OFAC and OFSI Publish Joint Comparative Guidance on U.S. and UK Sanctions Regimes

On June 23, 2026, the U.S. Department of the Treasury's Office of Foreign Assets Control ("OFAC") and His Majesty's Treasury's Office of Financial Sanctions Implementation ("OFSI") jointly published U.S. and UK Economic Sanctions Authorities: A Comparative Overview (the "Guidance"), a side-by-side comparison of key aspects of the U.S. and UK sanctions regimes. The Guidance is intended to help companies in the private sector better understand their respective sanctions obligations under both regimes. 

The Guidance consolidates the key similarities and differences between the U.S. and UK sanctions regimes, covering the following topics: the types of sanctions lists; licensing approaches; recordkeeping and reporting responsibilities; the standard for determining whether an entity is owned or controlled by a sanctions target; and enforcement (including the approach to assessing voluntary disclosures).

This alert summarizes the Guidance, and highlights the points of convergence and divergence that are likely to be most relevant for companies and financial institutions navigating both regimes. The issuance of the Guidance by OFAC and OFSI underscores the increasing cross-border and multijurisdictional nature of sanctions enforcement, and emphasizes the need for companies operating globally to have in place appropriate compliance controls to address, in many cases, obligations under multiple sanctions regulatory regimes.

Background

The Guidance is the latest joint publication issued by OFAC and OFSI as part of the OFAC-OFSI Enhanced Partnership (the "Enhanced Partnership"), which the two agencies launched in October 2022 to align their public guidance and support shared stakeholders. While the United States and United Kingdom frequently coordinate on designations and policy, their underlying legal frameworks remain distinct. As a result, parties subject to both regimes must navigate different terminology, jurisdictional rules, and procedural requirements. 

The comparative overview set forth in the Guidance is best understood as a practical reference, rather than a statement of new policy. Its value lies in bringing together, in a single document, several important similarities and differences between the U.S. and UK sanctions regimes that compliance teams must consider when operating across both jurisdictions. The Guidance is also relevant in underscoring that OFAC and OFSI regularly coordinate, and expect that firms operating globally will be aware of their obligations under both regimes.

Key Points of Convergence and Divergence

Terminology and core concepts. The two regimes use different vocabulary to describe similar concepts. OFAC "blocks" property and refers to listed parties as "blocked persons" or "SDNs" (meaning parties listed on the Specially Designated Nationals and Blocked Persons List), and defines "property" expansively to capture financial, real, tangible, and intangible assets. OFSI "freezes" assets and refers to "designated persons" on the UK Sanctions List. The UK also draws a formal distinction between "funds" and "economic resources" and imposes certain mandatory reporting obligations on defined "relevant firms" and "relevant institutions," a category-based approach that has no direct counterpart in the OFAC framework.

Jurisdictional reach. Both regimes apply to covered persons—U.S. persons and UK persons, respectively—wherever located, to conduct within the relevant territory, and count both domestically incorporated entities and their foreign branches as entities subject to U.S. or UK jurisdiction. The frameworks, however, diverge in certain respects. OFAC's jurisdictional reach is broader: certain sanctions programs (such as those targeting Cuba and Iran) automatically apply to non-U.S. subsidiaries of U.S. persons; can restrict transactions involving U.S.-origin goods, technology, and services, even when no U.S. person is involved; and, perhaps, most notably, OFAC utilizes secondary sanctions, which allow OFAC to penalize—including with sanctions designations—non-U.S. parties that engage in transactions that would be prohibited under U.S. law. The UK regime does not have this broad, extraterritorial reach. Instead, the UK regime applies to UK persons wherever located, UK-incorporated entities and their foreign branches, conduct within the United Kingdom and its territorial sea, and, in certain circumstances, non-UK persons where there is a UK nexus. Notably, the Guidance also confirms that OFSI does not have broad jurisdiction-based (i.e., comprehensive country-wide) sanctions of the kind OFAC administers.

