March, 2020 - Fines against Standard Chartered Bank upheld by UK's OFSI

The UK’s Office of Financial Sanctions Implementation (OFSI), part of HM Treasury, has upheld two monetary penalties on Standard Chartered Bank for breaching EU financial sanctions. Although following the review, OFSI has reduced the fines from £31.5million to £20.5 million, these penalties are still the highest OFSI has imposed to date.

The penalties imposed related to a breach of EU financial and trade sanctions imposed on certain Russian entities, which are in place to encourage Russia to cease actions which undermine or threaten the territorial integrity, sovereignty and independence of Ukraine.

Standard Chartered had made a series of 102 loans to Denizbank A.Ş. between 8th April, 2015 and 26th January, 2018. Denizbank was a subsidiary of Sberbank of Russia. At the time the loans were made, EU persons were prevented from making certain loans or credit available to Sberbank, pursuant to the financial and trade sanctions in place.

Standard Chartered was aware of the EU sanctions position and it believed that the loans fell within an exemption within the regime. On discovery of the mistake, however, the bank made a voluntary disclosure to OFSI. As a result of the voluntary disclosure, OFSI initially reduced the fines by 30% from £45 million to £31.5 million, in line with its published guidance. This was further reduced to £20.5 million in the most recent review in March, 2020.

The fines imposed on Standard Chartered Bank are an indication that the UK authorities are prepared to enforce sanctions with severe penalties and is a reminder of the importance of full compliance with sanctions regimes.