Lloyds-owned Bank of Scotland penalized for violating UK sanctions on Russia after regulators found the lender had allowed a sanctioned Russian-linked individual to open and operate a bank account in the United Kingdom, authorities confirmed this week.
Bank of Scotland, part of Lloyds Banking Group, was fined £160,000 ($218,640) for breaching Britain’s financial sanctions regime. The penalty followed an internal review that revealed the bank had opened an account for a former senior Russian government figure who was already listed as a designated person under UK sanctions.
According to the Office of Financial Sanctions Implementation (OFSI), the account was used to process 24 transactions in February 2023, with payments totaling about £77,000 moving in and out of the account. Handling funds for sanctioned individuals is strictly prohibited under UK law.
A source familiar with the case told Reuters that the account belonged to Dmitrii Ovsyannikov, a British citizen with a high-profile political past in Russia. When opening the account at Halifax, a division of Bank of Scotland, Ovsyannikov reportedly used a British passport that contained a slightly different spelling of his name than the version listed on the UK sanctions register.
OFSI said it determined that the bank had breached rules banning financial dealings with sanctioned individuals and the provision of funds to them. Lloyds voluntarily disclosed the issue in March 2023, a move that led regulators to reduce the final fine by 50 percent.
Ovsyannikov was sentenced last year to 40 months in prison after being convicted of violating UK sanctions and committing money laundering offenses. He previously held several senior roles in the Russian government and was appointed governor of Sevastopol by President Vladimir Putin following Russia’s annexation of Crimea. Despite being on Britain’s sanctions list since 2017, he was granted a British passport in January 2023, according to prosecutors.
In a statement responding to the penalty, a Lloyds spokesperson said the company acted quickly once the issue was identified. “We acted swiftly and transparently, proactively referring this one-off, isolated matter to OFSI,” the spokesperson said. “We have further strengthened our controls to ensure we continue to meet the highest standards of risk management and governance.”
A lawyer representing Ovsyannikov did not respond to requests for comment.
The case underscores the challenges banks face in enforcing complex sanctions regimes and highlights the importance of rigorous identity checks as financial institutions remain under close scrutiny from regulators.
