A law firm retained to defend a designated individual has a problem that goes beyond professional conduct. The moment the client's assets are frozen, every fee invoice touches prohibited territory. Paying counsel from blocked funds requires a licence. Getting that licence wrong – or submitting an incomplete application – can delay a defence for months and expose the firm to regulatory risk of its own. That is the operational reality practitioners face under both UK and Australian sanctions.
Legal-fees licences under the UK's Office of Financial Sanctions Implementation (OFSI) and Australia's Department of Foreign Affairs and Trade (DFAT) autonomous sanctions regime share a common purpose – to allow access to justice without defeating asset-freeze controls – but they differ sharply in procedure, fee caps, timing expectations, and the scrutiny applied to the underlying sanctions designation. As of May 2026, neither regime operates an automatic or self-executing authorisation; each requires a positive act by the authority before funds move.
This analysis maps the two regimes criterion by criterion, identifies the points at which they diverge most significantly, and sets out the practical steps a cross-border practice – or an in-house team managing both jurisdictions – must take before submitting an application.
How does OFSI's legal-fees licensing regime work?
OFSI grants legal-fees licences under the general power to license otherwise prohibited transactions under the Sanctions and Anti-Money Laundering Act (SAMLA) and the relevant thematic sanctions regulations. The licensing ground is not automatic; OFSI must be satisfied that the payment is for reasonable legal costs and that the release of funds is consistent with the purpose of the designation.
In practice, OFSI applies a multi-step assessment. First, the applicant must establish that the designated person is the intended beneficiary of the legal services. Second, OFSI evaluates whether the fees claimed are proportionate – a ceiling applies, though the precise figure is set by the applicable thematic regulations and not fixed universally across all UK sanctions programmes. Third, OFSI considers whether a licence would be inconsistent with a UN Security Council resolution or other binding international obligation. Where the designation has a UN underpinning, that Security Council resolution takes precedence.
OFSI's enforcement guidance confirms that applicants are expected to submit supporting documentation: a scoped description of the legal services, a breakdown of anticipated costs, and confirmation that the funds to be released are held in a frozen account or are otherwise controlled assets. In our experience, applications that arrive without a cost breakdown or that describe the legal work in vague terms are returned for further information, extending the process considerably. Has your application addressed every item on OFSI's published checklist?
Once a licence is granted, it is typically time-limited and case-specific. The licence authorises a defined quantum of fees for a defined scope of work. If the matter expands – a new hearing, an additional annulment application, a fresh appeal – a separate or amended licence is required. OFSI does not grant open-ended legal-fees licences that run for the life of the matter.
What is Australia's equivalent mechanism under DFAT?
Australia's autonomous sanctions regime, administered by DFAT under the Autonomous Sanctions Act and the relevant autonomous sanctions regulations, does not contain a standalone legal-fees licensing ground in the same form as OFSI's. Instead, access to frozen assets for legal costs is addressed through a permit mechanism, which DFAT may issue where it is satisfied that a dealing in a controlled asset is necessary for a purpose consistent with the sanctions objective.
The practical consequence is significant. Where OFSI operates a dedicated licensing track with established procedural expectations for legal-costs applications, DFAT's permit process is more general in character. There is no published fee cap equivalent to those found in UK thematic regulations. The assessment is inherently discretionary, and DFAT will consider the nature of the legal proceedings, the relationship between the proceedings and the conduct that gave rise to the designation, and whether the designated person has access to alternative, unsanctioned assets from which fees could be paid.
Australia also gives weight to multilateral coordination. Where a designation mirrors a UN Security Council listing, DFAT's analysis will track the applicable Security Council committee's position. In our cross-border practice, we see this most acutely when a client is designated under both a UN-derived programme and an autonomous Australian measure; the two tracks must be managed simultaneously, and a permit granted for one purpose does not automatically satisfy the other.
Processing timelines under the Australian regime are not codified in the way OFSI's are not fully codified either – both authorities retain discretion – but DFAT's smaller scale means a concentrated case load can move quickly or, in contested matters, wait considerably longer. This unpredictability is a material risk for criminal defence work where a court timetable runs independently of the sanctions permit calendar.
Where do the regimes diverge most sharply?
