OFSI has increased the cap under Legal Services in General Licence from £500,000 to £2,000,000 and now permits law firms using the General Licence to accept payment from their branches abroad.
From 29 October 2024, a new Legal Services General Licence INT/2024/5334756 (“General Licence”), permitting payment by designated individuals under the UK’s Russia and Belarus sanctions regimes to providers of legal services, is taking effect. This new General Licence replaces the Legal Services General Licence INT/2024/4671884 which expired at 23:59 on 28 October 2024. The main changes from the previous licence include an increase to the fees and expenses caps, a restricted permission to pay into non-UK bank accounts and further clarification of OFSI’s position in relation to caps applicable for in-house lawyers and counsel who are instructed directly.
1. The fees and expenses caps have increased
Prior to 29 October 2024, the General Licence imposed a cap of £500,000 for legal fees (which could be combined if the provider of legal services had been instructed before a designated person had been sanctioned, bringing the total to £1,000,000). This cap has now been increased to £2,000,000 (or £4,000,000 if instructed by the designated person before they were sanctioned).
This increase is significant and aims to decrease licencing pressure on OFSI as more designated persons will be able to rely on the General Licence for payments of their legal fees without an OFSI-specific licence which was previously required when the costs of legal services exceeded £500,000.
2. OFSI has introduced a restricted permission to pay into non-UK bank accounts
This change now permits UK Law Firms regulated by the Solicitors Regulation Authority, the Law Society of Scotland or the Law Society of Northern Ireland, with branches providing legal services in countries listed in the General Licence to receive payment into the branch accounts in these countries:
- Canada
- any Member State of the European Union
- any Member State of the European Free Trade Associtation
- the Unites States.
This is another important change as it will make it easier for UK Law Firms with an international presence to receive funds. As firms and designated individuals adapt to this new landscape, a strong emphasis on compliance must also remain crucial in safeguarding against any potential risks.
OFSI has also provided clarification on how the caps relate to in-house lawyers and directly instructed counsel.
The General Licence expires at 23:59 on 28 April 2025 but may be varied, revoked, or suspended by HM Treasury at any time.
Updated October, 2024
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