On 14 November 2024, the UK government announced several changes to its existing sanctions regulations via the Sanctions (EU Exit) (Miscellaneous Amendments) (No. 2) Regulations 2024. As of 14 May 2025, by expanding the definition of “relevant firms” subject to financial sanctions reporting, Insolvency Practitioners (“IPs”) are now legally required to adhere to reporting obligations in the UK. The Office of Financial Sanctions Implementation (“OFSI”) have published guidance (the “Guidance”) to support the affected sectors in navigating the new reporting requirements. This blog post will provide an overview of the new reporting requirements for IPs.

What are financial sanctions?

Financial sanctions are economic measures imposed by the government or international bodies to assist the UK in meeting its foreign policy and national security objectives. Sanctions can take various forms; OFSI examples include the freezing of financial assets, restrictions on “designated persons” and wider restrictions on investment and financial services. Financial sanctions apply to all persons within the territory and territorial sea of the UK and to all UK persons. Therefore, all individuals and legal entities who are within or undertake activities within the UK’s territory must comply with the UK financial sanctions that are in force.

A “relevant firm”?

Under financial sanctions regulations, certain types of business (known as “relevant firms”) are subject to sanctions reporting obligations. From 14 May 2025, changes to the definition of “relevant firms” means that IPs will now fall within its remit and must therefore comply with sanctions reporting obligations.

What do the reporting requirements cover?

IPs are now required to report to OFSI as soon as is practicable if they know or have reasonable cause to suspect that:

• a person is a “designated person”; or
• a person has committed a breach of financial sanctions regulations.

“Designated persons” are set out in the list of all asset freeze targets. If the designated person is a customer of the relevant firm, the IP must also provide OFSI with additional information setting out the nature and amount or quantity of any funds or economic resources held by them for the customer at the time when they first had the relevant knowledge or suspicion.

Under The Russia (Sanctions) (EU Exit) Regulations 2019, IPs are also required to inform OFSI as soon as is practicable if they know or have reasonable cause to suspect that they are holding funds or economic resources for a “prohibited person”, which includes the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation and the Ministry of Finance of the Russian Federation (or people who are controlled by or acting on behalf of these institutions).

What is covered by the new reporting regulations?

The Guidance notes that relevant firms are only required to report to OFSI if the information, knowledge or suspicion arose “in the course of carrying on its business” as an IP. The regulations rely on the definition of IP as set out in section 388 of the Insolvency Act 1986 indicating that, for example, acting as a liquidator, administrator, administrative receiver, supervisor of a voluntary arrangement or a trustee in bankruptcy would all fall within the new regimes remit. The Guidance carves out “business that does not constitute insolvency practitioner business” and provides two examples of when sanctions reporting obligations would not apply: when acting as a receiver in the sale of a property or when conducting an independent business review.

What to include in a report to OFSI

When making a report to OFSI, an IP can use the Compliance Reporting Form found on the Reporting information to OFSI page of the government’s website. The completed form should be sent to ofsi@hmtreasury.gov.uk. The Guidance for IPs notes that the following should be included in a report:

• Information or other matter on which the knowledge or suspicion is based;
• Any information held about the person or the designated person by which they can be identified; and
• If you know or have reasonable cause to suspect that a person is a designated person and that person is a “customer” of your relevant firm, you must also state the nature and amount or quantity of any funds or economic resources held by you for that “customer”.

Going forward

Although the need to report is only likely to impact a small number of appointments, it is important for IPs to ensure that the sanctions reporting requirements are fulfilled because non-compliance with the regime is a criminal offence. Enhanced due diligence checks are likely to be key and for most firms, their compliance teams will already have processes and procedures in place to address these changes.

Ellie Phillips also contributed to this article.