Sanctions and export control | UK Regulatory Outlook March 2025

OFSI issues monetary penalty for breach of Russia sanctions

The Office of Financial Sanctions Implementation (OFSI) OFSI issued a monetary penalty against the former Russian subsidiary of Herbert Smith Freehills (HSF), HSF Moscow, for breaches of the Russia sanctions regime.

HSF Moscow was given a penalty of £465,000 in relation to six payments totalling £3,932,392.10 to designated persons subject to an asset freeze. In committing the breaches, the firm made funds directly available to sanctioned entities.

This case was classified as "serious".  Aggravating factors included the cumulative total of the payments (although most of the payments were of lower value) and their repeated nature. The payments were made over successive days and demonstrated a "pattern of failings" including inadequate due diligence and sanctions screening.

OFSI stated that HSF London's initial disclosure to it and the proactive, voluntary, prompt and detailed report were taken into account as mitigating factors in the case. Therefore, a 50% reduction has been applied to the final penalty amount (which would have been £930,000).

See the full penalty notice. For further reading, see our commentary on the first and second monetary penalties issued by OFSI in 2019 and 2024, respectively.

Updated OTSI trade services licensing guidance

The UK government updated its guidance on applying for a licence to provide sanctioned trade services, such as professional and business services under the Russia sanctions regime.

The update:

• clarifies that licensing grounds are examples of activities for which the Department of Business and Trade (DBT) may grant a licence;
• provides examples of information applicants should gather before applying for a services licence; and
• explains that the Office of Trade Sanctions Implementation cannot provide a response timescale to applications due to the complexity of some applications.

New UK financial sanctions guidance for high value dealers and art market participants

OFSI published guidance on UK financial sanctions for high value dealers and art market participants.

The guidance is intended to supplement its general financial sanctions guidance and is aimed at entities and individuals operating in the sale or trade of high value goods, in particular those trading internationally with areas that may be affected by UK financial sanctions.

The guidance covers techniques commonly used within the sector to circumvent and evade sanctions, as well as details on due diligence measures, reporting obligations, licensing, compliance and penalties for breaches of sanctions, ownership and control and the relevance of trade sanctions.

For further information, see the accompanying factsheet with sector-specific examples of methods of circumvention and this OFSI webinar recording which provides an overview of the updated guidance and reporting requirements for the sector.

Updated Russia sanctions guidance for UK exporters 

The DBT updated its guidance for UK exporters on countering Russian sanctions evasion and circumvention (NTE 2025/03).

The updated guidance concerns the level of risk the government is willing to accept when assessing export licence applications for Common High Priority List items subject to expert controls. The guidance states that the UK government will not issue a licence where there is a risk the items will be diverted to an "undesirable end-user or for an undesirable end-use", such as items destined for stock.

HMRC compound settlement for breaches of export controls

HM Revenue and Customs (HMRC) issued a compound settlement offer to an unnamed UK company totalling £373,326.07. The settlement relates to unlicensed exports of dual-use goods and failure to declare a licence to customs. 

HRMC states that there has been an increase in the number of voluntary disclosures made in relation to unlicenced exports, incorrect licence usage and breaches of licence conditions over the past 12 months. HMRC reminds exporters to ensure that they comply with the relevant licensing requirements ( guidance for which can be found here).

Updates to strategic export control list

The Export Control Joint Unit (ECJU) published an advance notice to exporters detailing upcoming changes to the UK strategic export control list. Also known as the consolidated list, this includes strategic military and dual-use items that require a licence from the ECJU.

The changes reflect updates to control lists administered by the multilateral control regimes as well as UK legislation, and include:

• amendments in line with changes published in the control lists on The Wassenaar Arrangement website (introducing sub-orbital spacecraft as dual-use items subject to export controls); and
• amendments to technical notes and definitions for "spacecraft", "satellite", "space probe" and "space vehicle".

OFSI general licences

The following general licence has expired:

General Licence: INT/2025/5635701. The licence was granted on 10 January 2025 and permitted wind down transactions relating to PJSC Surgutneftegas, Gazprom Neft and their subsidiaries.