News Type: Blogs

The first half of 2026 has produced several decisions with immediate practical implications for businesses litigating in London. The cases considered below address the management of privilege, proof of corporate fraud, historic shareholder claims, contractual termination and jurisdiction provisions, arbitral enforcement and challenges, collective proceedings, and court transparency.

Across those areas, these decisions have practical consequences for how businesses manage litigation risk. They show the importance of defining the client group for legal advice privilege purposes, controlling the circulation of confidential material, maintaining clear transaction and disclosure records, following contractual notice and pricing provisions carefully, and considering how funding, settlement, and court transparency issues may affect the conduct of proceedings. This round-up summarises some of the main developments from the year so far and draws out the points most likely to matter to boards, in-house legal teams, and disputes practitioners.

Advice from a Partner Who Has Watched This Pattern Before

Every generation of new lawyers has inherited a profession in motion. I know this because I was one of them once, handed a matter that required Shepardizing, the laborious process of confirming that every case you intended to cite was still good law, by hunting through thick burgundy and gold volumes arranged on shelves. You pulled the bound Shepard’s Citations for the relevant reporter, cross-referenced your case by volume and page number, then traced a web of subsequent history through notation symbols that took months to learn fluently. It was painstaking and methodical. Then Westlaw and Lexis arrived, and that entire world disappeared.

Word processors replaced the transcription pool. Voice dictation replaced the micro-cassette recorder. E-discovery platforms replaced warehouses of bankers boxes. Each time, the worry was that something essential was being lost. Each time, what was lost was the mechanical layer, and what remained was sharper, more interesting, and more genuinely legal. The pattern is familiar. The scale is not.

Our firm made a deliberate decision to get ahead of AI early, investing substantially across both client-facing practice and internal operations. The goal was never to replace lawyers. It was to put our people in a position to move faster, serve clients better, and grow into trusted advisers sooner. What we have seen bears that out.

Artificial intelligence is the largest version of this story I have witnessed.
And if you are a new lawyer right now, you are standing at exactly the right moment.

If you are worried that losing the mechanical work means losing the training ground, I hear that. But apprenticeship has never really been defined by the mechanics of gathering information. It has always been defined by learning to evaluate it, challenge it, and turn it into advice a client can trust. AI accelerates that journey. It does not replace it.

The cite-checking, the manual document review, the regulatory cross-referencing that once consumed a first-year’s early years can now be done in a fraction of the time. Use that well. Get closer to the client, go one level deeper than the assignment asked for, and ask the question nobody else thought to put in the memo. That is where reputations get built, and all of it is available to you far earlier in your career than it was to any generation before you.

Don’t ignore the new practice area. AI and technology law is growing faster than most firms have fully reckoned with, and new lawyers are better positioned to own it than most senior partners ever will be. You understand this environment intuitively. The clients navigating data privacy, algorithmic liability, and AI governance are largely your generation. Get close to that work now, and you will find that your future clients are the people you are meeting today.

The noise right now is that this is a dangerous time to be starting out. I have heard that before, about every tool that turned out to be an opportunity. The mechanical floor of this profession is rising. What remains, judgment, relationships, and genuine counsel, is exactly what drew most of you here. That is why I believe this is the most exciting time to be a new lawyer.

This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for advice in specific situations.

Middlesbrough F.C. were knocked out of the playoffs by Southampton F.C. on Tuesday 12 May and, by Friday the 15^th, they were reportedly preparing for the final. Whether that preparation is required now depends on the outcome of disciplinary proceedings brought by the EFL against Southampton concerning allegations of spying in advance of the first leg of the playoff semifinal.

William Salt, a Southampton FC analyst, is alleged to have observed a Middlesbrough training session at Rockliffe Park last Thursday, within 72 hours of the first leg of their semifinal. Southampton have been charged with misconduct under Regulations 3.4 and 127.1 of the EFL’s Regulations, which respectively provide that clubs shall behave towards each other with utmost good faith, and that no club shall directly or indirectly observe, or attempt to observe, another club’s training session in the period of 72 hours prior to any match scheduled to be played between those respective clubs. There is no requirement of intent and no threshold of harm that must be caused: the prohibition is absolute.

These stricter provisions were introduced following the infamous 2019 incident involving the Leeds United manager, Marcelo Bielsa, who admitted to sending a member of staff to watch Derby County train, midway through the 2018/19 season. Leeds was fined £200,000 on 18 February 2019.

An independent disciplinary commission has been set up to hear the charges against Southampton. If the charges are established, the disciplinary commission has the power to impose a wide range of sanctions under Regulation 93.2 of the EFL Regulations.

The Powers of the Commission

The commission will hold a hearing, accepting evidence from both sides about the alleged rule-breaking by Southampton. If it decides that Southampton have breached Regulation 127, it has several options in terms of the sanctions that can be imposed on Southampton. That includes:

• a points deduction (Regulation 93.2.7);
• the imposition of a financial penalty payable to the League (Regulation 93.2.8); and/or
• ordering any other sanction as the Disciplinary Commission may think fit (Regulation 93.2.12).

What Happens Next?

The Telegraph reported on 15 May that Southampton have pleaded guilty to spying on a Middlesbrough team training session. If this is the case, and much will turn on the evidence before the commission, then this hearing will be a high-stakes damage limitation exercise for Southampton.

Fans and the media are debating whether Southampton deserve to be expelled from the playoff next weekend. That power is available to the commission under Regulation 93.2.12. It remains to be seen whether the evidence that is adduced convinces the commission to use this power to expel Southampton from the playoffs. For example, recent news reports suggest that the allegations of spying are more widespread than the one instance first reported. The commission’s decision is due on 19 May, with the play-offs scheduled for 23 May.

How exactly the process will play out is uncertain. Even if the strongest sanction possible (i.e. expulsion) is adopted, the timeline does not account for Southampton’s right of appeal against the decision of the commission (or the EFL’s appeal, if Southampton receive a lesser sanction).

The Complications With an Appeal

Under the EFL rules, both parties have the right to challenge the commission’s decision to an appeal board under Regulation 95.1. The appeal board’s decision is final and cannot be challenged. The three days between the commission’s decision and the playoffs mean that an appeal, if lodged, cannot be concluded in time.

That further complicates the timelines, as clubs promoted to the Premier League become shareholders in the League at a shareholders’ meeting in early June upon transfer of shares from relegated to promoted clubs. Therefore, this issue has the possibility of affecting timelines for the Premier League, who will be observing intently.

Conclusion

While the first instance commission’s decision in the ‘Spygate’ scandal is expected on 19 May, it has the potential of playing out for longer legally. The fans, and other clubs, will be watching closely. The MR team will update you on the decision as soon as possible after it is published.

This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for advice in specific situations.

KEY DEVELOPMENTS

• Russia-focused multilateral action: EU adoption of its 20th package of sanctions against Russia, adding 120 new listings and expanding restrictions across energy, military-industrial, trade, financial services and crypto-asset sectors, alongside enhanced anti-circumvention measures targeting shadow fleet operations and third-country intermediaries; accompanying US licensing activity facilitating limited operational continuity, including in relation to Lukoil-linked assets and pre-existing oil shipments; UK amendment to an existing Russia designation.

• Expansion of licensing and wind-down measures: Continued reliance by OFAC on general licenses to permit the orderly wind-down of transactions and limited ongoing activity across multiple regimes, including Iran, Nicaragua and Venezuela, as well as authorisations supporting administrative and day-to-day operations for US persons in Russia, reflecting a calibrated approach to maintaining core prohibitions while allowing practical disengagement and compliance with local requirements.

• UK sanctions framework reform and enforcement focus: Publication of OFSI’s Strategy for 2026 to 2029 introducing a revised implementation and enforcement model, coupled with the Sanctions (EU Exit) (Miscellaneous Amendments) Regulations 2026 establishing a new criminal offence targeting circumvention by diversion and updating licensing grounds, procedural mechanisms and financial thresholds.

