UK Economic Crime Enforcement Newsletter

In our first edition of the Enforcement Newsletter for 2026, we consider the following updates relating to economic crime and regulation in the United Kingdom (UK):

• Governmental and Legislative:
  • The launch of a “British FBI” with the creation of the National Police Service (NPS) 
  • The UK’s new Anti-Corruption Strategy 
  • Creation of a reward scheme for whistleblowers, to tackle tax fraud
• Serious Fraud Office (SFO):
  • Ending of the prosecution of former employees at London Mining PLC
  • Issuing updated corporate compliance guidance
  • Reaffirming its commitment to jointly tackle crime with the U.S. Department of Justice (DOJ)
  • Launching an investigation into a $28 million crypto scheme
• Financial Sanctions:
  • The Office of Financial Sanctions Implementation (OFSI) has announced changes to its enforcement powers
  • The UK has moved to a single list for sanctions designations
  • Mikhail Fridman, sanctioned billionaire, is bringing an Investor State Dispute Settlement (ISDS) arbitration claim against the UK government
• The Financial Conduct Authority (FCA) takes on a new supervisory anti-money laundering role.

By way of social commentary, we consider Sir Brian Leveson’s review and recommendations to alleviate the growing backlog of criminal trials.

UK Government Updates

UK to Launch a “British FBI” with the Creation of the National Police Service

On January 26, 2026, the Home Secretary announced significant reforms to policing, including the creation of a new National Police Service dubbed the “British FBI.” The NPS will be established to tackle serious and complex crimes, including fraud, organized crime, and counter-terrorism. The plan for this new policing structure coincides with announcements of key personnel changes within the SFO, most notably the Director, Nick Ephgrave, who announced his early retirement from the role. This has prompted renewed speculation regarding the SFO’s structure and independence. The reforms have been set out in the Home Office’s White Paper ‘From Local to National: A New Model for Policing’, asserting that the NPS will:

• Offer clearer leadership across the police service by issuing strategy, policy, and guidance in place of the various existing bodies with overlapping remits
• Establish stronger nationwide standards on data, technology, and training, so that the public receives a more consistent service across the country
• Deliver services to support local forces, such as a centralized procurement system for equipment and technology, and a new national forensics service; and
• Combine the intelligence, technology, and staff from existing agencies to improve the fight against serious crime, freeing up local police forces so they can serve their local communities

A key part of the reforms is an increased use of technology. The government will invest £115 million in police technology, significantly increasing the number of live facial recognition vans available to police forces and introducing Artificial Intelligence (AI) tools to identify suspects from Closed-Circuit Television (CCTV) and mobile phone footage. Police.AI, a new national center devoted to AI, will also be established.

The SFO is conspicuously absent from the White Paper announcing the reforms. When Ephgrave, Director of the SFO, announced on January 15, 2026, that he would be stepping down at the end of March, midway through his tenure, commentators were quick to wonder whether this should be taken as a sign that the SFO might not remain an independent agency. Indeed, such speculation has surrounded the SFO for years, including questions over whether it would be subsumed into the National Crime Agency (NCA), although under the new policing reforms, the NCA will now be merged with the new NPS.

The former Metropolitan Police officer’s legacy as the first non-lawyer Director of the SFO will be marked by his proactive, swifter approach to law enforcement. In his first three months as Director, the SFO conducted more dawn raids than in the three years prior. Ephgrave also oversaw the investigation and charging of individuals in relation to the Axiom Ince law firm collapse, in just 15 months, a feat described in the SFO’s press release on his retirement as the fastest in the SFO’s history. Investigations opened under Ephgrave were more focused on smaller domestic fraud cases, representing a shift in priorities away from the SFO’s historic investigations into large global corporates. This creates more overlap with the work of other enforcement agencies, so a merger might become a realistic prospect, perhaps with the new NPS or the CPS.

An interim Director will assume leadership of the SFO from the end of March until a successor is found. With 26 known ongoing investigations and prosecutions, questions remain about the SFO’s future and its role in the UK’s enforcement landscape, which is set to change significantly with the establishment of the NPS.

