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Massive fine over law firm’s Russia dealings

London-based Herbert Smith Freehills (HSF) has been fined £465,000 (€556,000) by Britain’s Office of Financial Sanctions Implementation (OFSI) for breaching sanctions against Russia.

The firm made payments to sanctioned Russian banks following the country’s invasion of Ukraine, violating strict financial measures aimed at weakening Russia’s economy and military funding.

In May 2022, as HSF Moscow was winding down operations, the Russian subsidiary made six payments totalling nearly £3.93 million (€4.7 million) to three Russian banks: Alfa-Bank JSC, PJSC Sovcombank, and PJSC Sberbank.

However, these banks were already subject to an asset freeze under British sanctions, meaning that no regulated entity was allowed to provide them with funds or financial resources.

According to the OFSI, the payments showed compliance failings, insufficient due diligence, and inadequate sanctions screening during HSF Moscow’s closure.

Some payments were linked to redundancy settlements for employees with accounts at the sanctioned banks, while others covered audit services and insurance products.

Robust

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

The statement also confirmed that HSF London voluntarily reported the breaches to the OFSI, meaning a 50% reduction was applied to the fine.

Companies that self-disclose sanctions violations often receive more lenient penalties, as regulators encourage transparency and cooperation.