A company director receives a designation notice. His personal assets are frozen. His solicitors need paying. The firm handling his appeal cannot act without confirmation that accepting fees is lawful. Time is moving. Every day without a licence is a day without legal representation – and a day closer to a deadline that may not be extended.
A legal-fees licence (an OFSI-issued authorisation permitting a designated person's frozen funds to be released to pay reasonable legal costs) is available under UK sanctions legislation, but it is not automatic. The applicant must satisfy OFSI that the proposed expenditure falls within a defined statutory basis, that the amount is reasonable, and that no unlicensed person benefits. As of June 2026, OFSI administers these licences under the Sanctions and Anti-Money Laundering Act ("SAMLA") and the relevant thematic regulations.
This guide sets out the procedure step by step, explains where applications fail, and places the OFSI regime alongside its US and EU counterparts so that cross-border clients can plan intelligently.
Step 1: Confirming the legal basis and OFSI's authority
OFSI – the Office of Financial Sanctions Implementation, part of HM Treasury – is the UK authority responsible for licensing exceptions to financial-sanctions prohibitions, including the legal-fees exception.
The power to grant a legal-fees licence flows from SAMLA and from the relevant thematic regulations that implement each UK sanctions programme. Those regulations each contain a licensing ground for reasonable legal costs. OFSI's published licensing guidance sets out how it exercises that discretion. There is no single "legal-fees regulation" across all programmes; the applicable rules are programme-specific, so the first task is identifying which programme applies to the designated person's listing.
Why does this matter? Because the scope of the licensing ground, and in some cases the fee-cap mechanism, can vary between programmes. A business that assumes one standard template across all UK designations can prepare an application that cites the wrong regulatory basis. OFSI will return that application for correction, losing weeks.
In our practice we always begin by confirming: (a) the programme under which the individual or entity is designated; (b) whether that programme's regulations include a legal-costs licensing ground; and (c) whether any general licence already covers the position. Only then does the application drafting begin.
Step 2: Assessing eligibility – who may apply and what is covered
The licensing ground covers the reasonable professional fees and disbursements incurred by the designated person in obtaining legal representation; it does not extend to every category of expenditure a legal matter might generate.
Applicants may be the designated person, the legal-services provider, or a third party acting on the designated person's behalf. In practice, the law firm or solicitors handling the underlying matter typically manages the application, since they hold the cost information OFSI requires.
Covered expenditure generally includes:
- Solicitors' fees for legal advice and representation directly related to the sanctioned person's situation
- Barrister and counsel fees
- Reasonably incurred disbursements – court fees, expert reports, translation costs where necessary
What it does not cover, in OFSI's consistent approach, is expenditure that benefits a third party who is themselves subject to a prohibition, or costs attributable to a matter unrelated to the designation. Compliance counsel supporting a corporate review of the designated person's business interests, for example, may fall outside the ground unless the connection to the designation is direct and demonstrable.
The "reasonable" standard is real and enforced. OFSI has returned applications where hourly rates appeared inconsistent with the type of matter or where the total estimate lacked supporting detail. We regularly advise clients to prepare a schedule of anticipated fees broken down by task – it accelerates OFSI's review and reduces the back-and-forth.
One threshold that catches applications: the position of law firms operating in a multi-jurisdictional structure. If the legal-services provider has an entity in the EU or the US, the application may need to address whether those entities are providing services under a separate licence or authorisation in the relevant regime. OFSI does not license EU or US prohibitions, and an application that ignores the cross-border structure leaves a gap that OFSI may well probe.
Step 3: Preparing the application package
A complete OFSI legal-fees licence application requires, at minimum: a covering letter identifying the designated person, the relevant programme, and the licensing ground relied upon; a clear statement of the legal services to be provided; supporting evidence of the fee estimate; and confirmation that no prohibited person other than the designated applicant will benefit from the payment.
OFSI's application form should always be used and kept current – the form has been revised periodically and submissions on an out-of-date version cause delay. The form requests identifying information for the designated person, the legal-services provider, and any intermediary financial institution through which payment will flow.
