In a landmark ruling, the U.K. this week convicted and sentenced Dmitrii Ovsiannikov, Russia’s former deputy minister of industry and trade and an ex-governor in annexed Crimea, for violating financial sanctions.
The case had attracted considerable attention in part because of Ovsiannikov’s profile and in part because he had successfully applied for a British passport in early 2023, citing eligibility through his British-born father. He then relocated to the U.K. and established residency there, despite being listed under its financial sanctions.
His criminal prosecution marked the country’s first for sanctions violations, as the U.K. ramps up its sanctions enforcement more broadly.
What happened
Ovsiannikov, who has been subject to an asset freeze since 2017 because of his role in Russia’s annexation of Crimea, was found guilty Wednesday on six of seven counts for violating U.K. sanctions as well as possessing and using criminal property. On Friday, he was sentenced to 40 months in prison.
The convictions relate to financial support he received from family members to maintain a luxury lifestyle in London despite the U.K.’s sanctions restrictions. His brother, Alexei Owsjanikow, was also convicted for his role in facilitating the violations.
According to the National Crime Agency, Ovsiannikov received in a bank account more than £76,000 from his wife, Ekaterina, who transferred more than £800,000 from Russia to the U.K. Alexei also contributed to his living expenses by funding a £54,500 luxury SUV and paying £41,000 in private school fees for Ovsiannikov’s children.
Ekaterina was acquitted of all charges.
What it means
The Ovsiannikov case brings to light one of the thorniest challenges in sanctions compliance: circumvention through third parties. Ovsiannikov’s conviction hinged on the financial support provided by people who were not themselves targets of sanctions, but whose actions were found to enable and sustain the lifestyle of a designated individual.
This kind of indirect facilitation—especially for payments presented as routine household transactions—can be difficult for financial institutions and professional service providers to detect, posing serious compliance risks.
The case thereby raises practical questions for businesses: How far should customer due diligence extend? What systems are in place to spot this kind of circumvention, particularly in cases where the sanctioned individual otherwise may appear to be living quietly?
What’s next
The U.K. previously had relied on civil monetary penalties and other regulatory tools for its sanctions enforcement. The successful prosecution of Ovsiannikov sets a new precedent, and sends a clear message: Facilitating or financing the lifestyle of a sanctioned individual, even for a family member, carries real criminal risk.
The case had attracted considerable attention in part because of Ovsiannikov’s profile and in part because he had successfully applied for a British passport in early 2023, citing eligibility through his British-born father. He then relocated to the U.K. and established residency there, despite being listed under its financial sanctions.
His criminal prosecution marked the country’s first for sanctions violations, as the U.K. ramps up its sanctions enforcement more broadly.
What happened
Ovsiannikov, who has been subject to an asset freeze since 2017 because of his role in Russia’s annexation of Crimea, was found guilty Wednesday on six of seven counts for violating U.K. sanctions as well as possessing and using criminal property. On Friday, he was sentenced to 40 months in prison.
The convictions relate to financial support he received from family members to maintain a luxury lifestyle in London despite the U.K.’s sanctions restrictions. His brother, Alexei Owsjanikow, was also convicted for his role in facilitating the violations.
According to the National Crime Agency, Ovsiannikov received in a bank account more than £76,000 from his wife, Ekaterina, who transferred more than £800,000 from Russia to the U.K. Alexei also contributed to his living expenses by funding a £54,500 luxury SUV and paying £41,000 in private school fees for Ovsiannikov’s children.
Ekaterina was acquitted of all charges.
What it means
The Ovsiannikov case brings to light one of the thorniest challenges in sanctions compliance: circumvention through third parties. Ovsiannikov’s conviction hinged on the financial support provided by people who were not themselves targets of sanctions, but whose actions were found to enable and sustain the lifestyle of a designated individual.
This kind of indirect facilitation—especially for payments presented as routine household transactions—can be difficult for financial institutions and professional service providers to detect, posing serious compliance risks.
The case thereby raises practical questions for businesses: How far should customer due diligence extend? What systems are in place to spot this kind of circumvention, particularly in cases where the sanctioned individual otherwise may appear to be living quietly?
What’s next
The U.K. previously had relied on civil monetary penalties and other regulatory tools for its sanctions enforcement. The successful prosecution of Ovsiannikov sets a new precedent, and sends a clear message: Facilitating or financing the lifestyle of a sanctioned individual, even for a family member, carries real criminal risk.