The UK's Anti-Corruption Strategy 2025

On December 8, 2025, the UK government announced its Anti-Corruption Strategy, which sets out a five-year plan to tackle financial crime. This new strategy of 123 commitments for government agencies represents the next progression from the previous 2017-2022 framework. The government has been steadily increasing its pursuit of economic crime with successive developments since 2010, starting with the Bribery Act, then the seminal ‘failure to prevent’ offenses (with the most recent addition to these, the ‘failure to prevent fraud’ offense, introduced by the Economic Crime and Corporate Transparency Act 2023 (ECCTA), which came into force in September 2025), and on the horizon in 2026 is the major Crime and Policing Bill.

These reflect the government’s concerns that anti-corruption measures are needed now more than ever. In the 2025 Transparency International’s Global Corruption Perceptions Index, the UK’s score fell again to its lowest since the index underwent a major revamp in 2012, now sitting at 20th in the world. The NCA estimates that over £100 billion in illicit cash is laundered every year through the UK or through UK corporate structures.

The central tenets of the strategy are:

1. Combating corrupt actors and their funds

The Strategy sets out a 5-step process to identify, triage, disrupt/investigate, prosecute, and ultimately administer justice against fraud actors. The expansion of the City of London Police’s pilot Domestic Corruption Unit (DCU) nationwide will help empower this agency to investigate corruption nationwide, stepping up enforcement. The increased presence of the DCU will be supported by an additional £15 million in funding. Further, technology is highlighted as being central to future investigations across enforcement bodies. The DCU will use AI to assist in its investigations, and the SFO is piloting a prototype AI corruption investigation assistant.

2. Addressing pressing vulnerabilities in the UK

The second section aims to tackle extant structural weaknesses in the UK political and financial landscape. A key area highlighted to be at risk is football clubs and agents. Having been explicitly identified as high risk for money laundering for the first time in the summer of 2025, the sector has been under increased scrutiny from a financial crime perspective. In the Anti-Corruption Strategy, the government has pledged to support the new Independent Football Regulator (established by the Football Governance Act 2025) to strengthen its anti-corruption capabilities.

3. Looking outwards: tackling corruption globally

The Strategy has a renewed focus on combating international financial crime, particularly that being facilitated through the UK financial system. The UK has established itself as a global leader in combating corruption. It will host a major international conference, the Countering Illicit Finance Summit, in June 2026 to bring together like-minded governments and organizations such as major banks, with a shared interest in tackling fraud. This follows the Countering Illicit Finance Campaign, which was launched in November 2024. Corruption does not respect borders; an effective anti-corruption strategy demands transnational cooperation. Crown Dependencies and Overseas Territories will also be required to introduce enhanced registers of beneficial ownership transparency. The Strategy is also explicit in its intention to expand the use of sanctions. The government shows no signs of slowing its use of targeted restrictions and asset freezes.

The new Strategy signifies that the government and its enforcement bodies have heightened expectations around compliance and are bolstering this with a more coordinated and hands-on approach to surveillance and enforcement. Businesses and firms should use this as an opportunity to prompt:

• A review of existing anti-corruption and anti-money laundering frameworks, to ensure they are robust, comprehensive, and align with the new requirements
• A risk assessment of areas of exposure and potential risk areas in the future
• The testing of controls and screening processes, as third-party systems cannot always be relied upon; and
• A refresh of whistleblowing and internal investigation frameworks, and audits to confirm that adequate training and SOPs are accessible to employees

UK Government Announces Reward Scheme for Whistleblowers to Tackle Tax Fraud in 2025 Budget

In a previous edition of our Enforcement Newsletter, we reported on HM Revenue & Customs’ (HMRC) announcement of a new whistleblower reward scheme inspired by similar schemes operated by tax authorities in the United States and Canada. Late last year, the UK Government confirmed the rollout of HMRC’s ‘Strengthened Reward Scheme’ in the Autumn Budget, asserting that such measures were part of an overall effort to “close the tax gap” and expose high-value tax evasion.

Individuals who provide HMRC with information where tax valued over £1.5 million is subsequently recovered, could now receive between 15% to 30% of the additional tax collected as a reward (excluding penalties and interest). This metric is akin to the one adopted by the Internal Revenue Service (IRS) in the United States (U.S.), which is known to pay substantial sums to whistleblowers. Unlike certain other Budget measures, the Strengthened Reward Scheme operates with immediate effect.

