This week the OTSI, the UK body responsible for enforcing trade sanctions, published its annual report (click here). For context, while the Office of Financial Sanctions Implementation (OFSI) is responsible for the UK’s financial sanctions regime (including the Oil Price Cap), the OTSI is responsible for trade sanctions. Trade sanctions are directly relevant to energy and commodity firms given the import bans on Russian-origin crude oil, processed products and LNG.
The OTSI itself is a relatively new office which sits within the Department for Business, Innovation, Science and Trade. It came into being in October 2024 to enable the civil enforcement of trade sanctions violations. Criminal sanctions powers are still held by HM Revenue and Customs (HMRC), hence the large number of referrals to the tax authority reflected in the report. The report covers the period 1 April 2025 to 31 March 2026 and is the OTSI’s first full-year report since being established.
According to the report, the OTSI did not impose any civil monetary penalties during the year, but it did open a substantial number of investigations into potential breaches which are at an “advanced stage”. The report provides a breakdown of the cases pursued over the 12-month period during which time 178 cases were instituted by the OTSI. Perhaps unsurprisingly, almost 90% of them (160 cases) relate to the Russia and Belarus sanctions regimes, and four relate to Iran. A total of 62% of cases (111) were reported by sectors which have mandatory reporting obligations and include both self-reports (i.e. voluntary disclosures) and reports by third parties. Many of these were from the financial services sector (which has mandatory reporting obligations). Over the year, 104 cases were closed. Of this number, 41 saw no breach being identified and thus no further action taken, and 40 were referred to HMRC for a range of reasons (including for potential criminal enforcement or because the suspected breaches predated the OTSI's October 2024 enforcement powers). The remaining 23 cases were closed on other grounds, including no recordable activity (nine cases), referral to another government department or agency (seven cases), and cases where OTSI reached no view on whether a breach had occurred (seven cases).
The report states that in the 2025-26 year, the OTSI established a dedicated intelligence function to identify potential breaches. Over the year, approximately six percent of the cases were proactively opened by the OTSI. On the topic of licensing, the OTSI received 51 licence applications during the year, only three of which were from the energy sector. Regarding cross-government coordination, the report discusses the OTSI’s role in developing the latest package of trade sanctions on Russia in May 2026 which was a major priority for the office. The package included new restrictions on the maritime transportation of Russian-origin LNG, a ban on the import of processed oil products of Russian origin, and new powers to tackle the so-called Russian shadow fleet.
In terms of forward-looking commitments, the report notes that OTSI expects to make “effective use” of the OTSI’s enforcement and Sanctions End-Use Controls powers in the 2026-27 year where it sees risks (click here).
While the OTSI did not issue any civil penalties over the year, the report clearly signals that the relatively new office is developing its monitoring and enforcement capabilities. With the large number of open investigations carrying through into 2026-27, enforcement by the OTSI is likely to materialise in the near future. Energy and commodity trading firms falling within the OTSI’s jurisdiction should be aware of the growing maturity of the office, particularly regarding its analytical and monitoring capabilities, and ensure that appropriate processes and controls are in place to track and communicate sanctions updates and prevent inadvertent sanctions violations.