Herbert Smith Freehills fined £465,000

Herbert Smith Freehills CIS LLP (HSF Moscow) has been fined £465,000 by the Office of Financial Sanctions Implementation (OFSI) for breaching UK sanctions on Russia. The penalty follows six payments made to sanctioned entities during the firm’s withdrawal from the Russian market.

HSF Moscow, a subsidiary of UK-registered Herbert Smith Freehills LLP (HSF London), made payments totalling £3,932,392.10 to designated persons under asset freeze restrictions, including Alfa-Bank JSC, PJSC Sovcombank, and PJSC Sberbank. The breaches occurred over a seven-day period while the firm wound down its operations, leading OFSI to issue a financial penalty.

James Clark, Partner at Quillon Law, commented: "This is a cautionary tale for businesses withdrawing from the Russian market - particularly law firms. Whilst OFSI stressed that it was issuing the monetary penalty against HSF Moscow, and that it found no fault with the actions of the parent company, it was HSF London that was left to pick up the bill. OFSI’s decision to impose a monetary penalty and publish detailed findings in that regard demonstrates their commitment to promoting better compliance with the UK sanctions regime, and highlights the importance of disclosing any potential breaches."

Economic Secretary to the Treasury Emma Reynolds said: "Our commitment to robust enforcement of UK financial sanctions is steadfast. A just and lasting peace in Ukraine must be our priority, and UK financial sanctions continue to be essential to disrupting Russia’s war machine and putting Ukraine on the strongest footing possible."

HSF London voluntarily disclosed the breaches, resulting in a 50% reduction in the final penalty amount. The case is part of OFSI’s broader efforts to enhance enforcement, with further sanctions-related penalties expected.

Quillon Law is a specialist commercial disputes law firm covering areas such as commercial and insolvency litigation, banking and financial markets disputes, white-collar crime, regulatory matters, commercial fraud, asset tracing, and contentious trusts and estates.