The U.K.’s sanctions enforcement landscape has buzzed with legal and regulatory actions in recent weeks, highlighting a growing scrutiny on compliance and due process beyond just financial institutions.
Two significant enforcement cases have emerged from the Office of Financial Sanctions Implementation (OFSI), one against U.K.-registered charities and another involving a global law firm. Meanwhile, a sanctioned Russian politician is on trial in the U.K. for allegedly circumventing sanctions.
Coming in quick succession, the three actions together mark a significant moment for U.K. sanctions enforcement.
OFSI had vowed that 2024 would be a “year of enforcement.” There are signs now that 2025 actually could be.
A law-firm first
In its first-ever enforcement action against a law firm, OFSI fined Herbert Smith Freehills CIS LLP (HSF Moscow), the Russian subsidiary of the global firm, £465,000 for violations of U.K. financial sanctions. After a ministerial review upheld that civil monetary penalty in February, OFSI finalized and published it last week.
HSF Moscow, OFSI said, had made a number of payments to designated Russian individuals during the closure of its Russian subsidiary. Its fine underscores a growing expectation that firms providing professional services must exercise rigorous due diligence just like banks.
Dmitrii Ovsiannikov, a former governor in Russian-held Crimea and a one-time deputy minister for industry and trade, is on trial in the U.K. on charges of circumventing sanctions and engaging in money laundering. Ovsiannikov, along with his wife and brother, faces charges related to financial transactions conducted after his 2020 U.K. designation.
OFSI also took enforcement action against three U.K.-registered charities, issuing a disclosure notice after they failed to comply with information requests relating to financial sanctions compliance. The notices mark another step in OFSI’s increasing use of its enforcement toolkit, to enforce compliance obligations.
These developments suggest that U.K. sanctions regulators are becoming more proactive in enforcement while also facing growing legal scrutiny. Businesses, financial institutions and non-profits alike should be prepared for heightened regulatory expectations and potential enforcement actions.
Two significant enforcement cases have emerged from the Office of Financial Sanctions Implementation (OFSI), one against U.K.-registered charities and another involving a global law firm. Meanwhile, a sanctioned Russian politician is on trial in the U.K. for allegedly circumventing sanctions.
Coming in quick succession, the three actions together mark a significant moment for U.K. sanctions enforcement.
OFSI had vowed that 2024 would be a “year of enforcement.” There are signs now that 2025 actually could be.
A law-firm first
In its first-ever enforcement action against a law firm, OFSI fined Herbert Smith Freehills CIS LLP (HSF Moscow), the Russian subsidiary of the global firm, £465,000 for violations of U.K. financial sanctions. After a ministerial review upheld that civil monetary penalty in February, OFSI finalized and published it last week.
HSF Moscow, OFSI said, had made a number of payments to designated Russian individuals during the closure of its Russian subsidiary. Its fine underscores a growing expectation that firms providing professional services must exercise rigorous due diligence just like banks.
- What happened: Between May 12 and May 19, 2022, during the winding down of its Moscow operations following Russia's invasion of Ukraine, HSF Moscow made six payments totaling nearly £4 million to three sanctioned Russian banks: Alfa-Bank JSC, PJSC Sovcombank and PJSC Sberbank, OFSI said.
- Why it happened: The violations were attributed to human error, specifically local finance staff failing to adhere to internal screening processes amid the expedited closure of the Moscow office.
- Mitigating factors: Upon identifying the violations, HSF's London headquarters promptly reported them to OFSI. This proactive self-reporting led to a 50% reduction in the initial penalty amount, reflecting the value to OFSI of cooperation and commitment to rectifying compliance failures.
- The implications: This enforcement action serves as a critical reminder to law firms and professional services providers of the need to implement and communicate rigorous compliance frameworks, even under challenging circumstances— and throughout any subsidiaries of the business.
Dmitrii Ovsiannikov, a former governor in Russian-held Crimea and a one-time deputy minister for industry and trade, is on trial in the U.K. on charges of circumventing sanctions and engaging in money laundering. Ovsiannikov, along with his wife and brother, faces charges related to financial transactions conducted after his 2020 U.K. designation.
- The allegations: Upon arriving in the U.K. in February 2023, Ovsiannikov opened a bank account, into which his wife, Ekaterina, allegedly transferred approximately £76,000. According to the BBC, Ovsiannikov then allegedly put a deposit down on a £54,000 luxury SUV, before the bank realized he was sanctioned and froze his account. With Ovsiannikov’s funds frozen, prosecutors say, his brother Alexei Owsjanikow bought the car instead and later paid more than £40,000 in school fees for Ovsiannikov’s children. The U.K. says those actions violated and attempted to circumvent Ovsiannikov’s sanctions.
- The implications: All three family members have pleaded not guilty. If convicted, they could face a maximum of seven years in prison for sanctions circumvention and up to 14 years for money laundering offences.
OFSI also took enforcement action against three U.K.-registered charities, issuing a disclosure notice after they failed to comply with information requests relating to financial sanctions compliance. The notices mark another step in OFSI’s increasing use of its enforcement toolkit, to enforce compliance obligations.
- The details: OFSI requested a “range of information” from the charities Sahara Hands, Peculiar Peoples’ Palace Ministries and Impact Planet. Its three successive attempts to elicit a response from the charities were ignored, OFSI said. It wrote that it assessed the cases as “moderately severe” violations of counterterrorism sanctions, though they did not rise to the level of a fine.
- The implications: Charities and non-profits can face unique challenges in sanctions compliance, especially when operating in high-risk jurisdictions. But OFSI’s actions here signal that it’s placing increasing emphasis on transparency and that it expects all sectors—including non-profits—to cooperate fully with sanctions-related information requests and ensure they keep information up to date.
These developments suggest that U.K. sanctions regulators are becoming more proactive in enforcement while also facing growing legal scrutiny. Businesses, financial institutions and non-profits alike should be prepared for heightened regulatory expectations and potential enforcement actions.
