Trade Finance: OFSI fines U.K. based fintech payments company for Russian sanctions violation

The U.K.'s Office of Financial Sanctions Implementation (OFSI) has enforced a fine of £50,000 to TransferGo Limited, a fintech payments company, in regard to apparent violations of Russian sanctions. In 2014, the European Union (including United Kingdom) imposed restrictive measures against Russia following the annexation of Crimea, and in-turn the destabilization of Ukraine. The economic sanctions were enforced to affect multiple sectors of the Russian economy:

• Restrictions on trade; effectively an import and export ban that would impact the advancement of Russia's oil and gas industry
• Sanctions against individuals and entities including asset freezes and travel restrictions
• Exclusion from regular European Union meetings
• Ceased lending from both the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRB)

After receiving reports of a potential sanctions breach, OFSI discovered that over a two-year period between 2018 and 2019, TransferGo Limited issued instructions for 16 payments totaling just over £7,500 to be made to accounts held at the Russian National Commercial Bank (RNCB). Although regulated by the Financial Conduct Authority (FCA), and with knowledge of the restrictive financial measures imposed on Russia, TransferGo Limited continued to allow payments to the Russian entity. TransferGo Limited used the RNCB Russian bank identification code as the recipient when issuing payments to individuals residing in Crimea. They continued to conduct business in this way, explaining their clients and the beneficiaries of the payments were not on any restrictive or sanctioned list.

In their final report, OFSI concluded the fine was warranted given TransferGo Limited lacked judgement and demonstrated poor understanding of the European Union imposed Russian sanctions. In addition, the fintech payments company initially withheld information that would have led to more timely ruling. After an independent review the full fine was upheld and OFSI's investigation was deemed satisfactory.

TransferGo Limited committed these offences between 2018 and 2019. From January 1st, 2021, the United Kingdom (U.K.) left the European Union meaning the U.K. no longer applied to European sanctions regulations. Although, sanctions are now independently implemented through U.K. regulation, OFSI reiterated it remains committed to investigating and imposing monetary penalties, where appropriate, for sanctions breaches prior to 31st December 2020.

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Posted 28 October 2021 by Ravi Amin, Trade Compliance Subject Matter Expert, Maritime, Trade & Supply Chain, S&P Global Market Intelligence