HM Treasury Sanctions List: A 2025 Compliance Handbook for Businesses

On March 20, 2025, OFSI, a part of HM Treasury, imposed a £465,000 monetary penalty on Herbert Smith Freehills CIS LLP (“HSF Moscow”) for violating UK financial sanctions on Russia related to its unlawful invasion of Ukraine.

Can institutions be sanctioned for financial misconduct? How can they ensure their actions comply with particular sanction obligations? Who enforces these sanctions in the UK?

Read this article to find the answers to all your concerns.

What is the HM Treasury Sanctions List?

His Majesty’s Treasury (HM Treasury or HMT) is the UK Government’s ministry of finance and economy. It sets the UK’s economic policy direction and controls public spending to ensure strong and sustainable growth.

The UK government imposes various financial restrictions, known as sanctions, on different entities and individuals within the UK’s boundaries to achieve its foreign policy and national security goals.

HM Treasury administers and enforces these financial sanctions through one of its departments, the Office of Financial Sanctions Implementation (OFSI).

Financial sanctions are measures to freeze assets and restrict dealings with certain individuals, entities, and organizations whose identifiable details are published in the form of lists, commonly referred to as HM Treasury Sanctions Lists.

Individuals and entities included in the sanctions lists are known as “designated persons”.

As of the end of March 2024, the UK consolidated sanction list included 3,463 designated individuals, 853 entities, and 15 ships across 35 regimes.

Who Must Adhere to The HM Treasury Sanctions Lists?

All citizens of the UK, its residents, and businesses operating from or within the territory of the United Kingdom must be aware of their obligations to comply with the UK financial sanctions.

These obligations include:

• Freezing assets that belong to designated persons
• Prohibiting any dealings with the designated persons
• Reporting suspicion or knowledge of a financial sanctions breach to OFSI
• Reporting possession of economic resources that belong to designated persons

Contravention of OFSI Sanctions, either knowingly or unknowingly, invites serious consequences, both in the form of financial penalties and reputational damages.

How Is a New Designation Made To HMT Sanctions?

The Sanctions and Anti-Money Laundering Act of 2018 provides the legal basis for most of the designations in the HM Treasury Sanctions Lists.

Once the designated name and other identifiable details of the designated persons and even different regimes (such as authoritarian governments or dictatorships) subject to financial sanctions in the UK are added to the HM Treasury sanctions lists.

The inclusion of a name in the OFSI Sanctions list isn’t an arbitrary process; it requires fulfilling certain legal criteria such as for compliance with a United Nations or an international obligation, achieving foreign policy and national security goals, preventing terrorist financing and proliferation of weapons of mass destruction, and deterring human rights violations.

Objectives of UK Financial Sanctions: Why They Matter

Sanctions serve as a powerful tool in achieving foreign policy and national security goals. The UK government aims to achieve the following objectives through targeted restrictions on financial resources:

Fight against crimes: Perpetrators of terrorism, human trafficking, and smuggling run large financial networks, disrupting these networks and depriving them of access to financial resources significantly reduces their ability to operate.

Exert Pressure: Sanctions can be used to signal disapproval of certain actions and encourage changes in behavior by targeted individuals, entities, or even regimes. For example, sanctions imposed by the UK and allies have significantly impacted Russia’s economy, depriving it of over $400 billion since February 2022.

International Obligations: Often, these sanctions help support a collective effort to uphold international laws, norms, and global security. Thereby fulfilling the UK’s commitments and obligations towards international treaties and resolutions.

Sanctions are not just symbolic – they’re crippling Russia’s ability to fund its war.

It is important to note that the sanctions do not operate in isolation; to maximize their impact, they require a systematic and well-coordinated approach among the international partners, like the United Nations and other countries.

In 2023-24, OFSI participated in 245 international engagements to help implement UK sanctions effectively.

OFSI’s Role in Enforcing HM Treasury Sanctions

The Office of Financial Sanctions Implementation (OFSI), through the powers delegated by HM Treasury, is responsible for maintaining and enforcing UK financial sanctions.

It provides guidance, reviews requests for licenses (for exemptions), and imposes financial penalties where contraventions are detected. In 2023-2024, OFSI issued 161 e-alerts communicating updates on changes to regulations, guidance, and designations to UK financial Sanctions.

This ensures that the HM Sanctions Lists are efficiently implemented, understood, and complied with to achieve the required results.

