Bank of Scotland has been penalised with a £160,000 fine by a UK Treasury body after it processed payments that violated financial sanctions imposed against Russia.
The Office of Financial Sanctions Implementation (OFSI) found the bank facilitated 24 transactions, totalling £77,383, to or from a personal current account belonging to a British citizen listed under the government’s sanctions regime.
These payments occurred between 8 and 24 February 2023.
The UK, alongside international allies, has implemented extensive sanctions on Russian sectors, businesses, and individuals in response to the invasion of Ukraine. Such designations typically involve an asset freeze and an investment ban.
OFSI’s investigation revealed that the UK-designated individual opened an account at Halifax, a subsidiary of Bank of Scotland, on 6 February 2023.
They reportedly used a UK passport that featured a spelling variation of their name, differing from the one on the official sanctions list.
The variations included changes in characters and a missing middle name.
This meant the account was not flagged as a potential match by the bank’s automatic sanctions screening system.
The account remained unrestricted until 24 February, 2023 when the customer was identified as a designated person as part of a so-called politically exposed person (PEP) screening.
The penalty for Bank of Scotland, which is part of Lloyds Banking Group, was cut by 50 per cent thanks to it voluntarily disclosing the breaches a month after the payments were made.
A spokeswoman for Lloyds Banking Group said it “takes its regulatory responsibilities extremely seriously”.
“We acted swiftly and transparently, proactively referring this one-off, isolated matter to OFSI and working closely with them throughout,” the company said.
“OFSI has recognised our prompt voluntary disclosure, resulting in the maximum possible reduction of the penalty.
“We have further strengthened our controls to ensure we continue to meet the highest standards of risk management and governance.”
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