UK financial sanctions apply to every accountancy practice, whatever its size, and they are separate from the money laundering rules. A firm must not deal with funds or economic resources of a designated person or make them available to one, and as a “relevant firm” it must tell the Office of Financial Sanctions Implementation (OFSI) as soon as practicable if it knows or has reasonable cause to suspect that a client is designated or has breached sanctions. Civil penalties are strict liability and can reach £1 million or 50% of the breach value, whichever is greater.

Who has to comply with UK financial sanctions?

OFSI’s general guidance states that UK financial sanctions apply to everyone within the UK and its territorial sea and to all UK persons wherever they are, including UK nationals and entities established under UK law and their branches. There is no exemption for small firms and no risk based threshold. ICAEW points out that the prohibitions apply whether a target is dealt with directly or through an intermediary such as an accountant, and the intermediary is also caught.

OFSI, part of HM Treasury, implements financial sanctions. Trade sanctions, which include some restrictions on services, are the responsibility of the Department for Business and Trade, with civil enforcement of breaches involving services handled by the Office of Trade Sanctions Implementation (OTSI).

What do sanctions actually prohibit?

The most common measure is an asset freeze. OFSI’s guidance says that where it applies it is generally prohibited to:

  • deal with funds or economic resources owned, held or controlled by a designated person;
  • make funds or economic resources available, directly or indirectly, to or for the benefit of a designated person;
  • do anything that circumvents these prohibitions.

The prohibitions extend to entities owned or controlled, directly or indirectly, by a designated person, even if those entities are not named on any list. OFSI’s ownership test includes holding more than 50% of the shares or voting rights, the right to appoint or remove a majority of the board, and situations where the affairs of the entity are conducted in accordance with the designated person’s wishes. This is why sanctions screening has to extend to beneficial owners, which the firm should already have identified under beneficial ownership verification.

For practices, the risk points are client money, fees and services. Receiving a fee from a designated person, paying out client money, or preparing accounts that help a designated company keep trading can each be a breach. OFSI can issue licences, for example on a basic needs ground, which for an entity can include paying tax and employees, but its guidance says licences cannot be issued retrospectively.

Do accountants have to screen clients, and against what?

The legislation does not prescribe a screening process. ICAEW recommends a sanctions check as an important part of customer due diligence, with ongoing monitoring helping to identify clients designated later, and suggests that screening may also cover beneficial owners, trustees or directors on a risk sensitive basis. It warns that AML systems in accountancy tend to focus on identity rather than on payments, whereas sanctions compliance means knowing to whom money is being paid.

Since 28 January 2026 the UK Sanctions List, published by the Foreign, Commonwealth and Development Office, has been the only source of UK sanctions designations. The OFSI Consolidated List is no longer updated, so any screening tool or manual check still using it needs to be switched. New designated persons now carry only a UK Sanctions List “Unique ID”.

OFSI distinguishes a name match, where a name matches but other details do not, from a target match, where all the details match. If the firm is satisfied the client is not the listed person, no further action is needed; if it remains unsure, it can contact OFSI. The reasoning should be recorded on the file. Screening sits naturally within customer due diligence, but it is a separate legal duty with no simplified option for low risk clients.

What must a practice report to OFSI?

Each sanctions regime made under the Sanctions and Anti Money Laundering Act 2018 sets out reporting duties for “relevant firms”. Using the Russia regulations as the example, regulation 71(1)(d) of the Russia (Sanctions) (EU Exit) Regulations 2019 includes a firm or sole practitioner that provides accountancy services, advice about tax affairs, company services or trust services to others by way of business, and regulation 71(1)(c) includes statutory auditors.

Under regulation 70, a relevant firm must inform the Treasury (in practice, OFSI) as soon as practicable if it knows, or has reasonable cause to suspect, that a person is a designated person or has breached certain prohibitions, and the information came to it in the course of its business. The report must state:

  • the information on which the knowledge or suspicion is based;
  • any information the firm holds by which the person can be identified;
  • if the person is a client, the nature and amount or quantity of any funds or economic resources the firm holds for them at the time the knowledge or suspicion first arose.

Regulation 70(4A) adds an annual duty: anyone holding funds or economic resources owned, held or controlled by a designated person on 30 September must report them to the Treasury by 30 November of that year. Failing to comply with the reporting duties is an offence. Reports are made using OFSI’s online forms.

How does an OFSI report relate to a SAR?

They are different reports to different bodies. ICAEW’s guidance makes three points:

  • making a suspicious activity report to the National Crime Agency does not remove the duty to report to OFSI;
  • finding that a client is a sanctioned person is not of itself grounds for a SAR, and telling the client is not necessarily tipping off, because designations are public;
  • if there is also suspicion of money laundering or terrorist financing, a SAR is required and telling the client would then be tipping off.

See suspicious activity reports and tipping off.

Can a UK practice act for clients connected with Russia?

Often not. Regulation 54C of the Russia regulations prohibits providing accounting, auditing, business and management consulting, and certain other professional services, directly or indirectly, to a person connected with Russia. Regulation 21(2) defines that as an individual ordinarily resident or located in Russia, or an entity incorporated, constituted or domiciled in Russia. It is a defence to show that the firm did not know and had no reasonable cause to suspect the connection. This prohibition applies whether or not the client is designated, so a sanctions list check alone will not catch it; the firm’s knowledge of where the client lives and is incorporated, gathered through CDD, is what reveals it. Country links are also relevant to high risk third countries.

What are the penalties for getting it wrong?

OFSI’s guidance gives a maximum of seven years’ imprisonment on indictment for breaches of the main prohibitions. OFSI can also impose civil monetary penalties under section 146 of the Policing and Crime Act 2017. Where the value of the funds can be estimated, the maximum is the greater of £1,000,000 and 50% of that value; otherwise it is £1,000,000. Since 15 June 2022, section 146(1A) means that any requirement for the person to have known or suspected something is ignored when OFSI decides whether a breach occurred, so a firm that unknowingly deals with a newly designated client can still be penalised. OFSI says it takes into account whether a breach was voluntarily and promptly disclosed.

What does a sound process look like, and where do firms slip?

Illustration only. A practice screens every new client, its directors and beneficial owners against the UK Sanctions List at onboarding, and rescreens the whole client base automatically whenever the list is updated. A rescreen flags a target match: a 60% shareholder of a client company has just been designated. The company is therefore owned by a designated person. The firm stops all work and holds the £2,400 of client money it is holding for the company, reports to OFSI with the identifying details and the amount held, considers separately whether a SAR is needed, and takes advice before seeking a licence for any further work or fees.

Common mistakes include:

  • screening only at onboarding and never again;
  • screening the client entity but not its owners;
  • still using the closed OFSI Consolidated List;
  • assuming a SAR covers the OFSI reporting duty;
  • overlooking the Russia professional services ban for clients who are not designated;
  • clearing name matches without recording why.

Solar Protect runs fee protection schemes for accountancy and bookkeeping practices. See how our accountant schemes work or read fee protection schemes for accountants.

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Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.