Figures reveal that £37 billion worth of assets had been frozen in the UK as of last year, reflecting heightened enforcement efforts.

In its latest proactive review, which assessed systems and controls at more than 150 firms since February 2022, the regulator discovered a stark contrast in compliance capabilities.

While many institutions demonstrated strong controls capable of identifying potential breaches beforehand, others suffered from systemic gaps. The most common root causes of reported failures stemmed from weaknesses in due diligence, alert management, transaction and name screening, asset freezing management, and compliance with specific licences.

The report highlights that firms are facing distinct challenges in detecting and preventing breaches of trade sanctions, which involve export and import bans on goods, services, and technologies.

The regulator reported a greater variance in the effectiveness of controls used for trade compliance compared to standard financial sanctions. While the majority of reported issues still relate to the Russian sanctions regime, the FCA noted a rising number of reports involving Libya, Iran, and North Korea.

To bolster regulatory oversight and intelligence sharing, the FCA has signed a new Memorandum of Understanding (MoU) with the Office of Trade Sanctions Implementation (OTSI). This agreement mirrors an existing arrangement between the FCA and the Office of Financial Sanctions Implementation (OFSI).

The regulator is now sharing its findings on good and poor practice to help firms across the sector identify vulnerability gaps and strengthen their compliance frameworks.