Clifford Chance

On 22 July 2025, the Office of Financial Sanctions Implementation ("OFSI") launched a public consultation on changes to the civil enforcement process for financial sanctions. This is the first consultation conducted since 2016-2017, when OFSI's current enforcement framework was introduced. 

The consultation proposes a number of measures aimed at improving efficiency and increasing transparency in the way cases are brought to a resolution by OFSI:

• Changing OFSI's case assessment guidance through a new case assessment matrix that considers conduct around the time of the breach and the severity of the breach to determine the seriousness of the case.
• Increasing the baseline penalty to up to 75% of the statutory maximum for Serious cases (up from 50%), and to between 75% and 100% of the statutory maximum for Most Serious cases.
• Reducing the maximum voluntary disclosure discount to up to 30% in both Serious and Most Serious cases (down from up to 50% in Serious cases).
• Introducing a settlement scheme which could lead to a settlement discount of up to 20% (applied after any voluntary disclosure discount, if applicable, has already been applied) if the matter settles within 30 business days from receipt of OFSI's draft Notice of Intention.
• Introducing an Early Account Scheme (EAS) where the subject of an investigation agrees to provide a detailed account of the potential breaches together with relevant evidence. In cases where the EAS is used, the maximum settlement discount would be increased from 20% to up to 40%.
• Introducing indicative or fixed penalties for certain information, reporting and licensing offences. The amounts proposed are £5,000 for failure to respond to a request for information, non-compliance with a licence condition or failure to report without reasonable excuse, and £10,000 in aggravated cases.
• Increasing the statutory maximum penalty for breaches of financial sanctions to the greater of £2,000,000 or 100% of the value of the funds or resources (up from £1,000,000 or 50% of the value of the funds or resources).

Case Assessments and Discounts for Self-Reporting and Cooperation (Chapter 3)

OFSI proposes to enhance transparency in its penalty decision-making by publishing a new case assessment matrix. Under the proposed policy, severity and conduct will be assessed independently, allowing for flexibility in outcomes. Depending on the assessment of conduct and severity, the case will be categorised as either Lesser Severity, Potentially Serious, Serious or Most Serious. The conduct assessment will be limited to behaviour leading up to and at the time of the breach, removing the current practice of rewarding post-breach conduct, such as voluntary disclosure and co-operation, at both the conduct assessment stage and in applying a reduction to the penalty amount at subsequent stages. Instead, voluntary disclosure and cooperation will be recognised through a penalty discount applied separately from the conduct assessment.

OFSI also proposes to increase the baseline penalty to between 75% and 100% of the statutory maximum for Most Serious cases, and up to 75%, for Serious cases, marking a shift from the current amounts of 50% and above for Most Serious cases and 0-50% for Serious cases.

The voluntary disclosure discount would be standardised at up to 30% for both Serious and Most Serious cases, replacing the current higher 50% discount for Serious cases, and would only apply where there is prompt self-reporting, a complete account of the breach, and ongoing cooperation with OFSI’s investigation.

Settlement Scheme (Chapter 4)

OFSI is proposing a settlement process, modelled on those used by the FCA and PRA, to expedite the resolution of penalty cases which currently can take up to 12 months. Under this scheme, after concluding its investigation, OFSI may offer a settlement scheme to the subject, who then has 10 business days to opt in. If accepted, OFSI would send the subject a draft Notice of Intention and a draft public penalty notice that would form the basis of the settlement discussions. A 30-business-day "without prejudice" period would then follow for settlement discussions, during which the subject can make representations. Settling within this window would entitle the subject to a 20% discount (compared to a 30% discount in the FCA and PRA schemes) on the remaining penalty amount after any voluntary disclosure discount has been applied, but settlements outside this period would not receive the discount. The settlement scheme will unlikely be available for cases involving intentional breaches, circumvention, or non-cooperation.

The settlement scheme is not equivalent to an out-of-court settlement; the subject must accept the breach finding, pay the penalty, and waive rights to Ministerial Review or judicial appeal. Self-disclosure does not guarantee a settlement offer but is a relevant factor, while evidence of concealment may preclude settlement. Subjects may also approach OFSI proactively to indicate willingness to settle, potentially accelerating the process.

OFSI is also considering alternative incentives, other than penalty discounts, including the ability for subjects to make representations as to OFSI's characterisation of the case in the published Decision Notice, or the possibility for firms to avoid admitting liability when agreeing settlements. OFSI is not, however, proposing to offer anonymisation of parties subject to a settlement.

