Bank of Scotland, part of Lloyds Banking Group, has been fined by the UK watchdog over an account for a sanctioned individual.
The bank was fined £160,000 ($219,268.8) by the Office of Financial Sanctions Implementation (OFSI), part of HM Treasury, in this regard.
According to the regulator, the designated individual under UK sanctions opened an account with Halifax in 2023.
Although the watchdog did not name the concerned individual, several media sources identified the person to be Dmitrii Ovsiannikov, previously governor of Sevastopol in Russian-occupied Crimea.
Ovsiannikov was later sentenced to 40 months imprisonment for breaching sanctions and money laundering offences.
The fine on the bank was levied for contraventions of the Russia (Sanctions) (EU Exit) Regulations 2019, specifically sections addressing dealings with and access to funds by sanctioned individuals.
The breach stemmed from an incident in which a person subject to UK government sanctions opened a personal account using a newly issued British passport at Halifax (part of Bank of Scotland).
In a statement to Retail Banker International, a spokesperson from Lloyds Banking Group said: “Lloyds Banking Group takes its regulatory responsibilities extremely seriously. We acted swiftly and transparently, proactively referring this one-off, isolated matter to OFSI and working closely with them throughout.”
The passport contained a spelling variation of the individual’s name compared to that listed on OFSI’s Consolidated List of Asset Freeze Targets, including character changes and a missing middle name.
These variations included altered characters and an omitted middle name, which were not recorded as aliases on OFSI’s screening list at the time.
As a result, the bank’s automated systems did not initially flag the individual as sanctioned.
A later review under Politically Exposed Person (PEP) protocols led to the customer being correctly identified and the account being restricted on the same day, 24 February 2023.
The account was opened on 6 February 2023 and subsequently restricted on 24 February 2023 after the customer was recognised as a designated individual.
The individual had opened the account earlier that month and conducted 24 transactions amounting to £77,383 before restrictions were imposed.
Following identification of the breach, Bank of Scotland notified OFSI and submitted a formal disclosure within two weeks.
OFSI assessed the matter as “serious,” but not “most serious”.
The regulator applied a 50% reduction to the penalty due to Bank of Scotland’s voluntary disclosure, resulting in a final fine of £160,000.
