Spotlight on sanctions: Enforcement, judicial developments and policy shifts

Enforcement

OFSI and His Majesty’s Revenue and Customs (HMRC) have taken recent enforcement action with a promise of more on the way, and OFSI is taking steps to streamline its processes to facilitate more expeditious enforcement action.

In the last few months:

• OFSI published a disclosure notice concerning Vanquis Bank Limited (VBL). The notice details breaches of certain of the asset freeze prohibitions under the Counter-Terrorism (Sanctions) (EU Exit) Regulations 2019 following VBL’s delay in restricting access by a designated person to their funds for a period of eight days, notwithstanding that OFSI had written to the bank the day before the designation was imposed. OFSI did not impose a fine on VBL, referring to mitigating factors including: VBL self-reported, funds withdrawn by the designated person were low in value, and there was no evidence of deliberate circumvention on the part of the bank.
• OFSI fined UK company, Markom Management Limited (MML), £300,000 for a historic payment made to a designated person in 2018, in breach of The Ukraine (European Union Financial Sanctions) (No.2) Regulations 2014. Notwithstanding MML’s voluntary disclosure and cooperation with OFSI during its investigation, OFSI did not agree to reduce its fine until further representations were made by MML after OFSI announced its intention to impose a penalty.
• HMRC issued a compound penalty of £1,160,725.67 on a UK exporter for making goods available to Russia, in breach of UK sanctions – this is the largest compound penalty it has concluded on a Russia sanctions offence to date. HMRC has now issued a total of 4 compound penalties in respect of breaches of Russia-related sanctions.
• OFSI fined a UK registered company for its failure to respond to a Request for Information, the first of its kind, which OFSI has highlighted as one of its key areas of focus. Although the fine itself was not significant (£5,000), the accompanying guidance published by OFSI indicates its expectation that firms and individuals will respond in a timely manner to its formal requests.

OFSI’s enforcement process may change following an on-going consultation. OFSI is seeking views on issues such as: (i) the extent to which changes should be made to its guidance, (ii) the introduction of a settlement scheme for monetary penalty cases, (iii) the introduction of an early account scheme, (iv) the introduction of more streamlined processes, and (v) changes to OFSI’s statutory penalty maximums. As several of the proposed changes do not require any form of statutory amendment these changes could be made relatively quickly. OFSI’s consultation on its civil enforcement processes closes on 13 October 2025.

Areas of Focus

Although we are seeing an increase in investigations and enforcement activity across industries, the following sectors appear to be particularly active at present.

Decentralised finance and crypto exchanges:

In August 2025, the UK announced a series of designations on those operating in the crypto space, including on Grinex LLC and CJSC Tengricoin.

This follows on from the publication by OFSI in July 2025 of its first threat assessment report for cryptoassets. In that report, OFSI confirmed that there is an 80-90% probability that UK cryptoasset firms have been directly or indirectly exposed to Garantex (a Russian exchange) since its designation on 4 May 2022 and that it is likely UK cryptoasset firms are currently facilitating transfers to Iranian cryptoasset firms who have links to designated persons. OFSI also singled out North Korea-linked threat actors as “the most significant and persistent threat to the cryptoassets sector at present.”

While we are yet to see a published UK enforcement action, there have been a number of public crypto-related enforcement actions in the United States.

Oil and gas

Following the appointment of Yvette Cooper as the UK’s new Foreign Secretary, new sanctions designations were introduced targeting, amongst other things the ‘shadow fleet’ carrying Russian oil. In this package, a total of 70 ships were specified.

In July 2025, the UK government reduced the price cap on Russian crude oil from $60 a barrel to $47.60 (in-line with the EU’s decision to lower the price cap, but diverging from the US position as at the time of writing) and designated 135 oil tankers as well as those facilitating illicit trades such as Intershipping Services LLP and Litasco Middle East DMCC.

In the same month, the UK’s National Crime Agency (NCA) and OFSI issued a red alert in connection with shadow fleet networks to assist financial institutions in identifying where sanctions evasion could be taking place with respect to the sale of Russian oil and gas.

Growing number of Iran-related designations

On 21 August 2025, the UK announced designations against those who “operate on behalf of Iran”, namely Petrochemical Commercial Company (PCC), Admiral Shipping Group, Ocean Leonid Investments, Milavous Group. Each of these groups are associated with Hossein Shamkhani, who was designated at the same time. It is expected there will be further designations relating to Iran in the coming months with the announcement that the UK, France and Germany will reimpose UN sanctions on Iran.

