UK Sanctions Risk Across Key Non-Financial Sectors
Sanctions compliance extends beyond the traditional financial sector. Non-financial professionals such as high value dealers, art market participants, insolvency practitioners, and letting agents face growing scrutiny from the UK Office of Financial Sanctions Implementation (OFSI). The UK government expects these sectors to understand and mitigate sanctions risks effectively. Failure to do so may result in enforcement action, reputational damage, or criminal liability.
On 14 May 2025 Non-Financial Sectors were brought within the scope of the UK’s sanctions framework under the Sanctions and Anti-Money Laundering Act 2018 (SAMLA 2018), which provides the legal foundation for the UK’s autonomous sanctions regime post-Brexit. Under SAMLA, non-financial businesses and professions particularly those already subject to AML regulations must ensure they do not make funds, goods, or economic resources available to designated persons. The expansion of coverage under SAMLA 2018 reflected the UK’s intention to strengthen its ability to implement and enforce sanctions consistently across financial and non-financial sectors.
This document explores in depth how sanctions risk manifests within these four sectors, the specific challenges each faces, and practical steps to enhance compliance frameworks. It provides detailed guidance on key risk exposures, control measures, and best practices to help organisations build robust, risk-based sanctions compliance programmes.
1. High Value Dealers (HVDs)
Overview
High Value Dealers (HVDs) are businesses or individuals that accept or make cash payments of £10,000> (or its equivalent in any currency) for goods, such as (but not limited to) jewellers, luxury car dealerships, and antique traders. While their primary regulatory obligation stems from anti-money laundering (AML) regulations overseen by the FCA, their exposure to sanctions risk is significant due to the international nature of luxury goods markets. HVDs often deal with cross-border clients, third-party intermediaries, and complex supply chains all of which increase the potential for sanctions breaches if appropriate controls are not in place.
Key Sanctions Risks
HVDs face a variety of sanctions-related risks that stem from their exposure to international clients, luxury goods markets, and complex payment chains:
Customer and Counterparty Risk
Transactions may involve designated persons or entities listed under UK or allied sanctions regimes (e.g., U.S., EU, UN).
Sanctioned individuals may attempt to use intermediaries or nominees to disguise their involvement.
Lack of adequate due diligence, especially for foreign clients, can obscure ultimate beneficial ownership.
Goods and Supply Chain Risk
Goods may originate from sanctioned jurisdictions or contain components from embargoed regions.
Certain items (e.g., luxury vehicles, precious metals, gemstones) are subject to UK trade restrictions under Russia and Belarus sanctions regimes and comprehensive sanction programs imposed on countries like the Democratic People's Republic of North Korea.
Inadequate verification of supply chain provenance can result in dealing with restricted goods unknowingly.
Payment and Transaction Risk
Payments may be routed through offshore or high-risk jurisdictions.
Cash payments, cryptocurrency transactions, or complex financial structures can obscure the source of funds.
Layered transactions make it difficult to detect designated persons’ involvement.
Reputational and Legal Risk
Enforcement by OFSI can result in fines, public naming, or even criminal prosecution.
Media coverage of sanctions breaches can damage client confidence and brand reputation.
Directors and senior managers may be held personally accountable for wilful non-compliance.
Operational and Control Risk
Lack of dedicated compliance personnel or formal sanctions procedures.
Over-reliance on manual screening without automated or reliable tools.
Failure to update systems and processes as new sanctions regimes are implemented.
Controls and Mitigation
Effective sanctions controls for HVDs should form part of their broader compliance and due diligence framework. These controls should be proactive, risk-based, and integrated into existing AML processes.
Customer and Beneficial Owner Screening
Conduct initial and ongoing screening of customers, beneficial owners, and connected parties against OFSI’s consolidated list. PLEASE NOTE the UK is moving toward a single consolidated list for all UK sanctions designations, shifting from the OFSI list to the unified UK Sanctions List (UKSL) by 28 January 2026. Firms are advised to start adapting their sanction compliance systems now and not wait until the UKSL launch date.
Use reliable, frequently updated screening tools that detect name variations and transliterations.
Periodically review customer relationships to capture changes in ownership or control.
Supplier and Goods Verification
Conduct provenance checks to verify the geographic origin of goods.