HMRC has provided a list of specific circumstances in which individuals will not be eligible to receive a reward, which includes:

• Civil servants who obtained the information while employed
• Individuals who are required by law to disclose, or not disclose, the information
• The reward might lead, directly or indirectly, to the funding of illegal activity
• Individuals acting on behalf of someone else
• The information is from someone who would not have been eligible for a reward themselves
• Individuals who submit anonymous reports

The information reported must also be “new” to HMRC; i.e., if the information an individual provides is already known to HMRC or could have been identified through routine processes, no reward will be offered.

Importantly, to avoid tipping off those engaged in the illicit activities, individuals making a report to HMRC must not try to find out more about the activity, tell anyone they are making a report, or encourage anyone to commit a crime to obtain further information.

It remains to be seen how effective the new scheme will be in achieving HMRC’s goal of clamping down on tax evasion, particularly as the focus is on high-value fraud, and any reward payment will ultimately be subject to HMRC’s discretion.

Looking ahead, the government estimates that the first rewards will be paid in 2027/2028, and that around £225 million of additional tax will be collected as a result of the scheme by the 2030/2031 tax year.

The forecasted recovered tax revenues are likely to lead to expectations that HMRC will administer higher rewards to whistleblowers, in contrast to the modest sums paid under its previous incentive model (which average less than £1 million per year).

The enhanced HMRC reward scheme is certainly a shift in the UK’s efforts to detect and deter serious tax fraud and displays greater alignment with the IRS model. The operation of the scheme will have important implications for corporates with the new measures potentially acting as an incentive to employees of large companies to report allegations directly to HMRC. In response, it will be critical for corporates to review their existing whistleblowing and non-retaliation policies, ensuring that effective internal reporting structures are in place to address employee concerns and undertake remedial action where appropriate.

SFO Updates

SFO to Drop Prosecutions for Alleged Bribery at London Mining PLC

The SFO has ended its prosecution of two former employees of London Mining PLC and a consultant who assisted the company. The investigation was first announced in 2016, and it now appears that disclosure issues have resulted in the case being dropped ten years later.

In 2023, Graeme Hossie, the former CEO of London Mining, and Rachel Rhodes, the former CFO, were charged with two counts of corruption: one from 2009 and 2012, and the other from 2010 to 2014. A consultant for the business, Ariel Armon, was charged with one count of corruption for the latter period. It was alleged that London Mining paid $7 million through Armon to overcome administrative hurdles affecting its operations in Sierra Leone.

However, in December 2025, after extensive preparation for the trial and a confirmed trial date of April 2026, the SFO requested to vacate the trial, as a result of the discovery of more than half a million documents that should have been provided to the defendants by the SFO as part of its disclosure process. Subsequently, the SFO concluded that there was no longer a realistic prospect of conviction. As a result, the SFO offered no evidence against the defendants, and they were formally acquitted on February 12, 2026.

At the same time, the SFO announced that the disclosure issues in this case related to its prior evidence review software and that around 20 cases were being reviewed for similar issues. This new review is separate from another review of disclosure issues for the same software relating to how keyword searches were conducted, under which the SFO is reviewing the safety of 66 convictions. It is understood that only three of these convictions remain under review, and of those already reviewed, there is no material that casts doubt on them.

This is not the first time that the SFO has faced case-ending failures in its disclosure obligations, with the prior collapse of the case against individuals related to Serco and the overturning of convictions in respect of Unaoil. Following these cases, the SFO disclosure process was subject to a number of independent reviews and reports aimed at improving SFO disclosure. Nonetheless, it appears that lessons have not been fully learned, with the current collapse of the London Mining case and the prospect of up to 20 other cases facing similar issues.

SFO Publishes Updated Corporate Compliance Guidance

The SFO has issued updated guidance setting out when, how, and why the agency may evaluate a company’s compliance program. The guidance identifies three key stages at which compliance programs are likely to be relevant to the SFO: (i) when deciding whether to prosecute, (ii) when determining whether to offer a Deferred Prosecution Agreement (DPA) and on what terms, and (iii) when making sentencing submissions following a guilty plea or conviction.

