Steptoe LLP | Alexandra Melia and Elliot Letts

United Kingdom

Economic and financial sanctions

Asset freezes

In what circumstances may a person become subject to asset freeze provisions in your jurisdiction? What dealings do asset freeze provisions generally restrict in your jurisdiction?

Asset freeze provisions under UK sanctions regimes are detailed in the Sanctions and Anti-Money Laundering Act 2018 (SAMLA). They apply to individuals and entities (“designated persons”) named on a sanctions list and aim to restrict the designated person’s access to funds (ie, financial assets and benefits of every kind) and economic resources (ie, assets of any kind that may be used to obtain funds, goods or services) by preventing persons subject to UK sanctions jurisdiction from dealing with funds or economic resources owned, held or controlled by a designated person. It is also prohibited to make funds or economic resources available to, or for the benefit of, a designated person. These restrictions also apply to entities that are “owned or controlled” by the designated person.

The UK government may designate persons by name or description when it has reasonable grounds to suspect that the person is (or has been) involved in an activity falling within the scope of the purpose of the pertinent UK sanctions regime or is owned, controlled, acting on behalf or at the direction of, or associated with such a person. The UK government can designate persons to give effect to UN sanctions.

Since March 2022, the UK government also has been able to designate persons using the urgent procedure when the person already has been designated by certain countries (currently Australia, Canada, the European Union or the United States) and it is in the public interest to do so. Urgent procedure designations are temporary and generally cease to have effect 56 days after they are made (or 112 days based on a certification by the Secretary of State that the conditions for urgent designation continue to be met) unless converted to a designation under the standard procedure. The use of the urgent procedure was broadened in April 2025 to designations made under 26 UK sanctions regimes.

There are also designation grounds under the Russia sanctions regime that have a “secondary sanctions”-like effect.General carve-outs and exemptions

Are there any general carve-outs or exemptions to the asset freeze provisions in your jurisdiction?

SAMLA permits the UK government to create exceptions under the asset freeze provisions of individual sanctions regimes. In practice, exceptions are created sparingly and permit:

  • non-designated persons to transfer legal or equitable interests in frozen funds or economic resources to another person, provided that they are not jointly holding the interest with a designated person and are not owned or controlled by them;
  • the transfer of funds to a UK bank for crediting to an account held or controlled by a designated person in full or partial discharge of an obligation arising prior to designation;
  • UK banks to credit a frozen account with interest or other earnings due on that account, as well as when receiving funds transferred to it for crediting to the account (with notification to HM Treasury’s Office of Financial Sanctions Implementation (OFSI)); and
  • UK banks to transfer otherwise frozen funds so as to comply with ring-fencing obligations (ie, the separation of retail and non-retail business) (with notification to OFSI).

New exceptions are periodically created; for example, a new exception was introduced in July 2025 to authorise payments towards HM Treasury debt involving UN designated persons, provided the payment obligation arose before the person’s UN designation.List of targeted individuals and entities

Do the competent sanctions authorities in your jurisdiction maintain a list of individuals and entities blocked under asset freeze restrictions?

Since 28 January 2026, the UK Sanctions List maintained by the UK Foreign, Commonwealth and Development Office (FCDO) is the sole sanctions list detailing sanctions designations published by the UK government.

With respect to asset freeze and making available sanctions, the funds or economic resources of entities “owned or controlled” by a designated person are also subject to restrictions under the asset freeze and making available sanctions. This test is met if one or both of two conditions are met:

  • condition one – a designated person holds directly or indirectly:
    • more than 50% of the shares or voting rights in the entity; or
    • the right to appoint or remove a majority of the board of directors of the entity.
  • condition two – it is reasonable, having regard to all the circumstances, to expect that the designated person would (if they chose to) be able in most cases or in significant respects, by whatever means whether directly or indirectly, achieve the result that the affairs of the entity are conducted in accordance with their wishes.

“Owned or controlled” entities generally are not included in the UK Sanctions List and it is necessary to conduct due diligence on a case-by-case basis to determine whether dealings with an entity would be impacted by these sanctions. Various guidance documents have been issued addressing the nature and extent of due diligence that should be considered to assess “ownership and control” by a designated person such as OFSI’s general guidance on financial sanctions, civil enforcement guidance, and public officials and control guidance.

A list of persons named in relation to financial and investment restrictions under the Russia sanctions regime is also maintained on the UK government website. However, the scope of financial and investment sanctions under some sanctions regimes, including the Russia regime, is expansive and goes beyond those entities identified on this website.Other restrictions

What other restrictions apply under the economic and financial sanctions regime in your jurisdiction?