Request supplier documentation such as invoices, customs declarations, and certificates of origin.
Avoid trading in goods that originate from or transit through sanctioned countries.
Transaction Monitoring and Payment Controls
Implement rules for identifying unusual payment structures or sources.
Refuse payments from unrelated third parties or accounts located in high-risk jurisdictions.
Apply enhanced due diligence (EDD) for cash payments or cryptocurrency transactions.
Escalation and Reporting
Establish clear internal escalation procedures for potential sanctions matches.
Report any suspected breach or frozen asset to OFSI immediately.
Maintain full records of all screening, escalations, and communications.
Governance, Training, and Record-Keeping
Provide ongoing sanctions training for employees involved in sales, procurement, and finance.
Retain detailed documentation of due diligence processes and outcomes.
Conduct regular internal reviews or audits to ensure control effectiveness.
2. Art Market Participants (AMPs)
Overview
The art market includes dealers, galleries, auction houses, and agents, all of whom can be used by designated persons to conceal wealth or ownership. High-value art can act as a store of value and an anonymous vehicle for transferring wealth. OFSI and HM Treasury view the art market as particularly vulnerable to sanctions evasion, given its reliance on discretion, intermediaries, and international transactions.
Key Sanctions Risks
The art market faces heightened sanctions exposure due to its international, high-value, and often opaque nature. Transactions frequently involve multiple intermediaries, off-market dealings, and cross-border transfer conditions that can be exploited by designated persons.
Ownership Concealment
Sanctioned individuals or entities may attempt to hide their involvement by using complex ownership structures, such as offshore companies, nominee directors, or discretionary trusts. These arrangements make it difficult for art market participants to identify the true beneficial owner. In many cases, intermediaries such as agents, galleries, or consultants are used to purchase or sell artwork on behalf of clients, increasing the risk that a sanctioned person could indirectly participate in a transaction. The use of freeports and secure storage facilities in jurisdictions with limited transparency further complicates the identification of sanctioned ownership.
Cultural Property Restrictions
UK sanctions prohibit dealing in cultural property unlawfully removed from certain territories or conflict zones. For example, artworks or antiquities looted or illegally exported from conflict zones may fall under trade restrictions or asset-freeze measures. Dealing in such items could constitute a breach of both sanctions and cultural property laws. Additionally, transactions involving cultural items from Russian state institutions or sanctioned Russian nationals are prohibited under current measures. Art market participants must therefore verify provenance rigorously and ensure compliance with international conventions on cultural heritage.
Cross-Border Exposure
The global nature of the art market means that buyers, sellers, and intermediaries often operate across multiple jurisdictions. This creates exposure not only to UK sanctions but also to other regimes such as those of the EU, U.S. (OFAC), and UN. A single transaction might involve a seller in Switzerland, a buyer in Hong Kong, and shipment through the UK, each step potentially subject to different sanctions laws. Firms must therefore adopt a multi-jurisdictional perspective, ensuring compliance with the most restrictive applicable measures.
High-Value Transactions
Artworks and collectibles can command prices in the millions, making them a highly attractive vehicle for sanctions evasion and value transfer. The subjective nature of art valuation and the reliance on private sales create opportunities for manipulation of prices to disguise illicit wealth transfers. Designated persons might use ‘over-valued’ or ‘under-valued’ art trades to move value discreetly without triggering traditional financial monitoring systems. Participants must conduct enhanced due diligence on high-value transactions and scrutinise the source of funds, especially when linked to politically exposed persons (PEPs) or clients from high-risk jurisdictions. A designated person may use shell companies, trusts, or agents to mask beneficial ownership.
Controls and Mitigation
Due Diligence and Screening
Perform enhanced due diligence on buyers, sellers, and intermediaries.
Verify beneficial ownership structures for corporate or trust clients.
Use advanced screening tools to identify potential sanctions exposure.
Provenance and Documentation Review
Require detailed provenance records for each artwork.
Validate the authenticity of documentation (e.g., export certificates, customs records).
Avoid acquiring or selling items linked to sanctioned countries or restricted territories.
Transaction Oversight
Monitor payment flows and settlement accounts to detect indirect involvement of sanctioned entities.
