OFSI fines Bank of Scotland £160,000 over sanctions screening failures
The Office of Financial Sanctions Implementation (OFSI) has fined Bank of Scotland Plc £160,000 after sanctions screening failures allowed a designated individual to open and operate a bank account.
The penalty, imposed on 10 November 2025 and published in February 2026, relates to breaches of the Russia (Sanctions) (EU Exit) Regulations 2019. OFSI concluded that, between 8 and 24 February 2023, the bank processed 24 payments totalling £77,383.39 to and from an account held by an individual designated under the Russia sanctions regime.
Four of the payments, amounting to £76,000, were credited to the account, while 20 payments totalling £1,383.39 were debited. OFSI determined that these transactions breached regulations prohibiting dealing with funds and making funds available to a designated person.
The account was opened on 6 February 2023 at Halifax, a trading division of Bank of Scotland Plc, which is part of Lloyds Banking Group (LBG). The designated individual, a British citizen, used a UK passport containing spelling variations of their name compared with the UK sanctions list. These differences reflected common transliteration variations between Russian Cyrillic and the Latin alphabet.
OFSI found that the bank’s automated sanctions screening system failed to identify the match because it did not adequately reconcile the spelling variations. It also noted that LBG did not use a commercial sanctions list to enhance its screening, although it did use such a list for politically exposed person (PEP) screening.
An automatic PEP alert was triggered on 7 February 2023. A manual review later identified that the individual was designated under UK sanctions. However, due to human error, the customer was incorrectly assessed as having been removed from both the UK and EU sanctions lists, when only the EU listing had changed. The account remained unrestricted until 24 February 2023.
OFSI assessed the case as “serious” rather than “most serious”. Aggravating factors included the relatively high value of funds made available, repeated breaches over more than two weeks, and the failure to enhance sanctions screening in the context of heightened Russia-related sanctions risk. Mitigating factors included prompt and voluntary disclosure by LBG on behalf of Bank of Scotland in March 2023.
A 50% voluntary disclosure discount was applied, reducing the penalty from a potential £320,000 to £160,000.
The case serves as a reminder that sanctions operate under a strict liability regime. OFSI emphasised the importance of robust name-matching, including fuzzy matching for transliteration variants, clear escalation procedures for potential sanctions connections, and regularly updated training reflecting the current sanctions environment.
Law firms and other regulated entities are expected to take proportionate, risk-based steps to ensure effective sanctions screening and to avoid assumptions based on nationality or passport type when assessing sanctions risk.