UK OFSI £465,000 civil monetary penalty: Herbert Smith Freehills CIS LLP (HSF Moscow) — Russia sanctions breach

Mechanism

HSF Moscow made six payments between 25–31 May 2022 — the final week of its office wind-down following Russia's February 2022 invasion of Ukraine — to three Russian entities already designated under UK financial sanctions (asset freeze):

The dominant transaction — the £3.92M lease transfer to a local Russian firm established by former HSF Moscow staff — constituted 99.6% of the total value. OFSI characterised the breaches as "human error caused by the hasty closure" of the office, not deliberate evasion.

Legal basis: Section 146 of the Policing and Crime Act 2017; Regulation 12 of the Russia (Sanctions) (EU Exit) Regulations 2019 (payments to designated persons).

Penalty calculation: Base penalty £930,000, reduced 50% to £465,000 for HSF London's voluntary self-disclosure to OFSI on behalf of the subsidiary and full cooperation throughout the investigation. No findings of fault were made against HSF London itself.

Downstream implications

• Sector precedent: First OFSI monetary penalty against a law firm; OFSI explicitly stated

"more enforcement actions are in the pipeline" for other professional-services firms, signalling a deliberate expansion beyond financial-sector targets (banks, insurers, fintechs).

• Compliance implications for professional services: Law firms, consultancies, accountancies,

and other non-financial intermediaries managing Russia-nexus wind-downs face heightened OFSI scrutiny. Voluntary disclosure and cooperation remain powerful mitigants (50% discount preserved here despite the £3.9M breach value).

• Big-Law wind-down liability: Several international law firms closed Moscow offices

post-February 2022 under time pressure. This enforcement creates personal liability exposure for office-closing decisions made in that period, particularly around lease transfer arrangements and HR obligations (redundancy, insurance) involving designated banks.

• OFSI lessons published: An April 2025 OFSI blog post extracted key lessons for industry —

notably that wind-down does not create an automatic licence or exemption, and that firms must screen all closure-related payments against the consolidated list before execution.

Open questions

• Whether additional UK law firm penalties materialise from OFSI's stated pipeline
• Whether UK Solicitors Regulation Authority (SRA) pursues parallel professional-conduct

proceedings against HSF entities

• Whether equivalent OFAC enforcement follows for US-nexus payments by the same or other

firms during Russia wind-downs