• Strengthening of anti-circumvention controls: Introduction of UK Sanctions End-Use Controls extending licensing requirements to goods and technology at risk of onward diversion to sanctioned jurisdictions, supported by detailed government guidance emphasising risk-based due diligence, supply chain visibility and enhanced compliance obligations.

• Guidance and general license developments: Updated UK guidance clarifying the operation of sanctions exceptions and licences across regimes, including the interaction between financial and trade restrictions; issuance of new and revised UK general licences, including a Legal Services General Licence and an insolvency-related licence concerning the Prince Group, reflecting continued refinement of licensing frameworks.

• Geopolitical recalibration of sanctions regimes: Further easing of UK Syria sanctions, including removal of certain trade restrictions and confirmation of broader reforms aimed at supporting economic recovery, alongside targeted US measures permitting limited commercial engagement with the Government of Venezuela and associated entities.

GLOBAL SANCTIONS

AFGHANISTAN

• On 14 and 16 April 2026, the Foreign, Commonwealth & Development Office updated the UK Sanctions List under the Afghanistan (Sanctions) (EU Exit) Regulations 2020, making a series of variations to existing entries. The amendments relate to updates to identifying information, including names, aliases and other biographical details for designated individuals. All affected persons remain subject to asset freezes and travel bans, and the variations do not alter the underlying sanctions measures.

• On 29 April 2026, the Foreign, Commonwealth & Development Office updated the UK Sanctions List under the Afghanistan regime, making 17 variations to existing entries. All individuals remain subject to asset freezes and travel bans, with the updates reflecting changes to identifying information and designation details.

IRAN

• On 24 April 2026, OFAC issued General License V under Executive Order 13902, authorising the wind-down of transactions involving Hengli Petrochemical (Dalian) Refinery Co., Ltd. The licence permits activities ordinarily incident and necessary to terminate existing dealings with the entity and its majority-owned subsidiaries until 24 May 2026, subject to conditions. In particular, any payments to blocked persons must be made into blocked, interest-bearing accounts in the United States. The measure reflects a targeted wind-down authorisation, allowing the orderly cessation of pre-existing business while maintaining broader prohibitions on dealings with sanctioned parties.

NICARAGUA

• On 16 April 2026, OFAC issued General License No. 5 under the Nicaragua Sanctions Regulations, authorising transactions ordinarily incident and necessary to the wind down of activities involving Exportadora de Metales Sociedad Anonima (EMSA) and entities in which it holds a 50 percent or greater interest. The authorisation remains in effect until 12:01 a.m. EDT on 16 May 2026, subject to the condition that any payments to blocked persons are made into blocked accounts.

RUSSIA

• On 8 April 2026, OFAC issued General License 13Q under the Russian Harmful Foreign Activities Sanctions Regulations, authorising certain administrative transactions necessary for the day-to-day operations of U.S. persons in Russia. The licence permits payments such as taxes, fees and import duties, as well as the receipt of permits, licences and similar authorisations, where these would otherwise be restricted under Directive 4. The measure is intended to allow continued basic operational compliance with local legal requirements, while maintaining broader prohibitions, including restrictions on dealings with blocked persons and limitations on access to accounts of key Russian state financial institutions.

• On 14 April 2026, OFAC issued General License 128C under the Russian Harmful Foreign Activities Sanctions Regulations, authorising certain transactions involving Lukoil retail service stations located outside Russia. The licence permits activities necessary for the continued operation, maintenance or wind-down of such stations, including the purchase of goods and services, subject to conditions. The measure reflects a targeted approach to allow limited commercial continuity outside Russia, while preserving core sanctions restrictions, including prohibitions on transfers to Russia and dealings with other blocked persons.

• On 14 April 2026, OFAC also issued General License 130A under the Russian Harmful Foreign Activities Sanctions Regulations, authorising transactions involving specified Lukoil entities operating in Bulgaria. The licence permits otherwise restricted dealings with these entities until 29 October 2026, reflecting a continued effort to manage the impact of sanctions on energy infrastructure and regional markets. The authorisation remains limited in scope and does not extend to other blocked affiliates or broader transactions prohibited under the Russian sanctions regime.

• On 17 April 2026, OFAC issued General License 134B under multiple Russia-related sanctions authorities, authorising transactions necessary for the delivery and offloading of Russian-origin crude oil and petroleum products loaded onto vessels prior to 17 April 2026. The licence provides a time-limited wind-down period, allowing such cargoes to be delivered through 16 May 2026, including associated services required for safe transport and handling. The measure is intended to facilitate the orderly completion of pre-existing shipments, while maintaining restrictions on new transactions and broader sanctions prohibitions.

• On 23 April 2026, the Council of the European Union adopted its 20th package of sanctions against Russia, introducing 120 additional listings alongside expanded economic measures targeting energy revenues, the military-industrial sector, trade and financial services, including crypto-assets. The package also includes strengthened anti-circumvention measures, new restrictions on access to sensitive technologies, and further action targeting the shadow fleet and third-country intermediaries involved in sanctions evasion.

• On 29 April 2026, the Foreign, Commonwealth & Development Office amended an entry on the UK Sanctions List under the Russia regime, updating the designation for one individual. The individual remains subject to asset freeze, travel ban, trust services and director disqualification measures.

SYRIA

• On 22 April 2026, the UK Government updated its guidance on the Syria sanctions regime following amendments to the Syria (Sanctions) (EU Exit) Regulations 2019, including the removal of restrictions relating to gold, precious metals, diamonds and luxury goods. The update builds on earlier reforms introduced in April 2025, which lifted a range of trade, financial, transport and energy-related sanctions to support Syria’s economic recovery, while maintaining targeted measures against former regime figures and associated persons. The guidance also reflects the lifting of asset freezes on certain previously designated state-linked entities, including financial institutions and energy companies, and confirms that the Government of Syria is not currently designated under UK sanctions, underscoring a continued shift towards facilitating investment and reconstruction while preserving accountability measures.

VENEZUELA

• On 14 April 2026, OFAC issued General Licences 56 and 57 under the Venezuela Sanctions Regulations, authorising certain commercial and financial activities involving the Government of Venezuela and specified state-linked entities. The measures permit U.S. persons to engage in negotiations of contingent commercial arrangements with the Government of Venezuela, as well as to provide a broad range of financial services involving designated Venezuelan banks and certain government-affiliated individuals, subject to conditions. The licences form part of a broader easing of restrictions aimed at facilitating limited commercial engagement and improving access to financial channels, while maintaining core sanctions prohibitions, including restrictions on entering into or performing contracts without further authorisation and the continued application of asset freezes and other targeted measures.

GLOBAL REGULATIONS/ TOOLS UPDATE

• On 15 April 2026, OFSI published its Strategy for 2026–2029, setting out an updated framework for the implementation and enforcement of UK financial sanctions. The strategy introduces a new operating model built around four pillars, Promote, Enable, Respond and Change, aimed at improving compliance clarity, streamlining licensing processes, strengthening enforcement activity and embedding long-term behavioural change across regulated sectors. It also emphasises a more data-driven and intelligence-led approach, enhanced engagement with industry, and closer coordination with domestic and international partners, reflecting a broader shift towards proactive compliance support alongside more targeted and effective enforcement.

• On 20 April 2026, the UK Government made the Sanctions (EU Exit) (Miscellaneous Amendments) Regulations 2026 (SI 2026/443) under the Sanctions and Anti-Money Laundering Act 2018 (SAMLA 2018) which come into force on 13 May 2026. The regulations introduce a new criminal offence aimed at addressing the risk of sanctions circumvention through diversion. The offence applies where a UK person proceeds to export goods or transfer technology after being notified by the Secretary of State that there is a risk those items could be diverted to a sanctioned destination or end user, without first obtaining a licence. The Regulations implement these end-use controls across a number of trade sanctions regimes, including those relating to Russia, Belarus, Iran, Syria and Myanmar, with licence applications to be assessed on a case-by-case basis. The amendments also revise the “prior obligations” licensing ground so that obligations are no longer limited to being discharged using a designated person’s frozen funds or by that person alone, and remove that ground entirely from the Afghanistan regime. Additional changes include updating financial thresholds for certain regulated sectors, allowing licensing decisions to be communicated electronically, clarifying the scope of the debt payment exception, and removing outdated statutory references, reflecting a broader effort to enhance the effectiveness and operability of the UK sanctions framework.