On November 26, 2025, the SFO confirmed that its “refreshed” guidance outlines six scenarios in which prosecutors may assess a compliance program, emphasizing that all evaluations will be conducted on a case by case basis. Importantly, the guidance reiterates that the existence of policies, procedures, and controls alone does not mean a compliance program is effective; prosecutors will examine how these measures operate in practice.

For the first time, the SFO has also set out the criteria that will be used to determine whether a company had “reasonable procedures” in place to prevent fraud, a statutory defense to the new corporate offense of failing to prevent fraud, which came into force in September. While the burden of proving reasonable procedures rests with the company seeking to rely on the defense, the SFO may nonetheless review a compliance program during an investigation to assess the likelihood of the defense succeeding should a prosecution be brought.

The Home Office published guidance in 2024 setting out the overarching principles that companies must follow in order to rely on the reasonable procedures defense. The SFO’s updated publication supplements this by clarifying how the agency will approach compliance assessments in practice.

The previous iteration of the SFO’s corporate compliance guidance already identified five scenarios in which a compliance program may be reviewed, including: assessments of whether prosecution is in the public interest; consideration of whether a DPA is appropriate; whether to impose monitorship obligations as part of a DPA; and claims that a company had “adequate procedures” in place to prevent bribery under the Bribery Act 2010. Compliance programs may also be evaluated when the SFO is considering appropriate sentencing submissions following convictions for failing to prevent bribery or fraud.

The SFO notes that information about a company’s compliance program may be obtained from a “variety of sources” using the agency’s investigatory powers, including compelled document production under section 2 notices and suspect interviews conducted under the Police and Criminal Evidence Act 1984 (PACE).

The revised guidance also provides responses to several frequently asked questions. Notably, the SFO confirms that there is no “formal guidance or interpretation” of what constitutes adequate procedures under the Bribery Act or reasonable procedures under ECCTA beyond the statutory principles already published. It adds that “external sources may assist” companies in assessing the effectiveness of their compliance program, pointing to guidance issued by the U.S. DOJ and the French Anti Corruption Agency as relevant for companies with a U.S. or French nexus.

The updated guidance is the latest step in the SFO’s broader refresh of its corporate enforcement approach. It follows the agency’s revised corporate prosecution guidance issued jointly with the Crown Prosecution Service (CPS) earlier in 2025, as well as updates to the SFO’s corporate cooperation guidance released earlier the same year.

SFO and DOJ Reaffirm Commitment to Joint Working to Tackle Crime

Last year, the UK’s SFO and the U.S. DOJ reaffirmed their commitment to deepening cross border cooperation in the fight against financial crime. Following a high level meeting in June 2025, SFO Director Nick Ephgrave and Head of the DOJ’s Criminal Division Matthew Galeotti committed to strengthening long standing operational ties and aligning enforcement priorities in areas such as fraud, bribery, and corruption.

The discussions focused on the DOJ’s updated white collar crime enforcement strategy, with both agencies emphasizing their shared interest in encouraging voluntary self disclosure from corporations and reducing delays in large, multi jurisdictional investigations. The goal, both parties noted, is to deliver swifter and more effective justice, particularly as cross border criminal schemes grow in sophistication and scale.

The meeting also followed the DOJ’s broader recalibration of its corporate enforcement approach, including new policy documents issued in 2025 that place greater emphasis on fraud enforcement, voluntary cooperation, and clearer incentives for corporate self reporting. These policy shifts are broadly aligned with the SFO’s recent updates to its own cooperation and compliance guidance, which similarly aim to promote transparency, reduce investigatory timelines, and enhance collaboration with international partners.

Following the meeting, Ephgrave highlighted the damaging impact that fraud, bribery, and corruption have on individuals and economies, reaffirming the agencies’ “long standing commitment to working together wherever possible to tackle this threat.” He described the engagement as a “significant milestone” in strengthening the SFO’s international enforcement strategy.

Galeotti echoed these sentiments, emphasizing the importance of coordinated strategies and shared enforcement tools to protect market integrity and secure justice for victims. He noted that the Criminal Division and SFO “have been partners in this fight for many years” and expressed a clear intention to deepen that partnership further.

