Emma RadmoreOFSI has imposed a penalty of £160,000 on Bank of Scotland plc for breaches of the Russian sanctions restrictions. During February 2023 the bank processed 24 payments totalling around £77,000 (£76,000 credited and the rest debited) to or from a personal account held by a designated individual. OFSI concluded that the processing of these payments breached Regulation 11 of the Russian sanctions regulations on dealing with funds, and also that there was a breach of Regulation 12 (making funds available) in respect of the four of those payments that went into the account and were transferred from a separate account held with the bank. The account in question was with Halifax and the designated person, a British citizen, used a UK passport for identification, with a spelling variation of the name entered on the Consolidated List. The bank’s sanction screening system did not identify the potential match as it did not reconcile the changes and had not been enhanced to enable it to do so. OFSI considered it could have recognised them if these issues had been resolved. In fact, a PEP flag was raised and at that time a manual check showed the sanctions match, but human error meant the customer was assessed as having been removed from the list.
The bank’s parent disclosed the breaches a couple of weeks later and as a result the full 50% voluntary disclosure discount applied.
In its notice of penalty, OFSI sets out what it expects firms to do to optimise their sanctions controls – including that firms with inherently higher sanctions risks should use commercial providers to enhance their controls.