OFSI Tightens Licensing Evidence Rules for High Value Sanctions Applications

The Office of Financial Sanctions Implementation (OFSI) has updated its approach to assessing the “reasonableness” of costs submitted in sanctions licence applications, introducing new evidential expectations for high value legal fees and complex maintenance claims. The updated guidance, published on 13 March 2026, applies across all UK financial sanctions regimes and builds on OFSI’s original 2021 framework for evaluating licence applications.

The update focuses primarily on strengthening the evidence required to demonstrate that payments requested under sanctions licences are reasonable. OFSI emphasises that applicants must continue to justify the costs they seek to pay from frozen funds, particularly where the sums involved are substantial or the services provided are complex.

Under the revised approach, OFSI will require an independent Costs Draftsperson’s Report (CDPR) in certain legal services licence applications. For UK law firms, a CDPR will be mandatory where total legal and counsel fees exceed £2,000,000 including VAT within a six month period. For counsel instructed directly, the requirement applies where costs exceed £1,000,000 including VAT over the same timeframe. These thresholds apply per law firm or counsel and are assessed in relation to each designated person. They are cumulative across all licence applications and approvals relating to that individual.

Where a licence application covers a longer period, OFSI will apply the thresholds on a pro rata basis. For example, an application covering 18 months of legal work would trigger thresholds of £6,000,000 for a law firm and £3,000,000 for counsel. Applicants may also submit a CDPR voluntarily in cases where legal matters are complex or where doing so may assist OFSI’s assessment.

OFSI clarified that CDPRs must be prepared by independent practising Costs Lawyers regulated by the Costs Lawyer Standards Board. The expert must not be part of the legal team providing the services subject to the licence application. Although a CDPR forms part of the evidential package, OFSI retains discretion and may still reduce or refuse costs if reasonableness is not fully demonstrated.

The update also addresses administrative uplifts sometimes applied by law firms to fee earner charges. OFSI now requires applicants to provide a detailed breakdown explaining what these fees cover and supporting evidence demonstrating their basis. Without this information, OFSI may refuse to license the additional charges.

In addition, OFSI encourages applicants seeking licences under the “maintenance of frozen funds and economic resources” ground to submit independent expert reports where costs are high value, novel, or technically complex. This could include maintenance of specialised assets such as superyachts, aircraft, or industrial infrastructure. Experts must be independent, appropriately qualified and able to demonstrate relevant professional accreditation or experience.

OFSI stated that evidence supporting licence applications should generally be dated within the previous six months. Older evidence may still be accepted but applicants must explain why updated information could not be obtained and why the earlier evidence remains reliable.

The regulator said the changes are intended to improve transparency around its decision making and to help applicants submit more complete and well evidenced applications. In practice, the updated approach is likely to increase the level of documentation required in high value sanctions licensing requests and may affect how law firms and advisers structure applications involving designated persons.

Read the blog post here.