Developments in case law: speedy decisions still need to be informed ones

In July 2025, the High Court handed down its judgment in Tonzip Maritime Ltd v 2Rivers Pte Ltd [2025] EWHC 2036 (Comm). The case concerned a charterparty dispute between the owners of a vessel (Tonzip Maritime) and its counterparty (2Rivers).

The dispute arose after 2Rivers ordered Tonzip Maritime to load cargo shipped by Neftisa. Tonzip Maritime refused to board cargo on the basis that Neftisa was indirectly owned or controlled by a designated person (Mr Gutseriev).

Tonzip Maritime’s screening tool, WorldCheck, linked Neftisa to Mr Gutseriev, but evidence was also available to Tonzip Maritime disputing that Mr Gutseriev had any such control including: two legal opinions from law firms, a letter from Neftisa on its letterhead confirming Mr Gutseriev had no such ownership or control, and a newspaper article reporting that Mr Gutseriev had transferred ownership of his shares to, and been replaced as the head of the board of directors by, his brother as well as a report contradicting Tonzip Maritime’s WorldCheck report, from Infospectrum.

The judgment considered the proper construction of the sanctions clause in the charterparty as well as the oft-disputed area of ownership and control.

The sanctions clause included the following:

THE OWNERS SHALL NOT BE OBLIGED TO COMPLY WITH ANY ORDERS FOR THE EMPLOYMENT OF THE VESSEL IN ANY CARRIAGE, TRADE, VOYAGE, SHIP-TO-SHIP TRANSFER OPERATION OR OTHER SERVICE WHICH IN THE REASONABLE JUDGEMENT OF THE OWNERS, IS PROHIBITED BY SANCTIONS OR WILL EXPOSE THE OWNERS, THE VESSEL OR ITS MANAGERS, CREW, THE VESSEL'S INSURERS OR REINSURERS TO SANCTIONS. IN THE EVENT THAT SUCH RISK ARISES IN RELATION TO A VOYAGE THE VESSEL IS PERFORMING, THE OWNERS SHALL BE ENTITLED TO REFUSE FURTHER PERFORMANCE AND THE CHARTERERS SHALL BE OBLIGED TO PROVIDE ALTERNATIVE VOYAGE ORDERS” [emphasis added]

Beyond the judgment’s fact specific determinations, the Court found that:

• given its operation as a constraint on one of 2Rivers key rights, the sanctions clause needed to be narrowly construed and any ambiguity in that clause needed to be interpreted against Tonzip Maritime (as the party seeking to rely on it);
• the term “exposure…to sanctions”, when coupled with references to “such risk” and “reasonable judgment” earlier in the clause meant that the proper approach was for a reasonable commercial party to determine if the listed parties in the clause were subject to the risk of or danger of contravening sanctions rather than determining that there was a definitive breach.
• tanker shipping is a fast-moving commercial environment such that decisions need to be made quickly: making an assessment in this context accordingly meant making an assessment that is achievable “in a relatively short timeframe”.

As to the issue of ownership and control, the Court referred to a number of recent cases including the Mints and Litasco cases (see our earlier briefings here and here) as well as the four categories of control outlined in Hellard v JSC Rossiysky earlier this year (de facto, de jure, potential future de facto and potential future de jure control) and found that the shipowner was seeking to rely on an argument that the designated person had de facto control over Neftisa. Interestingly, Tonzip Maritime did not appear to make any pleadings as regards circumvention, notwithstanding the transfer of ownership to Mr Gutseriev’s brother.

The Court noted that regard should only be made to evidence available to Tonzip Maritime at the time of its assessment (even if it had not actually considered that evidence), but not materials that did not exist as at the time of the decision or which did not relate to the existing state of affairs.
Based on the circumstances of the case the Court ultimately found that Tonzip Maritime had not made a reasonable and objective assessment as the decision was based on speculation, such that the burden of proof had not shifted to 2Rivers. The Court found that the screening results did not actually evidence any indirect or direct control of Neftisa, and there was other documentation pointing to the fact that Mr Gutseriev did not have any such control which could and should have been properly considered.

More broadly, this decision is particularly interesting when contrasted against the recent EuroChem AG judgment. In that instance the judge found that based on witness evidence, despite a series of measures taken to insulate the EuroChem group from its founder and then-owner Andrey Melnichenko (a designated person), various Russian subsidiaries of the group were in fact still owned or controlled by Melnichenko. EuroChem AG had, however, been appropriately insulated. This judgment serves as a reminder that caution should be taken when conducting desktop due diligence of counterparties with significant potential exposure to sanctions.