An international NGO receives a grant to deliver medical supplies through a local partner in a country subject to UK financial sanctions. The local partner's bank account sits within a designated entity's payments infrastructure. The NGO's legal team asks: can this transaction proceed lawfully, and if so, how? Getting the answer wrong – or taking too long to get it right – can halt the programme, expose the organisation to enforcement action, or both.
Humanitarian and NGO authorisations under OFSI are the principal route by which non-governmental organisations, charities, and humanitarian agencies can lawfully carry out activities that would otherwise be prohibited under UK financial-sanctions law. OFSI issues these authorisations either as general licences – covering defined categories of humanitarian activity without a separate application – or as specific licences issued case by case. Choosing the right route, and preparing the application correctly, determines how quickly authorisation is granted and whether conditions attached to it are workable in the field.
This page explains the governing authority, the licensing routes available, how they interact with US OFAC and EU sanctions requirements, the risk flags that most frequently create problems, and how Calder & Vance assists organisations through the process.
What is the legal basis for OFSI's humanitarian licensing power?
OFSI's authority to grant licences – including humanitarian and NGO licences – derives from the Sanctions and Anti-Money Laundering Act (SAMLA) and the thematic sanctions regulations made under it. SAMLA gives OFSI the power to issue a licence permitting an otherwise-prohibited activity where a statutory licensing ground is satisfied. For humanitarian work, the relevant grounds include humanitarian assistance, the prevention of human suffering, and the meeting of basic human needs.
OFSI's enforcement guidance and its published licensing guidance set out how those grounds are applied in practice. The guidance makes clear that OFSI considers applications on their merits. There is no automatic entitlement. An organisation must demonstrate that its activities fall within the licensing ground it relies on, that it has adequate controls to prevent licensed funds or assets reaching non-intended recipients, and that the specific conditions it proposes are sufficient to manage the risk of diversion.
Understanding the statutory grounds is the starting point. In our experience, applications that fail – or that attract onerous conditions – tend to misidentify the applicable ground or provide insufficient supporting evidence for the ground they claim. The legal basis is not a formality. It is the foundation on which the entire application rests.
General licences vs specific licences: which route applies?
OFSI operates two distinct licensing mechanisms, and the choice between them shapes the entire transaction structure. A general licence (a standing authorisation that permits a defined category of transactions without a separate application) is self-executing: an organisation that meets the conditions stated in the licence can proceed without contacting OFSI, provided it keeps adequate records and, in some cases, registers its use. A specific licence (a case-by-case authorisation to conduct an otherwise prohibited transaction) requires a formal application, a review by OFSI, and a grant decision before any activity begins.
OFSI has published general licences covering certain humanitarian activity under several of its sanctions regimes. Each general licence is regime-specific – a general licence issued under one set of thematic regulations does not extend to a prohibited activity under a different regime. An NGO operating across multiple programme countries must check whether a general licence exists for each relevant regime and whether the specific activity falls within its scope.
Where no general licence covers the activity – or where the activity falls outside the scope of an available general licence – a specific licence is required. Specific licences take longer to obtain. OFSI does not publish a statutory decision deadline for specific licences in all contexts, though it aims to process routine applications within a defined target period; verify the current position before relying on published timescales. The application must identify the parties, the funds or assets involved, the activity to be authorised, and the controls in place to prevent diversion.
The practical question – general licence or specific licence? – depends on the regime, the nature of the activity, the counterparties involved, and whether the organisation can demonstrate compliance with the conditions on the face of the general licence without further engagement with OFSI. We regularly advise NGOs on this threshold question before any application is drafted.
The cross-border dimension: OFAC, EU, and UN requirements alongside OFSI
UK OFSI authorisation is necessary for UK-nexus activities, but it does not confer protection under any other sanctions regime. A humanitarian programme funded in US dollars, staffed by US nationals, or routed through US correspondent banking has a US nexus and requires a separate analysis under OFAC's rules. OFAC's own specific licence process, and its published general licences for NGO activity, operate in parallel and independently of the OFSI position.
The EU sanctions regulations, administered by member state competent authorities, add a further layer for organisations with a European footprint – EU-incorporated entities, EU-domiciled staff, or transactions processed through EU financial institutions. EU general licences and the humanitarian derogations available under specific EU sanctions regimes differ in scope and conditions from their UK counterparts. What OFSI permits may not be permitted by the relevant EU competent authority, and vice versa.
At the UN level, the Security Council's own targeted sanctions regimes sometimes include humanitarian exceptions or carve-outs. These are embedded in Security Council resolutions and administered through the relevant sanctions committee. UK, US, and EU designations derived from UN listings do not automatically carry the UN-level humanitarian exception into national law; each national regime must implement it separately.
For an NGO operating across multiple jurisdictions, this creates a genuine coordination problem. A transaction structure that clears OFSI may require parallel licence applications under OFAC and one or more EU national regimes. Timing must be managed so that authorisations are in place across all relevant regimes before disbursement begins. In our cross-border practice, we map the nexus points first – banking, currency, personnel, organisational structure – and then sequence the licensing applications accordingly.
The position above covers the standard multi-regime analysis. Your programme's specific geography, funding currency, and banking arrangements will change the picture.
For a confidential assessment of your exposure across OFSI, OFAC, and the EU, contact Calder & Vance at info@caldervance.com.
What are the key risk flags in humanitarian and NGO authorisations?
Diversion risk is OFSI's primary concern in humanitarian licensing, and it is the factor that most frequently generates conditions, delays, or refusals. A diversion risk arises where funds, goods, or services authorised for a humanitarian purpose could, in practice, reach a designated person or a sanctioned entity. OFSI expects the applicant organisation to identify that risk and to propose controls that mitigate it to an acceptable level.