Reject payments from unrelated third parties.
Escalate transactions involving offshore entities or politically exposed persons (PEPs).
Record-Keeping and Reporting
Maintain detailed audit trails of all client interactions, screening results, and provenance checks.
Report any suspected breach or frozen asset to OFSI.
Training and Awareness
Provide regular training for staff and art experts on sanctions and cultural property laws.
Develop clear internal guidance on escalation procedures.
3. Insolvency Practitioners
Overview
Insolvency practitioners (IPs) manage the affairs of insolvent companies and individuals. They may encounter assets, funds, or property belonging to designated persons. OFSI has explicitly reminded IPs that they must not deal with frozen assets without a licence, even when appointed by the court.
Key Sanctions Risks
Insolvency practitioners (IPs) operate in complex legal and financial environments where sanctions exposure may arise through the management of assets, funds, or creditors linked to designated persons. A lack of due diligence or awareness of sanctions implications can result in inadvertent breaches of UK law, financial penalties, or professional censure. The following risks highlight the primary areas of concern for IPs:
Frozen Assets
Insolvency practitioners may be appointed to administer the estate or business of an individual or company that is a designated person under UK sanctions. In such cases, any funds, property, or economic resources belonging to that person are considered "frozen assets" under the UK sanctions regime. IPs cannot sell, transfer, or otherwise deal with these assets without first obtaining a licence from OFSI. Even using such assets to pay creditors or professional fees could constitute a breach. IPs must therefore identify frozen assets promptly, segregate them, and apply for authorisation before undertaking any transaction.
Corporate Connections
Insolvency cases may involve companies or directors connected to sanctioned individuals or entities, either through ownership, control, or financial relationships. These connections can be direct, such as a designated shareholder or indirect, such as a subsidiary of a sanctioned parent company. Failing to identify these links may lead to IPs inadvertently managing or distributing assets on behalf of designated persons. Additional risk arises when creditors, lenders, or suppliers are based in or controlled by entities from sanctioned jurisdictions. Full due diligence and ownership tracing are essential to mitigate this exposure.
Asset Sales
During the insolvency process, IPs may be responsible for selling company assets to generate funds for creditors. However, if these assets originate from sanctioned regions, are owned by sanctioned persons, or are subject to export or trade restrictions (e.g., dual-use goods, luxury items, or Russian-origin commodities), their sale could breach UK trade or financial sanctions. IPs must therefore verify asset ownership and ensure no restricted goods are being sold or transferred. Where uncertainty exists, obtaining legal advice or OFSI guidance is critical.
Cross-Border Insolvencies
Many insolvency cases involve overseas assets or creditors, creating a heightened risk of engaging with jurisdictions subject to UK or international sanctions. For instance, an insolvent company may hold bank accounts in sanctioned countries or owe money to creditors located in restricted territories. Conducting business in these jurisdictions without proper licensing could constitute a breach of sanctions law. Additionally, IPs must consider the extraterritorial reach of allied regimes, such as U.S. or EU sanctions, when managing cross-border estates. Proactive screening, documentation review, and consultation with legal experts are essential when dealing with international insolvency cases. Handling funds or property owned by a designated person without an OFSI licence.
Controls and Mitigation
Screening and Verification
Screen all parties involved in insolvency cases, including debtors, creditors, directors, and shareholders.
Rescreen periodically during case administration.
Review overseas assets or creditors for links to sanctioned jurisdictions.
Licensing and Permissions
Seek OFSI licences before dealing with frozen assets or proceeds.
Keep copies of all licence applications and correspondence.
Engage with legal counsel when sanctions risk is unclear.
Case Management Controls
Embed sanctions checks into standard onboarding and case intake processes.
Record and review asset valuations for potential sanctions exposure.
Maintain a clear escalation route to compliance or legal teams.
Governance and Training
Train all insolvency staff on identifying potential sanctions indicators.
Review policies annually to ensure alignment with OFSI guidance.
4. Letting Agents and Property Professionals
Overview
Letting agents and property professionals may handle property or client funds linked to designated persons. Given UK sanctions against Russian and other foreign property owners, this sector is increasingly exposed to regulatory scrutiny. Agents must ensure that they are not facilitating the use or management of sanctioned assets.
