Herbert Smith Freehills CIS (HSF Moscow) was the subsidiary office to HSF London until it was closed on 31 May 2022 due to Russia’s invasion of Ukraine in February of that year.
However, HSF Moscow made six payments totalling more than £3.9m to designated persons subject to an asset freeze—Alfa-Bank JSC, PJSC Sovcombank, and PJSC Sberbank. The payments were made over seven days as the firm wound down.
Consequently, the Office of Financial Sanctions Implementation (OFSI) has fined HSF Moscow £465,000 for the breach.
Emma Reynolds, Economic Secretary to the Treasury, said: ‘HSF London, on behalf of HSF Moscow, voluntarily disclosed the breaches to OFSI, and therefore a 50% reduction has been applied to the final penalty amount.’
OFSI emphasised that it found no fault with the actions of the parent company, HSF London.
James Clark, partner at Quillon Law, said: ‘This is a cautionary tale for businesses withdrawing from the Russian market—particularly law firms.
‘While OFSI stressed that it was issuing the monetary penalty against HSF Moscow, and that it found no fault with the actions of the parent company, it was HSF London that was left to pick up the bill. OFSI’s decision to impose a monetary penalty and publish detailed findings in that regard demonstrates their commitment to promoting better compliance with the UK sanctions regime, and highlights the importance of disclosing any potential breaches.’
