New regulations require insolvency practitioners (IPs) to report suspected breaches of the UK financial sanctions regime to the Office of Financial Sanctions Implementation (OFSI). The Sanctions (EU Exit) (Miscellaneous Amendments) (No.2) Regulations 2024 (the Regulations) came into force on 14 May 2025 and have expanded the previous definition of “relevant firms” to include IPs (among others). We previously reported on the Regulations here.

Only time will tell how much of a material impact the Regulations will have on the day-to-day business of IPs. Notably, the Regulations apply only to work undertaken by IPs “in the course of carrying on their business” as IPs - and therefore will not encompass all engagements. While in many cases, it will be clear whether an IP is subject to the reporting obligations under the Regulations by virtue of the work they are undertaking, this will not always be the case. However, given the potential criminal liability and financial penalties that may be imposed for breaches, IPs will be well advised to ensure their client onboarding and due diligence processes are robust enough to ascertain when a new instruction may trigger the requirement to report to OFSI under the Regulations. While the Regulations do not have retrospective effect, IPs will nonetheless be required to consider their reporting obligations in relation to work undertaken for existing clients from the date the Regulations came into force (i.e. from 14 May 2025 onwards).