Sanctions 2026: enforcement moves up the agenda for private wealth
Byline: Karen Jones, founder of Citywealth, has more than 20 years’ experience in global private wealth.
Sanctions enforcement is accelerating. From the Amadea superyacht dispute to Citi’s £4.73 million OFSI penalty, Citywealth looks at what tougher enforcement means for trustees, private banks, family offices and internationally mobile wealth.
In brief
What has changed in sanctions enforcement?
After several years of rapidly expanding sanctions, particularly following Russia’s invasion of Ukraine, regulators are putting greater emphasis on enforcement.
Why does the Citi fine matter?
OFSI fined Citibank’s London branch £4.73 million over 970 payments worth £19.72 million. Citi voluntarily disclosed the majority of the breaches, highlighting the difficulties even large institutions face implementing complex sanctions.
Why does this matter for trusts?
Sanctions compliance increasingly requires advisers to keep ownership, control, counterparties and assets under review rather than relying on screening when a client or structure is first taken on.
What does the Amadea superyacht case show?
The dispute demonstrates why legal title may not answer every question about an asset. Courts and sanctions authorities can examine who exercises control, uses an asset and bears its costs.
Can UK and US sanctions produce different answers?
Yes. Sanctions are territorial regimes. An activity authorised in the US may still be restricted under UK sanctions, making cross-border advice increasingly important.
Are advisers becoming more cautious about clients?
Some lawyers warn that increased enforcement is contributing to de risking, with banks and professional firms potentially declining clients because of nationality or perceived sanctions exposure rather than an individual’s own position.
Last week, Citywealth looked at the superyacht market around the Monaco Yacht Show. This week, a yacht provides a rather different window into the world of private wealth.
The 348 foot superyacht Amadea has been at the centre of a long running US sanctions and forfeiture dispute involving claims about who really owned and controlled it. In June, a US appeals court upheld a decision that Eduard Khudainatov and his company Millemarin Investments lacked standing to contest its forfeiture. Although Millemarin held legal title, the court found that title alone was not enough when the evidence indicated that the claimants had given up meaningful ownership and control. US authorities allege that the yacht was beneficially owned by sanctioned Russian billionaire Suleiman Kerimov.
For the private wealth industry, the case goes well beyond yachts. Trusts, companies and other structures may establish legal ownership, but sanctions authorities and courts are increasingly interested in the reality behind them: who controls an asset, who pays for it and who benefits from it.
That comes as sanctions themselves enter a different phase. After several years in which governments concentrated on building restrictions, particularly following Russia’s invasion of Ukraine, enforcement is becoming more prominent. Banks, trustees, lawyers and other advisers are also having to deal with the practical difficulty of implementing rules which have expanded rapidly and can produce different answers in different jurisdictions.
From sanctions expansion to enforcement
Rebecca Niblock, Partner at Kingsley Napley, says the most significant development over the past year has been the shift towards enforcement:
“The most significant development over the past year has been the shift from sanctions expansion to sanctions enforcement. For several years the UK created an increasingly extensive sanctions framework, particularly in response to Russia’s invasion of Ukraine, but the enforcement record remained relatively modest (as observed in the 2025 update). That is now changing. The Government has published a cross-government enforcement strategy, OFSI has made stronger enforcement central to its 2026-29 strategy, and we are seeing substantially larger penalties. The £4.7 million penalty imposed on Citibank’s London branch last month is an obvious example. For banks, professional advisers and businesses, sanctions compliance increasingly requires a broader governance and risk-management response rather than reliance on screening tools alone. Regulators are focusing not only on whether potential sanctions issues are identified, but also on how organisations investigate, escalate, document and respond to those issues once they arise.”
Olga Boltenko-Kroon, Founding Partner at Boltenko Law, Zurich, believes there is another reason enforcement is becoming more visible: regulators and compliance departments have had time to catch up with the rules.
“Enforcement has caught up because the law stopped moving. After four and a half years of near-continuous expansion the framework has settled, and settled law is enforceable law. Compliance officers have had time to become genuinely fluent in it, the teams are now staffed and funded rather than improvised, and AI has changed the economics of detection: what used to take an analyst a week to spot now surfaces in an afternoon. None of this is a change of policy – it is the system finally running at the full speed.”
