Report

Sanctions solutions

This report from UK think tank the Adam Smith Institute discusses how to implement more effective sanctions.

The report by the Adam Smith Institute, Sanctions Solutions, argues that the United Kingdom’s post-Brexit sanctions regime has become a convoluted and inefficient bureaucratic machine that stifles British commerce while failing to meet its strategic objectives. Since the invasion of Ukraine, the number of sanctioned individuals and entities has expanded exponentially, yet the institutional infrastructure—split between the Office of Financial Sanctions Implementation (OFSI) and the newly created Office of Trade Sanctions Implementation (OTSI)—has struggled to keep pace.

This fragmentation has created a climate of legal uncertainty, where the threat of ‘strict liability’ for technical breaches forces businesses to adopt an overly cautious ‘de-risking’ approach. This effectively cuts off legitimate trade and harms the UK’s reputation as a premier global financial hub. A primary criticism within the report is the absence of clear ‘off-ramp’ or sunset clauses for sanctions, leading to a ‘zombie’ regime where designations remain in place indefinitely without regular, transparent review. The analysis highlights that the current ‘ownership and control’ criteria are notoriously vague, leaving small and medium-sized enterprises in particular vulnerable to accidental non-compliance.

Furthermore, the licensing process—required for businesses to conduct permitted activities—is described as a significant bottleneck, with delays of many months hindering the ability of firms to operate effectively. By failing to provide timely guidance and a streamlined authorisation process, the state is imposing an ‘informal tax’ on British industry through excessive compliance costs and lost opportunities. To restore the UK’s competitive edge, the report advocates for a radical shift toward transparency and administrative efficiency.

It recommends the introduction of automatic sunset clauses to ensure sanctions are proportionate and time-limited, alongside a consolidated ‘single front door’ for all sanctions inquiries to eliminate departmental overlap. Rather than relying on punitive measures that disproportionately affect domestic firms, the Adam Smith Institute calls for a system that provides ‘safe harbours’ for businesses acting in good faith.

By modernising the regime and prioritising clarity over complexity, the UK can ensure that its foreign policy tools remain effective without unnecessarily sabotaging the nation’s economic dynamism or the principles of the rule of law.