A UK-based trading company receives an instruction to release funds to a supplier. A routine screening check flags a match against a designated entity on an OFSI-maintained list. The payment is frozen. The supplier insists it is a mis-match; the goods are urgently needed. Without a specific licence (a case-by-case authorisation granted by OFSI permitting an otherwise prohibited transaction to proceed), the payment cannot move. How does the company apply? What can go wrong? And how does the UK process compare with equivalent procedures elsewhere?
A specific licence under OFSI is the primary mechanism for authorising a transaction that would otherwise breach UK financial sanctions. Applications are made to OFSI under the Sanctions and Anti-Money Laundering Act 2018 ("SAMLA") and the relevant thematic regulations. OFSI applies a purpose-based test, assessing whether the transaction falls within a defined licensing ground. The process is not automatic, and a poorly prepared application risks refusal or significant delay.
This guide walks through the procedure step by step, identifies the most common application errors, and sets the OFSI process alongside its counterparts at OFAC, under EU sanctions, and at comparable regimes – because a licence from OFSI alone rarely resolves a cross-border transaction.
Step 1: Establish whether a licence is legally required
Before any application is drafted, the first question is whether a licence is required at all – or whether an exemption or general licence already applies. OFSI administers UK financial sanctions under SAMLA. The regime prohibits dealings with designated persons and with entities they own or control. Not every payment involving a sanctions nexus requires a specific licence; some categories of transaction are covered by general licences (standing authorisations that permit a defined class of transaction without a separate application). Confirming that no general licence covers the situation is the prerequisite to a specific-licence application.
The ownership and control analysis matters here. Under UK rules, a non-designated entity that a designated person owns or controls may itself be caught by the prohibition. The UK test, unlike OFAC's purely mechanical 50 percent threshold, also encompasses control – meaning a minority stake, combined with board representation or contractual rights, can be sufficient. We regularly advise clients who assume that a below-50-percent holding is safe under UK rules; that assumption is incorrect and can cause an entire transaction to be mis-classified.
Once the prohibition is confirmed and no general licence applies, the formal specific-licence route opens. Rushing to that route before completing the preliminary analysis wastes preparation time and can produce an application built on an incorrect premise.
Step 2: Identify the applicable licensing ground
OFSI will only grant a specific licence where the transaction falls within a defined licensing ground set out in the relevant thematic sanctions regulations. Common grounds include payments for basic needs, legal fees, prior contracts, extraordinary situations, and humanitarian purposes. The applicant must identify the correct ground before preparing the substantive case. Selecting the wrong ground – or applying under a ground without evidencing its requirements – is among the most frequent reasons for refusal.
Each thematic regime has its own licensing-ground schedule, and they differ. A ground available under one set of regulations may not appear in another. In our experience, applicants dealing with multi-sanctioned counterparties often conflate the licensing schedules across regimes, producing an application that argues for a ground that simply does not exist in the applicable regulations.
A practical preliminary step is to map the transaction facts to the precise language of the licensing ground. If the facts do not fit comfortably, the application will not succeed regardless of how the supporting documents are presented. Is the business genuinely dealing with a "prior contract" obligation, or is it seeking to continue a commercial relationship that falls outside that definition? The distinction matters and OFSI will probe it.
Step 3: Prepare the application and supporting evidence
OFSI accepts applications through its online portal. The submission must identify the parties, the sanctions regime in question, the specific licensing ground relied upon, and the full factual basis for the application. Supporting documentation is not optional – OFSI expects it from the outset. Incomplete submissions are not uncommon, and they delay the process from the moment of receipt.
The evidence package typically includes: corporate documentation identifying all parties and their ownership structures; the relevant contract or transaction documentation; financial statements or proof of funds where the ground requires a showing of economic need; a clear narrative explaining why the transaction is necessary and why it falls within the stated ground; and, where applicable, evidence that no alternative route exists that would not require a licence. The narrative must be written for a non-specialist reader within OFSI: precise, factually anchored, and free of unexplained technical jargon.
One point worth emphasising: OFSI is not obliged to seek further information before refusing an application. If the submission is thin on evidence, a refusal may arrive before any dialogue has begun. Building the evidential case thoroughly at the outset is therefore more efficient than relying on a follow-up exchange to fill gaps.
The position above describes the standard process. Your transaction – the identity of the counterparty, the sanctions regime in play, the licensing ground available, and the documentary record you hold – shapes every element of the analysis. For a preliminary assessment of whether your transaction is licensable, contact Calder & Vance at info@caldervance.com.
Step 4: Submit the application and manage the review
Once submitted, OFSI acknowledges receipt and assigns a case officer. The review timeline varies by case complexity and the volume of applications OFSI is processing. OFSI has published target processing timelines in its guidance, and these may be updated; verify the current position before relying on any specific timeframe. In our experience, straightforward applications with complete evidence packages tend to move more quickly than those requiring supplementary information requests. Every supplementary information request adds time.
