The UK’s OFSI has announced a £5,000 monetary penalty imposed on Svarog Shipping & Trading Company Limited.
The fine was for failing to respond to an information request from OFSI in breach of regulation 74(1)(a) of the UK’s Russian sanctions regulation.
The Penalty Notice states that the request for information was made in the context of a wider “large and complex investigation into suspected breaches” of the UK’s sanctions in relation to Sovcomflot. That investigation is, presumably, ongoing.
Further to last week’s post, sentencing has now been completed against Dmitrii Ovsiannikov and Alexei Owsjanikow, who were both convicted of breaches of the UK’s sanctions regime.
As per a press release from the Crown Prosecution Service, Ovsiannikov was convicted of 8 counts of breaking the asset freeze imposed upon him as a designated person, and has been sentenced to 40 months in prison for each count with each sentence to be served concurrently. He was also convicted of two charges of money laundering.
The charges relate to the purchase of a car, the payment of private school fees, deposits into bank accounts and insurance.
Alexei Owsjanikow was convicted of 2 of the charges against him, relating to the payment of school fees on behalf of his brother-in-law, and was given a suspended 15 month prison sentence and made subject of a curfew order.
It is being reported that the jury in the criminal prosecution of designated person Dmitrii Ovsiannikov, his wife Ekaterina Ovsiannikova, and his brother in law Alexei Owsjanikow have returned two guilty verdicts and one acquittal.
See our earlier posts on the progress of this case here and here.
These are the first criminal convictions obtained by the UK authorities under the UK’s Russian sanctions regime, and the first criminal conviction under any sanctions regime since 2017. It is also a rare example of the prosecution of a designated person.
Ekaterina Ovsiannikova was acquitted on four counts of circumventing sanctions arising from payments to her husband of £76,000 in 2023.
Alexei Owsjanikow was acquitted of several counts relating to access to a car, arranging car insurance and use of a bank account. He was, however, convicted of two counts of circumventing sanctions relating to the payment of £41,027 in private school fees.
Dmitrii Ovsiannikov was convicted of six of the seven counts he was charged with, all relating to breaches of the asset freeze imposed upon him by reason of his status as a designated person.
Sentencing will take place in due course, and it is to be hoped that the judge’s Sentencing Remarks are made public.
Yesterday the UK’s HMRC issued a Notice to Exporters publishing three recent compound penalties issued to exporters.
In line with HMRC policy when agreeing to a compound penalty resolution, the information provided on the offending, the offender, and the co-operation provided is limited, although in this instance it is specified that the penalties do not relate to sanctions breaches. The detail available states:
The settlements relate to unlicensed exports of military-listed goods and related activity prohibited by The Export Control Order 2008 and contrary to The Customs and Excise Management Act 1979. These do not relate to sanctions offences.
The 3 settlements agreed with UK companies were:
The UK’s OFSI has published a penalty notice imposing a £465,000 fine on Herbert Smith Freehills CIS LLP (“HSF Moscow”) – a UK LLP which operated as the Moscow office of the law firm Herbert Smith Freehills (“HSF”)
The fine was reduced by half due to prompt self reporting by HSF (all the breaches had been reported by 15 July 2022) and further co-operation in the form of the conduct of an internal investigation.
The breaches of the UK’s sanctions were all done by HSF Moscow between 25 and 31 May 2022. The breaches arose from six payments made to designated persons with a total value of £3,932,392.10. The six breaches were:
This case emphasizes above all the approach that OFSI takes in relation to accounts held at designated banks. In the view of OFSI payments into such accounts, albeit accounts held by non-designated persons, will amount to making funds available to a designated person.
In relation to the payment to a subsidiary of a designated person, OFSI also emphasizes the importance of appropriate due diligence to understand possible issues of ownership and control.
OFSI has published its annual report for the year 2023/2024.
The report provides the following data:
2021/22 – 147 investigations opened (and 101 closed);
2022/23 – 473 investigations opened (and 74 closed); and
2023/24 – 396 investigations opened (and 242 closed).
Of the 396 investigations opened in 2023/24, 288 were as a result of self-reporting with 108 opened through pro-active investigation or other means.
Further, OFSI’s report gives a break down of which sanctions regimes the investigations relate to:
The report also gives a break down of the 242 investigations closed during the year of the report:
The UK’s HM Revenue and Customs has published a compound penalty of £374,326.07 against an unnamed UK company for “unlicensed exports of dual-use goods and failure to declare a licence to customs”.
No further details were provided as to the nature of the conduct or the basis for offering a compound penalty rather than a prosecution.
In a letter written from the UK’s HMRC (the body with primary responsibility for the criminal enforcement of trade sanctions) to Parliament’s Treasury Select Committee, HMRC has provided significant information on its recent enforcement efforts.
| Year | Number of investigations opened |
| 2021 | 0 |
| 2022 | 14 (all relating to Russian sanctions) |
| 2023 | 22 (20 relating to Russian sanctions) |
| 2024 | 29 (27 relating to Russian sanctions) |
Of those 65 investigations, HMRC has confirmed that 30 remain live of which 27 relate to Russian sanctions.
The letter tabulates the six fines imposed to date for breaches of the Russian sanctions, and in relation to the largest single fine of £1,000,000 imposed in August 2023 (see our earlier post), the letter notes that this fine relates to “brokering and technical assistance” and not to an actual export.
HMRC’s letter also states that a previously published compound penalty of £1,000 from September 2023 (see our earlier post) was actually for a breach of the UK’s Iran sanctions despite being described at the time as “relating to the attempted export of Dual Use goods”.
HMRC’s letter also states that in October 2024 it referred a case for possible prosecution to the Crown Prosecution Service.
Further to our earlier post regarding the UK’s Charity Commission investigating Aozma Sultana in relation to possible sanctions breaches, it has now been reported (first by GIR – behind a paywall), that Aozma Sultana has been charged with sanctions offences in the UK and that she appeared in court last week.
Ms Sultana is a designated person under the UK’s anti-terrorism sanctions.
The alleged offence is one of refusing or failing to comply with a request from HM Treasury for information as to her assets and finances.
Trial is currently set for June 2025.
As first brought to wider attention by the Global Sanctions site, the UK’s Economic Secretary has provided a written answer on the UK Parliament’s website to the question: “how many investigations by the Office of Financial Sanctions Implementation into breaches of Russian sanctions (a) are open and (b) have been undertaken since February 2022“.
The answer stated that 388 cases have been investigated by OFSI and closed since February 2022, and that 318 investigations are currently open.
This is a total of 706 investigations opened by OFSI into potential or alleged Russian sanctions breaches in the UK since February 2022.
In that time OFSI has imposed two fines (here and here) in relation to Russian sanctions and disclosed one other breach by Wise Payments Limited (here).
This means that 385 of OFSI’s opened Russian investigations since February 2022 were closed without further action.
As of April 2023, OFSI was reporting it had 172 lives cases ongoing, indicating that there has been a significant increase since then.
