FCA Report on Sanctions Compliance: Insights and Recommendations

The UK Financial Conduct Authority (FCA) released its recent assessment of sanctions compliance among 150 authorized firms on May 28, 2026. This evaluation highlighted both progress and areas needing attention in regulatory adherence, particularly in the context of evolving sanctions obligations.

The review revealed that companies are becoming increasingly proactive in identifying and averting potential sanctions breaches, thanks largely to improved systems and controls since 2022. However, challenges persist, especially in trade sanctions compliance, which is significantly more complex than financial sanctions. The FCA noted that firms often lack consistency in handling these trade sanctions given the diverse range of goods and technologies now subject to restrictions.

While most breach reports focus on Russia-related sanctions, there is a noticeable rise in reports concerning Iran, North Korea, and Libya. The insurance and digital assets sectors are anticipated to contribute more breach reports as most currently arise from payments, retail banking, and wholesale financial markets. The FCA found inconsistencies in the timeliness of reporting breaches, with many identified retrospectively.

The governance of sanctions compliance varies, with differences in oversight by senior management and in the robustness of risk assessment frameworks. Effective sanctions compliance frameworks require robust governance and clear oversight responsibilities, emphasizing the importance of managerial understanding of sanctions-related risks and controls. The FCA continues its proactive evaluations, enhancing collaboration with governmental entities like the Office of Trade Sanctions Implementation (OTSI) through a new memorandum of understanding.

The FCA underscores that firms must maintain effective and risk-based control frameworks for sanctions compliance. In-house legal and compliance teams are advised to follow practical checklists to manage regulatory sanctions risks effectively.