Early Account Scheme (Chapter 5)

The EAS aims to accelerate investigations, which can currently take up to three years in complex cases. Where OFSI agrees to the use of the EAS, the subject must provide a comprehensive factual account of potential breaches and all relevant evidence, similar to the PRA’s Early Account Scheme introduced in January 2024. Where the EAS process is used, OFSI is proposing that the maximum settlement discount would be increased from 20% to 40% (this is the same increase as under the PRA scheme), applied after any voluntary disclosure discount, provided the account is complete and timely. The EAS is not automatically available; OFSI will consider factors such as the seriousness and nature of the breach, previous sanctions enforcement history of the subject, any relevant adverse findings by other authorities, and the need for further information. Voluntary self-disclosure is not required but is a positive indicator. For regulated entities, OFSI would consult with supervisory bodies and law enforcement as appropriate.

Under the EAS, OFSI sets the scope and timeline, and the subject (or an independent third party) must investigate, identify all relevant breaches, and provide supporting materials. A senior individual must attest to the account’s accuracy and completeness. OFSI may exit the process if concerns arise about the integrity or completeness of the account, and the subject may also withdraw, though any delays as a result could affect cooperation discounts. Use of the EAS may result in a private warning, a Disclosure Notice, a monetary penalty, or no further action.

Indicative or Fixed Penalties for Information, Reporting and Licensing Offences (Chapter 6)

Breaches of information, reporting and licensing offences are currently dealt with under the same regime as instances of serious sanctions breaches. To streamline the enforcement of these, OFSI is looking to introduce indicative or fixed penalties for such breaches, to provide greater clarity and consistency.

Indicative penalties would be set out in published guidance and would apply to offences such as non-compliance with reporting obligations, incomplete or non-compliant reporting on licences, and breaches of licence conditions, including breaches involving funds or resources with a value of up to £10,000. OFSI would still investigate each case, assess mitigating or aggravating factors, and retain discretion to impose higher penalties or issue warning letters instead of penalties.

The indicative penalty amounts proposed are £5,000 for failures to respond to a request for information or comply with licence conditions or reporting obligations, and £10,000 for aggravated or repeated failures, or reckless provision of materially false or incomplete information. The process for these cases would be streamlined, with OFSI proposing to shorten each stage from 28 business days under the existing framework to 15 business days. In the alternative, OFSI proposes the use of fixed penalty notices, with set penalty amounts (mirroring those proposed under the indicative guidance) set out in statute.

Statutory Penalty Maximums (Chapter 7)

Maximum civil monetary penalties for breaches of financial sanctions have remained unchanged since 2017, currently set at the higher of £1million or 50% of the estimated value of the relevant funds or resources. OFSI proposed increasing the £1million cap to £2million, which can be amended via secondary legislation. Additionally, OFSI proposed raising the specified percentage from 50% of the value of the funds or resources to 100%. This change would require an amendment to the primary legislation. These changes are independent, meaning one could be implemented without the other.

OFSI also seeks feedback on alternative penalty calculation methods, such as basing penalties on a percentage of a subject's turnover during the period to which the breach relates, or imposing penalties per breach rather than for the case as a whole (as is the case under the current regime). OFSI states that increasing the maximum penalties would allow OFSI more discretion to impose higher penalties for cases at the upper end of the seriousness scale. To date, 8 of the 12 penalties imposed have been equal to or less than 5% of the maximum.

Conclusion

OFSI is seeking public views on whether it should be taking a bolder stance on enforcement, with higher fines and lower discounts. It is simultaneously signalling that it is prepared to engage more proactively with the subjects of its investigations through the proposed EAS and settlement scheme. It is clear that OFSI is aiming to introduce elements of the enforcement regimes used by the FCA and PRA, which those regulators use to speed up investigations and outcomes. However, it is also clear that OFSI wants to increase the penalties it can impose and considers that such increases "could help to further reinforce the deterrent effect of the civil enforcement of sanctions".¹ If adopted, the proposals in OFSI's consultation have the potential to increase penalty amounts significantly. Whilst on their face, the proposals include additional discounts (for settlement or participation in the EAS), the effect of the increase in the statutory maximum plus the increase in the baseline penalty, means that even where subjects may benefit from the new additional discounts, penalties are likely to be significantly higher under the new proposals.

The consultation runs to 13 October 2025. No date or timeline has been set for OFSI's response to the consultation, so it is unclear when any changes might come into effect. If you are considering responding to the consultation and wish to discuss your comments with us, please reach out to one of our team.

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¹ Paragraph 7.2, OFSI's enforcement processes consultation