Rethinking Whistleblowing in the Age of Global Sanctions

The economic, legal and trade restrictions imposed on Russia in the wake of its full-scale invasion of Ukraine represent arguably the most sweeping sanctions regime ever implemented. The UK has played a leading role in this international response, sanctioning over 2,000 individuals and entities linked to the Kremlin’s war machine and freezing more than £25 billion of Russian assets.

Yet sanctions are only as effective as their enforcement and, in an increasingly globalised and digitised economy, enforcement is complex. Professional enablers register shell companies in offshore jurisdictions and obscure ownership through the use of opaque investment vehicles and cryptocurrencies. Organised crime networks provide covert money laundering services to sanctioned individuals and a shadow fleet of illicit oil tankers maintains Russia’s oil exports in violation of sanctions.

In this ever-shifting cat-and-mouse game, enforcement agencies often find themselves in the dark, a challenge compounded by their lack of resources. The UK Office of Financial Sanctions Implementation (OFSI) has been taking an increasingly proactive approach to sanctions enforcement, including through collaboration with sanctions authorities in other countries. But where the UK lags behind its US and EU partners is in acknowledging that sometimes the most powerful force multiplier is an insider – someone who can turn on the light.

The Inside Advantage

Whistleblowers have faced an uphill battle to be recognised as critical sources of intelligence in exposing corporate fraud, money laundering and public corruption. From the Panama Papers to the Danske Bank scandal, insider disclosures have repeatedly succeeded where institutional oversight failed. The unique value of whistleblowers lies in their proximity to the breach – the mid-level manager instructed to ignore red flags, the compliance officer told not to ask too many questions, and the accountant who sees that the numbers do not add up. The potential benefit of this insider knowledge for sanctions evasion investigations is clear, yet progress has been slow. Whistleblowing has long been underutilised as a tool for sanctions enforcement – underdeveloped in law, under protected in practice, and underappreciated in policy.

A shift in attitudes could be seen in 2022, when the European Commission launched its dedicated whistleblowing tool for sanctions breaches. This platform, which allows anonymous and confidential disclosures, was designed as a channel for insiders to report suspected violations of EU sanctions. However, in the absence of criminal penalties, its impact was limited. This all changed at the end of May, when the EU’s directive introducing minimum criminal penalties for sanctions violations entered force.

This is no small matter. Until now, sanctions enforcement within the EU has been uneven and fragmented. While the Union collectively agrees on whom to sanction, enforcement has remained the preserve of national authorities. The result has been a patchwork of regimes and even patchier enforcement. Some countries already prosecute sanctions breaches as crimes, others impose only light-touch penalties. In many European countries, sanctions enforcement capacity is weak, political will is limited, and legal ambiguity offers convenient cover. Inconsistencies have created safe havens for sanctions evaders, undermining the credibility of EU foreign policy.

The criminalisation directive serves two ends. First, it raises the stakes for would-be sanctions violators by increasing the punishment and enhancing deterrence. But second, and perhaps more importantly, it legitimises and empowers the act of whistleblowing. When evading sanctions is categorically a criminal offence, reporting it ceases to be a grey area of corporate or civil compliance, it becomes a duty that is reinforced by the full weight of criminal law. Combined with the protections implemented under the EU Whistleblower Directive, this legal upgrade could transform the EU’s underused sanctions reporting tool into a more active conduit for actionable intelligence.

The UK’s Blindspot

Criminal offences already exist for breaches of the UK’s sanctions regime. However, historically individuals who report information relating to sanctions evasion were not protected as whistleblowers under the UK’s whistleblowing law, the Public Interest Disclosure Act 1998 (PIDA). The government’s latest policy paper on sanctions implementation and enforcement pledged to rectify this situation and, as promised, an order amending PIDA will come into force at the end of June, ensuring that workers who disclose information relating to financial, transport and certain trade sanctions can qualify for whistleblower protections.