The most operationally significant divergences between OFSI and DFAT on legal-fees licences fall across four dimensions: the existence of a dedicated licensing ground, fee caps and proportionality assessment, the UN interface, and post-grant conditions.
Dedicated licensing ground. OFSI's thematic regulations contain explicit licensing grounds for reasonable legal costs, giving applicants a defined legal basis. Australia's permit mechanism is general purpose; practitioners must frame an application by reference to the overarching sanctions objective rather than a specific costs exception. That framing exercise adds complexity and creates scope for DFAT to decline on discretionary grounds that OFSI could not apply.
Fee caps and proportionality. UK thematic regulations impose quantitative limits on the amount that may be licensed for legal costs. The specific figures vary by programme. Australia has no published numerical cap. DFAT will consider proportionality, but without a published ceiling the assessment is harder to predict and harder to challenge if refused.
UN interface. Both regimes defer to Security Council obligations. OFSI, however, operates within the UN Consolidated List framework and must refuse or limit a licence where a Security Council resolution prohibits it. DFAT applies a similar rule. In practice the difference is that OFSI's UN-derived designations come with more detailed guidance from the relevant Security Council committee, whereas DFAT's position on the applicable committee's view can require more active research by the applicant's team.
Post-grant conditions. OFSI routinely attaches reporting conditions to a legal-fees licence: the licensed law firm must confirm that fees were applied to the stated purpose and must retain records for a prescribed period. DFAT's permits may also carry conditions, but the standard form is less developed. A firm operating across both jurisdictions must maintain parallel compliance tracks – a material administrative burden that, if mismanaged, converts a compliance matter into an enforcement matter.
The position above covers the standard case. Your facts – the counterparty, the specific designation, the applicable UN programme, and the jurisdictions in play – change the analysis materially. For a cross-regime assessment of a legal-fees licence application, contact Calder & Vance at info@caldervance.com.
What are the main risk flags for legal practitioners?
Legal practitioners acting for designated persons face a distinctive risk profile. They are not simply intermediaries in a commercial transaction; they are themselves the ultimate service providers whose fees will be paid from frozen assets if the licence is granted. That means the law firm's own compliance obligations are engaged at every stage.
The first risk flag is acting before the licence is granted. Providing legal services to a designated person is not itself prohibited in most UK sanctions programmes – sanctions target financial transactions, not professional advice as such. But receiving payment from a frozen account, or arranging for payment from controlled assets, without a licence is a prohibited dealing. Firms that begin work and then defer the licensing application create a payment problem that a retroactive licence may not solve cleanly.
The second risk flag is describing the scope of work inaccurately. OFSI's licence is granted for a stated scope. If the work expands and the firm does not seek an amendment, fees invoiced for the additional work fall outside the authorisation. In our experience, this gap most often emerges in litigation matters where interlocutory applications multiply beyond the original timetable.
The third risk flag arises on the Australian side: assuming that a UK licence covers Australian assets or dealings. It does not. A firm with a client who holds frozen assets in both jurisdictions needs two separate authorisations. The Australian permit does not follow from the OFSI licence, and vice versa. We regularly advise firms that conflate the two, sometimes only after a payment has already been attempted.
A fourth consideration, applicable in both jurisdictions, is the rule that prohibits the payment of legal fees from funds that are themselves subject to a UN asset freeze without the explicit authorisation of the relevant Security Council committee. That authorisation is additional to, and not substituted by, the national licence. Where both layers apply, the sequence matters: the UN-level clearance typically must precede the national authorisation.
How does the cross-regime picture affect a designated person's right of access to justice?
Access to justice is the publicly stated rationale for legal-fees licensing in both the UK and Australian regimes. The practical tension is that the licensing process itself consumes time, and time is the currency of litigation. A criminal trial with a fixed hearing date does not pause while OFSI or DFAT processes a permit application.
What does this mean operationally? It means that a firm retained in a complex, multi-jurisdictional matter needs to submit applications early – before work begins, or as work begins, not after the first set of fees has been invoiced. In both regimes, retroactive applications are technically possible but more difficult to justify. An authority reviewing an ex post application must be satisfied not only that the fees were reasonable but that there was a genuine reason why the ex ante route was not taken.
