Licensing Policy Update under Operation Economic Outcast
OFAC’s Iran-related specific licensing policy has been modified in furtherance of the U.S. Department of the Treasury-led Operation Economic Outcast. Effective immediately, OFAC is considering Iran-related specific license applications with a presumption of denial except as required by law or in certain circumstances, such as risk to life, limb, or environmental safety. Applicants are encouraged to subscribe to OFAC Recent Actions for further updates.
OFSI Updates Guidance on Permitted Travel Expenses for Sanctions Licence Applications
OFSI has updated its guidance, ‘Permitted travel expenses for sanctions licence applications’, to clarify its expectations of applicants and align the guidance with wider OFSI guidance and current practice.
The update:
Clarifies that the guidance applies not only to travel undertaken by designated persons, but also to travel undertaken by legal representatives or other individuals where an OFSI licence is required to make the relevant payments;
Reflects current practice and expectations that applicants provide sufficient evidence at the outset and that OFSI may return an incomplete application for resubmission or refuse an application where adequate evidence is not provided;
Confirms that in exceptional circumstances, OFSI may license a flight in a class above that which is normally permitted;
Clarifies that where higher-cost travel or accommodation is not justified, OFSI may license a lower amount equivalent to permitted rates (subject to receiving sufficient evidence);
Confirms that each application will be assessed on its own merits; and
Removes outdated mileage rates and updates links to other relevant guidance.
Permitted travel expenses for sanctions licence applications
Updated 10 September 2026
This guidance is produced by the Office of Financial Sanctions Implementation (OFSI), part of HM Treasury, the authority for the implementation of financial sanctions in the UK.
This guidance sets out OFSI’s policy on licensing for travel and applies to travel and associated expenses for which an OFSI licence is sought. It is not limited to travel undertaken by the designated person or their dependents and may include travel undertaken by a designated person’s legal or other representatives where an OFSI licence is required to make the relevant payments.
This should be considered supplementary to, and not a replacement for, OFSI’s general guidance. Further sources of information that may prove helpful can be found at the end of this guidance.
This guidance does not represent legal advice.
If you are unsure about your obligations in a given case, you should consider seeking independent legal advice.
1. Licensing travel expenses
If you are applying for a licence from OFSI to release otherwise frozen funds for the purpose of travel and associated expenses, (for example, to allow you to attend legal meetings or court hearings), you will likely come across the term ‘reasonableness’. An associated expense may be incurred by attending legal meetings or court hearings for example, and when issuing a licence to enable the payment of such expenses, OFSI is legally obliged to ensure that those expenses are ‘reasonable’ as required under the various regime or sector specific regulations made under the Sanctions and Anti-Money Laundering Act (2018).
Each application is reviewed on a case-by-case basis and based on the facts provided, which may not necessarily be covered in this guidance.
Applicants may also apply for travel costs under another licensing purpose which does not carry a requirement for OFSI to conduct a reasonableness assessment. Nevertheless, they should provide a full explanation as to why a specific licensing ground applies to their case.
This guidance should be considered best practice and OFSI would expect the same considerations to be demonstrated. This guidance is not intended to cover all eventualities.
2. Applying for a licence
Various regime or sector specific regulations made under the Sanctions and Anti Money Laundering Act set out the basis upon which HM Treasury may issue a licence. The specific regime regulations appear on the financial sanctions targets by regime on GOV.UK.
It is important that applicants consult the relevant regulations before applying to OFSI.
Each set of regulations will have their own licensing purposes, but commonly the regulations will include two licensing purposes which include a ‘reasonableness’ test. These are ‘legal services’ and ‘maintenance of funds and economic resources’.
OFSI generally receives requests under these licensing purposes to enable the payment of:
• Reasonable professional fees for the provision of legal services
• Reasonable expenses associated with the provision of legal services
• Reasonable fees arising from the routine holding or maintenance of frozen funds or economic resources
• Reasonable service charges arising from the routine holding or maintenance of frozen funds or economic resources
It may be the case that other licensing grounds could be relevant to an application for travel expenses and applicants should provide an explanation as to why a specific licensing purpose reasonably applies to their case.
OFSI receives many licence applications where applicants have not provided sufficient evidence of reasonableness or with no evidence at all.
OFSI requires a significant level of evidence when scrutinising the reasonableness threshold. This is because the various specific regime regulations made under the Sanctions and Anti Money Laundering Act gives HM Treasury the power to issue licences, also stipulates legal fees and maintenance of funds and economic resources should be ‘reasonable’.
If OFSI does not receive the level of detail it needs, OFSI may deem the licence application incomplete and return it to the applicant for resubmission, or refuse the licence application.
In addition, applicants are strongly encouraged to apply to OFSI no less than four weeks in advance of making any travel arrangements.
Reasonableness may have different meanings in different contexts and applicants should note that just because a payment has been licensed in a previous case, does not necessarily mean that it will be licensed again. OFSI assesses each application on a case-by-case basis and applicants will be required to justify the proposed expenditure in each application.
OFSI does not want to cause delays to the consideration and issuance of any licence, so this guidance is aimed at setting out what information OFSI requires when considering if an application for travel costs is ‘reasonable’.
Before making any travel arrangements or applying to OFSI for a licence, you should consider the following four criteria:
Step 1. Consider alternatives to travel
As a first step in all cases, applicants should consider whether there are any practical alternatives to travelling in the first place, such as video, audio or web-based conferencing. They should explain why these alternative options are not possible in their particular case.
Step 2. Consider efficiency and cost-effectiveness
If travel is deemed to be the only option available, then consideration should be given to efficiency and cost-effectiveness (booking in advance, travelling off-peak, using timed trains, economy or standard class), safety and security.
Step 3. Consider necessity
OFSI would expect that only those individuals who absolutely must travel, do so. Support staff, such as paralegals, trainees and secretaries for example, should not be included unless deemed to be essential. In such cases, applicants should provide a clear explanation as to why these additional people are considered necessary and justifying the additional, proportionate cost.
Step 4. Apply for a licence before travel
Applicants should make an application for a licence to OFSI no less than 4 weeks in advance of travel and before making any concrete arrangements. Where an applicant is unable to apply for a licence 4 weeks in advance then explanation as to why should be provided.
