Apple Subsidiary Hit with £390,000 Fine for Breaching UK Sanctions Against Russia
The UK government has imposed a significant fine of £390,000 on a subsidiary of Apple for violating sanctions related to Moscow. The penalty targets Apple Distribution International (ADI), which is headquartered in the Republic of Ireland, over payments made to a Russian streaming platform.
Details of the Sanctions Breach
ADI instructed a UK-based bank, which remains unnamed, to process two payments totalling more than £635,000 to the streaming service Okko. These transactions occurred in June and July 2022 from an ADI bank account located in Britain. ADI is responsible for distributing Apple products across Europe and the Middle East, including managing sales from the App Store.
The Office of Financial Sanctions Implementation (OFSI), the UK's sanctions watchdog operating under the Treasury, levied the fine. OFSI stated that it was satisfied, based on the balance of probabilities, that ADI had breached prohibitions set by financial sanctions legislation.
Background on Okko and Sanctions
Okko was originally purchased by Sberbank, Russia's largest bank, in 2018. Following Russia's full-scale invasion of Ukraine in February 2022, Sberbank sold Okko to a company called JSC New Opportunities in March 2022. The UK government placed JSC New Opportunities under sanctions in June 2022, shortly before the payments were made.
Sberbank was among the first Russian entities added to the UK's sanctions list after the invasion. According to the US thinktank, the Foundation for Defense of Democracies, the sale of Okko to an "obscure company" likely represented an attempt to shield assets from Western sanctions.
OFSI's Findings and Apple's Response
OFSI noted that ADI voluntarily disclosed the payments, and the fine resulted from settlement discussions. The watchdog clarified that ADI had no reason to suspect the payments would breach sanctions, as there was no evidence the company was aware of press articles linking Okko to a sanctioned entity at the time.
This case underscores that non-UK companies can be found in breach of sanctions if they utilise UK financial institutions for transactions. OFSI emphasised the importance of robust due diligence frameworks for monitoring clients and customers, warning that reliance on third-party sanctions screening firms carries inherent risks.
An Apple spokesperson responded, stating, "We follow the laws in the countries where we operate and take sanctions compliance extremely seriously. After identifying two payments to a developer that days earlier had become affiliated with a sanctioned entity, we promptly and proactively reported our finding to the UK government. We are constantly working to enhance our already robust compliance protocols, which are consistent with industry standards."