The role of AI in detection is an interesting new dimension. But the experience of Citi also shows that technology does not necessarily remove the difficulty of implementing sanctions.
Citi: what happens when sanctions systems come under strain?
The Citi case illustrates both the increased willingness to impose substantial penalties and the practical difficulty of keeping pace with sanctions. OFSI found that Citibank’s London branch processed 970 payments with a cumulative value of £19.72 million which it considered breaches. The resulting penalty was £4.73 million.
Importantly, Citi voluntarily disclosed the majority of the breaches and cooperated with OFSI’s investigation, receiving reductions to its penalty. OFSI did not find that Citi intended to breach or circumvent sanctions. The regulator also acknowledged that the unprecedented scale and complexity of sanctions introduced following Russia’s invasion of Ukraine created significant operational challenges. Citi faced large numbers of new alerts, pressure on manual investigations and in its screening and information sharing systems.
The figures provide some perspective. The £4.73 million penalty was substantial against £19.72 million of transactions. This was not a case of a bank making hundreds of millions from sanctioned business and receiving a relatively insignificant fine.
For smaller private banks, trustees, family offices and professional firms, the cost and difficulty can be proportionately greater. One Swiss trustee told Citywealth that the accumulating demands of AML and financial crime compliance were making the administration of private wealth structures increasingly difficult and expensive.
Screening once is no longer enough
Christopher Cook, Counsel at Baker McKenzie, says this changes what is expected of advisers: “For advisers, sanctions compliance is increasingly about process as much as results. It is not enough to screen names at onboarding; advisers need to keep ownership, control, counterparties and assets under review, and be able to evidence how issues were escalated and assessed with the facts of the matter. As enforcement becomes more active, the quality of the audit trail may be just as important as the initial sanctions check.”
Cook’s observation is particularly relevant to the trust industry because many private wealth structures were established years or decades ago. The Panama Papers prompted trustees, banks and private client lawyers to revisit historic structures in a very different context. The question now is whether greater sanctions enforcement could provide another reason to go back through old files.
A trust established 10, 20 or 30 years ago may have acquired different beneficiaries, protectors, investment advisers or other connected parties. Family relationships can change and, importantly for sanctions, so can the practical exercise of control.
OFSI has acknowledged that determining ownership and control can be difficult. In February it launched a call for evidence specifically on the rules, noting concerns from financial and legal professionals about uncertainty, additional costs and legal risk, particularly where complex companies, trusts and proxies are involved. That leaves a practical question for trustees and private client lawyers: how far back should they look?
The Citi case adds another consideration. If a firm discovers something itself, voluntary disclosure and cooperation can affect the eventual penalty. For long lived trusts, periodically reviewing historic structures and the current reality of ownership and control may therefore become increasingly important.
Enforcement and the rule of law
Niblock says stronger enforcement also moves safeguards up the corporate agenda: “This increased emphasis on enforcement also makes the rule of law safeguards surrounding sanctions more important. Sanctions can have profound and prolonged consequences for individuals and businesses without any finding of criminal wrongdoing. As sanctions become an established and increasingly heavily enforced instrument of foreign policy, there must be meaningful scrutiny of whether individual measures remain justified and proportionate, together with effective mechanisms for licensing, review and challenge.”
That distinction matters for private wealth. A sanctions designation is not a criminal conviction, yet its practical consequences can extend across banking relationships, investments, businesses, property and international mobility.
One transaction, different rules
Chris Roberts, Partner at Grosvenor Law, points to another difficulty: sanctions regimes reflect national policy and are not identical. “The past year has reinforced that a country’s sanctions regime reflects its foreign and domestic policy concerns. In the UK, OFSI has announced it will double the maximum penalty it can impose to the full value of a breach, and the Citibank fine in September shows it is willing to use that power. In the US, waivers such as General License 134 have temporarily allowed Russian oil to flow again on a limited basis, even though the underlying sanctions remain in place.”
Roberts adds. “In practice, clients with assets or structures on both sides of the Atlantic need to consider UK and US advice together. In the case of Russian oil permitted under US General License 134, the same activity may still be caught by UK sanctions.”