The renewed alignment between the SFO and DOJ signals a renewed intention towards greater transatlantic cooperation, particularly in areas involving complex fraud and corporate misconduct, and underscores the strategic importance both agencies place on collaborative enforcement in a globalized economy. It will be interesting to see whether this momentum continues under the eagerly anticipated change in SFO directorship.

SFO Announces Investigation into $28 million Crypto Scheme

The SFO has launched an investigation into Basis Markets, a $28 million crypto investment scheme, marking the agency’s first foray into investigating cryptocurrency fraud. On November 20, 2025, the SFO issued a public appeal for assistance with the investigation, asking investors to provide information relating to the collapse of Basis Markets. As part of the investigation two men have been arrested on suspicion of multiple fraud and money laundering offenses.

The investigation stems from Basis Markets raising approximately $28 million through two fundraising rounds in November and December 2021, with the apparent intention of creating a “crypto hedge fund.” In June 2022, investors were informed that proposed regulatory changes in the United States prevented the project from progressing. The SFO now alleges that the representations made to investors were fabrications intended to disguise the misappropriation of investor funds.

A Turning Point for Crypto Enforcement

For several years, victims of cryptocurrency related fraud have lacked avenues for redress. The SFO’s action in this case signals a notable shift, indicating a greater willingness and operational capacity to investigate complex crypto based misconduct.

The agency has emphasized its commitment to expanding its cryptocurrency expertise and pursuing individuals or entities that misuse digital assets to defraud investors. This broader enforcement posture reflects the increasing scale and sophistication of crypto related financial crime, as well as the need for more robust regulatory and investigative tools.

It is, however, notable that the SFO has taken a substantial amount of time to launch this investigation, more than three years after the collapse of Basis Markets. This likely reflects the time needed for the agency to build its internal capabilities and understanding of cryptocurrencies, as well as the complexity of such investigations.

Implications for the Digital Asset Sector

The Basis Markets investigation underscores several key risks in the crypto ecosystem:

• Overreliance on opaque, “proprietary” technology: Fraudulent schemes often rely on claims of advanced bots or algorithmic strategies that are difficult for investors to verify
• High pressure fundraising models: Rapid capital raises through non-fungible tokens or token sales can circumvent traditional due diligence safeguards
• Regulatory blind spots: Fraudsters exploit gaps between national jurisdictions, particularly where crypto products are cross border

More broadly, the case aligns with increasing regulatory focus on digital assets in the UK, reflecting an emerging enforcement trend aimed at restoring confidence in the sector. Firms operating in this space are likely to face heightened scrutiny, particularly where their business models rely on untested or unverifiable technology.

Conclusion

The SFO’s investigation into Basis Markets represents an important milestone in the UK’s approach to policing cryptocurrency related fraud. As the agency continues to develop its technical expertise, crypto asset businesses should anticipate a more assertive enforcement landscape, reflecting a broader regulatory shift aimed at safeguarding investors and strengthening confidence in the digital asset sector.

Financial Sanctions Updates

OFSI Announces Changes to its Enforcement Powers

On January 29, 2026, OFSI published its Consultation Response regarding reforms to its enforcement processes. Giles Thomson, the Director of OFSI, confirmed that such initiatives are intended to reduce the number of cases being pursued simultaneously (prioritizing the most serious cases, cases in support of specific wider objectives, and those highlighting vulnerabilities in particular sectors) and to expedite the process for those that are investigated.

Key changes include:

• OFSI will publish a new case assessment matrix for the purpose of increasing the transparency of its penalty processes.
• The statutory penalty maximums will be increased, albeit subject to effecting legislation being passed. The previous cap of the higher of £1 million or 50% of the value of the breach will be replaced so that maximum penalties will become the higher of £2 million or the full value of the breach. 
• The discount available for voluntary disclosure will be capped at a maximum of 30% for all cases, regardless of severity. Previously, “serious” cases could obtain a discount of up to 50%.
• OFSI is introducing a negotiated Settlement Scheme. Parties who agree to its terms, including waiving the right to ministerial review and to appeal OFSI’s decision, will benefit from a 20% discount to their baseline penalty figure, as long as they settle within 30 business days. 
• OFSI will also launch an Early Account Scheme (EAS) that allows parties to provide a full and complete account of potential breaches, accompanied by all relevant materials and evidence. The EAS participation discount will be up to 20%. Importantly, parties will still benefit from this discretionary discount to their baseline penalty regardless of whether they choose to contest or settle thereafter.