• On 22 April 2026, the UK Government introduced new Sanctions End-Use Controls and issued guidance for businesses, establishing a licensing requirement where exporters are aware, or have been notified, that goods or technology exported to non-sanctioned countries may ultimately be diverted to sanctioned destinations or end users. The measures are intended to address circumvention risks and apply to items not otherwise subject to existing military or dual-use export controls, thereby expanding the scope of regulated activity. The guidance outlines compliance expectations, including responding to government notifications, undertaking risk-based due diligence on end use and end users, and maintaining appropriate records, reflecting an increased emphasis on supply chain scrutiny and enforcement.

• On 23 April 2026, the UK Government updated its guidance on how to use exceptions and licences to comply with sanctions, providing consolidated direction across financial, trade and transport regimes. The guidance clarifies the distinction between “exceptions”, which operate as automatic exemptions where specific conditions are met, and “licences”, which constitute formal authorisation to undertake otherwise prohibited activities. It also outlines the role of different competent authorities in issuing licences across regimes and emphasises the need for businesses to assess applicability carefully, including compliance with any notification and record-keeping requirements attached to exceptions. The update highlights the potential for overlapping financial and trade restrictions, reinforcing the importance of ensuring that all necessary permissions are obtained before proceeding with sanctioned activities. The guidance can be found here.

General Licences

General Licence INT/2026/9512597 (Legal Services), issued 24 April 2026

OFSI issued General Licence INT/2026/9512597, introducing a new framework permitting UK legal firms and counsel to receive payment from designated persons for legal services, subject to specified conditions. The licence replaces the previous Legal Services General Licence expiring on 28 April 2026, takes effect from 29 April 2026, and remains in force until 28 October 2026, with associated reporting and record-keeping requirements applying.

General Licence INT/2026/9491628 (Prince Group Insolvency), issued 14 April 2026

This licence permits insolvency-related payments and activities in connection with the sanctioned Prince Group and its subsidiaries, including the making, receiving and processing of payments necessary for insolvency proceedings, without breaching UK financial sanctions. It applies to insolvency practitioners, relevant institutions and other persons involved in such proceedings, provided that any funds or economic resources remain frozen and are not made available for the benefit of designated persons except as permitted. The licence imposes notification requirements to HM Treasury within 14 days of relevant activity and requires records to be maintained, reflecting a targeted approach to facilitate orderly insolvency processes while preserving asset freeze restrictions.

CONCLUSION

April’s developments highlight the increasing focus by US, UK and EU authorities on targeted licensing, regulatory reform and enhanced anti-circumvention tools as key mechanisms for shaping the global sanctions landscape. The expanded use of general licences to facilitate wind-downs and limited commercial activity, alongside significant EU measures relating to Russia, reflects a continued effort to balance geopolitical objectives with practical compliance considerations. At the same time, the UK’s introduction of new end-use controls and updated enforcement strategy signals a more proactive and operationally focused approach to sanctions implementation, with a growing emphasis on supply chain scrutiny and risk-based compliance. These developments contribute to an increasingly complex and enforcement-driven environment for businesses and financial institutions operating across jurisdictions. MR’s monthly sanctions update will continue to monitor these developments, providing timely insight into international sanctions measures, regulatory reforms and key enforcement trends shaping the global sanctions landscape.

This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for advice in specific situations.

The imposition of sanctions following Russia’s war on Ukraine resulted in a flurry of commercial cases. While these commercial decisions have been useful in guiding parties’ approach to sanctions implementation, the clearest guidance on OFSI’s approach comes from enforcement cases, which have been rarer.

In one such recent case, OFSI has imposed a £390,000 penalty on Apple Distribution International Limited (ADI), an Irish-incorporated subsidiary of Apple Inc., for making funds available to an entity owned or controlled by a designated person in breach of regulation 12 of the Russia (Sanctions) (EU Exit) Regulations 2019.

This is the first case under OFSI’s settlement regime and is a useful illustration of how UK sanctions can apply to non-UK entities, as well as OFSI’s approach in practice.

Background

ADI operates Apple’s App Store in Europe and the Middle East. It collects revenues from the App Store and instructs payments to app developers through a UK bank account; one of those developers was a Russian media streaming business, Okko LLC (Okko).

Okko had previously been owned by Sberbank, Russia’s largest bank, which the UK designated in April 2022. In May 2022, Sberbank sold Okko to a newly created entity, JSC New Opportunities, which was itself designated on 29 June 2022. From that point, Okko was again subject to asset-freeze restrictions as a wholly owned subsidiary of a designated person.

ADI made two payments to Okko from the UK account: Payment A was instructed on 6 June 2022 and released on 30 June 2022; Payment B was instructed on 30 June 2022 and released on 28 July 2022, by which point JSC New Opportunities had been designated for approximately a month. The total amount transferred was £635,618.75.

Jurisdiction and strict liability

ADI is not subject to UK sanctions law as it is incorporated in Ireland. However, its conduct was treated as occurring in the UK on the basis that ADI had instructed a UK bank to make the payments. As UK sanctions regimes apply to any conduct within the UK, the instruction of a UK bank triggers the application of UK sanctions.

The strict liability regime was introduced in 2022, by means of amendments to the Policing and Crime Act 2017, after which an entity is liable for breaches of sanctions regimes even if it had no knowledge of the breach or reasonable cause to suspect one. Given the payments to Okko were made following its designation, OFSI found that ADI was liable despite the fact that it had neither knowledge of the breach nor reasonable cause to suspect one. Under the Enforcement Guidance, OFSI found the breach to be “serious” rather than “most serious”. Further, in its assessment of the case, OFSI considered several factors, and assessed their relevance to aggravation or mitigation, which then informs how seriously OFSI views a case.

Aggravating factors

In this case, OFSI found that there were several aggravating factors.

First, ADI had a compliance framework in place which relied on self-certification and third-party due diligence providers; OFSI’s view was that it was inadequate for the sanctions climate at the time of breach because of Russian corporate ownership changing rapidly following the invasion of Ukraine. Contemporaneous open-source reporting described Sberbank’s sale of its assets and highlighted that JSC New Opportunities had been created specifically to acquire them. These factors were not identified by the third-party due diligence mechanisms in place.

OFSI also concluded that ADI failed to affirmatively request ownership information from Russian developers, which would have materially increased the chance of identifying the risk, and was considered an aggravating factor. OFSI also reiterated that ADI, as the entity making the payments, remained responsible for the adequacy of its own controls and had ultimate responsibility for ensuring sanctions compliance.

The fact that ADI made two previous payments to Okko in April 2022 (while it was designated), prior to the strict liability regime coming into force, was also considered an aggravating factor. Lastly, Russia sanctions were also treated as a strategic UK priority, which added to the weight given to the seriousness of the breach.

Mitigation

There were also several mitigating factors in this case. OFSI accepted that ADI had neither intent, knowledge, nor reasonable cause to suspect the breach. Payment A was completed on the day of designation, in a window so narrow that OFSI acknowledged automated systems would not necessarily be expected to catch it.

ADI also made a voluntary disclosure in October 2022, cooperated fully with the investigation, and subsequently enhanced its framework, including introducing a process to require Russian developers to provide direct and indirect ownership information at onboarding and periodically thereafter. Those steps were considered as mitigating factors when OFSI calculated the penalty.

Penalty and settlement

The baseline penalty was £600,000 against a statutory maximum of £1,000,000. A reduction of 35% was applied to reflect voluntary disclosure and ADI’s agreement to settle under the transitional arrangements, producing a final penalty of £390,000. The position has since changed. Under OFSI’s updated February 2026 enforcement guidance, voluntary disclosure is capped at 30% and a separate 20% discount applies for settlement.