The most important substantive attachment is the fee schedule. It should:
- Identify the legal-services provider's name, registered address, and relevant professional registration
- Set out the scope of the legal work with reference to specific tasks (advice on the designation, preparation of a review petition, attendance at hearings)
- State the hourly rate, estimated hours, and any fixed-fee elements
- Separate disbursements from professional fees
- Provide a total for the period covered, and confirm whether the application is for a single tranche or a rolling arrangement
OFSI expects the application to be self-contained. An incomplete application will receive a request for further information, and the processing clock effectively restarts at that point. In our experience, roughly half of the procedural delay in OFSI legal-fees applications arises not from OFSI's review time but from gaps in the initial submission.
The covering letter should also address the source of funds. If the funds to pay legal fees are held in a blocked account at a UK bank, the application must identify the institution, the account, and – where known – confirm that the institution has been put on notice that a licence is being sought. Some institutions require their own confirmation that they will act on a licence once granted; this is best addressed in parallel with the OFSI application, not after.
The position above covers the standard case. Your facts – the counterparty, the goods, the route, the regime in play – change the analysis. For an assessment of your exposure under OFSI or to discuss a licence application, contact Calder & Vance at info@caldervance.com.
Step 4: Submitting to OFSI and managing the review
Applications are submitted electronically through OFSI's online portal. Once received, OFSI assigns the application to a caseworker and may issue a request for further information at any point during its review.
OFSI does not publish a fixed statutory determination period for legal-fees licence applications. Processing times vary with caseload, programme, and application complexity. Straightforward applications on less-contested programmes have, in our experience, been resolved within weeks; applications in high-profile programmes, or those requiring OFSI to consult internally on policy grounds, can take longer. Clients should plan their litigation timeline with this uncertainty factored in, and should brief instructed counsel on the position so that any court or tribunal deadline can be addressed.
OFSI may grant a licence in the terms applied for, grant it with conditions or modifications, or refuse it. Where OFSI modifies the scope – for example, approving a lower fee total than applied for – the licence will specify the permitted amount and the payment mechanism. The legal-services provider cannot accept payment above the licensed amount without a further application.
Conditions typically imposed include: payment only to the named legal-services provider; a prohibition on onward transfer; a requirement that OFSI be notified if circumstances change; and, in some cases, a requirement for periodic reporting on how the funds are used. The financial institution releasing the funds must receive a copy of the licence and confirm its own compliance position before making the payment.
One practical point that matters: the licence authorises the designated person to make a payment and the financial institution to process it. It does not automatically mean the bank will act without independent review. Build bank clearance time into the plan.
How does OFSI's approach compare to OFAC and the EU?
Understanding the divergence between OFSI, OFAC, and the EU regime is essential for cross-border clients who face designation in more than one jurisdiction, or whose legal-services providers operate internationally.
Under OFAC, legal-fees authorisations are typically addressed through a specific licence from OFAC itself, or – in some circumstances – through a general licence in the applicable programme's regulations that permits payment of certain legal costs. The OFAC approach applies a "reasonable" cost standard similar to OFSI's, but the procedural mechanics differ. OFAC administers a large volume of licensing applications and has developed a more structured public guidance suite on legal fees. Where both OFAC and OFSI designations are in place, the designated person needs separate authorisations from each authority; one does not cover the other.
The EU position is set by the relevant Council Regulation for each programme. EU regulations generally provide a licensing ground for legal costs, administered by the competent authority of the member state where the funds are held. That means a designated person with frozen assets in France applies to the French competent authority; assets in Germany require the German authority. There is no single EU-wide legal-fees licence. Where assets are spread across multiple member states, the administrative burden multiplies. EU competent authorities vary in their processing times and guidance documentation.
The key practical difference between OFSI and the EU for a client holding UK-frozen assets is that OFSI provides a single point of contact for all UK-frozen funds, regardless of which UK institution holds them. For EU assets, the multipoint structure demands co-ordinated applications – something that is easy to underestimate when planning a defence budget.
Switzerland – administered by SECO – operates a licensing regime with its own procedures for legal costs. For clients with assets frozen under Swiss sanctions, a separate application to SECO is required. Our separate guide on the SECO legal-fees licence procedure addresses that process in detail. For Singapore, the Singapore legal-fees licence guide covers the MAS framework.
The stricter prohibition governs: where a transaction is prohibited under multiple regimes, satisfying one regime's licensing process does not discharge the obligations under the others. This is the most commonly overlooked cross-border risk in legal-fees planning.
Common risk flags and where applications fail
In our cross-border practice, legal-fees licence applications fail or are delayed for a predictable set of reasons. Identifying these early protects the applicant's timeline and, ultimately, their right to effective legal representation.
