Sanctions Law in Mainstream Practice

Practitioners used to view Sanctions Law as peripheral and mysterious, but it now arises with increasing frequency in mainstream work. It is no longer confined to specialist compliance teams or large financial institutions. It is beginning to appear in criminal investigations, restraint or confiscation proceedings and regulatory inquiries. There has been a gradual shift, but the effect is now unmistakable as part of the everyday risk landscape.

Why are sanctions issues becoming more common?

One of the reasons for that shift is the development of the UK’s post‑Brexit framework. After the introduction of the Sanctions and Anti‑Money Laundering Act 2018, the UK moved towards a more autonomous and (in some respects) more assertive sanctions regime. Particularly in the context of geopolitical developments such as the Russia regime, new designations have significantly broadened the scope of individuals, entities, and the relevant activities. Enforcement has become more visible. The Office of Financial Sanctions Implementation (“OFSI”) now sits alongside traditional criminal enforcement bodies and regulators, creating a landscape in which multiple agencies may be interested in the same underlying facts, albeit with rather different objectives.

Consequently, sanctions issues rarely present themselves in isolation. They often emerge as one aspect of a broader problem. A client might be under investigation for suspected fraud or tax irregularities, when it becomes apparent that a counterparty is designated. Alternatively, a business might be the subject of restraint proceedings when questions arise about whether relevant assets are frozen under sanctions legislation. The sanctions analysis cannot simply be bolted on at the end. It often changes the framing of the case.

The overlap with money laundering and enforcement

One of the areas where this is most obvious is the relationship between sanctions and money laundering. In theory, the two regimes are distinct, but they overlap in ways that can be difficult to manage. A breach of sanctions may produce ‘criminal property’ for the purposes of the Proceeds of Crime Act 2002. Dealing with funds linked to a designated person may trigger suspicion and therefore reporting obligations. This may be the case, even if the underlying conduct does not resemble conventional money laundering. Practitioners are often left grappling with difficult questions such as - whether an OFSI licence is sufficient protection, or how to deal with situations where compliance with one regime appears to sit at an angle with obligations under another regime.

The introduction of strict liability for certain OFSI monetary penalties has added another difficulty. It removes the investigator’s need to establish knowledge or suspicion to impose a civil penalty. This shifts the focus firmly onto systems, controls, and decision‑making processes. From a practitioner’s perspective, this can feel like a significant change in emphasis. It is no longer a case of whether a client acted knowingly or recklessly, but whether the steps taken were sufficient in a context where the expectations continue to rise. This is particularly challenging in cases where the facts are still evolving, which is often the case in fast‑moving and complex investigations.

More serious cases may still be referred for investigation and prosecution, which means that the same set of facts can give rise to both civil and criminal proceedings. Managing a dual risk requires careful thought, especially when considering the OFSI. A proactive approach may mitigate, but it also involves making disclosures that could have consequences in another context if not handled correctly.

Evidential and procedural complexity

Evidential issues add to the uncertainty. Sanctions investigations often involve complex ownership structures, indirect control, and rapidly changing designation lists. Establishing the required knowledge can be far from straightforward. Questions of attribution become particularly acute in corporate contexts. The law is evolving and there is not always a clear roadmap for how knowledge and responsibility is assessed. This creates unpredictability, which is uncomfortable for advisers and clients, especially when set against the potentially serious consequences of getting it wrong.

The interaction with asset recovery regimes is another area where theory and practice do not always align. It is not uncommon for assets to be subject to both freezing measures under sanctions legislation and restraint under POCA. Each regime has its own procedures and objectives, but they may be operating with the same pool of assets. This can lead to difficult questions about access to funds (particularly for legal expenses) and about the timing of applications or challenges. For clients, it can feel like being caught in overlapping systems that do not always communicate effectively with each other.

Sanctions enforcement is inherently international, and UK matters often have a parallel in the United States or the European Union. There is a risk of duplication and divergence. Two jurisdictions may take different approaches to the same conduct, and steps taken to address exposure in one jurisdiction can have unintended consequences elsewhere. For practitioners, coordination is essential, even in cases that initially appear to be domestic.

Practical implications for practitioners

Professional advisers themselves need to be aware of risk. The broad scope of prohibitions, combined with strict liability in the civil context, means that involvement in a transaction can be scrutinised in previously unexpected ways. There is an increasing focus on what advisers knew, what they should have known, and what steps they took to investigate potential issues. Documentation, internal processes, and clear decision‑making become critically important.

This comes to a head when a sanctions issue arises partway through an investigation. The strategy may already have been set, based on a different understanding of the facts. Introducing sanctions considerations at a late stage can require rapid reassessment of risk, including:

• whether existing disclosures remain appropriate,
• whether further engagement with regulators is needed, and
• how to manage the narrative going forward.

Decisions must be made quickly, acknowledging that they may have consequences across other regimes.

What becomes clear is that sanctions law is no longer just about knowing the rules. Practitioners need to understand how those rules interact with other areas of law, and how they play out in real‑world situations. New designations, evolving guidance, and emerging enforcement trends mean that the ground is constantly shifting.

For practitioners, the most effective approach is often to treat sanctions as a core part of the analysis from the outset, rather than something to be addressed if it becomes relevant. It requires an integrated approach to risk, bringing together criminal, regulatory, and asset recovery factors; recognising that decisions in one arena are likely to have consequences in another.

Sanctions issues are becoming more prominent. The direction of travel suggests they will continue to expand in scope and in enforcement intensity. The practical challenge is not just to keep up with the law, but to navigate the uncertainty and complexity that comes with it.

Evan Wright is a partner and barrister in JMW’s Professional and Corporate Regulation team.