Deutsche Bank’s London branch has been fined £165,000 by a UK Treasury body for processing payments that breached financial sanctions imposed on Russia. The global financial firm processed two payments linked to a sanctioned Russian entity in June and July 2022, the Office of Financial Sanctions Implementation (OFSI) announced.
Details of the Breach
The transactions, totaling £635,618.75, were sent by one of the bank’s customers to a Russian company called Okko, which operates an online video streaming platform. Okko was owned by JSC New Opportunities, a sanctioned entity. At the time of the breach, Deutsche Bank was sourcing screening lists from a third-party provider, which did not include data on Okko or its ownership, thereby failing to alert the bank to the issue.
OFSI’s Findings
The OFSI, part of the Treasury, highlighted risks in Deutsche’s reliance on a third party for sanctions screening and emphasized that the bank was ultimately responsible for ensuring compliance with financial sanctions rules when processing customer payments. It noted that a separate payment of £1.1 million was made to Okko in April 2022 but was not classified as a breach because it occurred before changes to enforcement rules.
Background on Sanctions
The UK is among nations that have imposed sanctions on sectors, businesses, and individuals potentially facilitating Russia’s invasion of Ukraine. The OFSI stated that sanctions imposed by the UK in respect of Russia were a strategic priority for the UK and its foreign policy in 2022 and remain so today. Most sanctioned individuals are subject to an asset freeze and an investment ban.
Previous Fines
About 20 companies have been fined since 2019 for breaching sanctions rules. This includes Bank of Scotland, part of Lloyds Banking Group, which was fined £160,000 in January for processing 24 payments linked to a sanctioned person in February 2023.
Settlement and Response
Deutsche Bank agreed to settle the case last month and qualified for a discount on the fine after voluntarily disclosing details of the Okko payments. A spokesperson for the bank said: “After identifying two payments to a Russian entity that had become affiliated with a sanctioned entity, we voluntarily disclosed this to OFSI. Deutsche Bank takes sanctions compliance extremely seriously. We have strengthened and continue to strengthen all aspects of our sanctions compliance framework and associated processes.”