The new discounts introduced (for the Settlement Scheme and EAS), together with the voluntary disclosure discount, can be compounded, meaning that cooperative and eligible subjects could potentially reduce their penalty by up to 70%, though the EAS and voluntary disclosure discounts are subject to OFSI’s discretion.

These reforms to OFSI’s enforcement powers demonstrate a renewed appetite on the regulator’s part to fiercely police sanctions breaches using both enhanced rewards to encourage self-disclosure and cooperation, and more severe punishments to promote compliance through deterrence. The doubling of the statutory penalty maximums is especially notable - with the specter of harsher fines soon to be at OFSI’s disposal, now more than ever, firms need to be closely reviewing their sanctions compliance.

UK Moving to a Single List for Sanctions Designations

On January 28, 2026, the UK Sanctions List became the single, authoritative list for UK sanctions designations. Previously, sanctions designations were set out in two lists:

• The UK Sanctions List, published by the Foreign, Commonwealth and Development Office (FCDO), a comprehensive list of persons placed under sanctions through regulations made under the Sanctions and Anti-Money Laundering Act 2018 (SAMLA) (including financial, immigration, trade or transport sanctions); and 
• The Consolidated List of Asset Freeze Targets, published by OFSI, which only issued details on those subject to financial sanctions. 

The change is a joint initiative by the FCDO, OFSI, and HM Treasury, originally announced in October 2025. It follows industry feedback that having a single sanctions list would avoid duplication of effort, minimize the risk of errors, and simplify screening checks of sanctioned persons.

However, the ‘Russia: list of persons named in relation to financial and investment restrictions’, which sets out the entities subject to specific sectoral financial and investment restrictions, remains a separate list and will not be combined with the UK Sanctions List. Similarly, the FCDO has clarified that the UK Debarment List and list of proscribed terrorist organizations will remain unaffected by these changes.

The Government has published guidance to help businesses and the public interpret and prepare for the upcoming changes to the sanctions lists. Businesses that use these lists should (if they have not already):

1. Ensure any screening systems (whether internal or third party) using the OFSI Consolidated List are shifted to the UK Sanctions List; and
2. Ensure any systems that utilize the ‘OFSI Group ID’ as an identifier are updated to use the UK Sanctions List ‘Unique ID’, which is the identifier now assigned to newly designated persons (designated persons prior to January 28 will still retain valid and usable historic OFSI Group ID identifiers on the UK Sanctions List, although Unique IDs can equally be used).

Alongside these changes, the search tool on the UK Sanctions List is being updated to make it more user-friendly. The upgrades will include new search capabilities, such as fuzzy logic search (which returns relevant results even if the spelling is not exact), ranked search results, highlighted matches, and improved downloads. The new search tools were activated in January 2026, and OFSI’s most recent enforcement action against Bank of Scotland PLC, announced January 26, 2026, exemplifies their pressing need. OFSI fined Bank of Scotland £160,000 for various breaches of the UK’s Russia sanctions regime, namely dealing with funds and making funds available to a designated person. The crucial factor that caused the breaches was the Bank’s failure to recognize its customer’s designated status, due to their UK passport containing a spelling variation of their name. This fine and the changes to the Sanctions List search tools indicate that OFSI will not tolerate errors in sanctions screening due to transliteration, which are especially common when converting Russian into English, as an excuse for inadvertent sanctions non-compliance.

Businesses need to be proactive in their sanctions compliance. Companies should therefore ensure their internal policies, procedures, and screening processes (whether internal or through third parties) are up to date to these changes and, more broadly, working comprehensively and accurately. OFSI’s penalty publication notice against Bank of Scotland warns that OFSI expects firms to “assess and employ appropriate resources to enhance the effectiveness” of their screening apparatus, such as commercial list providers and enriched screening systems, to avoid mistakes in the first instance. Contractual terms and agreements must also be reviewed to ensure they reflect the amalgamation of the Consolidated List into the UK Sanctions List. Recent enforcement action by OFSI has highlighted that lack of familiarity with the inner workings of the regime is not a defense.