The OFSI process allows for an expedited track in cases where a hearing date creates genuine urgency. DFAT's framework is less explicit on expedited processing, but in our cross-border practice we have found that well-prepared, concise applications with clear supporting evidence move faster in both jurisdictions than applications that require the authority to chase documentation. Preparing the evidence package thoroughly is not a courtesy; it is the most effective way to protect the timeline.
There is also a reputational dimension for law firms. A firm that mismanages the licensing process in a high-profile matter risks not only a regulatory finding but also a public appearance of having disregarded its own compliance obligations while defending a client against compliance failures. That is a risk worth taking seriously at the instruction stage, before the retainer is signed.
If a transaction has already been flagged, or a filing has been refused, an early review can preserve options that narrow with time. Contact us at info@caldervance.com for a confidential assessment.
How do OFSI and DFAT compare on the myth that legal-fees licences are routinely granted?
The myth is that a legal-fees licence is a formality – that because access to justice is a stated value, the regulator will grant it as a matter of course. That assumption is wrong in both jurisdictions, and relying on it is a source of avoidable delay and risk.
Under OFSI, the licensing ground for legal costs is defined but not absolute. OFSI retains discretion to refuse a licence, to impose conditions that limit the quantum approved, or to require additional information that extends processing. In a small number of matters, OFSI has declined to grant a licence in full where it was not satisfied that the fees were proportionate, or where the scope described was too broad to be verified. Those decisions are subject to judicial review before the High Court, but that is a slow remedy for a client with an imminent hearing.
Under DFAT, the discretionary character of the permit process means that refusal, or partial grant, is a realistic possibility. Australia's autonomous sanctions regime is younger and has a smaller body of published guidance than OFSI's. That means there is less predictability in outcome and less precedent to draw on when framing an application or contesting a refusal.
In both jurisdictions, the quality of the application is the strongest lever an applicant controls. A well-evidenced application, framed clearly by reference to the applicable licensing ground and supported by a proportionate cost breakdown, gives the authority what it needs to grant the licence promptly. A poorly framed application, by contrast, guarantees delay and risks a partial or adverse outcome. We regularly advise law firms and in-house teams on how to frame these applications effectively – both for UK and Australian proceedings.
What steps should a cross-border practice take before submitting an application?
A cross-border practice managing legal-fees licence applications in both the UK and Australian regimes should follow a defined pre-submission sequence. The steps below are based on the procedural requirements of both regimes and the practical experience of our team in preparing these applications.
- Confirm the designation basis. Identify the specific designation – UK, Australian, UN, or all three – and confirm whether a Security Council asset freeze applies. The UN layer changes both the procedure and the sequence.
- Map the frozen assets by jurisdiction. A UK licence covers assets frozen under UK sanctions law. An Australian permit covers assets in scope under Australian law. If assets are held in both jurisdictions, both authorisations are needed. Do not assume one follows from the other.
- Scope the legal services precisely. Both OFSI and DFAT expect a clear description of what the fees will pay for. A vague description – "legal services in connection with the designation" – will not satisfy either authority. Set out the proceedings, the anticipated stages, and the work to be undertaken at each stage.
- Prepare a detailed cost breakdown. Neither authority will grant a licence for an unspecified amount. Provide a schedule of anticipated costs, broken down by phase of work. This document becomes a condition of the licence and must be accurate, because the licence will reference it.
- Check the applicable fee cap. Under UK thematic regulations, a cap may apply. Confirm the cap for the relevant programme before submitting, and ensure the amount requested does not exceed it. If the anticipated costs exceed the cap, identify whether the regulations provide for an excess to be approved in exceptional circumstances.
- Submit before the work generates fees. In both jurisdictions, an ex ante application is easier to support and processes more predictably than an ex post application. Where the matter is already underway, provide a clear explanation for the timing.
- Plan for conditions and follow-up compliance. Once a licence or permit is granted, identify who is responsible for compliance: tracking expenditure against the licensed amount, meeting reporting deadlines, and applying promptly for an amendment if the scope expands.
Related practices
- Frozen account management under BIS and the EAR – managing access to controlled assets across US export-control and sanctions programmes.
- Legal-fees licences: OFSI vs Australia – further analysis – extended commentary on procedural developments and recent practice.
- Licence amendment and renewal: EU vs SECO compared – how to manage licence lifecycles across EU and Swiss sanctions regimes.