Settlement itself is a new mechanism, and this is the first time OFSI has used it. Settlement requires the subject to pay the penalty as imposed and to waive rights of review and appeal to the Upper Tribunal. In return, the subject may contribute to the published case summary and will receive the settlement discount if agreement is reached within 30 business days. Firms facing investigation should consider whether to engage early to obtain the 20% discount.

Conclusion

Firms are under continued obligation to comply with sanctions. Where any part of the conduct engages the UK’s jurisdiction, including the payment mechanics, UK sanctions come into operation. Parties should note the following:

1. Ongoing awareness of, and compliance with, UK sanctions regimes remains necessary. The strict liability regime means lack of knowledge of the breach or intent to cause it is not an excuse.
2. Any act taking place within the UK requires compliance with UK sanctions, including the use of UK banks. Any business routing payments through UK financial infrastructure should treat UK sanctions obligations as directly applicable to it.
3. Firms have a continuing obligation to assess ownership and control, especially where ownership structures are complex, opaque, or subject to change.
4. Third-party providers are helpful, but they do not displace responsibility away from the party using them. The firm using the provider is still responsible for a sanctions breach, if the data is incomplete or delayed. Merely adopting third-party vendors will not reduce a firm’s liability.
5. Where a potential breach is identified, voluntary disclosure remains one of the most effective tools available to obtain a reduced penalty and OFSI expects disclosure promptly after discovery. Firms should also be aware of the settlement framework following the demonstration of its practical application. Given that the discount narrows if settlement is not reached within 30 business days, there is a real incentive to engage early.

This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for advice in specific situations.

KEY DEVELOPMENTS

• Major US, UK and EU designations: EU cyber sanctions against Integrity Technology Group, Anxun Information Technology and associated individuals linked to hacking activity affecting EU member states and partners; EU human rights sanctions against 16 individuals and three entities in Iran in connection with the authorities’ handling of protests earlier in 2026; EU cyber sanctions against Iranian entity Emennet Pasargad; EU Russia-regime listings targeting individuals involved in foreign information manipulation and interference and nine individuals linked to atrocities committed during the Bucha massacre.

• Sanctions litigation and enforcement developments: Central Bank of Russia challenge before the EU General Court to measures providing for the indefinite freezing of its assets held in the EU; German criminal convictions for the export of luxury vehicles to Russia in breach of EU restrictions, including custodial sentences and confiscation of proceeds; OFSI monetary penalty of £390,000 imposed on Apple Distribution International for breaches of UK Russia financial sanctions.

• General licences: OFAC General License No. 14 under the Belarus programme authorising certain transactions involving Belinvestbank Joint Stock Company and related entities; OFAC General License No. 1 under the DRC programme authorising wind-down transactions involving the Rwanda Defence Force; OFAC General License U authorising certain transactions relating to Iranian-origin crude oil and petroleum products loaded by 20 March 2026; OFAC General License 134 authorising certain transactions relating to Russian-origin crude oil and petroleum products already loaded onto vessels as of 12 March 2026; OFSI General Licence INT/2026/9247168 authorising certain activities involving PJSC Transneft in connection with Kazakh-origin crude oil.

• Russia-related developments: EU listings targeting foreign information manipulation and individuals linked to Bucha atrocities; OFAC extension of the deadline for negotiations relating to the potential sale of Lukoil’s foreign assets to 1 May 2026; updated UK guidance on countering Russian sanctions evasion and circumvention; OFSI enforcement action against Apple Distribution International for payments to a Russian entity owned by a designated person.

• Regulatory and guidance updates: UK publication of its cross-government strategic approach to sanctions enforcement; updated UK statutory guidance under the Central African Republic regime; UK guidance on Belarus trade sanctions licensing, including a structured tool for assessing licence availability; updated UK Starter Guide to Sanctions; OFSI update on evidential requirements and “reasonableness” in licence applications; OFSI open call for evidence on the ownership and control test closing on 13 April 2026; UK Sanctions List updates under the Afghanistan regime making variations to identifying information on existing entries.

• Trade controls and export licensing: ECJU update to the Open General Export Licence for military goods: Collaborative Project Typhoon, including expansion of permitted destinations.

GLOBAL SANCTIONS

AFGHANISTAN

• On 11 March 2026, the Foreign, Commonwealth & Development Office updated the UK Sanctions List under the Afghanistan (Sanctions) (EU Exit) Regulations 2020, making 22 variations to existing entries. The changes relate to updates to identifying information, including dates of birth, passport details, aliases and other biographical data for listed individuals. All affected persons remain subject to asset freezes and travel bans, and the variations do not alter the underlying sanctions measures.

BELARUS

• On 5 March 2026, the UK Government published guidance setting out considerations for granting trade sanctions licences under the Republic of Belarus (Sanctions) (EU Exit) Regulations 2019. The guidance provides a structured “look-up” tool to assist businesses in determining whether a licence may be available across a range of restricted sectors, including military goods, dual-use items, industrial goods, energy-related products and luxury goods. It outlines the types of circumstances in which licences may be granted, such as for humanitarian purposes, protective use or certain civil applications, and emphasises that a licence must be obtained before engaging in any activity otherwise prohibited by the regime.

• On 26 March 2026, OFAC issued General License No. 14 under the Belarus Sanctions Regulations, authorising transactions involving Belinvestbank Joint Stock Company, Belinvest-Engineering, Belbizneslizing, and entities in which they hold a 50 percent or greater interest. The licence permits transactions otherwise prohibited under the regime but does not authorise the unblocking of property or transactions involving other blocked persons not covered by the licence.

CENTRAL AFRICAN REPUBLIC

• On 25 March 2026, the UK Government updated its statutory guidance under the Central African Republic (Sanctions) (EU Exit) Regulations 2020 to reflect changes introduced by the 2025 Amendment Regulations and recent UN Security Council measures. The updated guidance provides further clarity on the operation of financial sanctions, including asset freeze obligations and restrictions on making funds or economic resources available, as well as the scope of remaining trade and export prohibitions following the lifting of the arms embargo. It also expands on the application of director disqualification measures, preventing designated persons from participating in the management of UK companies, and clarifies available exceptions, including the UN humanitarian exemption. The updates are intended to improve usability and support consistent compliance without materially altering the underlying framework.

CHINA

• On 16 March 2026, the Council of the European Union imposed restrictive measures under its cyber sanctions regime on Integrity Technology Group and Anxun Information Technology, as well as the two co-founders of Anxun. The designations relate to the provision of hacking tools and services used to compromise devices and target critical infrastructure in EU member states and partner countries. Those listed are subject to asset freezes, with EU persons prohibited from making funds or economic resources available to them, and the individuals also subject to travel bans.

DEMOCRATIC REPUBLIC OF CONGO

• On 2 March 2026, OFAC issued General License No. 1 under the Democratic Republic of the Congo Sanctions Regulations, authorising transactions ordinarily incident and necessary to the wind down of activities involving the Rwanda Defence Force (RDF) and entities in which it holds a 50 percent or greater interest. The authorisation remains in effect until 12:01 a.m. EDT on 1 April 2026, subject to the condition that any payments to blocked persons are made into blocked accounts.

GERMANY

• On 2 March 2026, a German court convicted two individuals for exporting 111 luxury vehicles to Russia in breach of the EU’s luxury goods restrictions under Article 3h of Regulation (EU) 833/2014. The vehicles, including armoured cars, were supplied to Russian customers via a network of intermediary companies. One defendant received a six-year custodial sentence, while the other was given a two-year suspended sentence. The court also ordered the confiscation of approximately €20 million in proceeds of crime. Authorities indicated that the scheme involved plans to export a further 400 vehicles valued at around €40 million.

IRAN

• On 16 March 2026, the Council of the European Union introduced further sanctions under its Iran human rights regime, adding 16 individuals and three entities in response to the authorities’ handling of protests earlier in 2026. Those designated include senior government, security and judicial figures, as well as organisations linked to the coordination of enforcement measures and surveillance activities. The listings impose asset freezes and travel bans and prohibit EU persons from making funds or economic resources available. The additions bring the total number of listings under the regime to 263 individuals and 53 entities.

