The Bank of Scotland has been hit with a £160,000 fine after processing payments that violated UK financial sanctions on Russia. The penalty comes after an investigation by the Office of Financial Sanctions Implementation (OFSI), which uncovered that the bank processed 24 payments from a British citizen linked to a person on the UK’s sanctions list.
Payments Linked to Sanctioned Individual
Between February 8 and February 24, 2023, the bank processed transactions totaling £77,383. The payments involved a personal current account held by an individual who had been designated by the UK Government as subject to sanctions due to their connection with Russia’s invasion of Ukraine. Individuals on this list are generally subject to asset freezes and investment bans.
The issue arose when the sanctioned person opened an account at Halifax, a subsidiary of Bank of Scotland, using a UK passport with a name variation that did not match exactly the one on the sanctions list. This discrepancy caused the bank’s automatic sanctions screening system to fail in flagging the account as potentially problematic.
Once the breach was discovered, Bank of Scotland voluntarily disclosed the issue to authorities in March 2023, which led to a 50 percent reduction in the fine.
The UK has imposed sweeping financial sanctions on individuals and entities with links to Russia’s ongoing conflict in Ukraine, part of broader international efforts to penalize the country for its actions. Bank of Scotland is a subsidiary of Lloyds Banking Group, which was also impacted by the revelation of these compliance failures.
