OFSI Fines HSF Moscow £465K for Russia Sanctions Breach

The UK’s Office of Financial Sanctions Implementation (OFSI) has issued a £465,000 penalty against Herbert Smith Freehills CIS LLP (HSF Moscow) for violations of UK financial sanctions related to Russia’s illegal invasion of Ukraine. The breaches involved six payments, totalling £3,932,392.10, made to sanctioned Russian financial institutions: Alfa-Bank JSC, PJSC Sovcombank, and PJSC Sberbank.

Background

HSF Moscow was a subsidiary of Herbert Smith Freehills LLP (HSF London) until the latter closed its Moscow office on 31 May 2022 in response to Russia’s invasion of Ukraine. The payments in question occurred over a seven-day period during the winding down of HSF Moscow’s operations. By making these transactions, the firm directly provided funds to sanctioned entities, constituting a clear breach of the UK’s asset freeze restrictions.

Given the seriousness of the violations, OFSI has reinforced its zero-tolerance approach to sanctions breaches, stating that all entities—whether financial institutions, professional services firms, or other businesses—are responsible for complying with UK financial sanctions laws.

Voluntary Disclosure & Reduced Penalty

HSF London, on behalf of HSF Moscow, voluntarily disclosed the breaches to OFSI, leading to a 50% reduction in the penalty amount. OFSI clarified in its public penalty notice that the enforcement action was solely against HSF Moscow and that HSF London was not found at fault.

Government Response & Sanctions Enforcement

Economic Secretary to the Treasury, Emma Reynolds, underscored the UK’s commitment to strict enforcement of sanctions:

“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.”

OFSI also highlighted that this case is part of a broader enforcement drive. Recent improvements in OFSI’s tools, intelligence, and processes are yielding results, with this case and the monetary penalty issued against Integral Concierge Services Limited (ICSL) in August 2024 being the first in a series of enforcement actions related to Russia sanctions breaches.

UK’s Sanctions Commitment

The UK government has reiterated that financial sanctions are a key tool in holding Russia accountable for its aggression in Ukraine. OFSI has pledged to continue prioritising enforcement, utilising its full range of statutory powers, including monetary penalties, warning letters, and regulatory referrals.

This latest action serves as a stark warning that compliance with UK financial sanctions is non-negotiable, and all firms—regardless of size or sector—must ensure they are fully aligned with UK sanctions regulations to avoid serious financial and reputational consequences.

Read the press release here.