The Office of Financial Sanctions Implementation (OFSI) has imposed a £300,000 monetary penalty against Markom Management Limited (MML) for a breach of UK financial sanctions imposed against Russia following the 2014 annexation of Crimea.
The breach relates to MML’s involvement in the making of a payment of £416,590.92 to a designated person, who remains subject to an asset freeze under current Russia sanctions. This payment was in breach of the UK sanctions in force at the time in response to Russia’s annexation of Crimea.
MML gave instructions to make the payment from another company’s bank account with the knowledge that the recipient was a designated person, showing a disregard for proper sanctions and failure to have in place adequate compliance and controls procedures.
As a result of this breach, OFSI imposed a penalty of £300,000 on MML.
The imposition of this penalty highlights some key lessons for industry. All firms, regardless of their size, should take appropriate steps to understand and address their exposure to sanctions risks; have adequate sanctions processes to ensure compliance including to promptly identify as well as report suspected breaches of financial sanctions to OFSI; and be alert to the risks of making payments in haste.
The UK considers financial sanctions to be a vital foreign policy tool. They remain central to the UK’s efforts to hold Russia to account, place Ukraine on the strongest footing possible, and deter malign activity around the world.
To date western sanctions have resulted in Russia’s oil and gas revenues falling every year since 2022 – losing over a third of its value in three years. Sanctions and the cost of Putin’s barbaric war are causing the Russian economy to stall – with the wealth fund hollowed out, inflation rising and government spend on defence and security spiralling.
This case is the latest in a series of monetary penalties announced over the past year. The UK will continue to prioritise sanctions enforcement, through public actions, such as monetary penalties, as well as actions which are not made public, such as warning letters and referrals to partner agencies and regulators.
On the 22 July, OFSI launched a consultation on proposed changes aiming to improve the effectiveness of its enforcement processes. These proposals, if implemented, will double the value of penalties for the worst sanctions breaches, and potentially speed up the resolution of certain penalty cases.
