Penalty imposed for violating sanctions against Russia

The UK Office of Financial Sanctions Implementation (OFSI) has imposed a financial penalty of £300,000 on Markom Management Limited (MML) for violating financial sanctions imposed against Russia following the annexation of Crimea in 2014.

The violation relates to MML's involvement in making a payment of £416,590.92 to a person included in the sanctions list and still subject to asset freezing under existing sanctions against Russia. This payment violated UK sanctions in force at the time in response to the annexation of Crimea.

MML gave instructions to make the payment from another company's bank account, knowing that the recipient was a person included in the sanctions list, and without implementing appropriate control and compliance procedures.

As a result of this violation, OFSI imposed a fine of £300,000 on MML.

The imposition of this fine highlights several important lessons for businesses. All companies, regardless of their size, must take appropriate measures to understand and manage the risks associated with sanctions; have adequate internal sanctions compliance processes in place to ensure compliance, including the prompt identification and reporting of possible violations to OFSI; and be alert to the risks associated with rush payments.

The UK considers financial sanctions to be an important foreign policy tool. They remain a key element of the country's efforts to hold Russia accountable, strengthen Ukraine's position, and deter malicious activity around the world.

As of today, Western sanctions have resulted in Russia's oil and gas revenues declining every year since 2022 — by more than a third in total over three years. Sanctions and the costs of Putin's war are crippling the Russian economy: reserve funds are being depleted, inflation is rising, and government spending on defense and security is skyrocketing.

This case is the latest in a series of financial penalties announced over the past year. The UK will continue to prioritize enforcement of sanctions through both public measures, such as financial penalties, and non-public actions, such as sending warning letters or referring cases to partner authorities and regulators.

On July 22, OFSI launched a consultation on proposed changes aimed at improving the effectiveness of enforcement procedures. If these proposals are adopted, the fines for the most serious sanctions violations will double, and the consideration of individual cases for imposing fines may be accelerated.

Source: Gov.UK