However, one of the critical limitations of PIDA is that it only protects individuals who report misconduct perpetrated by their current or former employer. Sanctions evasion rarely follows that script. Instead, it tends to involve a network of intermediaries, contractors or facilitators with informal ties, who exploit numerous opaque legal and illegal entities spanning multiple jurisdictions. The sanctions whistleblower may uncover one strand of this complex spiderweb, such as the compliance officer who spots falsified end-user certificates or the freight forwarder who is pressured to look the other way. Crucially, the whistleblower will not always work for the entity they wish to expose. 

Defining whistleblowing as the protection of employees was appropriate when PIDA was passed over 25 years ago, but it does not represent the 21st century work environment, let alone reflect the complexity of modern sanctions evasion. Even under the newly expanded PIDA, if an individual with information of sanctions evasion does not have the required employment nexus, they may not qualify for protection. This is a glaring blind spot and one that undermines the government’s stated objective in implementing the legislative amendments – to increase whistleblower disclosures. A truly effective system must be broader in scope, extending legal protections to any individual with credible information, regardless of their employment status. The UK needs to do more than tweak an outdated law. It needs to reimagine the contribution whistleblowers could make to sanctions enforcement and develop a legal framework fit for purpose.

Incentivising Information Flows

The US has long recognised the value of whistleblowers in combating economic crime. The Dodd-Frank Act, passed in the wake of the 2008 financial crisis, implemented robust protections and financial rewards for whistleblowers whose information leads to successful legal action in cases involving securities and commodities fraud. Recent RUSI research found that these reward programmes have not only increased the quantity and quality of information received, but also have a deterrent effect due to increased rates of detection and enforcement.

In 2022, the US government expanded the whistleblower reward programme run by the Financial Crimes Enforcement Network (FinCEN), a bureau of the US Treasury Department, to include violations of its sanctions regime. As a result, anyone with non-public information related to sanctions evasion can report that information and be eligible for a reward. The program has successfully incentivised insiders to come forward with over 270 tips received, many relating to Iran and Russian sanctions evasion. Furthermore, in May the US Department of Justice announced that it was expanding its Corporate Whistleblower Award Pilot Program to include sanctions violations, further entrenching whistleblowers as a key source of US sanctions evasion intelligence.

In the UK, there has been a long-held antipathy towards paying whistleblowers. Rewards have been seen as having a polluting influence on an act that should be done out of a sense of civic duty. However, this perspective ignores a fundamental reality – that moral motivations alone are rarely sufficient to incentivise corporate insiders to turn whistleblower. Speaking up can have career-ending and life-altering consequences, with whistleblowers often suffering immense professional, personal and psychological harm. Offering rewards is not about commodifying integrity, it is about recognising the cost of coming forward and levelling the playing field.

Despite historic resistance, the tide of UK opinion on whistleblower incentivisation does appear to be turning. Since the RUSI research on rewards was published last year, the Financial Conduct Authority changed its decade-long opposition to paying whistleblowers, the HM Treasury announced it would implement a US-style tax evasion rewards model, and the Serious Fraud Office included whistleblower incentivisation reform as one of its planned outputs for the year 2025-26. If OFSI wanted to follow suit, a well-designed reward programme for sanctions whistleblowers (with proper safeguards, clear reporting channels and adequate resources) could underpin the UK government’s goal ‘to give sanctions bite’.

Eyes on the Inside

The UK finds itself at a crossroads. With its reputable financial markets and complex corporate networks, is both a frontline jurisdiction for sanctions enforcement and a backdoor for potential evasion. Ensuring that insiders in banks, law firms, logistics companies and trading houses can report wrongdoing without fear of reprisal could significantly enhance the country’s ability to enforce its sanctions regime – especially against the backdrop of the government’s desire to show leadership on sanctions on the international stage.

But these whistleblowers will not come forward unless they are protected, supported and, where appropriate, financially rewarded. To gain the inside advantage, the UK needs a legal framework that moves sanctions whistleblowers from the margins to the mainstream because, without eyes on the inside, even the most ambitious sanctions regime is blind.

© RUSI, 2025.

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