear that consideration of intention, knowledge, and a reasonable cause to suspect remain relevant factors for determining seriousness.

3. Early Account Scheme (EAS)
OFSI has introduced a new Early Account Scheme, aimed at expediting investigations in appropriate cases. If available, EAS offers a 20 % monetary penalty reduction to legal persons. It is not available to individuals.

The EAS offers the subject of an OFSI investigation the option of providing an ‘early account’ of their potential breaches by undertaking their own independent, internal investigation, rather than being investigated externally by OFSI.

Use of the EAS is at OFSI’s sole discretion and in determining whether to offer EAS, OFSI will consider inter alia the potential complexity and scope of the investigation and their level of confidence in the target of the investigation providing a truthful, comprehensive account. OFSI may also make access to the EAS conditional on the appointment of a third party to conduct the investigation. Details of how to access the EAS (if available) will be provided to the subject in the initial notice notifying them of OFSI’s investigation and will be open to the subject for 15 business days.

After the conclusion of the internal investigation, OFSI will have various enforcement options, including private warning, public disclosure, monetary penalties, further investigation steps, or referral to law enforcement.

Accordingly, any subject of OFSI investigation offered the EAS will need to weigh the potential benefits of the EAS discount and greater control over the investigation process against the costs of internal investigations.

4. Settlement Scheme
OFS has added a new Settlement Scheme enabling subjects to resolve cases through negotiation in exchange for a 20 % penalty discount.

If OFSI determines settlement may be appropriate, it will invite the subject to enter settlement discussions on a specified date, providing 10 business days to respond. If the subject agrees to settlement discussions, OFSI will send a draft summary of its case to the subject, including details of the settlement process. In most cases, this will provide for a period of 30 business days for settlement discussions.

Settlement discussions will be on a without prejudice basis, and settlement agreements require subjects to waive rights to a Ministerial Review and appeals to the Upper Tribunal. Subjects that agree settlement will be named in published case summaries, but with opportunity to input on the relevant narrative.

5. Fixed Penalties for Reporting and Licensing Offences
The Guidance introduces fixed penalty charges of £5,000 and £10,000 for specified breaches of reporting obligations and licensing requirements, including late or incomplete responses to regulatory information requests.

Not every procedural breach will trigger a fixed penalty and OFSI anticipates warnings for early occurrences and fixed penalties for repeated or more serious failures. Fixed penalties will follow an accelerated timeline and are published online with subject names.

6. Increase in Maximum Penalties
OFSI has also indicated its intention to double the statutory maximum civil penalty for financial sanctions breaches to the greater of £2 million or the total value of the breach. This change requires legislative enactment and has no fixed implementation date.

Practical Considerations

• Assess cooperation strategies: Early and substantive engagement with OFSI may yield significant penalty reductions but requires resource investment and strategic planning.
• Compliance monitoring: The emphasis on risk controls and systems as conduct factors reinforces the importance of proportionate, documented compliance frameworks.
• Fixed penalties: Heightened focus on reporting and licensing compliance underscores the need for robust internal controls, audit trails, and timely responses to OFSI requests.