Citi fined £5m for breaching UK sanctions on Russia
Regulators slapped Citi with a £5m penalty after its London unit processed prohibited Russian payments, raising questions about banks' sanctions controls.
Citi has been ordered to pay almost £5m after the Office of Financial Sanctions Implementation (OFSI) found its London branch processed £19.7m in transactions that breached the United Kingdom’s sanctions on Russia. The breach involved 970 payments, including a case where the bank failed to freeze 24 accounts linked to 11 companies owned by a designated Russian individual.
Why the breach matters
The fine underscores how sanctions enforcement can affect even the world’s largest banks. OFSI said the failure allowed roughly £4.3m to move in the first 24 hours after the individual was added to the sanctions watchlist, a lapse that could undermine the UK’s foreign‑policy objectives and erode confidence in the financial system.
According to OFSI, the breach stemmed from the bank’s screening software not recognising the Russian corporate prefix “PAO Sovcomflot”, and an automated payment processor that added Russian correspondent banks from an internal list without checking them against sanctions registers.
“We are pleased to conclude this matter with OFSI. Citi takes sanctions compliance extremely serious and continues to invest significantly in its global sanctions compliance framework.”
The regulator also criticised Citi for delaying the reporting of frozen assets on 53 occasions, with some delays extending to 518 days. After a 20 per cent settlement discount for cooperation, the final penalty was reduced to £4.7m.
Industry context and next steps
The incident adds to a growing list of UK banks penalised for sanctions breaches. In May, Deutsche Bank received a £160,000 fine for authorising payments to a sanctioned Russian firm, while a subsidiary of Lloyds Banking Group and the Bank of Scotland faced similar penalties earlier this year.
OFSI rated Citi’s case as ‘high’ severity with aggravating factors, noting the material harm to UK foreign‑policy goals. The regulator’s message is clear: banks must tighten alert handling and ensure all internal lists are fully screened.
Going forward, Citi is expected to overhaul its compliance procedures, and other institutions are likely to review their own sanctions screening tools to avoid comparable fines. The heightened scrutiny may also prompt the UK Treasury to consider stricter reporting timelines for frozen assets.