The risk flags we most frequently encounter across our practice are:
- Local implementing partners with unclear ownership structures – where a field-level partner is ultimately owned or controlled by a designated person, the activity remains prohibited even under a humanitarian licence unless OFSI specifically authorises engagement with that entity.
- Banking channels passing through designated financial institutions – correspondent banking arrangements that route through a sanctioned bank require specific authorisation; a general humanitarian licence does not automatically cover the banking leg of a transaction.
- Mixed commercial and humanitarian activities – where an NGO's programme involves both humanitarian and commercial elements, OFSI will examine each element separately. The humanitarian licence covers only the humanitarian component.
- Currency and payment method – cash transfers and informal value-transfer systems raise diversion concerns that OFSI and OFAC both examine closely. Applicants using these methods must explain why alternatives are unavailable and what controls apply.
- Regime overlap at field level – where a programme operates in an area where multiple sanctions regimes designate different sets of entities, a counterparty that is clear under OFSI may be designated under OFAC. Screening must cover all relevant lists.
Have you screened the full payment chain – not just the end beneficiary – against all relevant sanctions lists? That question trips up more humanitarian programmes than any other single issue.
How does OFSI's ownership and control test apply to humanitarian counterparties?
The ownership and control test under UK sanctions law determines whether a non-listed entity is caught through its relationship with a listed person. Under OFSI's rules, an entity can be subject to financial-sanctions prohibitions if it is owned or controlled by a designated person, even if the entity itself does not appear on any list.
For humanitarian programmes, this test creates a due-diligence obligation that goes beyond list-screening. An NGO must assess whether a local partner, a sub-grantee, or a bank used by those parties is owned or controlled by a designated person. Ownership is assessed by reference to direct and indirect shareholding. Control is assessed more broadly – it can arise through contractual arrangements, governance structures, or practical influence over decision-making.
This is where the UK and EU tests differ from OFAC's mechanical 50-percent rule. Under OFAC, the 50 percent rule (OFAC's rule treating entities owned 50 percent or more by blocked persons as themselves blocked) applies as a bright-line threshold. OFSI and the EU assess control qualitatively – an entity may be caught even where designated ownership falls below 50 percent, if other indicators of control are present. For NGOs with field-level partners in complex ownership environments, this distinction is material.
In practice, OFSI's licensing guidance asks applicants to demonstrate that they have conducted enhanced due diligence on counterparties in higher-risk environments. An application that discloses partial or uncertain ownership information and explains the steps taken to investigate it is generally better received than one that presents a clean result without supporting evidence. Transparency about the limits of the due diligence is a strength, not a weakness, in an OFSI application.
Common myths about humanitarian authorisations under OFSI
A persistent misconception is that humanitarian organisations are automatically exempt from UK financial sanctions. They are not. The existence of a humanitarian purpose does not, in itself, create a legal exemption. An NGO that transacts with a designated person or entity without a licence – even for a genuine humanitarian purpose – is potentially in breach of UK financial-sanctions law and exposed to OFSI enforcement.
A second common misunderstanding is that a general licence will always cover the activity in question. General licences are drafted carefully and their scope is defined precisely. An activity that falls just outside the defined scope is not covered, and proceeding on the basis of a general licence without checking its conditions is a compliance failure. We have acted for organisations that discovered, only after funds had moved, that the general licence they relied on did not extend to the specific counterparty or payment mechanism used.
A third myth is that OFSI enforcement against the humanitarian sector is unlikely. OFSI's published enforcement posture makes clear that charities and NGOs are not exempt from the obligation to hold a licence where one is required. OFSI has the power to impose significant civil monetary penalties for non-compliance, and a breach can trigger reputational consequences that affect donor relationships and future programme funding.
How Calder & Vance supports humanitarian and NGO licensing under OFSI
We assist organisations at every stage of the OFSI humanitarian licensing process. Our work is grounded in the requirements of UK sanctions law and, where the programme has a wider nexus, in the parallel requirements of OFAC and the EU sanctions regimes.
For organisations approaching the licensing question for the first time, we conduct an initial nexus and route analysis: identifying which regimes are engaged, whether a general licence is available and sufficient, and whether a specific licence application is required. This assessment is delivered quickly, because programme timelines in humanitarian work are rarely flexible.
For specific licence applications, we assess eligibility for the relevant licensing ground, prepare and submit the licence application, and manage OFSI's queries through to a decision. Our applications identify the parties and the legal basis with precision, address the diversion-risk analysis that OFSI will conduct, and propose conditions that are workable in a field environment. Where OFSI requests further information, we manage that exchange to avoid the delays that arise from incomplete or mischaracterised responses.
In a recent matter, a humanitarian organisation with funding routed through a third-country banking system identified a potential payment-chain risk shortly before disbursement. We mapped the ownership and control questions, confirmed that a specific OFSI licence was required rather than a general licence, prepared the application with a full diversion-risk assessment, and managed OFSI's follow-up questions. The matter reached a conclusion without programme interruption.
We also advise on ongoing compliance once a licence is granted: record-keeping obligations, reporting requirements, screening of new counterparties that arise during programme delivery, and the steps required when a licence condition cannot be met in the field. If a potential breach arises – a payment made before authorisation was confirmed, or a counterparty that turns out to be connected to a designated person – we advise on voluntary self-disclosure to OFSI and manage the engagement with the regulator.
If a transaction has already been flagged, or if a programme has proceeded without authorisation, an early review can preserve options that narrow with time.
To discuss an OFSI humanitarian licence application or a compliance review, contact Calder & Vance at info@caldervance.com.
Related practices
- Frozen account management under BIS and the EAR – accessing restricted funds and assets under US export-control rules
- Legal fees licences under BIS and the EAR – structuring authorised payments for legal representation in export-control matters