Moscow: Russia’s invasion of Ukraine more than four years ago presented OFSI with its biggest challenge to date I Credit: Van Mailian (Pexels)

The UK’s Office of Financial Sanctions Implementation (OFSI) has said it is ‘working to embed’ artificial intelligence (AI) tools as it strives to ‘ensure UK financial sanctions remain effective, resilient and impactful.’

OFSI was set up a decade ago and is operating in an environment that has ‘changed markedly’, it acknowledges in its newly published ‘Strategy 2026-2029’. Russia’s invasion of Ukraine more than four years ago presented OFSI with its biggest challenge to date: implementing the largest ever sanctions regime in the UK.

The office, which is part of HM Treasury, notes in the strategy – published this week (15 April) – that sanctions are being used to tackle an ‘ever-wider range of threats and challenges across foreign policy and national security.’

‘As OFSI enters its second decade, this strategy sets out an ambitious plan for the next three years to ensure UK financial sanctions remain effective, resilient and impactful,’ writes economic secretary to the Treasury Lucy Rigby in the document’s foreword.

The strategy ‘aims to make expectations clearer, to ensure OFSI provides faster and more predictable support, to ensure OFSI is equipped to take decisive action where harm occurs, and to embed long-term improvements across the system,’ Rigby states. ‘It also highlights planned investment in modern, digital and data driven tools, including AI, to target the highest risk activity and reduce frictions for legitimate businesses.’

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Tech ‘central to OFSI’s approach’

Asset freezes are the most common form of financial sanctions, prohibiting the use of funds or economic resources owned, held, or controlled by designated individuals or entities.

‘Technology is transforming the threat of circumvention but also giving us new capabilities for intelligence and enforcement,’ the first chapter of the 19-page strategy points out. ‘Technology is central to OFSI’s approach and we have been working to embed AI‑enabled workflows across enforcement, licensing and intelligence functions.’

The effectiveness of UK, as well as European Union (EU), US and other countries and jurisdictions’ sanctions on Russia is inevitably a contentious topic, with evidence of both significant financial impact and ongoing challenges with evasion.

The government estimated last year (June 2025) that UK, EU and US sanctions have denied Russia access to at least $450 billion since February 2022. In October, OFSI said that, as of May 2025, £28.7 billion of assets linked to Russia had been frozen in the UK since 2022.

‘UK financial sanctions have played a critical role in constraining Russia’s war‑fighting capability by targeting the Russian government’s key revenue streams, disrupting circumvention routes, and supporting wider counter‑economic‑crime objectives,’ OFSI states in the strategy document.

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Crypto’s ‘rapid evolution’

‘The landscape which OFSI operates in will continue to evolve at pace over the next three years,’ the second chapter of the two-chapter document notes, going on to mention cryptocurrencies’ rise to prominence among relevant trends.  

‘New technologies will reshape sanctions evasion while the rapid evolution of crypto assets and a more fragmented financial services industry will present new challenges to compliance systems,’ the chapter continues. ‘Our work needs to be driven by a sophisticated understanding of the sanctions threat picture and its risks to the financial system, aiming to promote effective, efficient sanctions implementation across the private sector – maximising intended impact while minimising unintended consequences and unnecessary regulatory burden.’

It presents what is described as a ‘single organising framework’ containing four elements: ‘Promote’, ‘Enable’, ‘Respond’ and ‘Change’.  

On ‘Promote’ (‘shaping expectations and setting the standard’), OFSI strives to work with other regulators and enforcement bodies to be as ‘consistent and joined-up as possible to reduce friction for compliant firms’; and, through these collaborations, the office is ‘building a picture of circumvention activity and taking steps to detect and disrupt it.’

On ‘Enable’ (enabling sanctions-compliant behaviour that is ‘fast, predictable and scalable’), OFSI aims for ‘modern, digital-by-default engagement including social media, online services, reporting and forms’; and ‘using data and data sharing to improve our services.’

Mention is made of ‘AI-enabled workflows’ in both this section and the ‘Change’ (‘embedding lasting behaviour change across the whole financial sanctions’ system and all actors within it’) section. The Engage section describes ‘AI-enabled workflows to enhance our services, anticipate risk and stay ahead of evolving evasion methods’; the Change section describes ‘AI-enabled workflows to enhance our services and make the most of data OFSI holds and collects.’

RELATED ARTICLE UK government flows sanctions data into AI-powered fraud-detection tool – a news story (15 March 2024) on UK and US sanctions data being added to an AI-powered fraud-detection tool (the ‘Single Network Analytics Platform’ – SNAP) being used by UK authorities to root out criminals

Ownership and control test: consultation

A couple of months ago OFSI launched a call for evidence seeking industry’s views on how UK financial sanctions regulations on ownership and control are applied in practice, including how firms implement the regulations and where they face challenges.   

‘The ownership and control test is designed to stop sanctioned individuals and entities from sidestepping UK sanctions by hiding behind complex company structures, trusts or proxies,’ OFSI, which is overseen by director Giles Thomson, explained in a blogpost (16 February). ‘However, industry representatives report to OFSI that assessing the ability of a designated person to control an entity – even if they are not actively doing so – can be difficult in practice and may create additional costs and legal risk.’

‘This information [call for evidence] will help us understand whether the current approach is as clear, effective and proportionate as it should be, so that sanctions remain tough on those they target while being workable for legitimate businesses,’ it added. The call for evidence closes on 20 April.

The EU has itself imposed what it describes as ‘massive and unprecedented’ sanctions against Russia since 2022. These measures come on top of the sanctions already imposed on the country since 2014. The 27-member bloc has also adopted sanctions against Belarus, Iran and North Korea ‘in response to their support for Russia’.

The 27-member bloc has, in total, applied 19 packages of sanctions against Russia over the past four years, with the most recent announced in October 2025. This included sanctions against an additional 69 individuals, including crypto providers; a ban on transactions with an additional five Russian banks and other banks from third countries; and a ban on engagement by EU operators with Russia’s national payment card system (Mir) and faster payments system (SBP).