UK Facing ISDS Arbitration Claim Brought by Sanctioned Billionaire, Mikhail Fridman

In November 2025, the UK publicly acknowledged that it is facing an arbitration brought by Mikhail Fridman, who has been a designated person under the UK’s Russia sanctions regime since March 15, 2022. The Minister of State for Trade Policy, Chris Bryant, announced the arbitration in response to a question in Parliament, but the exact details of the case and claim have not been revealed.

The basis for Fridman’s designation is his position as co-founder and main shareholder of the Alfa Group. The Alfa Group is a major business enterprise with interests in critical Russian industries, including oil, gas, and banking. This includes Alfa Bank, Russia’s largest non-state bank, which has been sanctioned in its own right by the UK, EU, and U.S. While Fridman was originally sanctioned for his connections to Vladimir Putin, the grounds for his designation were amended in 2023 to focus on his position within the Alfa Group, and its role in contributing to the Russian economy and state.

Fridman’s case against the UK has been brought under ISDS rules, and these proceedings mark the second-ever case of this kind the UK has faced. The basis of Fridman’s claim is not known, but it is likely that he is arguing that the UK’s decision to sanction him violates the terms of the UK-Russia Bilateral Investment Treaty. The ISDS legal mechanism is a form of dispute resolution that is built into many international investment treaties and trade agreements, which was originally intended to give private investors a route to international arbitration for unfair treatment by states. However, there are concerns that ISDS proceedings can simply empower high-net-worth individuals to drag states into expensive, drawn-out cases which expend national funds, and such concerns are being voiced with growing urgency globally.

The UK is not the only state facing legal challenges from Fridman regarding his sanctioned status. Luxembourg is facing a $16 billion investment treaty claim related to assets frozen in the country under EU sanctions, which is being overseen by a United Nations Commission on International Trade Law (UNCITRAL) tribunal. Cyprus was also threatened with an investment treaty claim in May 2024 by the same Fridman-affiliated entity, ABH Holdings, but no formal proceedings have been initiated. Ukraine alone is subject to three cases brought by Fridman.

This new case is important in that it signifies a novel way for wealthy individuals to challenge their designations through a legal route that operates entirely outside the domestic sanctions framework, bypassing OFSI and the Office of Trade Sanctions Implementation (OTSI) – the regulatory bodies with authority over most sanctions regulations. However, the impact of ISDS judgments on the sanctions sphere is uncertain. Even if Fridman obtains a favorable ISDS outcome, any award would still need to be enforced in the UK courts, leading to further litigation and delay before a resolution. The UK could also follow in the steps of the EU, whose new sanctions measures in July 2025 explicitly prohibit member state courts from enforcing the decisions of investor-state tribunals if they relate to EU sanctions regulations.

FCA Update

FCA to Take On New Supervisory Anti-Money Laundering Role

On October 21, 2025, HM Treasury published its Consultation response announcing the UK Government’s decision that the FCA will become the Single Professional Services Supervisor (SPSS) as part of reforms to the anti-money laundering (AML) and counter-terrorism financing (CTF) supervision regime.

The present AML/CTF supervisory framework consists of three public sector supervisors (the FCA, the Gambling Commission, and HMRC), together with 22 private-sector professional body supervisors responsible for overseeing the legal and accountancy sectors, such as the Solicitors Regulation Authority (SRA).

The FCA will take over supervising firms that undertake activities covered by the Money Laundering Regulations (MLRs) as Legal Service Providers, Accountancy Service Providers, and Trust and Company Service Providers. The creation of the SPSS does not affect firms’ existing obligations under the MLRs, and firms with compliant, and robust AML / CTF controls should not need to make adjustments. The Consultation Response notes that the FCA will take a “risk-based approach” across approximately 60,000 regulated firms, focusing its resources proportionately on firms’ risk profiles. Further, the FCA will be given, in relation to its new role and extended responsibilities, powers for enforcement action to be set out in legislation, and funding to employ and train expert staff, as well as invest in new technology.

