As the UK’s Treasury department stated that it must continue to be “steadfast” in its commitment to sanctions against Russia for its war in Ukraine, a prestigious law firm in the UK voluntarily disclosed the violations to the OFSI.
The UK’s Office of Financial Sanctions Implementation (OFSI) has fined Herbert Smith Freehills, a prominent London-based international law firm, £465,000 (nearly €556,000) for violating economic sanctions on Russia, the official statement said.
According to Euronews, the company violated the UK’s stringent banking regulations intended to erode Russia’s economy and military funds by making payments to sanctioned Russian banks after Russia started a full-scale invasion of Ukraine and an all-out war.
As HSF Moscow was closing down in May 2022, the Russian company paid Alfa-Bank JSC, PJSC Sovcombank, and PJSC Sberbank a total of six payments amounting to over £3.93 million (€4.7 million).
However, due to UK sanctions, these institutions were already subject to an asset freeze, which prohibited any UK-regulated organization from giving them funds or other financial resources.
The OFSI claims that during HSF Moscow’s closure, the payments revealed violations of compliance, a lack of due diligence, and an inadequate screening of penalties.
While some payments covered audit services and insurance products, others were connected to redundancy settlements for staff members who had accounts at the sanctioned institutions.
“Our commitment to robust enforcement of UK financial sanctions is steadfast. A just and lasting peace in Ukraine must be our priority, and UK financial sanctions continue to be essential to disrupting Russia’s war machine and putting Ukraine on the strongest footing possible,” Emma Reynolds, Economic Secretary to the UK’s Treasury, stated.
The UK authorities confirmed that HSF London voluntarily disclosed the violations to the OFSI, leading to a 50% reduction in the penalties.
“HSF London, on behalf of HSF Moscow, voluntarily disclosed the breaches to OFSI, and therefore a 50% reduction has been applied to the final penalty amount,” the statement confirmed.
Since the British authorities value openness and collaboration, companies that self-disclose sanctions infractions frequently face lighter fines.
HSF London formally requested the UK government review after the punishment. The OFSI’s ruling was subsequently endorsed by a senior Treasury official, who confirmed that the amount was reasonable, appropriate, and supported by UK sanctions rules.
“Financial sanctions are essential to the UK’s efforts to hold Russia accountable and place Ukraine on the strongest footing possible. As part of the UK’s commitment to robust enforcement of financial sanctions, OFSI has made transformative improvements in its tools, processes, and intelligence,” the UK government reminded.
The OFSI did, however, clarify it that HSF London was not held accountable and that the penalty exclusively related to HSF Moscow. In terms of advising customers on financial compliance, including sanctions, the latter is still a major global player.