• On 16 March 2026, the Council of the European Union imposed sanctions under its cyber regime on Emennet Pasargad, an Iranian entity linked to cyber activities affecting EU member states. The designation relates to unauthorised access to data, including a French subscriber database, and the compromise of advertising billboards and a Swedish SMS service.

• On 20 March 2026, OFAC issued General License U, authorising transactions ordinarily incident and necessary to the sale, delivery or offloading of Iranian-origin crude oil and petroleum products loaded onto vessels on or before 12:01 a.m. EDT, 20 March 2026. The licence applies to such cargoes, including those carried on blocked vessels, and remains in force until 12:01 a.m. EDT, 19 April 2026. It also confirms that authorised transactions may include importation into the United States where such activity is incidental to the permitted sale or delivery. The licence does not authorise transactions involving persons connected with North Korea, Cuba or certain regions of Ukraine, or entities owned or controlled by such persons.

RUSSIA

• On 3 March 2026, the Central Bank of Russia brought proceedings before the EU General Court challenging Council Regulation (EU) 2025/2600, which provides for the indefinite freezing of its assets held in the EU. The claim, filed under Article 263 TFEU, seeks annulment of the measure and raises arguments relating to property rights, access to justice and sovereign immunity, as well as alleged procedural deficiencies in its adoption, including the use of a majority vote rather than unanimity. The case forms part of wider efforts to contest EU measures affecting Russian sovereign assets, estimated at around $300 billion held in Europe.

• On 12 March 2026, the U.S. Treasury’s Office of Foreign Assets Control issued General License 134, authorising transactions ordinarily incident and necessary to the delivery, sale and offloading of Russian-origin crude oil and petroleum products already loaded onto vessels as of that date. The licence provides a time-limited exemption, allowing such cargoes to be completed notwithstanding existing sanctions, and is set to expire on 11 April 2026.

• On 16 March 2026, the Council of the European Union adopted additional sanctions under its framework targeting Russia’s destabilising activities, listing four individuals involved in foreign information manipulation and interference directed at the EU and its partners. Those designated include media figures and propagandists linked to the dissemination of disinformation relating to Russia’s war against Ukraine. Following these additions, the regime applies to 69 individuals and 17 entities.

• On 16 March 2026, the Council of the European Union imposed additional restrictive measures under its Russia sanctions regime, listing nine individuals for their roles in atrocities committed during the Bucha massacre in 2022. The individuals, including senior military personnel, were identified as having played a significant role in actions undermining Ukraine’s territorial integrity and sovereignty, with the EU stating that the conduct in question amounts to war crimes and crimes against humanity.

• On 30 March 2026, OFAC extended, for a fourth time, the deadline for potential buyers to negotiate the purchase of Lukoil’s foreign assets, moving it to 1 May 2026. The extension provides additional time for discussions relating to assets reportedly valued at around $22 billion, with any eventual transaction remaining subject to OFAC approval.

TURKEY

• On 9 March 2026, the U.S. Department of Justice and Türkiye Halk Bankası A.Ş. (Halkbank), a state-owned Turkish bank, agreed a proposed Deferred Prosecution Agreement (DPA) in a long-running U.S. criminal case in which U.S. prosecutors allege that Halkbank participated in a scheme to evade U.S. sanctions on Iran involving approximately $20 billion in transactions. The agreement, filed in the U.S. District Court for the Southern District of New York, would suspend the criminal proceedings subject to court approval. Under the proposed terms, Halkbank would not admit to wrongdoing or pay financial penalties but would be required to implement compliance enhancements, including the appointment of an independent monitor, and refrain from transactions involving Iran during the term of the agreement.

GLOBAL REGULATIONS/TOOLS UPDATE – UK

• UK Government strategic approach to sanctions enforcement: On 10 March 2026, the UK Government published its cross-government strategic approach to sanctions enforcement, setting out how civil and criminal breaches of UK sanctions are investigated and enforced across departments and agencies. The document outlines key enforcement principles, the respective roles of enforcement bodies, and the range of tools available, including civil penalties and criminal action, together with the factors taken into account when determining outcomes. It also emphasises the importance of strong compliance, noting that enforcement is intended both to deter non-compliance and to address deliberate attempts to evade sanctions.

• Open General Export Licence update: On 11 March 2026, the Export Control Joint Unit (ECJU) updated the Open General Export Licence (OGEL) for military goods: Collaborative Project Typhoon, revoking the previous 30 September 2022 licence. The updated licence expands the list of permitted destinations to include Turkey (for maintenance purposes), while continuing to authorise exports of specified military goods, software and technology in support of the Typhoon programme to approved partner nations and permitted end users. The licence remains subject to conditions including prior ECJU approval of eligible contracts, compliance with security requirements, and record-keeping and reporting obligations, with exporters also required to include the relevant licence reference in customs declarations.

• Guidance on countering Russian sanctions evasion and circumvention: On 12 March 2026, the UK Government updated its guidance on countering Russian sanctions evasion and circumvention, aimed at supporting exporters in identifying and mitigating diversion risks. The guidance can be found here. The guidance outlines common evasion tactics, including the use of third-country intermediaries, indirect shipping routes and falsified end-use information, and highlights categories of high-risk goods, particularly military, dual-use and industrial items. It also sets out red flag indicators and recommended enhanced due diligence measures, emphasising that businesses are responsible for assessing their exposure and implementing appropriate compliance controls to avoid facilitating sanctions breaches.

• OFSI updated blog on “reasonableness” in licence applications: On 13 March 2026, OFSI published an updated blog on its approach to assessing “reasonableness” in sanctions licence applications, providing greater clarity on evidential requirements across key licensing grounds. The update introduces a requirement for an independent Costs Draftsperson’s Report in certain high-value legal fee cases, including where total legal fees exceed £2 million (including VAT) within a six-month period, or £1 million where Counsel is instructed directly. These thresholds apply cumulatively per designated person across related applications. OFSI also emphasised that applicants must demonstrate that requested payments are reasonable, supported by appropriate evidence.

• Updated Starter Guide to UK Sanctions: On 25 March 2026, the UK Government updated its Starter Guide to UK Sanctions, an introductory resource designed to help businesses and organisations understand the structure and operation of the UK sanctions regime. The guidance can be found here. The guidance outlines who must comply, the different types of sanctions, including financial, trade, immigration and transport measures, and key concepts such as designated persons, ownership and control, and the UK Sanctions List. It also highlights core compliance expectations, including sanctions screening, due diligence and the use of licensing and exceptions.

• OFSI monetary penalty against Apple Distribution International: On 19 March 2026, OFSI imposed a £390,000 monetary penalty on Apple Distribution International (ADI), with the decision published on 30 March 2026, for breaches of UK financial sanctions relating to Russia. The case concerned two payments totalling £634,570.08, made on 6 June and 8 July 2022, to a Russian entity owned by a designated person. OFSI determined, on the balance of probabilities, that the payments constituted breaches of the asset freeze, notwithstanding that ADI voluntarily disclosed the transactions. The penalty was imposed following settlement discussions and reflects OFSI’s assessment of the seriousness of the breach and mitigating factors.

• OFSI open call for evidence: OFSI’s open call for evidence on the operation of the ownership and control test in UK financial sanctions regulations, including how it is applied in practice and the challenges faced by firms, closes on Monday 13 April 2026. The survey can be accessed here.

General Licences

• On 19 March 2026, OFSI issued General Licence INT/2026/9247168 permitting certain activities involving PJSC Transneft and its subsidiaries in connection with the transportation and handling of Kazakh-origin crude oil. The licence authorises transactions, including payments, relating to the supply, purchase and movement of Kazakh oil where the oil is not owned by a person connected with Russia and is only transiting through or departing from Russia. The licence also allows relevant UK financial institutions to process associated payments. It remains in force until 18 March 2028 and is subject to standard record-keeping requirements.

