Herbert Smith Freehills, the elite global law firm based in London, has been fined by the British government after its former Moscow office made millions of pounds in payments to sanctioned Russian banks.
The Office of Financial Sanctions Implementation (OFSI), said it had imposed a penalty of £465,000
on HSF Moscow, which was a subsidiary of HSF London until its closure in 2022 after Russia’s invasion of Ukraine.
The fine, which was upheld after Herbert Smith requested a ministerial review, relates to six payments worth a combined £3.9m, made by HSF Moscow to Alfa-Bank JSC, PJSC Sovcombank and PJSC Sberbank.
The trio of banks are all subject to an asset freeze under Britain’s sanctions on Russia after the invasion of Ukraine, the UK government said.
Herbert Smith Freehills, which has 2,400 lawyers in 24 offices around the world, blamed the payments on human error during the final week of its efforts to shut down its Moscow operations in response to the war.
The payments do not relate to the company’s clients or client work, or to any of their offices other than its former office in Moscow, the law firm said in a statement.
“We were disappointed by the fine that has been imposed. Nonetheless, we are pleased that this matter has now been resolved,” said Herbert Smith, whose work includes advising clients on sanctions compliance.
OFSI, a division of the Treasury, said the payments, spread over a period of seven days as the company wound down its Russian offices, were caused by a “pattern of failings”.
It blamed inadequate due diligence and sanctions screening, amid the “hasty closure” of HSF Moscow.
Some of the payments related to redundancy settlements for staff with Sberbank accounts, while others related to fees for audit services and insurance products.
HSF London voluntarily disclosed the breaches to OFSI, resulting in a 50% reduction to the final penalty amount. HSF London agreed to pay the sum on HSF Moscow’s behalf.
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OFSI also disclosed that HSF London had sought a ministerial review of the fine, initially imposed in November 2024. A senior Treasury official upheld OFSI’s initial decision.
Emma Reynolds, the economic secretary to the Treasury, said: “Our commitment to robust enforcement of UK financial sanctions is steadfast.
“A just and lasting peace in Ukraine must be our priority, and UK financial sanctions continue to be essential to disrupting Russia’s war machine and putting Ukraine on the strongest footing possible.”
