Sanctions update: February 2026

24 February 2026 marked four years since the Russian invasion of Ukraine.

On that day, the UK Foreign Secretary, Yvette Cooper, took the opportunity, whilst on a trip to Kyiv, to announce what was described as the UK’s largest sanctions package against Russia and Russian entities and individuals to date. These landmark sanctions are intended to cut off Russia’s critical oil revenues and further obstruct its ability to fund the war.

Nearly 300 new sanctions were announced. In particular, the new measures target 175 companies said to form part of an oil network. PJSC Transneft, one of the world’s largest oil pipeline companies, has also been targeted. This is already impacting engagement with certain Russian ports owned by Transneft and would appear to cover all goods and not just oil. Furthermore, an additional 48 oil tankers said to be part of Russia’s shadow fleet have been sanctioned.

More generally, the sanctions package targets:

• 49 entities and individuals involved in sustaining Russia’s war capabilities, including international suppliers providing vital goods, components and technology in Russian drones and other weapons.

• Three civil nuclear energy companies and two individuals involved in trying to secure contracts for new Russian nuclear installations overseas.

• Six targets in Russia’s Liquified Natural Gas (LNG) industry including vessels (two gas carriers, LNG Soars and Kunpeng), traders and two Baltic export terminals, Portovaya and Vysotsk terminals, which are responsible for exporting Russian LNG.

• Nine Russian banks which process cross-border payments and thereby give Russia access to international markets and help finance the war effort.

The UK Government indicates that it has now sanctioned over 3,000 individuals, businesses and vessels under its Russian sanctions regime.

At the same time, the Foreign Secretary has announced an additional £30 million of funding for Ukraine.

It is worth noting that, in tandem with the UK, Australia has also introduced new sanctions on 24 February 2026. It has sanctioned 180 individuals and companies, as well as imposing restrictions on a number of ships believed to be part of the 'shadow fleet.' Australia’s sanctions cover the financial and banking sectors, defense, aerospace, oil and gas, transport, and science and technology.

European Union

On 23 February 2026, the EU failed to agree on its proposed 20th package of sanctions. It was reported that Hungary continued to block the package, as well as the proposed payout of a Euros 90 billion loan to Ukraine.

The proposed 20th package included a full maritime services ban on Russian oil exports that would have replaced the crude oil price cap. Such a ban would restrict insurance, classification and ship management services to Russian operators. Concern was apparently voiced by some Member States with regard to the effect of such a ban on European shipping companies and the potential disruption of global trade routes. It has also been suggested that a maritime services ban of this type will prompt greater use by Russia of its shadow fleet. If that is correct, there would be environmental and safety risks in addition to commercial and political considerations.

OFSI

On 9 February, the UK Office of Financial Sanctions Implementation (OFSI) issued an updated Financial Sanctions enforcement and monetary penalties guidance. This updated Guidance followed on from a public consultation on measures to enhance the effectiveness of OFSI’s civil enforcement processes.

In brief, the key changes include:

• Early Account Scheme (EAS). The EAS is new and enables subjects of enforcement action that disclose relevant information early on to seek up to 20% reduction in any monetary penalty reduction.

• Voluntary disclosure and co-operation. This replaces the previous voluntary self-disclosure scheme. Significant additional detail has been included clarifying what OFSI considers to be complete voluntary disclosure and co-operation.

• Settlement Scheme. The new Settlement Scheme allows subjects to resolve monetary penalty cases through a time-limited negotiated settlement.

• Case Assessment. The case assessment framework has been revised to provide a clearer classification of breaches through a four level seriousness model: (i) lower severity; (ii) moderate severity; (iii) serious; and (iv) most serious cases.

• Monetary Penalty Process. The methodology for calculating monetary penalties has been updated to incorporate the voluntary disclosure and co-operation discount (up to 30%), the Settlement Scheme discount (20%), and the EAS discount (up to 20%).

• Financial Hardship. A new policy has been added, allowing OFSI to consider claims of financial hardship in exceptional circumstances. The burden of demonstrating financial hardship lies with the subject, and OFSI may consider whether a reduction would be contrary to the public interest.

• Fixed Monetary Penalties. A new section sets out how the £5,000 and £10,000 fixed monetary penalties for information, reporting and licensing offences will be implemented.

At the consultation stage, OFSI had proposed increasing the maximum penalties from their current level (the higher of £1 million and 50% of the value of the breach) to the higher of £2 million and 100% of the value of the breach. It did not ultimately implement this proposal in the updated guidance due to concerns voiced during the consultation that such a change might lead to disproportionate fines.

On 16 February 2026, OFSI launched a call for evidence that seeks industry views on how UK financial sanctions regulations on ownership and control are applied in practice. Issues have arisen due to the fact that assessing the potential ownership and control of counterparties in connection with designated persons can be complex, particularly where there are obscure corporate or complicated trust structures in place.

Specifically, OFSI is looking for feedback on how often 'hypothetical control' (i.e. where the designated person has the ability to exercise control, whether or not they have in fact done so) is present in real financial sanctions cases. It is also asking for input on the impact this has on costs, legal risk and business decisions and whether other legal concepts and types of control might be more useful in determining ownership and control.

Those who have been keeping up with sanctions-related cases will recall the issue of control and ownership in the context of designated individuals/entities has come up a number of times in English court cases: two in 2023, PJSC National Trust Bank -v- Mints in the Court of Appeal and Litasco SA -v- Der Mond Oil and Gas Africa SA and another in the Commercial Court; and a 2025 case in the Commercial Court, LLC Eurochem North-West-2 and another -v- Societe Generale S.A and others. The issue, therefore, remains key.