CONCLUSION

March 2026 reflects an increasingly active sanctions environment, with new EU cyber and Russia-related listings, ongoing litigation such as the Central Bank of Russia challenge, and criminal enforcement in Germany signalling continued regulatory focus. In the UK, recent guidance on enforcement, evasion and licensing, alongside OFSI’s penalty against Apple Distribution International, reinforces the practical impact of the strict liability regime, where breaches may arise without knowledge or intent. At the same time, the use of general licences across US and UK regimes highlights the need for careful navigation of permitted activity within complex restrictions.

Overall, firms should ensure their sanctions compliance frameworks remain proactive, risk-based and responsive to ongoing developments. MR’s monthly sanctions update will continue to monitor these developments, providing timely insight into international sanctions measures, regulatory reforms and key enforcement trends shaping the global sanctions landscape.

This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for advice in specific situations.

KEY DEVELOPMENTS

• Major UK and EU designations and Russia escalation: UK announcement of its largest Russia sanctions package to date on 24 February 2026, introducing nearly 300 new designations targeting energy revenues, shadow fleet networks, LNG and civil nuclear sectors, military supply chains and certain financial institutions; EU restrictive measures against additional Russian individuals linked to human rights abuses and repression; continued UK Iran human rights designations; UN Security Council sanctions targeting senior Rapid Support Forces commanders in Sudan.

• Sanctions enforcement and penalty developments: OFSI publication of revised Financial Sanctions Enforcement and Monetary Penalties Guidance introducing a four-level seriousness framework, refined penalty calculation methodology and enhanced discount mechanisms; proposed increase to the UK Statutory Maximum Penalty from the greater of £1 million or 50 percent of breach value to the greater of £2 million or 100 percent of breach value, subject to legislative approval; OFSI case study highlighting compliance failings in the Bank of Scotland Russia sanctions breach. 

• Ownership and control scrutiny: OFSI launch of an open call for evidence on 16 February 2026 regarding the practical operation of the ownership and control test under UK financial sanctions, signalling potential future clarification or reform. 

• Russia-related asset divestment and licensing activity: OFAC extension of the deadline for authorised negotiations relating to the sale of Lukoil’s foreign assets; issuance of UK wind-down General Licences in respect of PJSC Transneft and Maritime Mutual; amendment and extension of the Lukoil Bulgaria continuation licence. 

• US enforcement and policy developments: US authorities strengthened sanctions enforcement infrastructure and policy tools, including the launch of OFAC’s Voluntary Self-Disclosure Portal and FinCEN’s sanctions whistleblower portal, alongside the first designations under the Protecting American Intellectual Property Act (PAIPA), signalling continued expansion of US sanctions authorities and reporting mechanisms.

GLOBAL SANCTIONS 

EU 

• On 26 February 2026, the Council of the European Union strengthened the scope of the EU’s counter-terrorism sanctions regime under Council Common Position 2001/931/CFSP and renewed all existing listings on the EU terrorist list. The framework provides for the freezing of funds and economic resources of listed persons, groups and entities, as well as a prohibition on making funds or economic resources available to them. In confirming the continued application of the regime and broadening its scope, the Council stated that the measures are intended to ensure the EU’s counter-terrorism sanctions remain effective and responsive to evolving security threats.

IRAN

• On 2 February 2026, the Foreign, Commonwealth & Development Office (FCDO) added one entity and ten individuals to the UK Sanctions List under the Iran (Sanctions) Regulations 2023 in response to serious human rights violations and abuses in Iran, including the violent suppression of protestors. The designated organisation is the Law Enforcement Forces of the Islamic Republic of Iran, which is subject to an asset freeze and director disqualification sanction. The ten individuals added include senior Iranian officials such as Eskandar Momeni, Mohammad Reza Hashemifar, Ahmed Amini, Mohammad Ghanbari, Ahmad Darvish Goftar and Mehdi Rasakhi, among others, who are sanctioned for their roles in violent crackdowns, arbitrary detention and serious human rights abuses.

• On 25 February 2026, OFAC designated multiple entities, individuals and vessels involved in facilitating Iranian petroleum sales and related financial flows, including networks used to disguise the origin of Iranian oil shipments. Those designated were added to the Specially Designated Nationals and Blocked Persons (SDN) List, triggering asset freezes and prohibiting U.S. persons from engaging in transactions with them.

MYANMAR

• On 10 February 2026, the FCDO issued a Sanctions Notice under the Myanmar (Sanctions) Regulations 2021 correcting an entry on the UK Sanctions List. The amendment updated the designation details for Sky One Construction Company Ltd, which remains subject to UK sanctions including an asset freeze and director disqualification sanction. The UK statement of reasons notes that the company contributed funds to the Myanmar Security Forces in 2017. The notice clarifies the entry but does not remove the entity from the sanctions list. All relevant prohibitions and reporting obligations continue to apply.

NICARAGUA 

• On 26 February 2026, OFAC sanctioned five Nicaraguan officials for their alleged roles in supporting repression by the Ortega–Murillo regime. Those designated include senior officials from Nicaragua’s Financial Analysis Unit, Ministry of Labor, telecommunications regulator, and military intelligence directorate. OFAC cited the ongoing repression of political opponents, restrictions on media freedom, and constitutional changes consolidating executive power.

RUSSIA 

• On 10 February 2026, the FCDO published a Sanctions Notice under the Russia (Sanctions) (EU Exit) Regulations 2019 that updates the UK Sanctions List entry for Digital Security Services LLC. The notice refines the details associated with the company’s listing, including corrections to its name and related identifiers, to improve accuracy in the sanctions register. The variation does not remove the company from the sanctions list and does not change the substantive sanctions measures applied to it. Digital Security Services LLC remains subject to the UK’s financial sanctions regime.

• On 13 February 2026, the FCDO issued a Sanctions Notice updating the UK Sanctions List under the Russia (Sanctions) (EU Exit) Regulations 2019 by varying the listing for Saodat Narzieva. The variation removed a reference to Narzieva “obtaining a financial or other material benefit from Alisher Usmanov” while keeping her subject to UK sanctions measures, including an asset freeze, travel ban, trust services sanctions and director disqualification sanction. Narzieva was originally designated on 13 April 2022 as an “involved person” under the Russia regime based on her familial and associational links to Usmanov. The update does not alter the underlying sanctions obligations, which continue to apply.

• On 23 February 2026, the Council of the European Union adopted restrictive measures targeting eight additional individuals responsible for serious human rights violations, the repression of civil society and democratic opposition in Russia, and the undermining of the rule of law. The newly listed individuals include members of the Russian judiciary involved in politically motivated trials and senior figures in the penal system connected to inhumane detention conditions for political prisoners, including activists sentenced on politically motivated charges. Those designated are subject to asset freezes and travel bans.

• On 24 February 2026, marking four years since Russia’s full-scale invasion of Ukraine, the UK Government announced what it described as its largest sanctions package to date against Russia, introducing nearly 300 new designations and bringing the total number of UK targets under the Russia regime to over 3,000. The measures focus heavily on Russia’s energy revenues, including action against PJSC Transneft, networks involved in trading Russian oil, dozens of oil tankers linked to circumvention activity, and entities connected to the LNG and civil nuclear sectors, as well as additional suppliers supporting Russia’s military capabilities and certain financial institutions facilitating cross border payments. The Government stated that the package is intended to further restrict the Kremlin’s ability to generate revenue and sustain its war effort, while reinforcing the UK’s continued support for Ukraine.

• On 26 February 2026, reporting indicated that OFAC extended the deadline under its existing OFAC authorisation permitting negotiations and preparatory steps for the sale of Lukoil’s foreign assets, moving the cut-off from 28 February 2026 to 1 April 2026. The extension continues the effect of the prior authorisation and provides additional time for potential buyers to progress divestment discussions while underlying sanctions remain in force.

• On 26 February 2026, during a parliamentary committee session, a UK government minister indicated that the UK could consider joining the EU in pursuing a ban on the provision of maritime services relating to Russian oil shipments, even if the United States does not adopt equivalent measures. The comments signal potential further tightening of restrictions targeting Russian oil exports and associated shipping and insurance services.

SUDAN 

• On 25 February 2026, the UN Security Council imposed sanctions on four senior commanders of Sudan’s paramilitary Rapid Support Forces (RSF) for their roles in the capture of el-Fasher on 26 October 2025, which a UN fact-finding mission described as involving mass atrocities. The individuals designated are RSF deputy commander Abdul Rahim Hamdan Dagalo, Brigadier General Al-Fateh Abdullah Idris (Abu Lulu), Gedo Hamdan Ahmed, and Tijani Ibrahim. The sanctions, which may include asset freezes and travel bans under UN authorities, follow previous designations by the United States and the United Kingdom relating to the same conduct. According to the UN refugee agency, more than 70,000 civilians have fled el-Fasher since it was captured.

SYRIA 

• On 25 February 2026, OFAC announced a $3,777,000 settlement with a US individual for 20 apparent violations of the former Syria Sanctions Regulations. Between 2018 and 2021, the individual provided managerial services to Syrian real estate companies while serving as an executive and board member. OFAC characterised the conduct as egregious and not voluntarily disclosed. Although US sanctions on Syria were lifted in 2025, OFAC emphasised that the removal of sanctions does not extinguish liability for past breaches, underscoring its continued enforcement posture.

GLOBAL REGULATIONS/TOOLS UPDATE – UK 

FCDO updated UK Sanctions List search tool user guide 

On 12 February 2026, FCDO published an updated user guide for the UK Sanctions List search tool. The guide explains how to use the search function and accompanying filters to identify individuals, entities and vessels subject to UK sanctions. The user guide can be found here. 

FCA publishes guidance on reporting suspected sanctions evasions 

On 12 February 2026, the UK Financial Conduct Authority published new guidance on reporting suspected sanctions evasion, clarifying how regulated firms and professionals should notify the FCA of suspected or actual sanctions evasion and weaknesses in sanctions controls. The guidance outlines reporting routes, including the FCA’s wrongdoing or misconduct reporting form and its whistleblowing channels, and emphasises that firms should report suspected breaches, control deficiencies or methods used to circumvent sanctions, particularly where these involve firms or individuals on the FCA’s registers or UK-listed securities. The guidance can be found here.

Updated OFSI guidance on financial sanctions enforcement and monetary penalties 

On 9 February 2026, OFSI updated its Financial Sanctions Enforcement and Monetary Penalties Guidance following a 12-week public consultation in 2025 on enhancing OFSI’s civil enforcement framework. The revised guidance introduces a clearer four-level seriousness categorisation for breaches and refines the case factors OFSI considers, including greater emphasis on management of sanctions risk and the strategic priority of the relevant regime. It sets out in more detail how OFSI determines the statutory maximum penalty, which is the greater of £1 million or 50 percent of the estimated value of the breach where that value can be assessed, and how it then establishes a reasonable and proportionate baseline penalty, with indicative guidance that the most serious Level 4 cases should generally attract a baseline at or above 75 percent of the statutory maximum. The guidance also formalises three potential discounts to that baseline penalty: up to 30 percent for voluntary, prompt and complete self-reporting combined with proactive cooperation, up to 20 percent under a new Early Account Scheme for early factual admissions, and a 20 percent settlement discount, with cumulative application where more than one applies. Additional updates include a new policy on assessing claims of financial hardship and expanded guidance on fixed monetary penalties for certain information, reporting and licensing breaches. The Government states that the changes are intended to increase transparency, incentivise early engagement, and ensure enforcement outcomes remain effective, proportionate, and consistent. The full guidance can be found here. 

Proposed increase to the UK’s Statutory Maximum Penalty 

In a 29 January 2026 blog post, OFSI Director Giles Thomson confirmed that the Government intends to increase the statutory maximum monetary penalty for financial sanctions breaches from the current threshold of the greater of £1 million or 50 percent of the estimated value of the breach to the greater of £2 million or 100 percent of the estimated value. Because the statutory maximum is set out in primary legislation under the Policing and Crime Act 2017, this change requires parliamentary approval and cannot be implemented through updated guidance alone. OFSI confirmed that all reforms not requiring legislative amendment took effect upon publication of the revised Enforcement and Monetary Penalties Guidance in February 2026, while the proposed increase to the statutory maximum will be introduced once the necessary legislative changes are enacted. 

OFSI launches an open call for evidence

On 16 February 2026, OFSI launched an open call for evidence on how the ownership and control test is operating in practice under the UK financial sanctions regime. The exercise seeks evidence and practical examples from firms, legal advisers and compliance professionals, particularly in relation to circumstances in which hypothetical control arises, the resulting compliance burden and legal risk, and whether existing legal concepts or typologies assist in assessing control.

The call for evidence closes on 13 April 2026. Responses may be submitted via an online form or by email. The Government intends to use the feedback to inform future policy development, with the aim of ensuring that the sanctions framework remains both effective and workable for legitimate business activity. 

Amendment to Personal Remittances General Licence

On 18 February 2026, OFSI amended its Personal Remittances General Licence (INT/2024/4761108) to expand the scope of permitted personal banking activities involving certain designated persons. The amendment authorises specified personal payments through institutions in the UK, EU/EFTA, US and Canada, subject to strict conditions and a cumulative monetary cap. The licence does not permit commercial transactions or activity beyond the defined personal remittance parameters. 

OFSI Prioritises Licence Applications 

On 19 February 2026, OFSI published new guidance explaining how it prioritises financial sanctions licence applications. The guidance outlines how OFSI categorises applications as high, medium or low priority, including consideration of factors such as humanitarian need, legal obligations, and risks to the integrity of the sanctions regime. The publication is intended to improve transparency around OFSI’s case management approach.

OFSI case study 

On 23 February 2026, OFSI published a blog highlighting practical compliance lessons from its £160,000 monetary penalty imposed on Bank of Scotland Plc for breaches of the Russia financial sanctions regime. The post uses the case to illustrate how sanctions controls operate in practice and what weaknesses can expose firms to the risk of breaching UK sanctions, which apply to conduct within the UK and to UK persons globally.

Key lessons include:

• Screening quality matters: The bank’s automated screening failed to match a designated person because of a spelling variation in the customer’s name, underscoring the importance of robust data configuration and using enriched screening tools where justified by risk.

• Automation alone isn’t enough: Firms need strong contingency procedures and clear escalation paths so staff know exactly when and how to raise potential sanctions issues, especially in higher-risk areas like PEPs.

• Training must be current: training should be regularly reviewed and updated to reflect changes in the geopolitical and regulatory landscape to ensure effective compliance.
• Voluntary disclosure helps: Prompt disclosure of a suspected breach can materially influence the outcome. OFSI rewards early and complete voluntary reporting with penalty discounts, and firms should act “as soon as practicable” in reporting.

OFSI emphasises that it looks at how well controls work in practice, not just whether they exist, and encourages firms to review their screening systems, escalation procedures, training and reporting frameworks in light of these lessons.

General Licences  

Maritime Mutual Wind Down General Licence (INT/2026/8893924), effective 24 February 2026 

This licence (INT/2026/8893924) permits UK insurers and UK insurance brokers to receive, process and transmit funds to or from Maritime Mutual Association Limited, Maritime Mutual Insurance Association (NZ) Limited and their subsidiaries in connection with insurance or reinsurance contracts agreed in writing before 24 February 2026. The licence also authorises activity reasonably necessary to cancel, terminate or otherwise wind down such arrangements, and allows relevant UK institutions to process associated payments. It expires at 23:59 on 9 April 2026. The licence imposes six-year record keeping requirements and does not authorise conduct beyond what is expressly permitted under the Russia Regulations.

PJSC Transneft Wind Down General Licence (INT/2026/8889196), effective 24 February 2026 

This licence (INT/2026/8889196) authorises persons to wind down or divest from transactions involving PJSC Transneft or its subsidiaries, including closing out positions, together with any activity reasonably necessary to give effect to that wind down. The licence also permits relevant UK institutions to support such activity and remains in force until 23:59 on 9 April 2026. It is subject to six-year record keeping obligations and does not permit activity that would otherwise breach the Russia Regulations.

Continuation of Business of Lukoil Bulgaria Entities General Licence (INT/2025/7895596), amended 10 February 2026 

OFSI’s General Licence INT/2025/7895596, originally issued on 14 November 2025 under the Russia (Sanctions) (EU Exit) Regulations 2019, permits certain activities necessary to support the continued operation and specified dealings involving Lukoil Neftochim Burgas AD and related Bulgarian subsidiaries, notwithstanding their designation under the Russia sanctions regime. The licence was amended on 20 November 2025 to expand the list of covered subsidiaries and further amended on 10 February 2026 to extend its expiry date to 13 August 2026. The February amendment did not alter the substantive permissions but prolonged the duration of the licence.

GLOBAL REGULATIONS/TOOLS UPDATE – USA 

Launch of Voluntary Self-Disclosure Portal 

On 6 February 2026, OFAC launched a new online Voluntary Self-Disclosure (VSD) Portal to provide a streamlined and secure method for reporting potential sanctions breaches. OFAC reiterated that qualifying voluntary self-disclosures are a significant mitigating factor and may result in up to a 50 percent reduction in the base penalty amount.

FinCEN launches sanctions whistleblower portal 

On 13 February 2026, the US Financial Crimes Enforcement Network (FinCEN) launched a dedicated online portal to receive confidential whistleblower tips relating to sanctions violations, as well as fraud and money laundering. The webpage provides information on eligibility, reporting procedures and potential award mechanisms under the US whistleblower programme, and is intended to strengthen detection and enforcement of financial crimes and sanctions breaches.

The PAIPA sanctions 

On 24 February 2026, the U.S. State Department announced the first-ever designations under the Protecting American Intellectual Property Act of 2022 (PAIPA), targeting a Russian cyber tools broker, its director and a UAE-based affiliate for their alleged involvement in the theft and sale of US trade secret exploits. PAIPA mandates the imposition of sanctions, including blocking measures and financial restrictions, against foreign persons engaged in significant trade secret theft that threatens US national security or economic interests. OFAC simultaneously designated the same parties under its cyber-related authorities, underscoring the US Government’s willingness to deploy IP-related sanctions tools alongside traditional financial sanctions frameworks.

CONCLUSION 

February’s developments reinforce that the scope and reach of the principal international sanctions regimes are becoming ever broader, extending across new sectors, actors and compliance touchpoints. At the same time, the consequences of breaching those regimes are becoming increasingly serious. In the UK, this is reflected in OFSI’s updated enforcement guidance and its proposed increase to the UK Statutory Maximum Penalty, signalling a more robust and structured approach to sanctions breaches.

As scrutiny intensifies, firms should ensure that their sanctions controls remain proportionate, well-documented and capable of withstanding regulatory review. MR’s monthly sanctions update will continue to monitor these developments and key enforcement trends shaping the global sanctions landscape.

This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for advice in specific situations. 

Investment arbitration has become a central feature of the international legal framework governing foreign investment. It provides investors with a direct mechanism to bring claims against host states for breaches of treaty obligations, outside the domestic courts of the host state. Used prudently, it can act as a practical system of legal protections that operates alongside contracts and domestic law.

This first blog in a two-part series provides a practical overview of investment arbitration and the core protections typically available to investors under investment treaties.

The Nature of Investment Arbitration 

Investment arbitration allows a foreign investor to bring claims directly against a host state before an independent international tribunal. The state’s consent to arbitration is given in a contract with the investor in an international treaty concluded with the investor’s home state or with multiple states.

When an investor initiates arbitration under the investment treaty, a binding arbitration agreement is formed. This structure enables private parties to enforce obligations grounded in public international law against a state, as opposed to the traditional system where public international law principles could only be enforced by states, against states.

Who May Bring Claims and Against Whom

Investment treaties limit standing to qualifying investors who are nationals. For individuals, nationality is usually determined by citizenship. For companies, nationality is typically based on place of incorporation or seat, though some treaties impose additional requirements such as substantial business activity.

These definitions are critical. Jurisdictional objections frequently turn on whether the claimant qualifies as an investor under the treaty with ownership structures, control, and timing often closely scrutinised.

Depending on the terms of the treaty, claims can be brought against states for governmental action, whether through their ministries, regulators, courts, and other entities exercising governmental authority. Conduct by state-owned enterprises may also be attributable to the state in certain circumstances.

What Constitutes a Protected Investment

Treaties define the investments they protect. Most adopt a broad, asset-based definition inter alia covering shares, loans, contractual rights, concessions, licences, and intellectual property.

Tribunals nevertheless assess whether the alleged investment meets objective criteria, particularly where treaties refer to contribution, duration, and risk. Purely commercial transactions or short-term sales may fall outside the scope of protection.

The way an investment is structured, financed, and documented therefore has legal significance. Economic exposure alone cannot guarantee treaty protection.

Core Substantive Protections

While treaty language varies, most investment treaties include a core set of substantive protections that define permissible state conduct.

Protection Against Expropriation

Expropriation, simply, means the taking of property. Treaties generally prohibit expropriation except where it is for a public purpose, carried out in accordance with due process, non-discriminatory, and accompanied by compensation.

Expropriation may be direct, such as formal nationalisation, or indirect, where measures substantially deprive the investor of the use or value of the investment through indirect measures such as regulatory action, licence withdrawal, and the like, depending on their effect on the investor.

Fair and Equitable Treatment

Fair and equitable treatment is among the most frequently invoked standards. It protects investors against arbitrary, abusive, or fundamentally unfair conduct by the host state in which the investment has been made.

Tribunals have interpreted this standard to include respect for legitimate expectations, transparency, consistency, due process, and good faith. While modern treaties increasingly seek to define or limit this obligation, it remains a central protection against egregious conduct by the state.

Full Protection and Security

This standard obliges states to exercise due diligence in protecting investments. While historically focused on physical security, it has in some cases been extended to legal and institutional protection, particularly where systemic failures undermine the investment.

Most Favoured Nation (“MFN”) and National Treatment

Investment treaties often include the non-discrimination standards of MFN and national treatment as protections for investors.

National treatment obliges the state to treat foreign investors no less favourably than domestic investors in like circumstances. Claims often arise where regulatory measures, licensing regimes, or enforcement practices disadvantage foreign investors relative to local actors.

Most favoured nation treatment, on the other hand, requires the state to treat investors from the claimant’s home state no less favourably than investors from any third state. In some cases, this clause has been invoked to access more favourable protections found in other treaties, though this approach is increasingly restricted by treaty drafting. Tribunal have also diverged on whether such a reading of the MFN clause is permissible.

Both standards involve a contextual comparison, and differential treatment may be justified by legitimate regulatory objectives.

Procedural Protections and Access to Arbitration

Treaties provide investors with access to international arbitration, commonly under ICSID or UNCITRAL rules. This offers neutrality, enforceability, and insulation from domestic political pressures.

Treaties oftentimes have procedural requirements for the access to arbitration. Cooling-off periods, notice requirements, limitation periods, and jurisdictional thresholds must be respected. Failure to comply can result in dismissal regardless of the merits.

Conclusion

Investment arbitration operates alongside contracts and domestic remedies and in some cases contractual obligations can be elevated to treaty disputes (through a provision often referred to as an umbrella clause). However, in most instances, treaty claims are based on breaches of international law, not merely contractual non-performance. For most cases, the state’s conduct must result in a breach of treaty standards.

Investors should seek strategic input early as in their disputes choices made in domestic forums can nonetheless affect treaty rights as treaty protections are only available if the investor and investment fall within the treaty’s scope. That determination often depends on decisions made at the investment stage.

Understanding and prudently leveraging investment arbitration as a legal framework, rather than an emergency remedy, gives investors a further tool to manage sovereign risk in cross-border investments. In the upcoming article in this series, we will explore what considerations investors need to consider while structuring their investments.

This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for advice in specific situations.