Herbert Smith Freehills Fined for Sanctions Violations Involving Russian Banks

The law firm faces a £465,000 penalty for payments made to sanctioned entities amid the closure of its Moscow office.

Herbert Smith Freehills (HSF), a prominent global law firm headquartered in London, has been sanctioned by the British government for breaching financial sanctions against Russia.

The penalty, amounting to £465,000, was levied by the Office of Financial Sanctions Implementation (OFSI) concerning activities tied to HSF’s former Moscow office.

The fine is a result of six payments totaling £3.9 million made by HSF Moscow to three Russian banks—Alfa-Bank JSC, PJSC Sovcombank, and PJSC Sberbank—entities that are currently subject to an asset freeze under UK sanctions imposed following the invasion of Ukraine.

The payments were made in the final week of HSF's efforts to wind down its Moscow operations, which were concluded in 2022.

HSF has characterized the payments as a consequence of human error during a tumultuous closing process.

The law firm clarified that these transactions were not connected to any of its clients or related client work outside of its former Moscow office.

In a statement, HSF expressed disappointment regarding the imposed fine but noted its resolution of the matter.

The firm, which operates with 2,400 lawyers across 24 global offices, took the step of voluntary disclosure of the breaches to OFSI, which resulted in a significant reduction of 50% in the original penalty amount.

OFSI cited a “pattern of failings” related to the payments, attributing them to inadequate due diligence and sanctions screening procedures amid the accelerated shutdown of its Moscow office.

Some payments were reportedly linked to redundancy settlements for employees holding accounts with Sberbank, along with fees for audit services and insurance products.

Following the fine's imposition in November 2024, HSF London sought a ministerial review of the decision, which was upheld by a senior Treasury official.

Emma Reynolds, the economic secretary to the Treasury, reaffirmed the UK government's commitment to the rigorous enforcement of financial sanctions, emphasizing their role in supporting a peace process in Ukraine and disrupting Russian aggression.