Who is Impacted by the UK Sanctions List? (OFSI)

Designated Individuals and Entities

The most severe impact of the UK Sanctions list is directly felt by the individuals, entities, organizations, and the regimes (authoritarian governments) who are the target of these sanctions, such as bans on entering the UK, restricting their access to the UK financial system and having their assets freezed within UK’s jurisdiction.

Designations related to Russia have massively increased, accounting for 2,001 designations (46% of the total) by March 2024.

Business and Financial Institutions

Businesses that operate cross-border import/export of services and products face restrictions on dealing with certain individuals, organizations, and regions. Banks and other financial institutions are also impacted significantly, having to implement obligations like asset freeze, reporting, and provision of services to those included on the HMT sanctions list.

In 2023-24, the financial services sector reported the highest number of suspected breaches (225 out of a total of 396), followed by the legal sector, which recorded 44 such cases.

Individuals

Even as an individual, you need to be aware that you’re not dealing with a person who is under the UK Sanctions, because even unknowingly dealing with a designated person carries legal consequences.

Ignoring the sanctions list isn’t a choice for businesses. Compliance is a legal requirement that must be fulfilled. The failure to implement these obligations may result in civil and criminal penalties.

Penalties for Non-Compliance with UK Financial Sanctions

Failure to comply with the UK Sanctions List may result in serious repercussions for businesses and individuals alike.

Under the powers delegated by the HM Treasury, OFSI can impose a monetary penalty as high as 1 million pounds or 50% of the economic value of the breach, whichever is higher.

Monetary penalties may be reduced up to 50% if the violation is self-reported.

Whereas an individual criminally prosecuted for breaching sanctions can face up to 10 years in jail. OFSI Guidance provides a detailed overview of how monetary penalties are measured and imposed.

Regulatory action against businesses also results in significant reputational damage. OFSI can now publish details of breaches even when no monetary penalty is imposed, as seen in the Wise Payments Limited case in August 2023.

Step-by-Step Process to check the HM Treasury Sanctions List

Businesses and individuals can look up or search through the HMT Consolidated List:

• Visit the official OFSI UK website
• Locate the sanctions list
• Utilize the search function to search for the name of a specific entity or person

However, compliance is an ongoing process, not a one-time check. A customer not listed today might be designated tomorrow. Updates require re-screening the whole customer base.

Therefore, thorough screening must be part of ongoing due diligence. As a result, businesses may need to integrate sanctions screening as part of their onboarding and transaction monitoring process.

UK Sanctions Compliance: Best Practices for Businesses

The HM Treasury sanctions regime is broad, regularly updated, and has serious consequences for noncompliance. To ensure compliance, firms should take the following important steps:

Regular Customer Screening

When establishing a connection, firms in the UK are required by law to acquire specific client information. This involves defining specifics and explaining the nature of their business.

Companies must screen consumers against sanctions lists, PEP data, watchlists, and negative publicity to thoroughly analyze possible risks.

Ensure Real Time Data

Regular modifications to sanction lists necessitate precise, up-to-date customer information. Relying on out-of-date or inadequate information raises the likelihood of missing new AML penalties or mistakenly identifying false positives.

Maintaining clean, organized data is critical for accurate sanctions screening and lowering compliance risk.

Check for Sanctions Updates

Compliance is a continual effort. Firms must constantly monitor clients and transactions for changes that might affect their sanctions risk profile. A previously unsanctioned individual may be added to the HM Treasury sanctions list or subjected to sector-specific penalties.

Effective payment screening and transaction monitoring systems detect and respond to suspected breaches in real time.

Automated Sanctions Screening:

Automated AML screening systems improve compliance with quickly changing sanctions lists, allowing organizations to spot sanctioned persons or entities right away.

Integrating these techniques into a risk-based AML/CFT program allows analysts to focus on more difficult situations.

Key Takeaways

• The HM Treasury Sanctions List is a vital tool for the UK in protecting its financial system and fulfilling international obligations.
• Understanding its purpose, scope, and how to access it is essential for all businesses and individuals operating within or connected to the UK.
• A proactive strategy on implementing sanctions can safeguard against violations and their serious consequences. Self-reporting can be a mitigating factor in enforcement action.
• Stay updated on OFSI changes and alerts, and consider comprehensive screening solutions tailored to your needs.

Achieve precise and efficient sanctions screening with a comprehensive solution like AML Watcher. Key features of our platform include:

• Real-time, proprietary database, updated every 15 minutes
• Global coverage, including OFAC, EU, UN, and the HM Treasury Sanctions
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