The practical problem Roberts identifies goes well beyond the company selling the oil or the tanker carrying it. General License 134 provided temporary US authorisation for certain transactions involving Russian oil. The broader point remains that US authorisation for a particular transaction does not automatically provide permission under UK sanctions for every British person or institution involved. A single shipment can involve a ship owner, charterer, commodity trader, insurer, broker and several banks. Each participant has to consider the sanctions regime applying to them.
The difficulty for an international family office is similar. A transaction may involve a US family member, a British adviser, a Swiss trustee, an offshore company and banks in several countries. Each participant has to consider the sanctions regime applying to them.
Greater divergence is nevertheless being accompanied by greater cooperation.
Niblock says: “The UK-US picture is also more nuanced. There remain important differences between the two regimes, but OFSI and OFAC have been working increasingly closely through their Enhanced Partnership. This year they published joint guidance comparing key features of the UK and US sanctions frameworks, including licensing, reporting and record-keeping requirements. For internationally mobile individuals and businesses, the practical problem remains that sanctions are territorial legal regimes, and the same transaction may have a very different outcome depending on the jurisdictions, currencies and financial institutions involved.”
For internationally mobile wealth, the increasingly important question may therefore be not simply “is this permitted?”, but where is it permitted, and who else is involved?
When the yacht comes back into the story
The Amadea case is worth returning to because it shows why Cook’s point about continuously reviewing ownership and control matters particularly to private wealth. The dispute was not simply about whose name appeared on the yacht’s paperwork. Khudainatov maintained that he was the beneficial owner through Millemarin, which held legal title. The US Government argued that the claimants were ‘straw’ or in name only owners.
The court looked beyond the ownership documents to the claimants’ actual relationship with Amadea. It noted that Khudainatov and his family stopped using the yacht after a September 2021 agreement, that none of his personal possessions was aboard when it was seized, and that the claimants provided no evidence that they continued to pay its insurance or other costs. Those facts mattered because Khudainatov and Millemarin first had to show that they had a sufficient real interest in Amadea to challenge its forfeiture in court. The appeals court concluded that they had not.
That does not mean the court ruled that sanctioned Russian billionaire Suleiman Kerimov was the beneficial owner of Amadea. The US Government alleges that he was, but the appeals court was deciding whether Khudainatov and Millemarin had sufficient ownership and control to bring their challenge, not who ultimately owned the yacht.
For trustees and private client advisers, the case nevertheless has an interesting resonance with something Cook himself told Citywealth four years ago.
In our 2022 examination of sanctions and trusts, Cook warned that sanctioned individuals might have interests through trusts, foundations, private trust companies and informal arrangements rather than straightforward legal ownership. His new comment therefore takes that argument a stage further. Identifying the structure is not enough. Advisers need to be able to demonstrate that they continued to understand it as people, assets and relationships changed.
Richard Stopford of Mishcon de Reya made a related point in Citywealth’s 2025 sanctions report, highlighting the courts’ willingness to look at substance over form when considering ownership and control, including difficult questions around discretionary trusts.
The Amadea litigation brings those warnings into sharp focus. A company and trust structure does not necessarily end the inquiry where authorities believe another person exercises the real control or receives the economic benefit.
Iran returns to the foreground
Russia is no longer the only sanctions development demanding attention from wealth advisers. The UK is introducing substantial additional restrictions concerning Iran from 29 September, extending into areas including energy, oil and petroleum products, shipping, gold, precious metals and diamonds, alongside financial restrictions.
For private wealth advisers, however, Iran matters for another reason: US sanctions can have an unusually long reach into international financial arrangements.
Citywealth examined this previously with Jacques Semmelman of Katten, a former Assistant US Attorney based in New York. Semmelman explained that US sanctions against Iran can become relevant to people and businesses outside America because an otherwise international transaction may acquire a US connection through the financial system, particularly where US dollars or US financial institutions are involved.
For a trustee or family office, therefore, the issue is not necessarily that an Iranian client or asset is physically located in America. The way a transaction is structured and paid can itself create a US connection.
