OFSI’s Cryptoassets Threat Assessment, July 2025: key risks and compliance gaps – Part 2

OFSI and partners clamp down on the abuse of cryptoassets

In July 2025, the Office of Financial Sanctions Implementation (OFSI) published its Cryptoassets Threat Assessment (the “Threat Assessment”), which we previously examined in detail in our article titled “OFSI’s Cryptoassets Threat Assessment, July 2025: key risks and compliance gaps”.

Prior to this, on 11 March 2022, OFSI (part of HM treasury), the UK Financial Conduct Authority (FCA) and the Bank of England issued a joint statement reiterating that all UK financial services firms are expected to play their part in ensuring compliance with UK financial sanctions, including firms operating in the cryptoasset sector.  At the time, we explored the additional measures firms needed to implement to reduce sanctions risk, as well as any potential red flags.

As far back as in September 2022, we noted that firms providing cryptoasset exchange and custodian services are required to report suspected sanctions breaches and comply with additional sanctions reporting obligations.

We shall now examine a 28 January 2026 OFSI blog, outlining how OFSI and its partners have clamped down on the abuse of cryptoassets.

What does the 28 January 2026 blog say?

The blog explains that sanctions enablers are increasingly turning to cryptoassets to move and conceal illicit funds.  However, this leaves a digital trace.  By working together, UK authorities are able to follow those traces to identify, investigate and disrupt criminal activity.

More specifically, the blog highlights that OFSI has recently joined forces with Crypto Cash Fusion Cell (CCFC) to target criminal activity linked to sanctions offences.  The CCFC brings together the National Crime Agency, the Metropolitan Police Service, His Majesty’s Revenue and Customs, the Financial Conduct Authority, City of London Police and OFSI to improve how UK enforcement and regulatory community identifies, understands and responds to the criminal abuse of cryptoassets.

OFSI is sharing detailed intelligence with the CCFC to enable coordinated action against specific, prioritised targets.

The blog concludes with a clear message:

“The use of cryptoassets to evade sanctions is treated no differently to the exploitation of traditional currencies. OFSI stands ready to investigate and pursue sanctions offences involving cryptoassets, alongside partners from across government, law enforcement and industry, as our intelligence continues to be developed. OFSI’s collaboration with the CCFC marks an important step forward on working operationally against the abuse of cryptoassets.”

How Gherson can assist

The Gherson team have years of experience advising on compliance matters, including sanctions. We regularly advise clients on sanctions rules and regulations and can assist companies with developing policies and systems aimed at preventing sanctions risks.

If you have any questions arising from this blog, please do not hesitate to contact us for advice, send us an e-mail or, alternatively, follow us on X, Facebook, Instagram or LinkedIn to stay-up-to-date.

The information in this blog is for general information purposes only and does not purport to be comprehensive or to provide legal advice. Whilst every effort is made to ensure the information and law is current as of the date of publication it should be stressed that, due to the passage of time, this does not necessarily reflect the present legal position. Gherson accepts no responsibility for loss which may arise from accessing or reliance on information contained in this blog. For formal advice on the current law please do not hesitate to contact Gherson. Legal advice is only provided pursuant to a written agreement, identified as such, and signed by the client and by or on behalf of Gherson.

©Gherson 2026