UK OFSI Adopts Presumption of Denial for Licence Applications from Designated Iranian Banks
HM Treasury’s Office of Financial Sanctions Implementation (OFSI) has published new guidance setting out a presumption of denial for licence applications submitted by certain designated Iranian banks operating in the United Kingdom.
The guidance, published on 23 September 2026, explains which designated Iranian banks fall within the policy and how HM Treasury will approach applications seeking permission for activity that would otherwise be prohibited by UK financial sanctions.
Presumption of denial, with limited exceptions
Under the new approach, applications from banks within scope will normally be refused. The policy is a presumption rather than an absolute prohibition: HM Treasury says activities may still be considered for licensing in exceptional circumstances, and applications will continue to be assessed on a case-by-case basis.
Where a licence is granted, OFSI may impose conditions and limitations on the authorised activity. The guidance therefore changes the practical licensing posture for affected designated banks without replacing the underlying statutory sanctions framework or eliminating HM Treasury’s discretion to consider exceptional cases.
Compliance significance
The guidance is relevant to financial institutions and other firms handling transactions or relationships involving designated Iranian banks. A transaction that requires an OFSI licence should not be treated as likely to receive authorisation merely because a licensing application can be submitted. For banks within scope of the policy, the starting position is now expressly one of denial, subject to exceptional circumstances and individual assessment.
Firms should distinguish this licensing policy from a new sanctions designation. The guidance does not itself state that additional banks have been designated; it sets out HM Treasury’s approach to licensing applications involving designated Iranian banks.