Sanctions do not operate alone
Niblock believes another important change is the need to consider sanctions alongside other restrictions on internationally mobile individuals: “We are also continuing to see sanctions operating alongside other forms of international restriction, including politically motivated criminal proceedings and misuse of international police cooperation mechanisms. For advisers to internationally mobile clients, it is important to look at the whole picture. A sanctions designation, an INTERPOL alert, an extradition request and domestic criminal proceedings may formally be separate processes, but in practice they can all interact to restrict an individual’s ability to travel, bank, conduct business and defend their interests across borders.”
That recalls another warning from Citywealth’s previous reporting. Dr Anna Bradshaw of Peters & Peters described how financial institutions can decide that the perceived risk associated with a client is simply too high and de risk the relationship. Once that happens, reversing the decision can be extremely difficult.
When compliance becomes de risking
Boltenko-Kroon believes increasing enforcement is creating a wider problem: “What troubles me is what enforcement pressure is doing to appetite. Banks and law firms are no longer just declining sanctioned clients. They are quietly declining whole nationalities. If a client holds a passport from a country with a difficult government, the commercial calculation increasingly favours saying no, whatever that individual’s own position happens to be. The result is a retreat to domestic business and a world in which legitimate people from turbulent places cannot bank, cannot get advice and cannot move their capital lawfully. That is not compliance. It is de-risking wearing compliance as a costume, and it makes the world smaller and poorer for all of us.”
That creates a difficult balance for the private wealth industry. Sanctions are intended to prevent designated people from accessing assets and disguising ownership through companies, trusts and proxies. They are not intended to exclude every person who happens to share a nationality with them.
Yet the commercial incentives can point in that direction. If establishing the true ownership and control of an international structure is expensive, uncertain and potentially punishable when a firm gets it wrong, declining the relationship altogether can become the safer option.
Citi demonstrates the difficulty from the institutional side. Amadea demonstrates it from the asset side. And that brings the story back to where it began.
Last week, the yachts at Monaco provided a window into the scale, mobility and complexity of international private wealth. This week, Amadea shows what happens when that same complexity meets sanctions enforcement.
For trustees and private client lawyers dealing with structures intended to last generations, sanctions compliance may therefore increasingly involve something more uncomfortable than screening today’s client list. It may mean going back through yesterday’s files, establishing who really controls and benefits from an asset today, and being able to show how that conclusion was reached.
The lesson from a superyacht is a useful one for the wider private wealth industry: the paperwork may tell you who owns an asset, but increasingly regulators want to know who controls it and benefits from it day to day.
Sanctions 2026: private wealth Q&A
How often should trustees review historic structures for sanctions risk?
There is no simple timetable that fits every structure. The growing enforcement focus suggests, however, that sanctions checks should not end at onboarding. Changes to beneficiaries, protectors, counterparties, assets or the way control is exercised can alter the risk profile of a long established structure. For trustees, the important question is increasingly whether the ownership and control recorded years ago still reflects the position today.
Can a trust separate a sanctioned person from ownership of an asset?
Legal separation does not necessarily settle the sanctions question. Authorities may examine whether a designated person exercises ownership or control in reality, even where companies, trusts or other structures sit between that person and the asset. This makes the factual operation of a structure, as well as its legal documentation, important.
Could tougher sanctions enforcement lead trustees to reopen old client files?
Potentially. The Citi enforcement action shows both the consequences of compliance failures and the importance of identifying and disclosing problems. For long lived private wealth structures, that raises the question of whether historic files should be revisited to establish whether changes in ownership, control, beneficiaries or counterparties have created sanctions risks that were not present when the relationship began.
Is sanctions enforcement increasing de-risking of international private wealth clients?
Some lawyers believe so. The concern is that as the cost and potential consequences of getting sanctions decisions wrong increase, banks and professional advisers may decide it is commercially safer to decline higher risk international clients altogether. The danger is that nationality or connections with a particular jurisdiction become a proxy for individual sanctions risk, leaving legitimate clients unable to obtain banking or professional advice.
Karen Jones is the founder of Citywealth and a wealth management commentator with more than 20 years’ experience across global private wealth, family offices and succession. Before founding Citywealth in 2005, she held publishing roles at The Times and The Sunday Times, London; Legal Business magazine and worked on the Asia Pacific Legal 500.
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