3. Travel types
The rates shown in this section act as an indicator as to what OFSI would ordinarily deem to be reasonable. In exceptional cases, OFSI may issue a licence exceeding these rates. Applicants will need to provide a clear explanation of such additional costs being reasonable, including supporting evidence.
Designated persons subject to certain regimes may also be subject to a travel ban. The applicant should ensure that anyone subject to a travel ban also has permission to travel and the necessary supporting documents.
In the event of a licence being issued for a travel expense, any travel ban in place would still apply and is not negated by any licence that may be issued by OFSI. It is the applicant’s responsibility to ensure they are aware of any such restrictions.
3.1 Air travel
The cost of air travel is governed by the fare structure as set by airlines on various routes, as well as the duration of the flight and calendar dates. Prices often rise at popular times of the year, such as school breaks or national holidays, so OFSI would expect timings to be fully considered in line with the earlier pre-planning section.
For flights up to 6 hours, OFSI expects applicants to use economy class wherever possible, even if this means that flights may be very early or late, or alternative dates need to be considered.
For flights more than 6 hours, OFSI expects applicants to consider efficiency and cost effectiveness, safety and security when booking flights.
The table below should be used as a guide.
If there are exceptional circumstances where a flight in a class above what is permitted is needed, applicants should provide an explanation and supporting documentation.
Where exceptional circumstances have not been demonstrated and a flight in a class above what is permitted has been booked, OFSI will generally only license the cost equivalent of the fare of the permitted class of travel. In these circumstances, OFSI requires applicants to provide supporting evidence demonstrating the cost of the permitted fare. If this evidence is not provided, OFSI may refuse the entire amount.
When making a licence application for taxi costs, the applicant will need to demonstrate that public transport has been considered and explain why the need for a taxi is appropriate and cost-effective.
Please note that carrying important documents will not generally in itself be considered an adequate justification. Many people can and do carry important documents, laptops etc on public transport.
3.3 Rail
When travelling by rail, OFSI expects applicants to travel standard class and generally at off-peak times. Moreover, OFSI expects that these rail tickets should be booked in advance, wherever possible, to take advantage of any discounts that may be available.
If an alternative class is required, applicants must explain how such costs are reasonable, like a higher class of air travel.
3.4 Hire Cars
The use of self-drive hire cars may be considered where this is cost-effective. The applicant will need to demonstrate their consideration of public transport options and explain how the need for car hire is appropriate and cost-effective.
3.5 Private vehicles and motor mileage allowance
The use of a private vehicle to travel on official business may be considered where the mileage rate provides a cost-effective means of transport. Applicants will need to provide mileage and destination details in their application and explain why this is cost-effective. Expected rates for mileage can be found at the link at the end of this document.
3.6 Hotels
OFSI will generally expect hotel stays to be minimised. Overnight accommodation should only be used where this is essential, for example, for a court hearing of more than one day. Applicants are expected to book the lowest reasonable class of hotel available, for example 3* rather than 5* wherever it is available. If overnight accommodation is essential, each case will be considered on its own merits. The general guidance provided by HMRC, which can be accessed through the link at the end of this document, will be a good indicator of costs that will be considered reasonable. Typically, OFSI would not licence a 4* and above hotel unless there are genuinely exceptional needs (such as a medical need for a particular facility). As with higher levels of air travel or rail travel, the applicant will need to explain how such costs are reasonable.
Where a 4* hotel or above is booked without demonstrating genuinely exceptional needs or the unavailability of suitable 3* accommodation, OFSI may instead license the cost equivalent of 3* accommodation. In these circumstances, OFSI requires applicants to provide supporting evidence demonstrating this cost. If this evidence is not provided, OFSI may alternatively license an amount capped at the costs outlined in the HMRC guidance.
3.7 Meals
Where meals are not included in the costs of the hotel or otherwise provided, it is possible to include these costs in the overall travel costs being applied for. The following table provides information on expected subsistence rates in the UK.
Meal Limit
London Limit
UK elsewhere
Breakfast
£6.00
£6.00
Lunch
£10.00
£10.00
Dinner
£25.00
£20.00
Subsistence rates outside of the UK will depend on the location of travel and will be assessed on a case-by-case basis.
4. Further support
For further support with UK financial sanctions, you can:
The Department of the Treasury’s Office of Foreign Assets Control (OFAC) is amending several Frequently Asked Questions (FAQs) today (5, 13, 51, 58, 59, 74, 75, 76, 77, and 78) as part of its ongoing process of reviewing published guidance to ensure information remains current. This batch includes review of OFAC’s FAQ topic pages, OFAC Licenses, and Assessing OFAC Name Matches. OFAC is also publishing two new license-related FAQs (FAQs 1269 and 1270).
Here are the two new FAQs – 1269:
1269. How do I find the case identification (“Case ID”) number for my license application? Is it different from the Reference ID or Application Alias in my original application?
Answer
Case Identification Number: Once OFAC receives and begins to process your specific license application, OFAC’s Licensing Division will assign a case identification (“Case ID”) number. This number will be in the Year-Case ID format (i.e., YYYY-9999999). Note the Case ID number is different from the Reference ID that was created when you submitted your application. Please take note of the Case ID as you will need to reference it throughout the application process, including to view your application’s status. For more information on checking the status of your specific license application, see FAQ 77 or the OFAC Specific Licenses and Interpretive Guidance page on OFAC’s website.
Reference ID: A Reference ID helps with the tracking and processing of your application until OFAC provides a Case ID. You may request to receive an email confirming OFAC’s receipt of your application upon submission, which will include your Reference ID. The Reference ID is also listed in the PDF copy of your submission, which is displayed on the screen confirming that your application was successfully submitted to OFAC.
If you submitted your specific license application as a guest user, you were asked to create a unique Reference ID for your application. OFAC’s Licensing Division will contact you to provide a Case ID when it is assigned to your application.
If you submitted your specific license application through an account, a unique Reference ID was automatically assigned to your application. When a Case ID is assigned to an application, it will automatically be reflected in your “My Applications” account dashboard.
Application Alias: If you submitted your specific license application through an account, you may have created an Application Alias to help easily identify and differentiate it among your applications when viewing your “My Applications” account dashboard. The Application Alias is not included in your application or tracked by OFAC.
