OFSI’s Enforcement Reforms: Why Sanctions Risk Is Now a Leadership Issue

Recently, the UK’s sanctions regulator, the Office of Financial Sanctions Implementation (OFSI), has fundamentally reshaped its civil enforcement framework. While the reforms are technical on the surface, their implications for businesses, financial institutions and legal and compliance professionals are strategic: sanctions compliance is not just a control function problem, it is a leadership and governance issue.

OFSI’s January 2026 consultation response makes one thing clear. The regulator wants to be faster, firmer and more confident in enforcing sanctions, while still rewarding firms that engage early and constructively. The balance between deterrence and cooperation has shifted and boards need to understand where it now sits.

Transparency with Teeth

At the heart of the reforms is a new case assessment matrix, designed to clarify how OFSI evaluates the severity of breaches and the conduct of firms. This increased transparency has been widely welcomed by industry leaders. However, they should not mistake clarity for leniency.

OFSI has been explicit that higher-severity cases will attract higher baseline penalties. The regulator’s message is that firms need to better understand enforcement outcomes, not expect softer ones. For leadership teams, this means that sanctions risk is becoming more predictable, but also more consequential.

Cooperation Still Matters, but the Bar Is Higher

Voluntary self-disclosure remains central to OFSI’s framework but incentives have been reset. The maximum discount for disclosure and cooperation in serious cases is now capped at 30%, down from up to 50%.

This reflects a deliberate policy choice. OFSI has prioritised deterrence over generosity, particularly in a geopolitical environment where sanctions are a core foreign policy tool. For firms, the implication is stark: disclosure alone is no longer enough. The timing, quality and credibility of engagement with the regulator will determine whether meaningful mitigation can be achieved.

Speed Has Become Strategic

Two new tools, a formal settlement scheme and an Early Account Scheme, place a premium on early, decisive action. Settlement offers faster resolution and certainty but requires firms to waive appeal rights and accept public outcomes. The Early Account Scheme goes further, rewarding firms that can rapidly produce a complete, well-evidenced account of issues at an early stage.

Both mechanisms favour organisations with strong internal investigation capability, clear escalation thresholds and empowered decision-making. Where these are absent, firms may find themselves locked into slower, more adversarial enforcement pathways.

For leadership teams, this raises a simple governance question: can the organisation investigate itself quickly and confidently enough when it matters most?

Less Forgiveness for “Operational” Failures

OFSI’s introduction of fixed penalties for reporting, information and licensing breaches reinforces another theme: procedural failures now carry real regulatory and reputational cost.

Shorter response windows and mandatory publication mean that technical lapses, often dismissed as operational noise, can escalate rapidly. Leaders should assume that regulators will increasingly judge firms not just on intent, but on execution discipline.

The Direction of Travel Is Clear

Finally, OFSI intends to double its maximum civil penalties, subject to legislation. While these maxima will be used selectively, they materially increase downside exposure in serious cases and underline the regulator’s confidence in its enforcement mandate.

Taken together, the reforms point to a regulator that expects firms to:

• Know their sanctions risk in near real time
• Escalate issues early
• Investigate thoroughly and quickly
• Make informed strategic choices under pressure.

What Leaders Should Do Now

OFSI’s reforms are not just about fines. They are about how organisations behave when sanctions risk crystallises. Leadership teams should not wait for an investigation to discover whether their governance, escalation and investigation processes are fit for purpose. This is the moment to pressure-test decision-making before the regulator test it for them.

Brighter Consultancy works with boards and senior executives to translate regulatory change into practical, decision-ready capability. In response to OFSI’s reforms, this includes helping organisations to:

• Assess sanctions enforcement exposure under the new penalty and discount framework
• Stress-test escalation, self-disclosure and settlement decisions at executive and board level
• Strengthen internal investigation readiness for Early Account and settlement scenarios
• Align sanctions governance with wider financial crime, legal and reputational risk oversight.

Sanctions enforcement has entered a new, critical phase. The question for leaders is no longer whether controls exist, but whether the organisation is truly ready when it matters.