Top City law firm fined after making payments to Russian state-owned bank despite sanctions
20 March 2025, 09:55 | Updated: 20 March 2025, 10:21
A top city law firm has been fined after making payments to sanctioned Russian banks.
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Herbert Smith Freehills (HSF) was hit with a £465,000 fine after making over £3.9 million to Sberbank - the majority state-owned Russian bank - and Sovcombank, which is privately owned.
HSF, which is one of the largest law firms in the UK, said that the payments were made in error by its Moscow office, which was shut down in May 2022, about three months after the war in Ukraine began. The company also said that the payments did not relate to client work.
The British government's sanctions enforcement team said the payments "demonstrated a pattern of failings".
The company reported the payments voluntarily to the British government, which resulted in the fine being halved. The fine was imposed on the Moscow subsidiary.
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Financial sanctions are part of the way that the government puts pressure on Russia and supports the Ukrainian war effort. Legal and financial services are a key part of this.
Sberbank is majority state-owned and is the largest bank in Russia. Sovcombank is majority owned by Matvey Yozhikov, a Russian oligarch.
Economic Secretary to the Treasury Emma Reynolds 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.”
Herbert Smith Freehills said: "These payments were made as a result of human error, in the final week of the winding up of our former Moscow office's operations. They do not relate to the firm's clients or client work, or to any of the firm's offices other than our former office in Moscow, Herbert Smith Freehills (CIS) LLP.
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"The firm self-reported these incidents to the Office of Financial Sanctions Implementation promptly and has cooperated fully throughout their investigation.
"Given the firm's self-reporting and cooperation, OFSI's recognition that these payments occurred as a result of good faith errors made during our withdrawal from Russia, and the prompt recovery of the only substantial payment, we were disappointed by the fine that has been imposed.
"Nonetheless, we are pleased that this matter has now been resolved. The firm is committed to complying in full with its obligations."