Note that if you are submitting questions to the OFAC Licensing Hotline, you should refer to one of the above numbers, preferably the Case ID if you have received one, within your submission. You may contact the OFAC Licensing Hotline for specific licensing-related questions.
Date Released
September 9, 2026
and 1270:
1270. How can I get my OFAC specific license amended or renewed?
Answer
If you currently have a specific license from OFAC and seek to amend the terms of the license due to a change in circumstance, or wish to renew or extend the license’s expiration date, please visit the OFAC Specific Licenses and Interpretive Guidance page on OFAC’s website and submit the same type of application as your current license (e.g., Transactional). You should reference your current license in the “Previous License Number” field.
Where applicable, OFAC recommends you apply at least 60 days prior to the current specific license’s expiration date to avoid a lapse in authorization.
Summarize UK sanctions regulations and exemptions regarding Basic Needs Allowance, including any relevant definitions, in light of today’s FAQs, attached here. plesse provide your response for an audience of non-UK sanctions professonals who are not lawyers.
The final response:
The legal architecture beneath BNA
Primary legislation. The Sanctions and Anti-Money Laundering Act 2018 (SAMLA, 2018 c.13) is the enabling statute for essentially all post-Brexit UK sanctions. It doesn’t itself list licensing grounds – it authorises Treasury/the Secretary of State to make regime-specific secondary legislation.
Regime-specific regulations. Each sanctions regime (Russia, Iran, Syria, Belarus, Chemical Weapons, and so on) has its own statutory instrument made under SAMLA – for example the Russia (Sanctions) (EU Exit) Regulations 2019 (SI 2019/855). Each of these includes a schedule titled “Treasury licences: purposes,” which is the actual legal source of each licensing ground. I confirmed this schedule structure directly: in the Chemical Weapons (Sanctions) (EU Exit) Regulations 2019 (SI 2019/618), Schedule 2, paragraph 2, “Basic needs” reads almost exactly as you’d expect:
To enable the basic needs of a designated person, or (in the case of an individual) any dependent family member of such a person, to be met.
For individuals, it lists medical needs, food, insurance premiums, tax, rent or mortgage, and utility payments as included needs. The Russia Regulations carry the equivalent ground at Schedule 5, paragraph 2, though I wasn’t able to pull the exact Russia-specific wording (only confirmed its existence and paragraph position via secondary indices) – the substance is consistent across regimes but the schedule number and paragraph numbering differ regime to regime, so it’s worth checking the specific regulation rather than assuming identical numbering.
Where basic needs sits among the other grounds. Per OFSI’s own “How to apply for a financial sanctions licence” guidance, the generally available licensing grounds are:
basic needs
legal fees and expenses
prior obligations (pre-designation contracts)
routine holding or maintenance of frozen funds/economic resources
implementation of a judicial, administrative, or arbitral decision or lien
That page also confirms the general/specific licence mechanics I described earlier: general licences are issued by OFSI at its own initiative for a defined class of activity, and OFSI does not accept applications for them – you either fall within one or you apply for a specific licence.
The direct throughline to BNA
This is the most useful find. OFSI’s “Designated Individuals Licensing Principles” (a policy document sitting under the General Guidance, last updated 2 February 2026) already contained a formal benchmark for basic needs, at Principle 4:
Licensing should permit basic needs, which OFSI considers to include the reasonable standard of living as compared to a person receiving the net UK median wage.
And Principle 4(a): “Ordinarily, Principle 4 will be generally satisfied by granting a designated individual the net UK median wage.”
That’s a striking match to today’s BNA FAQs, with one difference worth flagging as a genuine shift rather than a restatement: the February principle benchmarks to the net UK median wage (an individual figure), while today’s FAQ benchmarks to a median income household. A household benchmark is not the same number as an individual wage benchmark – it implicitly accounts for household composition and dependents in a way a flat wage figure doesn’t. I can’t tell you from the FAQ text alone whether that’s a deliberate policy refinement or just looser drafting, but it’s the kind of distinction worth watching for in OFSI’s next General Guidance update, since it would change the actual capped amount a DP receives.
Historical background, clearly caveated as background rather than confirmed lineage: In 2023, litigation against OFSI (Fridman v HMT, the first challenge to an OFSI licensing decision under the Russia Regulations) resulted in disclosure of a previously secret internal “Basic Needs Framework,” which split basic needs into “core needs” (proposed to be met by a flat monthly sum pegged to median wage) versus needs beyond that. The High Court dismissed the claim and confirmed OFSI retains “residual discretion to refuse to grant a licence, even if the conditions for the grant of a licence are met” – a principle that reappears in today’s FAQ as “compliance with those conditions does not guarantee that a licence will be renewed or varied.” Commentators at the time (Law Gazette, November 2023) explicitly called for OFSI to formalise exactly this kind of standing monthly allowance rather than handling it case by case. I can’t point to a document that explicitly says “BNA is the formalisation of the Basic Needs Framework” – but the throughline from the 2023 disclosure, to the February 2026 Designated Individuals Licensing Principles, to today’s FAQ is consistent enough that I think it’s a fair inference, not a stretch.
A limitation worth being upfront about
I tried to independently verify FAQs 197-202 on OFSI’s live FAQ page. The version I could retrieve carries a “last updated” stamp of 29 May 2026, predating your attachment’s 21 July 2026 date – so I couldn’t cross-check the exact text against a live, independently-fetched copy; I’m relying on your attachment as the primary source for the BNA-specific content itself. What I can confirm independently is that the FAQ numbering, format, and “Added on:” convention in your document are consistent with OFSI’s genuine, ongoing FAQ series (which runs to at least FAQ 186 in the version I retrieved), so the document is stylistically and structurally what it claims to be – I just can’t yet corroborate the specific new entries from a second, independent live source.
