OFSI Tightens Evidence Requirements for Sanctions Licence Applications

The Office of Financial Sanctions Implementation (OFSI) has updated its guidance on assessing “reasonableness” in sanctions licence applications, introducing more prescriptive evidential requirements and higher expectations for applicants across all UK financial sanctions regimes.

The most significant development is the introduction of mandatory independent Costs Draftsperson’s Reports (CDPRs) for high-value legal fees. Where legal costs exceed £2,000,000 for law firms or £1,000,000 for Counsel within a six-month period, applicants must now submit a CDPR prepared by an independent Costs Lawyer regulated by the Costs Lawyer Standards Board (CLSB). These thresholds apply cumulatively per designated person and extend across multiple licence applications, reinforcing OFSI’s focus on aggregated exposure rather than isolated submissions.

This change signals a clear shift towards more forensic scrutiny of legal costs. While CDPRs form part of the evidential package, OFSI retains discretion to reduce or reject claimed costs even where an independent report supports them. This underscores that “reasonableness” remains a regulatory judgement rather than a purely expert-led determination.

The guidance also clarifies treatment of anticipated costs, allowing CDPRs to cover future work, and encourages quarterly applications for long-running matters where forward-looking assessments are impractical. In parallel, OFSI has introduced stricter expectations around administrative uplifts, requiring detailed breakdowns and supporting evidence. Absent this, such fees are unlikely to be licensed.

Beyond legal services, OFSI has extended the evidential framework to applications under the maintenance of frozen funds and economic resources licensing ground. Independent expert reports are now अपेected in complex or high-value cases involving specialised assets such as maritime, aviation or technical infrastructure. These reports must demonstrate independence, relevant expertise and adherence to professional standards, mirroring the approach taken with CDPRs.

Importantly, OFSI reiterates that all supporting evidence should generally be dated within six months. Older evidence will only be accepted where applicants can justify both its continued relevance and the inability to obtain more recent data. This reinforces a broader regulatory trend towards contemporaneous, market-aligned benchmarking.

Overall, the updated guidance reflects OFSI’s intent to standardise and strengthen its assessment framework, reduce ambiguity and improve application quality. For practitioners, this raises the evidential bar and introduces additional cost and process considerations, particularly for complex or high-value matters. Firms will need to integrate these requirements into their sanctions compliance workflows to avoid delays or partial licensing outcomes.

Read the blogpost here.