Sanctions compliance

Copyright © 2025 LexisNexis

This Overview is a guide to the Lexis+® UK Financial Services subtopic Sanctions compliance and includes links to appropriate materials. UK sanctions obligations apply to all businesses and persons in the UK; this sub-topic focuses on the implications for firms regulated by the Financial Conduct Authority (FCA) under the Financial Services and Markets Act 2000 (FSMA 2000), cryptoasset firms registered with the FCA under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, SI 2017/692 (MLRs), and payments and e-money firms supervised by the FCA (herein referred to as firms), in their compliance with sanctions.

What are international sanctions?

Sanctions regimes are a tool of foreign policy affecting businesses or persons and are typically used where international peace and security is threatened. They can:

  1. •

    encourage a change in the behaviour, policy or activity of the target person, entity, government or country

  2. •

    apply pressure on a target to comply with certain objectives, and

  3. •

    enforce measures where diplomatic efforts have failed

Sanctions regimes are reviewed, lifted, revoked or adapted in the light of changes in the behaviour

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Latest Financial Services News

ESRB publishes annual report for 2024-25

The European Systemic Risk Board (ESRB) has published its 14th Annual Report, covering the period between 1 April 2024 and 31 March 2025. The report outlines developments in financial stability across the EU and the ESRB’s activities during the review period.

EBA updates ITS validation rules for supervisory reporting

The European Banking Authority (EBA) has published a revised list of validation rules in its implementing technical standards (ITS) on supervisory reporting. The update includes the deactivation of certain rules due to incorrectness or for triggering IT problems. National competent authorities (NCAs) are informed that data submitted in accordance with these ITS should not be formally validated against the set of deactivated rules.

ECB launches consultation on harmonised supervisory approach to legacy NPEs at small banks

The European Central Bank (ECB) has launched a public consultation on a draft guideline setting out a harmonised supervisory approach to the coverage of legacy non-performing exposures (NPEs) held by less significant institutions (LSIs). The draft guideline introduces calendar-based supervisory coverage expectations and outlines exemptions for LSIs with low non-performing loan (NPL) ratios, negligible amounts of legacy NPEs or those subject to restructuring. It provides for a gradual phase-in of the approach from 31 December 2025 to 31 December 2028, with reporting requirements based on a concise template aligned with common reporting (COREP) submissions. The ECB expects the approach to contribute to consistent supervisory outcomes across the Single Supervisory Mechanism. In a supporting blog post, Sharon Donnery, Member of the Supervisory Board of the ECB, explained that while most banks have reduced their NPEs, some smaller institutions continue to face challenges due to structural constraints and persistent stocks of high-vintage NPEs. Responses are sought by 27 October 2025.

Financial Services—other developments (15/9/2025)

A round-up of other developments, which have not been covered in full by the LexisNexis Financial Services practical guidance team but may nevertheless be of interest.

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