The Solicitors Regulation Authority for England and Wales has, in its Annual Report for Money Laundering covering 2023/2024, has stated that it has required 9 law firms to report themselves to the Office of Financial Sanctions Implementation.
In eight of these instances the breach was a breach of a licence condition. It is unclear whether these were specific licences or a General Licence. The breaches are said to have varied between late or no reporting, and taking payments not actually covered by the licence in question.
While many have related to the UK’s Russian sanctions no information is given as to the identity of the sanctions regime(s) in question.
Belgium, Bulgaria, Croatia, Cyprus, Denmark, France, Greece, Hungary, Ireland, Luxembourg, Malta, Moldova, Portugal, Slovakia, Slovenia, Spain, Sweden – 0
Czechia, Italy, Norway, Romania – 1
Finland – 4
United Kingdom and Lithuania – 7
* The Estonia figure is uncertain based on this story, but how high/low is uncertain.
Most currently-ongoing investigations:*
Finland – 800
Latvia – 310
United Kingdom – 307
Netherlands – 192
* Germany probably belongs on this list. It has commenced at least 1988 investigations since February 2022, but many of the States that responded to Freedom of Information Requests did not provide data on ongoing investigations, but only the total number of investigations commenced since the start of the full-scale war.
Longest custodial sentencessince 2017 (where the sanctions element can be distinguished):*
* The list excludes convictions where there are also non-sanctions offences and where the sentence cannot be divided, such as the 19-year sentence imposed in the Netherlands which included war crimes offences.
Most extraditions to the United Statesto face US sanctions charges
Latvia – 4
Cyprus, Estonia, Spain, United Kingdom – 2
Croatia, Germany, Greece, Italy, Romania – 1
All other European countries are at zero.
Highest total value of fines/confiscations/penalties (in Euros) since 2017:
United Kingdom – €268,344,548 (of which the FCA’s fines make up €228,465,751)
France – €50,600,000
Germany – €26,112,903
Lithuania – €23,513,079
Lowest total value of fines/confiscations/penalties(in Euros) since 2017 where value is known:*
Bulgaria, Croatia, Cyprus, Greece, Hungary, Ireland, Moldova, Portugal, Slovakia, Slovenia, Spain and Sweden – €0
The Rotterdam District Court has largely upheld a fine of €95,000 imposed on a trust services provider by the Dutch National Bank.
The DNB’s investigation started in 2019, and the fine was originally imposed on 2022.
The fine related to compliance failings including both money laundering and sanctions failures. The firm’s policies and procedures were insufficient and there was a lack of proper identification of the UBO and of ongoing diligence.
On appeal the fine was reduced to €90,250 due to an argument that the investigation process had been unduly lengthy,
Further to our earlier post from February 2024, it is being reported that the Paris Court has ordered that the prosecution of the French cement maker Lafarge and eight individuals on charges of terrorist financing and breach of EU sanctions against ISIS should proceed to trial.
The case is part of a long running saga arising from allegations that the company paid money to ISIS in order to keep a cement plant open and operating.
It is being reported that a number of government ministers in Luxembourg have filed a criminal complaint with the Public Prosecutor’s Office.
The complaint was filed against Spacety Luxembourg SA, the Luxembourg subsidiary of the Chinese company Spacety. The parent company has been sanctioned by the EU for providing support to Russia’s war in Ukraine.
The Luxembourg company has now filed for bankruptcy and the progress of the criminal matter is not known.
The Latvian publication The Insiderrecently reported on allegations that sanctioned Russian oligarchs, and others, were continuing to operate in Latvia through proxies and fronts.
In response the Latvian Prime Minister has ordered the relevant authorities in Latvia to conduct an investigation.
The UK’s Financial Conduct Authority has today fined Starling Bank £28,959,426 for sanctions compliance failings.
The Final Notice states that the bank became aware in January 2023 that its screening was being done against a small sub-set of the Consolidated List of sanctions targets.
The FCA described the compliance program at Starling as “shockingly lax”.
The FCA also noted that the fine would have been £40,959,426 without Starling’s agreement to resolve the matter.
With the news of OFSI imposing a civil penalty, Europe has today hit its 300th successfully-concluded enforcement action in relation to trade and financial sanctions and export controls since the start of 2017.
To mark the occasion we are publishing updated enforcement graphs which we last posted back in January when this blog first went live.
Total number of fines/penalties/convictions: 2017-2024
As the graph shows 2024 has, to date, been the most prolific in terms of sanctions enforcement in recent years with 69 so far this year. Already there have been three times as many successfully-concluded enforcement actions in Europe in 2024 as there were in 2017.
Total value of fines/penalties: 2017-2024
While the volume of enforcement has increased, the shape of this graph illustrates that the value of the fines imposed did not keep pace in the years following when the UK and French financial services regulators having imposed fines of £102m, €50m, and £38m.
After several years of plateau 2024 is, however, showing signs of acceleration with fines of over €32m imposed so far this year – more than double the figure for 2023.
Russian / Belarusian sanctions enforcement
Focusing just on enforcement of the sanctions against Russia and Belarus, perhaps unsurprisingly, the picture varies across Europe, although the total of 111 examples to date is worth stressing in and of itself.
This graph includes only enforcement actions that have concluded with a fine, penalty, conviction or confiscation. A total of 18 countries show no examples, although it is possible that there are such examples and they have not been made public. Poland, the Netherlands, Switzerland and Latvia are the only countries with more than 10 examples.
This is another way of looking at the same data. Again, this is specific to the Russia/Belarus sanctions, and is the number of concluded enforcements. This does not reflect the scale of the fines. A few countries dominate the picture.
Current investigations
Looking at publicly-available data on the number of current/live investigations reveals a similar picture. Many states appear to be currently inactive, while there are more than 2000 investigations which are reported as ongoing across Europe. That is a figure which bears repeating – more than 2000 ongoing regulatory/criminal sanctions investigations across Europe.
It should be remembered, however, that for most states such information has not been made public. In Germany alone nearly 2000 investigations have been started since early 2022, but the information is limited on how many of these remain active.
The UK’s Office of Financial Sanctions Implementation has today issued notice of a civil monetary penalty it has imposed on a company called Integral Concierge Services Limited (“ICSL”).
The penalty was for £15,000.
The fine related to 26 payments made to, or received from, a designated person under the UK’s Russian sanctions. The payments related to property management including collecting rent, paying for maintenance, and ICSL taking its own management fees. The designated person was not named.
The company did not initially self-disclose, but did then cooperate including by disclosing breaches that had not yet been identified by OFSI.
The company also breaches the reporting requirements under several general licences, but OFSO chose to not fine in relation to those breaches but rather to treat those failures as aggravating factors.
Germany’s Federal Criminal Police have seized the infrastructure of 47 Russian-language no-KYC cryptocurrency exchanges.
The website announcing the action (called “Operation Final Exchange”) states: “We have found their servers and seized them – development servers, production servers, backup servers. We have their data – and therefore we have your data. Transactions, registration data, IP addresses
Our search for traces begins. See you soon“.
It is being reported that the seizures, while certainly targeting a range of financial crimes, were also driven by the use of these exchanges as a means of circumventing sanctions, particularly by designated Russian banks.
It is likely that this Operation Final Exchange will generate substantive financial intelligence and further enforcement actions.
