Lloyds subsidiary fined £160,000 for Putin ally sanctions breach
A subsidiary of Lloyds Banking Group has been fined for sanctions breaches after it opened a bank account for an ally of Russian President Vladimir Putin.
Bank of Scotland, a subsidiary of Lloyds since 2009, was fined £160,000 by the Office of Financial Sanctions Implementation (OFSI) on Monday for breaching Russian sanctions.
Although not named in the report, it has been reported that the fine resulted from Halifax allowing Dmitrii Ovsiannikov to open an account in 2023 using a UK passport.
Ovsyannikov held senior positions in the Russian government, including as the former governor of Sevastopol in Russian-occupied Crimea and a deputy minister. Last year, he was sentenced to 40 months in prison for breaching UK sanctions and was placed on the UK’s Russian sanctions list, along with the EU.
Between 8 February and 24 February 2023, Bank of Scotland processed 24 payments, totalling £77,383 from a personal current account held by an individual designated under Russian sanctions.
Bank of Scotland processed four payments credited to the account between 8 February and 24 February 2023, totalling £76,000. The bank also processed 20 payments, which were debited from the account between 13 February and 23 February 2023, totalling £1,383.39.
OFSI has concluded that the processing of these 24 payments, and those made to another account, breached sanction rules.
Higher fine if Lloyds did not disclose
Lloyds, on behalf of Bank of Scotland, notified OFSI of a potential breach on 10 March 2023, and formally disclosed the breach to OFSI on 16 March 2023.
The penalty was originally set at £175,000, but OFSI considered it appropriate to reduce it to £160,000. A penalty of £320,000 would have been imposed were it not for the voluntary disclosure discount.
A spokesperson 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 the Office of Financial Sanctions Implementation and working closely with them throughout.”
“We have further strengthened our controls to ensure we continue to meet the highest standards of risk management and governance,” the bank added.