Source list
Primary legislation and regulations
Sanctions and Anti-Money Laundering Act 2018 (c.13) – legislation.gov.uk/ukpga/2018/13
Chemical Weapons (Sanctions) (EU Exit) Regulations 2019 (SI 2019/618), Schedule 2, para 2 (“Basic needs”) – legislation.gov.uk/uksi/2019/618/schedule/2/paragraph/2/data.html
Russia (Sanctions) (EU Exit) Regulations 2019 (SI 2019/855), regulation 64 and Schedule 5 – legislation.gov.uk/uksi/2019/855/regulation/64
OFSI guidance and policy
OFSI, “How to apply for a financial sanctions licence” (last updated 1 September 2025) – gov.uk/guidance/licences-that-allow-activity-prohibited-by-financial-sanctions
OFSI, “UK Financial Sanctions FAQs” (updated 29 May 2026 as retrieved) – gov.uk/government/publications/uk-financial-sanctions-faqs/uk-financial-sanctions-faqs
OFSI, “UK financial sanctions general guidance” (updated 28 January 2026) – gov.uk/government/publications/financial-sanctions-general-guidance/uk-financial-sanctions-general-guidance
OFSI Blog, “OFSI successfully defends first court review” (Fridman v HMT) – ofsi.blog.gov.uk/2023/11/28/ofsi-successfully-defends-first-court-review
Commentary (context on the pre-BNA “Basic Needs Framework”)
Law Gazette, “Sanctions: Time for a general licence to cover basic needs” (13 November 2023) – lawgazette.co.uk/practice-points/time-for-a-general-licence-to-cover-basic-needs/5117856.article
Corker Binning, same title/content (23 September 2024 mirror) – corkerbinning.com/time-for-a-general-licence-to-cover-basic-needs
OFSI has published FAQs 197-202 on Basic Needs Allowance (BNA) licences, which permit designated persons to access a capped monthly sum from frozen funds for essential living expenses. OFSI benchmarks the BNA against median household income. In many cases, including those involving high net worth individuals, the BNA will not provide for the continuation of a pre-designation standard of living.
FAQs 197-202 cover the purpose and scope of BNA licences, permitted expenditure, reporting requirements, treatment of monthly underspend, and how costs falling outside the BNA may be licensed separately.
The guidance is relevant to designated persons and any party facilitating payments under a BNA licence.
A Basic Needs Allowance (BNA) licence is a type of specific licence which OFSI may issue under the basic needs licensing ground across all non-counter-terrorism sanctions regimes. It permits a designated person (DP) to access a capped monthly sum from their otherwise frozen funds to meet essential day-to-day living expenses. OFSI benchmarks the allowance to reflect a median income household rather than the DP’s previous lifestyle or claimed expenditure. Rent or mortgage payments are considered separately from the BNA and assessed on a case-by-case basis.
Added on: 21 Jul 2026
198. What is the purpose of the basic needs allowance?
The basic needs allowance is intended to help ensure that a DP and any financially dependent family members can meet their day-to-day living costs, broadly in line with a median-income household. It is not intended to enable a DP to maintain the lifestyle, wealth, or business activities they enjoyed prior to designation.
DPs applying for or operating under a BNA licence should ensure that expenditure remains consistent with this purpose. Any party facilitating payments under a BNAlicence should similarly satisfy itself that the payments fall within the terms and purpose of the licence.
Added on: 21 Jul 2026
199. Do basic needs allowance licences include reporting requirements?
Yes. Basic needs allowance licences include reporting conditions requiring expenditure to be evidenced and reported to OFSI. This is a proportionate method that enables OFSI to maintain oversight of the usage of the licence and may inform any future decision when licences are renewed or varied.
Applicants should be prepared to comply with any reporting requirements imposed as conditions of a licence. Compliance with those conditions does not guarantee that a licence will be renewed or varied.
Added on: 21 Jul 2026
200. What can the basic needs allowance be spent on?
OFSI does not provide an exhaustive list of approved purchases. A DP has broad discretion, though not total, in how the allowance is used. That discretion is limited by the terms of the licence, the relevant sanctions regulations, and the purpose for which the licence is granted
The allowance is intended to cover goods and services that reasonably constitute basic needs. This may include (but is not limited to) food, clothing, personal hygiene, local transport, basic household items, and hairdressers. It does not cover expenditure that falls outside the terms of the basic needs licencing purpose, nor expenditure which would otherwise breach the financial sanction’s regime.
Some discretionary spending may be consistent with the terms of a BNA where it supports basic family life and remains proportionate to the benchmark of a median-income household. This may include recreation, education, leisure, and other miscellaneous goods and services. Whether such expenditure is appropriate will depend on the circumstances and must remain consistent with the purpose of the licence.
Added on: 21 Jul 2026
201. Does the basic needs allowance licence permit carry-over of any monthly underspend?
No. Each month’s allowance is a fixed, standalone cap. If a DP does not use the full allowance in a given month, the unspent amount cannot be carried forward or added to the following month’s allowance. The monthly cap resets at the start of each new month.
Added on: 21 Jul 2026
202. Does OFSI license costs separately that may fall outside of the core basic needs allowance?
Yes. Where a cost cannot reasonably be met from the basic needs allowance, OFSI may consider a separate licence application. Such applications are assessed on their individual merits and approval is not automatic.
OFSI will consider whether the relevant cost could reasonably be met from within the basic needs allowance. In particular, OFSI will assess whether the expenditure is of a type that a median-income household would ordinarily absorb through routine day-to-day spending.
Where a cost could reasonably be met from the basic needs allowance, OFSI would generally expect it to be funded from that allowance rather than licensed separately.
Sanctions practitioners routinely face three intertwined licensing problems: general licenses that overlap, authorizations that expire on hard deadlines, and the question of when a specific license is still required on top of a general one. Each reflects a core principle – an OFAC general license authorizes only what its text says, and nothing more.
Overlapping general licenses
A general license (GL) authorizes a category of transactions without any individual application to OFAC. Overlap arises when more than one GL could bear on the same transaction, and the practitioner must confirm which applies and whether each one’s conditions are satisfied.
The Russia program shows how GLs interlock. Russia-related GL 6D authorizes transactions related to the production, sale, transport, or provision of agricultural commodities, medicine, and medical devices. It is notable because, unlike most agricultural/medical authorizations, it is designed principally to permit these dealings even where an otherwise-blocked person is involved – clearing the blocked-counterparty obstacle for humanitarian-type goods.
But GL 6D’s reach is bounded by its own paragraph (c), which excludes several things even for otherwise-covered goods: opening or maintaining a correspondent or payable-through account for any entity subject to Directive 2 under E.O. 14024; any debit to a U.S.-institution account of the Central Bank of the Russian Federation, the National Wealth Fund, or the Russian Ministry of Finance; and transactions prohibited by E.O. 14066, 14068, or 14071 (subject to narrow carve-outs). So an authorized medical-device sale whose payment leg runs through a Directive 2 correspondent account is not cleared by GL 6D alone – that leg needs its own authorization. OFAC reinforces the point in its guidance: the agricultural/medical authorizations do not extend to prohibitions applied to persons sanctioned under other OFAC authorities.
