UK’s OFSI slaps its largest-ever fine on Standard Chartered Bank for violating Russia sanctions
The United Kingdom has imposed a fine of more than £20 million on UK-based Standard Chartered Bank (‘SCB’) for violating European Union sanctions against Russia. It is the largest monetary penalty to date handed out by the country’s Office of Financial Sanctions Implementation (‘OFSI’).
OFSI said that the £20.5m fine against SCB relates to more than 100 loans SCB made between April 2015 and January 2018 to Denizbank, a Turkey-based financial institution that was nearly wholly owned by Russia’s Sberbank. At the time, Sberbank was under EU-wide sanctions that followed Moscow’s 2014 annexation of the Crimea region.
‘OFSI assessed that Standard Chartered Bank was aware of the sanctions regime and the need to take compliance steps and had initially ceased all trade finance business with Denizbank A.Ş. when Denizbank A.Ş. became a sanctioned entity,’ said OFSI, which is part of the UK Treasury Office.
OFSI said that SCB had then sought to introduce dispensations enabling such loans to be made where it considered an exemption was applicable. OFSI said it had assessed that these dispensations were not appropriately put in place and the subsequent operation of the dispensations meant that loans were made ‘which were not within any exemption and therefore were in breach of the EU Regulation.’
‘The failings persisted over an extended period of time, leading to Standard Chartered Bank repeatedly making new loans to Denizbank A.Ş.’ OFSI said in its 31 March report. It explained that the fine against SCB was reduced by £11 million because the bank had made a voluntary disclosure to OFSI.
SCB said that the fine would not affect its financial results and stressed that it remained ‘unwaveringly committed to complying with all applicable financial sanctions’ regulations.’
Commenting on the penalty, law firm Akin Gump noted: ‘This… may indicate the U.K. regulator’s willingness to impose stricter and more substantial penalties in the future…This penalty serves as a stark warning for EU organizations that take a generalized approach to relying on exemptions to EU sectoral sanctions. [It] demonstrates that OFSI will not shy away from strict enforcement actions where compliance processes are not up to scratch, even where parties acted in good faith and intended to comply with sanctions regimes.’
https://www.akingump.com/en/news-insights/standard-chartered-hit-by-ofsis-largest-fine-to-date.html