The measures that apply under specific sanctions regimes vary and are determined by the particular purposes of each regime. Several regimes include prohibitions on the following:

  • dealings with certain transferable securities or money-market instruments issued by named persons, as well as certain categories of persons associated with the particular country;
  • sale or purchase of certain bonds;
  • granting, or entering into arrangements to grant, certain loans or credit to named persons, as well as certain categories of persons associated with the particular country;
  • certain types of investments in relation to the particular country;
  • correspondent banking and payment processing;
  • provision of certain (re)insurance services;
  • providing financial messaging services;
  • provision of financial services relating to foreign exchange reserve and asset management to certain financial institutions of the particular country; and
  • trust services restrictions.

Licensing – scope

Are the competent sanctions authorities in your jurisdiction empowered to issue a licence to permit activities which would otherwise violate economic and financial sanctions? If so, what is the extent of their licensing powers and in what circumstances will they issue a licence?

OFSI can issue two types of licences that authorise activities that otherwise would be prohibited by economic and financial sanctions – general and specific. General licences cannot be applied for and are issued by OFSI for specific policy reasons, for example, to permit payments related to certain humanitarian activity, reasonable legal fees or travel to a sanctioned country by UK nationals, subject to any conditions specified in the particular general licence being satisfied. Alternatively, a specific licence can be granted when a specified licensing ground is available. The available licensing grounds will vary by sanctions regime, as well as the type of economic and financial sanctions measure. They are normally set out in a schedule to the relevant sanctions regulations.

Specific licensing grounds commonly found in UK sanctions regimes are set out in OFSI’s general guidance and include:

  • basic needs: addresses the essential needs of designated persons or their financially dependent family members;
  • judicial decisions: permits implementation or satisfaction of judicial decisions or liens enforceable in the UK, whether made before or after designation;
  • humanitarian assistance: enables anything to be carried out in connection with the performance of humanitarian assistance activity;
  • extraordinary situations: applies to non-UN designated persons, allowing actions for unexpected, unavoidable, and non-recurring extraordinary situations;
  • prior obligations: authorises the use of frozen funds to satisfy obligations predating designation;
  • divestment: permits UK entities to divest funds or economic resources located in the sanctioned country to another person; and
  • insolvency: authorises insolvency, restructuring and related proceedings, provided that any payments to a designated person are credited to a frozen UK bank account.

When the relevant sanctions derive from primary legislation other than SAMLA (eg, the Anti-Terrorism, Crime and Security Act 2001) OFSI will consider the licensing grounds applicable under that legislation, which may differ.Licensing – application process

What is the application process for an exemption licence? What is the typical timeline for a licence to be granted?

OFSI only entertains applications for specific financial sanctions licences. To apply for a specific licence, applicants must complete OFSI’s online form. Applications should include the value and other details of the transaction to be licensed, purpose of the transaction, the payment route to be used and involved parties. Owing to the volume of licence applications, OFSI does not provide a target time frame for engaging with licence requests. Licence applications typically are prioritised by OFSI, with cases involving a risk of harm or threat to life being given priority, followed by urgent cases. Cases requiring UN Sanctions Committee approval typically have extended processing times.Approaching the authorities

To what extent is it possible to engage with the competent sanctions authorities to discuss licence applications or queries on economic and financial sanctions compliance?

For inquiries regarding the licensing regime, application submission and evidentiary requirements, OFSI can be contacted at ofsi@hmtreasury.gov.uk or by calling 0207 270 5454. Inquiries generally are triaged and relevant OFSI personnel subsequently respond to them. In our experience, OFSI does not provide indications of the likely success of theoretical licence applications or dispense legal advice on the application of specific sanctions regimes to particular scenarios.Reporting requirements

What reporting requirements apply to businesses who hold assets frozen under sanctions?

Relevant firms (as described at paragraph 5.1.2 of OFSI’s general guidance) are required to report to OFSI as soon as practicable when they know or have reasonable cause to suspect that a person is a designated person when the information is received in the course of carrying on their business. When a customer is known or reasonably suspected to be a designated person, details of the nature, amount or quantity of any funds or economic resources held for that customer also must be reported to OFSI, although information provided to a relevant firm in privileged circumstances is protected from disclosure. In May 2025, the definition of a “relevant firm” was extended to include high-value dealers, art market participants, insolvency practitioners and letting agencies.

All individuals and entities knowing or having a reasonable cause to suspect that they hold funds or economic resources owned, held or controlled by a designated person are required to make an annual report to OFSI by 30 November each year describing the nature and value of the funds or economic resources held as of 30 September that year.

Under certain sanctions regimes, relevant firms must comply with additional reporting requirements. For example, under the Russia sanctions regime, relevant firms must submit immobilised asset reports to OFSI, when applicable, using an online immobilised assets reporting form.

OFSI also possesses statutory powers to mandate the production of information, with non-compliance carrying criminal liability.

This article first appeared on Lexology | Source