The practice point is that general licenses are not additive by default. Each authorizes only what its text says, subject to its own conditions and exclusions. Where a transaction has two problematic features – a blocked counterparty and an excluded payment channel, or a second program’s designation – each feature needs its own authorization.
Expiring authorizations
Many general licenses, particularly wind-down authorizations, carry hard expiration dates and times. OFAC’s standard convention is 12:01 a.m. eastern on the stated date. Once that moment passes, the transaction reverts to prohibited unless another authorization applies.
The June 12, 2024 designation of Russia’s core financial-market infrastructure illustrates the mechanics, including how staggered the deadlines can be. Alongside blocking a group of entities, OFAC issued a cluster of wind-down GLs:
GL 98 authorized wind-down of transactions involving the entities blocked that day, through 12:01 a.m. EDT on July 27, 2024.
GL 99 and GL 100 authorized wind-down, divestment, and related debt/equity transactions involving MOEX, NCC, and NSD, through August 13, 2024.
Those two were subsequently extended by GL 99A and GL 100A to October 12, 2024.
A payment authorized the day before a GL’s deadline is prohibited the day after; the authorization does not roll over. Because these deadlines do not move in lockstep – GL 98 expired more than two weeks before GLs 99 and 100 – practitioners track each separately.
The practice point is that wind-down GLs authorize the termination of pre-existing dealings, not new business. OFAC has been explicit that wind-down activities do not include the continued processing of funds transfers, securities trades, or other transactions involving a blocked person that were part of ongoing business prior to the imposition of sanctions, unless separately authorized.
When a specific license is still required “on top”
The clearest illustration of a specific license required on top of a general one comes from the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA) framework in the Iranian Transactions and Sanctions Regulations (ITSR), because the residual specific-license requirement is written into the licensing architecture itself rather than triggered by an exception.
Section 560.530 of the ITSR sets out a favorable general license for the export and reexport of agricultural commodities, medicine, and medical devices to Iran. But the general license does not stand alone – its own text conditions the authorization. The export is authorized provided that, unless otherwise authorized by specific license, payment terms and financing are limited to, and consistent with, those authorized by § 560.532.
Section 560.532, in turn, generally authorizes only a defined menu of payment mechanisms: cash in advance; sales on open account (where the receivable is non-transferable); financing by non-U.S., non-Iranian third-country financial institutions (which U.S. institutions may confirm or advise); or a letter of credit issued by an Iranian financial institution whose property is not blocked. A practitioner who needs payment or financing terms outside that menu is not covered by the general license – and a specific license is required on top of the general authorization that already covers the goods.
The same structure recurs across the agricultural/medical provisions. Under § 560.533, brokering is authorized only where the underlying sale is itself authorized, either by a one-year specific license under § 560.530(a)(1)(i) or by one of the general licenses in § 560.530(a)(2), (a)(3), or (a)(4); brokering by U.S. persons on behalf of non-U.S., non-Iranian persons may be permitted only by case-by-case specific license. Sections 560.530, 560.532, and 560.533 are meant to be read together: one governs the export, one the payment and financing, one the brokering.
A separate dimension is cross-agency. An OFAC authorization does not resolve a licensing requirement administered by another federal agency. OFAC says so in the licenses themselves – the note to Russia-related GL 25D, for instance, states that nothing in the general license relieves any person from compliance with the export, reexport, and transfer licensing requirements maintained by the Department of Commerce’s Bureau of Industry and Security under the Export Administration Regulations. An OFAC GL and a BIS/EAR authorization are distinct; satisfying one does not satisfy the other.
The practice point is that a general license never obligates OFAC to grant a related specific license. OFAC evaluates specific-license applications case-by-case against the relevant program’s stated licensing policy.
The common thread
All three problems reduce to the same discipline: read the general license against the specific transaction, feature by feature. Identify every prohibited element – the counterparty, the goods, the payment channel, the timing, the agency whose rules are implicated – and confirm that some authorization covers each one. A general license that resolves one obstacle does not resolve the others, its authorization ends when its text says it ends, and where the license’s own terms carve out a category, the specific-license process is the path.
OFSI has today published a blogpost, Reasonableness in licensing – updated approach. It provides more clarity on the evidence we require to support licence applications under the legal services and routine holding and maintenance licensing grounds, helping applicants to submit complete, well‑evidenced applications. The blogpost should be read alongside OFSI’s earlier blogpost, Reasonableness in licensing.
The updated guidance:
Reasonableness in licensing – updated approach
In June 2021, OFSI published a blogpost, “Reasonableness in licensing”, which set out how we assess “reasonableness” when considering licence applications under UK financial sanctions regimes.
This blogpost, “Reasonableness in licensing – updated approach”, updates that guidance and applies across all UK financial sanctions regimes.
OFSI regularly receives applications under the legal fees licensing ground which relate to legal services provided on ongoing and complex matters. Some of these applications request permission for payment of fees in the millions of pounds. It is for the applicant to demonstrate to OFSI that the legal fees and expenses they are requesting payment for are reasonable.
To support OFSI’s assessment of reasonableness in these cases, OFSI will now require an independent Costs Draftsperson’s Report (CDPR) to be submitted as part of the licence application in certain circumstances.
Applicants may also choose to provide a CDPR proactively even where the relevant threshold has not been met but there are other factors which increase the complexity of the application. This may assist OFSI’s assessment of reasonableness.
When a CDPR is required
OFSI will require an independent CDPR in the following cases:
Law firms – where within any six-month period:
total legal fees and Counsel fees (where instructed via solicitors), including expenses, to be licensed exceed £2,000,000.00 (inclusive of VAT)
Counsel (instructed directly) – where within any six-month period:
Counsel related costs, including disbursements, to be licensed exceed £1,000,000.00 (inclusive of VAT).
How the thresholds apply
These thresholds:
apply per UK law firm or per Counsel,
are assessed in relation to each designated person, and
are cumulative across all specific licences and applications in relation to that designated person from the law firm or Counsel.