Key Sanctions Risks
Letting agents and property management firms face specific sanctions risks due to their role in handling funds, managing assets, and facilitating tenancy agreements on behalf of clients. The property sector can be exploited by sanctioned persons seeking to retain control of UK assets or channel funds through legitimate-looking transactions. Below are the main areas of exposure:
Property Ownership Risk
Letting agents and property managers may act for landlords or property owners who are designated persons under UK sanctions or entities controlled by sanctioned individuals. Under the asset-freeze provisions of the UK sanctions regime, any property or economic resource owned or controlled by a designated person must be frozen, meaning no rent collection, management activity, or sale can occur without an OFSI licence. Agents who unknowingly continue to manage such properties risk facilitating sanctions breaches. It is therefore essential to conduct thorough due diligence on landlords, property-owning companies, and beneficial owners before entering or renewing management agreements.
Tenant and Payment Risk
Agents may also face exposure when accepting deposits, rent, or service charge payments from tenants who are sanctioned or acting on behalf of a designated person. Funds may be transferred through restricted financial institutions or routed from high-risk jurisdictions to obscure their origin. Handling such payments without authorisation could constitute dealing with frozen funds. Enhanced screening of tenants and verification of payment sources especially for corporate tenants or international transfers is necessary to prevent inadvertent sanctions violations.
Management Risk
Continuing to provide letting or management services for property owned by a designated person, even if unaware of the designation, can still result in liability. Activities such as repairs, rent collection, or entering new leases are considered dealings with economic resources and therefore prohibited unless OFSI grants a licence. Firms must ensure they have mechanisms to promptly identify and cease activities involving sanctioned clients. Internal escalation procedures and periodic re-screening are vital to maintaining compliance.
Reputational Exposure
Beyond legal risks, association with sanctioned landlords, tenants, or entities can significantly damage a firm’s reputation. Public awareness of enforcement actions such as OFSI fines or media reports on property linked to sanctioned oligarchs can erode client trust and attract regulatory scrutiny. Maintaining transparent records, demonstrating proactive compliance, and promptly reporting concerns to OFSI or the firm’s compliance team help mitigate reputational harm and demonstrate good faith adherence to sanctions obligations. Acting for landlords or property owners who are designated persons or controlled by sanctioned entities.
Controls and Mitigation
Client and Counterparty Screening
Screen landlords, tenants, and beneficial owners against OFSI’s consolidated list (UK Sanctions List (UKSL) by 28 January 2026).
Rescreen existing clients regularly to detect new designations.
Verify beneficial ownership for corporate landlords or tenants.
Payment and Banking Controls
Screen all incoming and outgoing payments against sanctioned banks and entities.
Refuse to transfer or receive funds from designated persons or frozen accounts.
Maintain records of all payment due diligence.
Escalation and Reporting
Immediately report potential breaches or frozen assets to OFSI.
Suspend transactions pending compliance review if a match is identified.
Record all decisions and communications with regulators.
Policy, Training, and Monitoring
Develop clear internal policies and escalation procedures.
Train staff to recognise red flags such as offshore ownership structures or politically exposed clients.
Conduct regular reviews of sanctions screening effectiveness.
Conclusion
Each of these sectors faces distinct sanctions risks, but the compliance principles remain consistent: identify, screen, verify, and escalate. Effective sanctions compliance requires leadership support, trained staff, and documented controls. A proactive approach not only prevents legal and financial consequences but also enhances business integrity and reputation.
Key Takeaway
Regardless of sector, businesses must embed sanctions awareness into everyday decision-making, supported by continuous training, regular screening, and a clear escalation framework.
Author - Manmeet Lotay, Global Sanctions Advisor, Ferrer Consultancy Services
Ferrer Consultancy Services empowers clients to stay ahead of sanctions risk through proactive, data-driven controls that build resilience and agility in an evolving global landscape. By enhancing sanctions frameworks and implementing proactive risk mitigation strategies, Ferrer Consultancy Services enables organisations to anticipate and manage sanctions exposure not just react to it, ensuring confidence in a constantly shifting regulatory ecosystem.
If you're ready to turn compliance into a competitive advantage contact us today to learn how we can help your organisation proactively manage and mitigate sanctions risks.