Category: Financial Services

The UK’s Office of Financial Sanctions Implementation has issued a Penalty Notice against the London branch of Deutsche Bank AG fining it £165,000.

The fine related to two payments made in June 2022 and July 2022 that had been voluntarily reported to OFSI in September 2022. The “pace” of resolving this matter is in keeping with previous cases from OFSI.

The first payment leading to the fine was of £356,429.27 processed on 29 June 2022 in favour of a company called Okko LLC. Earlier that same day the UK had designated the 100% shareholder of Okko, JSC New Opportunities.

The second payment of £279,189.48 was made a month later.

OFSO took the view (particularly in light of the second payment) that even though there had been a limited window to stop the first payment, nonetheless there was such a window. The screening methods used by Deutsche Bank failed to identify that a newly-designated entity wholly-owned the intended transferee. This failing continued for the next month and was not purely a function of the short window for the first payment.

OFSI also took the view that the breaches could only be seen as such after the UK adopted a strict liability rule for the civil enforcement of sanctions breaches on 15 June 2022. An additional payment made before this date, was not considered a “breach” for this reason.

The notice was resolved under OFSI’s new settlement regime, and involved a 45% discount on what would otherwise have been a £300,000 fine based on the self-disclosure and Deutsche Bank agreeing to settle.

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).