JFSC ADD Herbert Smith Freehills (HSF Moscow) – 2025 to its sanction case studies:
23/03/2025
JFSC SAY
- HSF Moscow, a subsidiary of a UK-based law firm, has been fined more than £460,000 for making funds available to a designated person during the process of closing its Moscow office.
- The payments included life insurance and redundancy compensation for employees and occurred within a seven-day timeframe as the firm began winding down its Russian operations in 2022.
- The OFSI determined that these transactions reflected a concerning pattern of non-compliance with the UK sanctions regime imposed on Russia.
To add to the above - Here are the key details:
- Nature of the Breach: HSF Moscow made six payments totalling nearly £4 million to Russian banks that were subject to asset freezes]. These payments were made to institutions like Sberbank, Sovcombank, and Alfa-Bank
- Timing: The payments occurred over seven days as the firm was winding down its operations in Russia following the invasion of Ukraine.
- Self-Reporting: HSF self-reported the breaches to the Office of Financial Sanctions Implementation (OFSI), which led to a 50% reduction in the Fine
- OFSI's Response: The OFSI highlighted that the payments demonstrated a "pattern of failings" by the Firm. Despite the breaches, the firm's cooperation and self-reporting were taken into account when determining the penalty
- Impact: This fine is one of the largest issued by the OFSI to date, reflecting the seriousness of the breaches and the UK's commitment to enforcing sanctions
HUMAN ERROR
- Human error was cited as the reason for the breach.
- Herbert Smith Freehills (HSF) stated that the payments to the sanctioned Russian banks were made due to "good faith errors" during the final week of winding down their Moscow office's operations
- The firm emphasised that these errors were not related to client work and occurred as they were closing their operations in Russia
SOURCE
- https://www.jerseyfsc.org/industry/international-co-operation/sanctions/case-studies/
- Penalty Notice: 20 March 2025 - GOV.UK https://assets.publishing.service.gov.uk/media/67dae19a1a60f79643028472/200325_HSF_PENALTY_NOTICE.pdf /
- www.gov.uk/government/publications/penalty-notice-20-march-2025
OTHER REFERENCES
- ‘Human error’ costs HSF £465k as firm fined over Russia sanctions breach https://www.lawgazette.co.uk/news/herbert-smith-freehills-fined-465000-over-sanctions-breach/5122737.article
- Herbert Smith Freehills’ Russia subsidiary fined £465k for sanctions ...https://www.globallegalpost.com/news/hsf-to-pay-ps465k-fine-for-russian-arms-sanctions-breach-ahead-of-closure-1044724538
- City law firm Herbert Smith Freehills fined over Russia sanctions breaches https://www.msn.com/en-gb/money/other/city-law-firm-herbert-smith-freehills-fined-over-russia-sanctions-breaches/ar-AA1BjeLr
- UK law firm slapped with £465K fine for Russian sanctions breach
- https://www.politico.eu/article/britains-sanctions-watchdog-fines-law-firm-465k-for-russian-sanctions-breach/
- Penalty Notice: 20 March 2025 - GOV.UK https://assets.publishing.service.gov.uk/media/67dae19a1a60f79643028472/200325_HSF_PENALTY_NOTICE.pdf / www.gov.uk/government/publications/penalty-notice-20-march-2025
- Moscow office update | Herbert Smith Freehills | Global law firm https://www.herbertsmithfreehills.com/news/2022-03/moscow-office-update
- ‘Human error’ costs HSF £465k as firm fined over Russia sanctions ...https://www.legalcheek.com/2025/03/human-error-costs-hsf-465k-as-firm-fined-over-russia-sanctions-breach/
- City law firm fined over £400,000 for Russian sanctions breaches https://www.msn.com/en-us/money/financial-regulation/city-law-firm-fined-over-400-000-for-russian-sanctions-breaches/ar-AA1BnStM
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