During the review, OFSI may contact the applicant with questions. Responses should be prompt and precise. Where a question touches on the ownership structure of a party, an incomplete or delayed response signals to OFSI that the applicant does not have a clear picture of who it is dealing with. That perception is difficult to reverse.
OFSI may also consult other government departments, including HM Treasury's wider policy teams, where the application engages broader considerations. Applicants should plan for this possibility and not treat the process as a mechanical form-completion exercise.
How does the OFSI process compare with OFAC, the EU, and other regimes?
The OFSI specific-licence procedure shares structural similarities with its counterparts, but the differences are operationally significant for any business managing a multi-regime transaction. Understanding the divergences prevents the common error of assuming that a licence obtained in one jurisdiction clears the position in another.
OFAC (US): OFAC's specific-licence process operates under IEEPA and the relevant programme regulations. The US system uses a formalised application form and has its own licensing grounds, which do not mirror the UK schedule. OFAC publishes guidance on application requirements, and the processing time for specific licences can extend to several months for complex cases. Critically, a UK licence from OFSI does not authorise a US person – or any person using the US financial system – to proceed. The two applications must run in parallel where both regimes apply.
EU sanctions: Under the EU regime, licensing authority lies with the competent authority of the relevant member state, not with the Council in Brussels. Each member state designates its own licensing body, and the procedural requirements differ across jurisdictions. The EU ownership and control test follows a similar logic to the UK test – catching entities controlled, not just owned, by designated persons – but implementation varies. A business operating across multiple EU jurisdictions may need to approach more than one competent authority.
Switzerland (SECO) and other regimes: SECO administers Swiss sanctions under its autonomous ordinances. The Swiss licensing procedure has its own forms and substantive criteria. Singapore, Japan, and the UAE each maintain their own autonomous sanctions regimes with distinct licensing procedures. In a cross-border transaction touching several of these regimes simultaneously, the licensing burden multiplies. We have acted for trading houses and financial institutions where licences from three or more jurisdictions were required before a single payment could be released.
The core principle cutting across all regimes is that the stricter prohibition governs. Where one regime prohibits a transaction that another would license, the prohibition takes precedence for persons and transactions within that regime's reach. Obtaining the licence is necessary; it is not sufficient if another applicable regime still prohibits the payment.
If a payment has been blocked or a submission has already been refused, an early review can preserve options that narrow with time. Contact us at info@caldervance.com to discuss an urgent matter.
Risk flags: what causes applications to fail
Most OFSI specific-licence refusals have identifiable causes. Recognising them in advance materially improves the outcome of an application.
- Wrong licensing ground: The application relies on a ground that does not appear in the applicable regulations, or interprets the ground's requirements too broadly.
- Insufficient evidence of the designated person's role: The application does not demonstrate clearly why the designated person is involved and why the transaction cannot proceed without engaging the prohibition.
- Ownership chain not mapped: The applicant has not traced the full ownership and control structure of the counterparty. OFSI requires a complete picture, not a first-layer analysis.
- No explanation of necessity: The application does not address why the transaction must proceed and why alternative structures that avoid the prohibition are unavailable.
- Factual inconsistencies: The supporting documents are internally inconsistent, or they contradict the factual narrative in the application form. Any inconsistency will prompt scrutiny.
- Timing errors: For time-sensitive transactions, the application arrives too late for OFSI to process before a contractual or legal deadline passes.
A recurring pattern in our practice is the applicant who submits quickly, under commercial pressure, and then spends more time managing supplementary information requests and a potential appeal than an initial, well-prepared submission would have required. Speed of submission and quality of submission are not the same thing.
Objection: "Applying takes too long – we will wait and see"
A common misconception is that the specific-licence process is so slow that it is not worth pursuing for commercially urgent transactions, and that the business can simply hold the transaction frozen until the commercial relationship resolves itself. This understates the risk on both sides.
First, holding a prohibited transaction open without a licence is not a neutral act. Where a business has identified a sanctions match and continues to perform – even in a suspended way – without seeking authorisation, it may be exposing itself to a finding that it held blocked property without proper licence. OFSI's enforcement posture treats knowledge and reasonable grounds for suspicion as the relevant standard. "Waiting to see" is not a compliance position.
Second, OFSI does process applications for urgent transactions and can expedite review in appropriate circumstances. An application demonstrating genuine urgency, supported by clear facts and complete documentation, is more likely to receive expedited attention than an undocumented assertion of commercial need. Practitioners who have worked through the process know that preparation quality, not urgency claims alone, drives how quickly a case moves.
Related practices
- Frozen account management and BIS/EAR licensing – parallel US-regime licensing and blocked-property management for cross-border matters.
- Specific licence applications under SECO (Switzerland) – procedure and requirements for the Swiss autonomous sanctions regime.
- Specific licence applications in Singapore – licensing under Singapore's autonomous regime for transactions with a South-East Asian nexus.