Applications covering periods longer than six months
Where a single licence application covers a period longer than six months, OFSI will apply the relevant threshold pro rata to reflect the length of the period covered.
For example, an application covering 18 months of legal services would have threshold caps of:
£6,000,000 (inclusive of VAT) for a UK law firm (i.e., £2,000,000 per six-month period); and
£3,000,000 (inclusive of VAT) for Counsel (instructed directly) (i.e., £1,000,000 per six-month period).
What to include in your application
When submitting an application, please indicate clearly whether the criteria above apply. For example, you may wish to include a statement such as: “The legal costs exceed £2 million (including VAT) and a CDPR is attached.”
Anticipated (future) costs
OFSI recognises that applicants may seek licences for work already done and also work anticipated in the future. Where legal work is anticipated but not yet incurred, OFSI will accept a CDPR that assesses anticipated costs.
For long-running legal matters, where it is not feasible to obtain a CDPR covering anticipated costs, applicants are encouraged to consider applying for licences on a quarterly basis, with an enclosed CDPR covering costs incurred during the relevant period.
OFSI will seek to help applicants understand the licencing process, including by directing them to relevant guidance.
Disbursements
Where the threshold requiring a CDPR has been met, OFSI may, on a case-by-case basis and in extenuating circumstances, agree to assess disbursements (excluding Counsel fees or other legal services) without the provision of a CDPR separately in advance of the assessment of the wider legal fees element of the application. Examples include where a disbursement must be paid on a time‑critical basis to avoid prejudice to legal proceedings, and the applicant can provide clear evidence for that disbursement even though the CDPR for the wider legal fees is not yet available.
This is at OFSI’s discretion, and applicants should provide clear supporting evidence for the disbursements in question.
Independence and qualification of the Costs Lawyer
CDPRs must be produced by independent practising Costs Lawyers who:
are regulated by, and hold a current practising certificate issued by, the Costs Lawyer Standards Board (CLSB);
comply with the CLSB’s Code of Conduct; and
are not part of the legal team undertaking the work covered by the OFSI licence application.
How OFSI uses the CDPR and assesses reasonableness
A CDPR is one part of the evidential package that OFSI will consider when assessing whether legal fees and expenses are reasonable. We will look at the CDPR alongside other material you provide.
However, even where a CDPR concludes that costs are reasonable, OFSI may still determine that reasonableness has not been fully demonstrated; license a lower amount than requested; or decline to license certain costs altogether.
The costs of obtaining a CDPR may be licensed under the legal services licensing ground, subject to the normal reasonableness test. These costs can be included within the main legal services application or sought via a separate licence application.
You may apply for CDPR costs before you submit the primary application, at the same time as an application, or as a separate application after the primary application has been considered. In all cases, OFSI will assess the CDPR costs in the same way as any other legal fees and reasonableness must be demonstrated.
Legal services: Administrative and other additional fees
OFSI sometimes receives legal services licence applications that include an additional administration or similar fee applied as a percentage uplift to the total of fee earners’ charges.
To assess the reasonableness of any such fee, OFSI requires applicants to provide:
a clear, itemised breakdown of what the administration (or similar) charge covers; and
supporting evidence demonstrating the basis for, and level of, those costs.
Where this information is not provided, OFSI will not be able to assess the fee as reasonable and may refuse to license it. Applicants should therefore provide this information at the outset, as it is likely to enable a quicker assessment.
Maintenance of frozen funds and economic resources licensing ground: independent expert reports
For applications under the maintenance of frozen funds and economic resources licensing ground, applicants are encouraged to submit an independent expert report where the requested payments are high value, novel, or complex. For example, this could be payments related to a niche asset (such as a superyacht or racing car) for which expertise is required to determine the maintenance required; or for extraordinary payments which are not routinely required (for example, significant construction works to prevent a building falling into disrepair).
Where an expert report is not provided, OFSI may on a case-by-case basis and at OFSI’s discretion, request one where it is needed to support our assessment of the necessity and reasonableness of the proposed costs.
Type and qualification of the independent expert
The independent expert should have demonstrable and relevant expertise in the area to which the costs relate. This expertise may be demonstrated through relevant experience and/or appropriate professional accreditation.
Examples include, but are not limited to:
Maritime assets – a marine surveyor or naval architect accredited by a recognised professional body.
Aviation – an aircraft engineer or aviation asset manager with appropriate professional registration.
Technical infrastructure / industrial assets – an engineer with chartered status (or equivalent) in the relevant discipline and experience of maintaining comparable assets.
The expert should:
be independent of the applicant and any service provider benefiting from the payments;
have no financial interest in the proposed works or services, beyond standard professional fees for preparing the report; and
provide a signed report, prepared and presented in line with the relevant professional/industry standards, setting out the basis for their opinion on the proposed costs and their necessity.
How OFSI uses the report and assesses reasonableness
As with CDPRs, OFSI will treat any independent expert report as part of the overall evidential package. Even if the report supports the proposed costs, OFSI may conclude that costs are not fully justified and license a reduced amount or decline certain costs.
Cost of obtaining independent expert reports
As with CDPR fees, the costs of obtaining an independent expert report may be licensed under the relevant licensing ground, subject to the normal reasonableness test. Applicants may include these costs within the main application or request them via a separate licence application.
OFSI will assess the reasonableness of independent expert fees case-by-case, taking account of the scope, complexity, location, and urgency of the works.
To assist OFSI’s assessment, applicants should provide (as applicable):
A clear scope of services: what the expert will do, deliverables, and the time period covered.
How the fee is calculated: whether a fixed fee (and what it covers), or hourly rates and estimated hours (including any fee cap).
Evidence of market reasonableness: multiple quotes/tenders, or an explanation of why a single provider was selected.
Evidence to demonstrate reasonableness
OFSI will continue to assess reasonableness in line with our existing guidance and policy (see Reasonableness in Licensing).
Evidence submitted to demonstrate reasonableness should be recent and as a general rule, OFSI considers evidence dated within the past 6 months to be appropriate (in relation to the application).
Where evidence is older than 6 months, applicants must provide a clear explanation of:
why more recent evidence could not be obtained; and
why the older evidence remains a reliable basis for assessing reasonableness (for example, due to the nature of the market or stability of pricing).
