In November 2024, the UK Government introduced regulations which granted its financial sanctions regulator – the Office of Financial Sanctions Implementation (“OFSI”) – greater intelligence gathering and enforcement powers. Our previous blog post on these amendments can be found here.

The changes included the extension of mandatory financial sanctions reporting obligations (“UK Reporting Regime”) to cover Insolvency Practitioners (“IPs”), high-value dealers, art market participants and letting agencies (being industries identified as representing a higher risk for financial sanctions evasion). The changes are intended to encourage better sanctions compliance and assist OFSI in identifying potential circumvention gaps and financial sanctions breaches.

The new requirements came into force on 14 May 2025. We provide below an overview of the UK Reporting Regime and recommendations for how IPs (and those now affected by the regulations) can ensure compliance with the Regime, including adequate monitoring and prevention of potential UK sanctions breaches, and reporting requirements.

To whom do the new reporting requirements apply?

The following now fall within the definition of “Relevant Firm” and are subject to the new UK Reporting Regime:

• Insolvency Practitioner: those acting as IPs within the meaning of s388 of the Insolvency Act 1986 (the “IA 1986”) (or article 3 of the Insolvency (Northern Ireland) Order 1989 (“IO Northern Ireland 1989”)) and their firms.

• High value dealer: A firm or sole trader which trades or deals in goods (including an auctioneer) and makes / receives cash payment(s) (not bank transfer or digital payments) of at least €10,000 in total, whether the transaction is executed in a single operation or in several linked operations.

• Art Market Participant: A firm or sole practitioner who is registered or required to register with HMRC as an art market participant.[1] In the context of financial sanctions reporting, this captures firms or individuals who in the course of carrying out their business:
  • trade in, or act as an intermediary in, the buying or selling of works of art, where the transaction value (or the value of a series of linked transactions) is €10,000 or more; or
  • store works of art where the value of the art so stored for a person amounts to €10,000 or more 

• Letting Agent: A firm or sole practitioner who carries out, or whose employees carry out, letting agency work (defined as things done in response to instructions received from a prospective landlord or tenant for a month or more and done in relation to a prospective landlord or otherwise in the course of concluding an agreement for letting land for a month or more).

Industries that were already classified as Relevant Firms, and therefore subject to the UK Reporting Regime, include regulated financial institutions, currency exchanges, auditors, providers of accountancy, legal, tax and trust services, employment agencies, casino operators, precious metal sellers, cryptoasset exchange providers, and custodian wallet providers.

What information needs to be reported to OFSI?

Relevant Firms are subject to the following key requirements:

1. A report must be made to OFSI as soon as practicable if the firm knows or has reasonable cause to suspect that a person:

a. is either:

• i. a “designated person” (meaning subject to any UK asset freezing sanctions either by direct designation of the OFSI Consolidated List or by virtue of ownership or control); or

• ii. a “prohibited person” (this is a specific term in the context of the UK’s Russia sanctions regime and captures the Russian Central Bank, National Wealth Fund, Ministry of Finance, or a person owned or controlled directly or indirectly by, or acting on behalf of or at the direction of, these entities);[2] or

b. has breached a prohibition or failed to comply with an obligation of specified financial sanctions regulations. Examples of such sanctions include breaching asset freezing sanctions and other sectoral financial restrictions, such as Russian loan and credit or transferable security restrictions.

A Relevant Firm is only required to report, however, if the information or other matter on which its knowledge or cause for suspicion is based came to it “in the course of carrying on its business”.

For IPs, this means that they will only be subject to the UK Reporting Regime during the course of them acting as IPs (within the meaning of s388 of the IA 1986 or article 3 of the IO Northern Ireland). The Government guidance has given two examples where an IP is conducting “business that does not constitute insolvency practitioner business”; this is where they act as a receiver in the sale of a property, or undertake an independent business review. In either case, they will not be subject to sanctions reporting obligations.

2. Where the designated person or prohibited person is a customer of the Relevant Firm, the firm must also report to OFSI the nature and amount or quantity of any funds or economic resources held by it for the customer at the time when it first had the knowledge or suspicion. 

3. In addition, all UK firms (including but not limited to Relevant Firms) that hold any funds or economic resources owned, held or controlled by a designated person or prohibited person must provide OFSI with a report stating the nature and amount or quantity of these funds and economic resources held by that firm as at 30 September of that calendar year, by no later than 30 November in that same calendar year.[3]

Failure to comply with the UK Reporting Regime is an offence, and can result in both financial penalties and – in serious cases – potential imprisonment. Further information on requirements and how to report to OFSI can be found here.

Following the establishment last October of the UK’s new trade sanctions regulator, the Office of Trade Sanctions Implementation (“OTSI”), certain firms (such as financial institutions and legal practitioners) are subject to new reporting requirements for suspected breaches of trade, shipping and aircraft sanctions (see our blog post here for more details). It should be noted that IPs, high-value dealers, art market participants and letting agencies are not presently subject to these mandatory reporting obligations.

Recommendations for Compliance

For firms that are now subject to the UK Report Regime, it is even more critical to implement appropriate measures to ensure that they do not breach UK sanctions.

Unsurprisingly, OFSI recommends implementing a strong sanctions compliance programme, which is appropriate to the firm’s risk exposure. Such a programme may include:

• Operational policies and procedures for sanctions compliance, which details due diligence requirements.
• Appropriately sanction-screening business partners against UK and other relevant international sanctions lists.
• Training staff on the importance of sanctions compliance, firm policies and red flag indicators.
• Establishing confidential speak-up mechanisms for reporting suspected or actual sanctions breaches, and ensuring employees are protected from any retaliatory measures.
• In the event that a suspected sanctions breach or dealing with a sanctioned person is identified, having appropriate procedures for reporting such matters to OFSI.

If you have any questions about the new requirements, and need assistance in developing policies and procedures, please do not hesitate to reach out to the authors or your usual Crowell contact.

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[1] Pursuant to regs. 56(5) and (6) of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017

[2] https://www.gov.uk/government/publications/uk-financial-sanctions-faqs/uk-financial-sanctions-faqs

[3] Prior to 2025, OFSI relied on its general information gathering powers to require firms to report information of frozen assets.  As part of the November 2024 amending regulations, it codified this requirement in sanctions regulations.