UK sanctions update – winter 2025

Since our Sanctions Spotlight was issued in the summer, the UK sanctions regime has continued to evolve in response to geopolitical developments and enforcement priorities. The UK Government has expanded sanctions targets designations, refined regulatory frameworks and clarified compliance expectations, particularly in relation to Russia and serious international human rights abuses. UK regulators have also signalled ongoing reforms to enforcement and reporting regimes. 

This brief update signposts important changes with dates to note, new guidance to be aware of and recent enforcement:

Regulatory and Sanctions List reform

• From 28 January 2026, the UK Sanctions List will become the single authoritative list of all UK sanctions designations, replacing the current dual-list structure for financial and trade sanctions. This aims to simplify compliance and screening (Moving to a single list for UK sanctions designations, 28 January 2026 - GOV.UK).

Regime updates

• On 1 October 2025, the UK and EU reimposed extensive sanctions on Iran under the JCPOA’s “snapback” provisions. The sanctions focus on Iran’s oil and gas and banking industries.
  
  
• The UK continues to update its Russia sanctions list, covering individuals and entities involved in the energy, defence and financial services sectors of Russia. The sanctions also cover several ships allegedly involved in exporting Russian oil.

New and updated guidance

• On 15 October 2025, Office of Financial Sanctions Implementation ("OFSI") published its Annual Review 2024-25, which indicated that the enforcement of UK Russian sanctions remains a priority and that the UK had frozen £28.7 billion worth of Russian assets under the 2019 regulations since February 2022. As of April 2025, OFSI had 240 active cases.
  
  
• On 27 October 2025, HM Treasury issued an updated advisory notice regarding the risks posed by jurisdictions with unsatisfactory and terrorist financing controls.
  
  
• On 3 November 2025, the UK Department of Business and Trade and OTSI published guidance for the freight and shipping sectors intended to help businesses in those sectors understand Russian circumvention practices and reduce their risk of being targeted by those seeking to evade sanctions.
  
  
• HMRC published a case study on a £1.1m compound settlement reached in May 2025 with an unnamed business that exported goods in breach of the Russia sanction regulations.

Enforcement and case law

• OFSI issued two civil penalties in July and September 2025 (£300,000 and £152,750 respectively), and one disclosure penalty in September 2025, for breaches related to making funds and economic resources available to a designate person without a licence: Financial sanctions enforcement: decisions and monetary penalties imposed - GOV.UK.
  
  
• Sanctions and discrimination: Recent case law held that refusal of services solely because of Russian nationality was direct discrimination (XTX Markets Technologies Ltd v Mazars LLP (2025)).
  
  
• Key takeaway: any blanket sanctions policies should be reviewed to ensure that any refusal decision can be justified and is proportionate to the actual sanctions risk.
  
  

In conclusion

The fast pace of change for sanctions shows no sign of slowing. HM Treasury and OFSI responses on the recent consultation aimed at improving efficiency and transparency of financial sanctions enforcement in the UK is expected early 2026. Potential outcomes include increasing maximum civil monetary penalties; introducing a severity and conduct ratings matrix for penalties; and/ or a settlement scheme with incentive discounts. We will provide more detail on that and any further changes as part of our more detailed Winter Sanctions Spotlight, available early 2026. Meantime, if your business is affected by changes to the sanctions regime, or you are reviewing your own processes, taking on a new business, or responding to a potential breach, get in touch with our corporate crime team for support.

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