Further information
These updates are intended to enhance transparency around OFSI’s assessment of reasonableness, and to help applicants prepare complete and well evidenced applications. This should support more efficient processing of applications and clearer outcomes.
the relevant regime-specific and thematic guidance on GOV.UK; and
the terms of any applicable General Licences.
If you are unsure how these updates affect your application, you can contact OFSI using the details provided on GOV.UK.
and the original post, from June 2021:
Reasonableness in licensing
If you are applying for a licence from OFSI to release otherwise frozen funds for legal fees or the maintenance of frozen funds or economic resources, you will likely come across the term “reasonableness”.
When issuing a licence to enable the payment of professional fees and expenses for the provision of legal services, OFSI is legally obliged to ensure that those fees and expenses are “reasonable”.
OFSI’s Introduction to licensing blog, which was published in April 2021, set out the key changes to licensing under the Sanctions and Anti Money Laundering Act (the Sanctions Act) that came into effect from 23.00 on 31 December 2020. The following changes to reasonableness now apply:
Under the legal fees licensing ground, reasonableness now also applies to expenses
A reasonableness test has been applied to the maintenance of frozen funds and economic resources licensing ground.
OFSI receives many applications where applicants have not provided sufficient evidence of reasonableness or with no evidence at all. This could be because the applicant may not understand the full policy intention behind the regulations that need to be considered in parallel, or the justification submitted may be one-sided in the applicant’s favour. However, OFSI requires a significant level of evidence when scrutinising the reasonableness threshold. This is because the Sanctions Act which gives us the power to issue these licences, also stipulates that legal fees and maintenance of frozen funds should be ‘reasonable’. When we don’t receive the level of detail that we need, we will need to engage with the applicant for these further details. This can invariably cause delays in processing such licence applications and, in some cases, may result in the refusal of the licence application if further information is never provided. OFSI does not want to cause delays to the consideration and issuance of any of our licences, so this blog is aimed at setting out what information we need to consider when identifying if an application is “reasonable”.
Financial sanctions are a foreign policy tool. In the UK they are implemented through UK legislation (which sometimes applies restrictions imposed through the UN) in order to achieve a specific foreign policy or national security objective. Financial sanctions are generally imposed to:
coerce a regime or individual to change their behaviour;
constrain a target by denying access to key resources to continue their offending behaviour;
signal disapproval; and
protect the value of assets that have been misappropriated from a country until these assets can be repatriated.
As the competent authority for the implementation of financial sanctions in the UK, OFSI has to ensure that any permitted release or use of frozen funds maintains the integrity of the financial sanctions regime, supports the foreign policy ambition and that the decision to release remains in line with its legal duty under UK law. The term ‘reasonable’ is written in to the Sanctions Act which means there is a legal requirement both for OFSI to assess this and for applicants to provide evidence of why a payment is reasonable.
If you are in possession of an OFSI licence that permitted the use of frozen funds for the payment of legal fees/maintenance under the previous EU regulations, you may need to provide a new explanation for reasonableness, if that licence requires an amendment. In addition, if you were granted a licence that has now expired after only being partially used, or not used at all, any new application will need to meet the new requirements as set out under the Sanctions Act for the regime. This should include explaining and/or evidencing the reasonableness of the payments. Licence extensions under derogations that have reasonableness written into them will need to undergo ‘reasonableness’ assessments again. This can be done by providing evidence such as previous invoices against the licence to assist OFSI in its determination that the costs remain reasonable and whether all of the licence is being used in the same way that it was when the licence was initially granted.
The two licensing derogations under the Sanctions Act that include a ‘reasonableness’ test are ‘legal services’ and ‘maintenance of funds or frozen resources’. We have broken them down below and have outlined the types of questions that applicants may wish to consider when applying under these specific licensing grounds.
Legal Services
It is for the applicant to demonstrate to OFSI that the legal fees and expenses they are requesting payment for are reasonable. OFSI considers that the Solicitors’ guideline hourly rates or the sums that could be expected to be recouped if legal costs were awarded following civil court proceedings, provide a useful starting point for assessing the reasonableness of legal fees and expenses. If you seek fees of a level above those set out in the guideline, you need to demonstrate why those increased fees are reasonable in the given case. Whilst we will consider rates that vary from the guideline, it is a useful benchmark in the assessment of reasonableness.
When applying to for a legal fees and expenses licence, you should consider addressing the following in your application form:
Whether the work has already taken place or if it is anticipated work;
What the work will involve/has involved;
Which fee earner(s) will be/have been involved in the work (and their position(s)/role(s) within the firm, including relevant level of experience);
The fee earner(s)’ hourly rate;
How many hours each fee earner(s) will be estimated to spend/has already spent on each workstream;
Any supporting evidence as to why the involvement and/or the number of hours of the particular fee earner(s) is reasonable and/or proportionate to the nature and complexity of the work;
Any expenses that are expected and have been paid out; and
If any expenses are expected, why are they necessary.
If you are requesting a licence amendment to permit an increase in the hourly rate of fee earner(s) you should provide a detailed explanation. For example, this may be a breakdown and evidence of the firm’s running costs to explain the proposed increase. When OFSI reviews such amendments, it is not enough to cite for example, “an engagement letter between the DP and the law firm” which provides for an annual increase, nor that it is a “common practice amongst law firms”. As set out in OFSI’s guidance, legal services may be provided without a licence, but any payments for legal services provided, do require a licence.
In terms of legal professional privilege (LPP), OFSI expects legal professionals to carefully ascertain whether LPP applies and which information it applies to. It is not generally considered that fees notes and narratives of work (in generic terms) are privileged as they do not constitute the giving or obtaining of legal advice. OFSI may challenge a blanket assertion of LPP where it is not satisfied that such careful consideration has been made. For example, simply providing the cost of a workstream without providing a breakdown due to LPP is not satisfactory. This is because OFSI is unable to undertake a reasonableness assessment without having a breakdown of the individual legal cost for each area of work.
Maintenance of funds and frozen resources
Under the derogation of ‘Maintenance of funds and frozen resources’, licences may be issued for a number of purposes. These can range from the supply of Covid-related personal protective equipment, to property maintenance. When a licence application or amendment request is submitted under this derogation, sufficient evidence will need to be included for OFSI to make a decision. When applying, you should consider the following in your application form:
Provide evidence when submitting your licence application. Appropriate evidence will vary based on what you are applying for.