Ownership and control. This is the area where the divergence between U.S. and UK sanctions is greatest, and may be most likely to create compliance challenges for regulated parties. Under OFAC's 50 Percent Rule, an entity owned 50% or more—directly or indirectly, individually or in the aggregate—by one or more SDNs is itself treated as blocked. The rule speaks only to ownership, not control. The UK approach differs in three respects. First, the UK threshold turns on holding more than 50% of either an entity's shares or its voting rights. Second, the UK regime separately captures entities that a designated person "controls"—defined to include the right to appoint or remove a majority of the board, or circumstances where it is reasonable to expect that the entity's affairs are conducted in accordance with the designated person's wishes— a standalone control test that has no formal counterpart within OFAC's 50 Percent Rule (although OFAC has separately cautioned that parties should look beyond formal ownership structures where transactions or ownership arrangements are designed to evade sanctions). Third, and critically, the UK does not aggregate the holdings of different designated persons. Where two or more designated persons each hold 50% or less, the entity will not ordinarily be treated as owned by a designated person on that basis alone, although OFSI notes that coordinated arrangements or other facts demonstrating control may lead to a different conclusion. 

These differences mean that the same ownership structure can yield different results under the two regimes.

Licensing and access to guidance. Both regimes authorize otherwise prohibited activity through general licenses (i.e., self-executing terms, which are automatically available when the party meets the stated terms) and specific licenses (which are applied for and applicable only to the applicant). The regimes differ, however, in the informal guidance the relevant regulators provide. OFAC maintains a Compliance Hotline that offers informal guidance on sanctions compliance, as well as a separate Licensing Hotline for questions regarding specific license applications. By contrast, OFSI does not advise on the legality of specific transactions, although it will assist parties in understanding the licensing process and existing published guidance where appropriate. Parties accustomed to seeking informal compliance guidance from OFAC should not assume that OFSI provides the same type of informal compliance assistance.

Enforcement, voluntary disclosure, and penalties. Both agencies apply a strict liability standard to civil penalties, meaning liability can attach without knowledge of the violation. For OFSI, however, strict liability applies only to breaches occurring after June 15, 2022—earlier conduct requires knowledge or reasonable cause to suspect that a breach was taking place.

Both agencies encourage voluntary disclosures, but the mechanics differ. OFAC considers a qualifying voluntary self-disclosure to be a mitigating factor and may apply up to a 50% reduction to the base penalty amount, depending on the fulsomeness of the disclosure and any follow-on cooperation. The Guidance notes that OFSI may reduce a monetary penalty by up to 30% where a qualifying voluntary disclosure has been made. Separate OFSI guidance provides that additional reductions of up to 20% each may be available under its Early Account Scheme and Settlement Scheme, depending on the circumstances. Accordingly, while OFAC provides a single, clearly defined incentive for qualifying voluntary self-disclosure, OFSI's framework provides multiple avenues for penalty reductions that may reward both self-reporting and continued engagement with the regulator.

The regimes also differ markedly with respect to applicable statutes of limitations. For violations whose latest date occurred on or after April 24, 2019, OFAC may initiate a civil enforcement action within ten years of the date of the most recent violation of sanctions. By contrast, the UK sanctions regime does not impose a comparable statute of limitations on enforcement actions, meaning there is no limitations period.

Recordkeeping and reporting. OFAC requires records to be retained for at least ten years, and generally requires reports within ten business days of blocking, unblocking, or transferring blocked property pursuant to authorization. OFAC also requires similar reports for rejected transactions. The UK sanctions regime does not specify a single fixed retention period, and imposes no obligation to report a rejected transaction. Annual reporting cycles are required under both regimes, but the timelines differ: OFAC's Annual Report of Blocked Property is due by September 30, covering holdings as of June 30, whereas OFSI's Annual Frozen Asset Review is due by November 30, covering holdings as of September 30.

Publication of breaches. One further feature of the UK sanctions enforcement framework carries distinct reputational risk. OFSI may publish details of a breach where doing so is in the public interest, even where it imposes no monetary penalty, which may increase the risk of public disclosure of an OFSI enforcement action. By contrast, OFAC only publishes public enforcement actions where a civil monetary penalty or formal finding of violation is assessed.

Conclusion

The Guidance reflects continued OFAC-OFSI coordination under the Enhanced Partnership, and serves as a helpful reference for compliance teams responsible for ensuring their organizations comply with both sets of regulations.

As the foregoing summary demonstrates, although the two regimes share many similarities, there are also meaningful points of divergence—including concerning jurisdictional scope, ownership and control tests, licensing, and enforcement. Entities with legal or policy reasons to comply with both regimes should ensure they properly assess their obligations under both regimes, and should be aware that sanctions enforcement is continuing to grow more complex. 

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