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On 8 September 2025, the UK’s Office of Financial Sanctions Implementation (OFSI) published a report into breaches of the Counter-Terrorism (Sanctions) (EU Exit) Regulations 2019 by Vanquis Bank Limited (VBL). While no monetary penalty was imposed, the case was assessed as moderately severe, with OFSI opting to publish a disclosure to underline the seriousness of the lapses.
This case offers vital lessons for all firms subject to UK sanctions legislation.
What Happened?
VBL failed to promptly restrict access to a designated person’s account. Despite being forewarned by OFSI that a suspected customer would be designated, the bank took eight days to act. During that period, the designated individual withdrew cash and made a purchase, meaning funds were directly made available in breach of regulations.
OFSI highlighted aggravating factors, including:
- The bank had prior notice of the designation.
- Funds were made available after the designation.
- The delay in freezing the account created an ongoing risk of terrorist financing.
- As an FCA-regulated entity, VBL was expected to have robust systems in place.
Although mitigating factors were acknowledged—such as voluntary disclosure and cooperation—the breach highlights the importance of operational resilience in sanctions monitoring.
Compliance Lessons for Firms
The VBL case underscores several key compliance lessons that apply across industries:
1. Sanctions Screening Must Be Immediate and Effective
Even short delays in restricting access to designated persons’ funds can result in direct breaches. Screening systems need to be well resourced and supported by clear escalation procedures.
2. Operational Resilience Matters
Firms must plan for business continuity. Staffing gaps, IT failures, or remediation exercises cannot justify exposing the business to sanctions breaches. Contingency planning is essential.
3. Vigilance is Crucial When Forewarned
If OFSI issues a pre-notification, firms should treat it as a red flag requiring heightened attention. Pre-warnings are rare and issued in high-risk circumstances.
4. Low-Value Transactions Still Count
The £200 withdrawal and £8.99 purchase were small in monetary terms but significant in compliance terms. Any post-designation access can amount to terrorist financing risk.
5. Voluntary Disclosure Can Mitigate Outcomes
VBL’s cooperation and reporting to OFSI were treated as mitigating factors. If you suspect or identify a breach, proactive reporting is the right course of action.
Why This Matters Beyond Banking
Sanctions compliance isn’t just a concern for financial institutions. Estate agents, law firms, fintech providers, crypto businesses, and gaming operators all face sanctions exposure. Any business that handles client funds, payments, or assets can be caught by the regulations.
Failing to act swiftly can lead not only to reputational harm and regulatory scrutiny but also to real-world national security risks.
Key Takeaways for Compliance Teams
- Ensure your sanctions screening is accurate, automated, and tested regularly.
- Build redundancy and resilience into your compliance operations.
- Stay subscribed to OFSI e-Alerts and act immediately on updates.
- Train staff on the importance of sanctions and escalation procedures.
- Report suspected breaches to OFSI without delay.
At LondonCDD, we help regulated businesses build practical, resilient compliance frameworks that go beyond “box-ticking.” The VBL case is a timely reminder: sanctions compliance is not optional, and delays can cost far more than money.