HM Treasury confirmed in the Consultation Response its intention for the FCA to develop specific expertise in “the particularities of each sector it supervises”, having noted that some respondents to the Consultation argued such sector-specific knowledge would be required. Indeed, critics of the SPSS reform have highlighted that while the FCA is seasoned in financial services regulation, it does not have the specialist knowledge and experience to supervise law firms effectively. Client confidentiality and legal privilege are two thorny areas with which the FCA is unfamiliar, unlike the SRA. The Law Society has been especially vocal, expressing concern that, given the complexity of the AML regime, a single professional services supervisor may not be suitable. One criticism is that the newly proposed system may lead to regulatory overlap. Law firms will be regulated by the FCA for AML / CTF purposes but remain under the supervision of the SRA for professional conduct. However, episodes of misconduct rarely fit neatly into one of these; AML breaches are likely to simultaneously raise professional conduct issues.

Whatever the final status of this regulatory shake-up, firms are unlikely to see material differences for a while, as the changes cannot be implemented until legislation is passed, funding is arranged, and a detailed transition and delivery plan is drawn up. Firms should stay abreast of any developments as they come – at the time of writing, HM Treasury is currently considering feedback on a Consultation which closed on December 24, 2025, regarding proposals on the key duties, powers, and accountability mechanisms for the FCA’s new supervisory role.

Social Commentary

Leveson Review Recommends Radical Changes to the Crown Court Process

After years of a growing backlog of criminal trials in the Crown Courts, Sir Brian Leveson conducted an independent review and made recommendations to the Government to alleviate the issues, with the intention of increasing efficiency while retaining the fairness and transparency that must be the hallmark of our criminal justice system.

The current backlog has been building rapidly over recent years, with Ministry of Justice data showing nearly 80,000 cases awaiting trial in the Crown Court and hearings already calendared for 2030. This creates a long wait for justice for victims, witnesses, and defendants alike.

The Leveson review was issued in two parts, with the first dealing with systemic and overarching problems, while the second part deals with more technical matters, such as efficiency in case progression, the use of AI, and ways to incentivize more effective inter-agency cooperation.

Part one of the Leveson review provides 45 recommendations, across numerous topics, which, if wholly implemented, are estimated to save approximately 9,000 sitting days in the Crown Court each year, making a significant dent in the current backlog. However, many of the recommendations are contingent upon increased spending, which is yet to be agreed by the Government.

The recommendations include:

• The increased use of alternative resolution mechanisms, preventing cases from reaching the courts at all
• The creation of a new Crown Court Bench Division, which would hear certain cases before a judge and two magistrates, without a jury 
• The rebalancing of cases between the Magistrates’ Court and the Crown Court, removing the right of defendants charged with certain offenses to opt to have their case heard by the Crown Court; and
• The option for defendants to choose a trial by judge alone, avoiding certain jury trials

These changes would reduce the number of cases retained for the Crown Court but would place some of that burden on other parts of the criminal justice system. In respect of the creation of the Crown Court Bench Division, this requires the implementation of an entirely new division and the recruitment of new judges and magistrates. Removing certain jury trials, particularly for complex fraud cases, is expected to shorten trial lengths, allowing specialist judges to deal with such complex issues that can be difficult for layperson juries to understand and fairly assess.

Part two of the Leveson review then provides more than 130 recommendations, with a focus on more specific issues that can be implemented without legislative intervention. This includes recommendations to increase the use of remote hearings as a way to improve efficiency.

While many of the recommendations provide for substantial change to the Crown Court process, it is clear that the size of the backlog and its rate of growth require radical rather than incremental changes. However, this will require substantial financial investment after years of underfunding and commitment of other resources. The Government announced on February 24, 2026, increased funding for courts and on February 25, 2026, introduced the new Courts and Tribunals Bill, which would take forward some of the Leveson review recommendations. It will remain to be seen what shape the reforms ultimately take and whether the recommendations have been appropriately risk-assessed.

© Arnold & Porter Kaye Scholer LLP 2026 All Rights Reserved. This Newsletter is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.