Major Law Firm Subsidiary Fined for Russia Sanctions Breach
The Office of Financial Sanctions Implementation (OFSI) has imposed a monetary penalty against Herbert Smith Freehills CIS LLP (“HSF Moscow”).
The Office of Financial Sanctions Implementation (OFSI) has imposed a monetary penalty against Herbert Smith Freehills CIS LLP (“HSF Moscow”) for breaches of UK financial sanctions imposed on Russia, linked to its illegal invasion of Ukraine.
HSF Moscow was the subsidiary office to the UK registered Herbert Smith Freehills LLP (“HSF London”) until its closure by HSF London on 31 May 2022 as a consequence of Russia’s invasion of Ukraine in February 2022.
The monetary penalty relates to six payments made by HSF Moscow with a collective value of £3,932,392.10 to designated persons subject to an asset freeze. The designated persons were JSC, PJSC Sovcombank, and PJSC Sberbank. In committing the breaches, the firm made funds directly available to sanctioned entities. The payments, which took place over a period of seven days as the firm wound down its Russian offices, demonstrated a pattern of failings.
As a result of these breaches, OFSI has imposed a penalty of £465,000 on HSF Moscow.
Economic Secretary to the Treasury Emma Reynolds said:
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.
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.
This penalty demonstrates OFSI’s firm commitment to pursuing financial sanctions breaches wherever they occur. From the largest institutions to the smallest, everyone has an obligation to comply with the UK’s financial sanctions regime. OFSI is prepared to utilise the full extent of its statutory powers to pursue those who commit serious breaches of financial sanctions.
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 results are coming to fruition, with this case and the monetary penalty imposed on Integral Concierge Services Limited (ICSL) in August 2024 marking the first of several in OFSI’s pipeline linked to Russia’s illegal invasion of Ukraine. The UK will continue to prioritise sanctions enforcement, including through public actions, such as monetary penalties, and actions which are not made public, such as warning letters and referrals to regulators.
Notes:
- OFSI stressed in its public penalty notice that it was issuing the monetary penalty against HSF Moscow, and that it had found no fault with the actions of the parent company, HSF London.
https://www.gov.uk/government/news/penalty-issued-against-subsidiary-of-major-law-firm-for-breaches-of-sanctions-linked-to-russias-invasion-of-ukraine