Incomplete fee schedules. OFSI's caseworkers work from the information in the application. An estimate that reads "legal costs approximately £X" without task-by-task breakdown will receive an information request. The delay can be significant if the caseworker is managing a high volume of applications simultaneously.
Failure to address the source of funds. If the designated person has frozen funds in multiple institutions, the application should clarify which account is to be drawn on. Where the application is silent, OFSI may seek clarification before proceeding.
Third-party benefit questions. Where a law firm has acted for both the designated person and connected parties in the same matter, OFSI may query whether the licensed payment partly benefits a third party who is themselves subject to a prohibition. This is a genuine risk in group-entity designations or family designations. The application should address it proactively.
Stale information. If circumstances change between the application date and OFSI's determination – for example, a new designation of an associated person, a change in legal representation, or a change in the bank holding the funds – the applicant must notify OFSI. Failing to do so can result in a licence being granted on a false factual basis, which creates its own enforcement risk.
Timing with court or tribunal deadlines. A legal-fees licence does not guarantee that funds will be available before a filing deadline. The application should be submitted as early as possible in the matter, ideally before proceedings are commenced rather than after a court deadline has crystallised. Have you briefed your instructed counsel on the licence timetable before accepting a hearing date?
Overlooking the bank's own process. Banks and payment institutions handling blocked accounts may have their own internal compliance review before acting on an OFSI licence. In our experience, this step adds time that is rarely factored into the initial plan. Contact the relevant compliance team at the institution at the same time as submitting to OFSI.
If a transaction has already been flagged, or a filing has been refused, an early review can preserve options that narrow with time. Contact Calder & Vance at info@caldervance.com for a confidential review.
Addressing the objection: "legal-fees licences are always granted"
A common assumption among clients approaching a designation for the first time is that a legal-fees licence is a formality – that OFSI will always approve it because access to legal representation is a fundamental right. This assumption deserves direct correction.
OFSI has a discretion to refuse or to modify a legal-fees licence application. The right to legal representation is acknowledged in the licensing architecture, but that architecture does not compel OFSI to approve any particular fee arrangement. Applications that do not satisfy the reasonableness standard, that fail to evidence the scope of work, or that raise third-party benefit concerns can be refused or significantly modified.
Furthermore, even a granted licence operates within strict parameters. Payment above the licensed amount, or to a person not named in the licence, is a potential sanctions breach by the receiving firm – regardless of whether the firm believes the work was legitimately performed. We have acted for legal-services providers who received an overpayment against a legal-fees licence and needed to understand their obligations. The position is not academic.
There is also a temporal dimension. A licence granted for the first six months of a matter does not automatically renew. A further application is required to cover subsequent periods. Firms that treat the first licence as covering the full matter until conclusion are taking a risk that is entirely avoidable.
When to involve counsel early
The decision to involve external sanctions counsel in a legal-fees licence application should be made before the application is filed, not after a refusal or a request for further information.
Early involvement matters for three reasons. First, the application is more likely to be complete and properly scoped, reducing the back-and-forth that drives delay. Second, a counsel experienced in OFSI practice can identify cross-regime complications – a US or EU designation that the designated person or the law firm had not fully mapped – before those complications become licensing problems. Third, where an application is likely to be contentious (because of the programme involved, the complexity of the ownership structure, or the scale of the fee request), advance preparation of the evidential package can be the difference between a swift grant and a protracted exchange.
For matters involving frozen assets across US, UK, and EU regimes, we advise multinationals, financial institutions, and individuals on co-ordinated licensing strategy that addresses all three simultaneously rather than sequentially. The sequencing question – which regime to approach first, and how to structure the applications so that one grant does not inadvertently prejudice another – is a practical matter that early counsel can resolve.
Our practice covers the full application cycle: assessing eligibility under the relevant programme, preparing the application package, managing OFSI's queries, co-ordinating with the financial institution, and advising on renewal applications. Where the matter also involves US or Swiss freezes, we work with frozen-account management under the BIS/EAR framework and with local counsel in the relevant jurisdiction.
Related practices
- Frozen-account management under BIS/EAR – managing blocked assets and licence applications under US export-control rules
- Legal-fees licence under SECO – procedure and practical steps for Swiss-frozen assets
- Legal-fees licence in Singapore – MAS framework for releasing blocked funds to pay legal costs