Explain why the proposed activity is necessary. You may wish to explain what the outcome would be should you not receive a licence.
Where appropriate, consider obtaining quotes from more than one supplier to ensure that the fees can be demonstrated as reasonable and that you are receiving value for money.
If a quote is unable to be obtained, provide an evidence-based estimate. If you are a property management company looking to obtain a licence for a commercial building, you may wish to use quotes from similar-sized commercial buildings as evidence for reasonableness.
Provide a breakdown of the proposed payment/work. If you are requesting a licence to pay £100,000 for a change of windows, provide a breakdown of the payment – this could include the exact number of windows you are looking to change, cost of personnel and/or material etc.
If you are applying for a licence extension, you will be required to undergo the reasonableness assessment again. This may include reviewing your licence to ensure it is being used.
For any applicant that is submitting a licence application under a derogation that has ‘reasonableness’ written in to the regulations, you should use your own best judgement and not assume OFSI understands the process and practice of the profession when providing your response. We understand that reasonableness may have different meanings in different contexts and applicants should note that just because a payment has been licensed on a previous case, does not automatically mean that it will necessarily be licensed again. This is why OFSI considers each application on a case by case basis and the above pointers serve as a guideline of best practice when engaging with us.
For further information on licensing and financial sanctions implementation, please refer to OFSI’s general guidance.
A final call to register for the OIEL webinar, featuring a live demonstration of the new application functionality.
Dear exporter,
This is a reminder to register for our upcoming webinar on applying for an Open Individual Export Licence. If you haven’t yet done so and would like to attend, please register using the link below:
Those who register for the webinar will automatically receive the recording, so we encourage you to sign up even if you are unable to attend the live event.
If you have any questions, please submit them to LITE.support@businessandtrade.gov.uk. We will endeavour to cover them in the webinar or respond separately.
Today, OFSI published the following blog post about how it prioritizes licensing applications:
How OFSI Prioritises Licence Applications
OFSI remains committed to a transparent, fair and effective licensing process. Publishing this prioritisation framework is part of our continuing efforts to ensure that applicants understand how we assess cases and what they can do to support timely decision‑making.
OFSI receives a wide variety of licence applications each year, ranging from urgent humanitarian requests to complex commercial transactions. In the financial year 2024-2025, OFSI took over 900 licensing decisions. It is not possible to deal with all applications as soon as they are received. Publishing our prioritisation framework aims to help applicants understand how OFSI manages competing demands and how applications are prioritised.
Each licence application is assessed against seven criteria as set out below. These criteria help caseworkers understand urgency, risk, stakeholder impact and possible harm caused by delay. Applications are then categorised as high, medium or low priority.
While the framework provides structure, OFSI caseworkers continue to use professional judgement and may adjust prioritisation where circumstances require a different approach. Additionally, even if a licence application is prioritised as urgent, complexities may mean it still takes time to complete. Applicants should therefore submit licence applications well in advance of when they are needed, wherever possible.
The Criteria
1. Nature of the licensing purpose
Humanitarian applications, basic needs, or anything where delay could significantly affect access to justice (i.e. where there are court dates which must be complied with) are generally treated as high priority.
Generally, you won’t be prohibited from providing legal advice under an asset freeze. However, the payment for legal services and the provision of legal services on credit do require an OFSI licence. On that basis, applications may not immediately be considered as a high priority. OFSI has issued a Legal Services General Licence to allow payments for legal fees within certain limits and under certain conditions. It is recommended that you consult the Legal Services General Licence prior to an application to OFSI to determine whether that General Licence would be applicable to you.
2. Materiality to the applicant or affected parties
OFSI assesses how significant the application is in real terms. This includes the applicant’s circumstances, the size of the transaction relative to their means, and whether delay would result in economic loss.
3. Timing considerations
Applications may be prioritised where a decision is genuinely time‑sensitive, where delays would cause harm, or where the application has already been outstanding for a significant period.
4. UK economic impact
Applications that may affect UK jobs, business continuity or wider economic welfare may be prioritised.
5. Administrative impact on OFSI
Some cases may affect OFSI’s ability to progress other applications — for example, those forming part of a series of related applications.
6. Reputational or strategic impact
Applications may be prioritised where delay could undermine confidence in the UK sanctions regime, affect relationships with key partners, or have significant implications for foreign policy, national security or energy security.
7. Complexity of the application
Complex or precedent‑setting cases may require more time and scrutiny. These may be prioritised to ensure consistent and robust decision-making. However, even when a case is prioritised in accordance with this criterion, an application may still take time to complete.
How the criteria work in practice
High‑priority cases generally meet at least two of the criteria at a high level -humanitarian cases, or cases where a risk to life has been demonstrated, are almost always classified as high priority. Medium‑priority cases demonstrate a moderate level of impact across several criteria. Low‑priority applications generally show limited impact in most areas.
Caseworkers may adjust priority where individual circumstances justify doing so.
These criteria only assist in the prioritisation of applications and do not create an automatic right to priority or expediency. The outcome of this assessment does not affect the outcome of the application and there may still be a number of applications which have been categorised with the same urgency.
How applicants can support the process
Applicants can help OFSI process their applications more efficiently by submitting clear, complete and well‑evidenced information. Here are some steps that will help:
Provide a clear legal basis
Applicants should set out the specific licensing ground that applies and explain how their circumstances meet it.
Include all required information upfront
Missing or unclear information is one of the most common causes of delay. Applicants should provide evidence of urgency, where applicable, to assist in the prioritisation of applications.
Avoid repeat or speculative applications
Submitting an application again without new information, or submitting entirely speculative applications “just in case”, may delay processing and is unlikely to result in the case being prioritised as high priority. You may wish to seek legal advice in advance of making an application and check whether any General Licences apply to your situation.
Highlight genuine deadlines
Where a deadline exists—such as a court date or risk of hardship—applicants should clearly explain and evidence this in their application.
Use OFSI’s online application form
Using OFSI’s online application form will ensure that cases are received by the correct team as early as possible and could prevent any additional delays
OFSI is unable to provide legal advice to applicants and if you are in any doubt, you should seek independent legal advice in relation to the matters raised. You may also wish to consult OFSI’s other guidance products, such as:
