Guidance reminder – OFSI UK sanctions regime and reporting obligations

IPA Insolvency Practitioner newsletter, April 2025

The Office of Financial Sanctions Implementation (OFSI) regularly publishes reports assessing threats and vulnerabilities related to the UK sanctions regime across sectors. The latest report focuses on the financial services sector. While it does not specifically address insolvency-related risks, it provides valuable intelligence on emerging threats and best practices for compliance.

This serves as a timely reminder, particularly following OFSI’s recent publication of a £465,000 penalty against Herbert Smith Freehills CIS LLP Moscow for breaches of the Russia financial sanctions regime. The case underscores the importance of due diligence and strict adherence to sanctions regulations.

With the new reporting requirements for Insolvency Practitioners coming into effect from 14 May 2025, members should ensure they are fully aware of their obligations:

• Awareness of sanctions obligations – Insolvency Practitioners must be vigilant when handling assets or transactions that could involve designated persons.
• Reporting requirements – From 14 May 2025, Insolvency Practitioners will be legally required to report suspected sanctions breaches or frozen assets to OFSI.
• Policies, procedures & controls – IPs must be able to evidence that they have robust policies, procedures, and controls in place to ensure compliance with sanctions obligations. These should include:
  • Documented staff awareness and training on sanctions risks.
  • Due diligence processes to assess potential appointments that may be impacted by sanctions.
  • Clear internal reporting mechanisms for identifying and escalating sanctions concerns.
• Risk and compliance – Understanding broader sector risks can help mitigate breaches and ensure appropriate engagement with OFSI where necessary.

For further details on sanctions compliance and reporting, please review OFSI’s UK financial sanctions general guidance which provides a useful overview for further research on the topic.

Members should be aware that as issues  often overlap the reporting obligations for appointments will also often overlap and they should be prepared to report to several different entities to meet all their obligations.    

If you have any questions or require further clarification, please do not hesitate to contact the IPA on aml@ipa.uk.com.