The UK’s Office of Financial Sanctions Implementation (“OFSI”) has issued a Penalty Notice to the Bank of Scotland fining the bank £160,000.
The bank opened an account for a designated person in February 2023 and then allowed 24 transactions to and from that account to take place between 8 and 24 February totalling over £77,000.
The bank’s screening system missed the fact that the person was designated, using the spelling in the person’s passport that had a different transliteration from cyrillic than used in the UK’s Consolidated List. One of OFSI’s complaints in the Penalty Notice is that the screening tool was insufficiently able to create a “match” despite the spelling variations.
The designation was first identified because the person was identified as a PEP and adverse media searches then revealed the designation. This was not then escalated to be resolved.
OFSI also noted that the in-house training to the Bank’s staff “was out of date and did not reflect risks associated with the contemporary sanctions landscape, such as the heightened risk posed by Russia sanctions post-2022”.
After an investigation into a different account, the Bank identified this particular account as belonging t a designated person and reported a suspected breach to OFSI on 10 March 2023 and an actual breach to OFSI on 16 March 2023.
The fine was first set at £175,000, including a 50% discount for prompt self-reporting, but this was reduced by OFSI, after further representations from the bank, to £160,000.
In the Penalty Notice’s “Notes on Compliance” attention is drawn to the failure to use a sufficiently robust screening tool, the lack of a clear escalation procedure, and the poor training.
The Penalty Notice does not name the designated person, but similarities indicate that this notice relates to the UK’s conviction of Dmitri Ovsiannikov (see our earlier post).