OFAC vs OFSI Sanctions: Key Differences for UK Businesses

OFAC and OFSI are the primary US and UK sanctions regulators. Both can impose civil penalties, but the two systems differ sharply on liability standards, time limits for enforcement, and how ownership of blocked entities is calculated, differences that matter directly to any business trading across both jurisdictions.

• • OFAC sits within the US Department of the Treasury and was formally created in December 1950, while OFSI sits within HM Treasury and was established in March 2016, under the law of England and Wales.
  • OFSI applies strict liability to sanctions breaches occurring after 15th June 2022; before that date OFSI had to show knowledge or reasonable cause to suspect a breach.
  • OFAC must bring a civil enforcement action within 10 years of the latest violation, while UK sanctions law carries no statute of limitation at all.
  • The OFAC 50 Per cent Rule aggregates blocked persons' ownership stakes to test whether an entity is itself blocked, whereas the UK 50 per cent test looks at shares or voting rights plus a separate control test, and does not normally aggregate different designated persons' holdings.
  • A qualifying voluntary disclosure can reduce an OFAC penalty by up to 50 per cent, compared with up to 30 per cent under OFSI.

This forms part of our wider guide to Sanctions. Businesses operating in England and Wales with any US nexus, a US parent, dollar-clearing, US persons on the board, or US-origin goods, answer to both OFAC and OFSI at once, and the two regulators now coordinate directly. The comparative overview published on 23rd June 2026 sets out, in the regulators’ own words, exactly where the two frameworks converge and where they part company.

OFAC and OFSI formalised their cooperation through the OFAC-OFSI Enhanced Partnership, launched in October 2022, under which the two authorities coordinate on designations, guidance, and enforcement priorities. A firm can face parallel scrutiny from both sides of the Atlantic for a single transaction, so understanding where the standards diverge is a live compliance question for any general counsel or sanctions officer.

Where do OFAC and OFSI sit within government?

OFAC operates as a component of the Office of Terrorism and Financial Intelligence within the US Department of the Treasury, and was formally created in December 1950 after President Truman blocked Chinese and North Korean assets during the Korean War. OFSI operates as an office within HM Treasury and was established in March 2016, taking over financial sanctions functions previously carried out by the Bank of England. Both dates and the departments they sit within are set out in HM Treasury’s comparative overview of the two regimes.

OFAC traces its lineage to the Office of Foreign Funds Control, set up at the start of the Second World War following the German invasion of Norway in 1940, before its formal creation a decade later. OFSI’s modern legal footing in England and Wales comes from the Sanctions and Anti-Money Laundering Act 2018, which gives the Treasury the power to make sanctions regulations, designate persons, and set enforcement mechanisms including monetary penalties. HM Treasury’s asset-freezing and financial restriction powers were also shaped by the earlier Counter-Terrorism Act 2008, which conferred further powers on the Treasury to act against terrorist financing and related activity ahead of the 2018 Act’s broader sanctions framework. Regulated firms in England and Wales additionally answer to the Financial Conduct Authority for sanctions-related systems and controls failings under the Financial Services and Markets Act 2000.

Strict liability differences

OFSI applies strict liability only to sanctions breaches occurring after 15th June 2022, and for breaches before that date OFSI must show the person knew, or had reasonable cause to suspect, that a breach was occurring. OFAC’s strict liability standard, by contrast, has applied without that historical cut-off across the period the comparative overview addresses.

As HM Treasury’s comparative overview states:

“OFSI may impose civil penalties for sanctions breaches occurring after 15 June 2022 based on a strict liability legal standard”.

Under that standard, a person subject to UK jurisdiction can face civil liability even without knowledge that a transaction breached sanctions law. A company reviewing a legacy transaction dated before 15th June 2022 needs to assess OFSI’s older knowledge-based test separately from anything that happened afterwards, because the applicable standard depends on the date of the breach itself.

Why do the two 50 per cent tests differ?

The OFAC 50 Per cent Rule blocks an entity where blocked persons own 50 per cent or more of it, aggregating separate blocked persons’ stakes and looking only at ownership, not control. The UK test instead requires either more than 50 per cent of an entity’s shares or voting rights, plus a distinct control test, and OFSI does not generally aggregate different designated persons’ shareholdings unless the ownership structure appears designed to obscure control.

The comparative overview confirms that OFAC’s rule considers “the property and interests in property of entities directly or indirectly owned 50 per cent or more by blocked persons, either individually or in the aggregate” to themselves be blocked, and that the rule “speaks only to ownership and not to control”. Under UK regulations, control exists where a designated person can appoint or remove a majority of the board, or where it is reasonable to expect the entity’s affairs are conducted in accordance with that person’s wishes. A joint venture with two designated shareholders each holding 30 per cent could fall inside OFAC’s aggregated test while sitting outside the UK test, unless the structure is being used to obscure who really controls the business.

Time limits and disclosure incentives

OFAC must bring a civil enforcement action within 10 years of the latest date of violation, while UK sanctions law carries no statute of limitation, so OFSI can pursue a breach discovered many years after it occurred. Voluntary disclosure also pays off differently: OFAC can reduce a base penalty by up to 50 per cent for a qualifying self-disclosure, while OFSI can reduce a final penalty by up to 30 per cent.

The comparative overview states plainly that OFAC “may bring a civil enforcement action for violations of sanctions prohibitions within 10 years of the latest date of violation”, and that “there is no statute of limitations under UK sanctions law”. The absence of any UK time bar makes early legal advice on a suspected historic breach a genuine priority, because delay does not extinguish OFSI’s power to act. The table below sets out the core operational contrasts side by side.

Getting Legal Advice

If a transaction, ownership structure, or historic dealing touches both US and UK sanctions regimes, get advice before OFAC or OFSI raise the question themselves. Speak to our sanctions and export control team about your position by calling +44 (0) 203 972 8469.