• OFSI fines Bank of Scotland £160,000 for a UK sanctions breach
• Bank processed 24 payments worth about £77,000 in February 2023
• Account opened with a British passport carrying a name variation
• Person identified to Reuters as Dmitrii Ovsyannikov, later jailed
• Ovsyannikov has been on the UK sanctions list since 2017
• Lloyds voluntarily reported the breach, cutting the penalty in half
• Bank says it acted swiftly, transparently, and strengthened controls
• Case spotlights gaps in sanctions screening and name-matching systems

Bank of Scotland has been fined £160,000 for breaching the United Kingdom’s financial sanctions regime after it opened an account and processed payments for a person designated under UK sanctions linked to Russia.

The Office of Financial Sanctions Implementation said the bank handled 24 payments in February 2023 worth about £77,000 to and from the sanctioned individual’s personal current account.

According to OFSI, the customer used a British passport that contained a spelling variation of the name listed on the UK sanctions designation when the account was opened with Halifax, which is part of Bank of Scotland.

The variation meant the customer passed controls that should have blocked dealings with a sanctioned person, resulting in prohibited transactions being executed.

A person familiar with the matter identified the account holder as Dmitrii Ovsyannikov, a British citizen.

Ovsyannikov was sentenced to 40 months in prison last year after being found guilty of money laundering and breaching UK sanctions.

The Crown Prosecution Service said he had held senior roles in the Russian government and was appointed governor of Sevastopol by President Vladimir Putin following Russia’s annexation of Crimea.

OFSI said the bank breached prohibitions on dealing with, and making funds available to, a designated person.

However, the watchdog noted that Lloyds Banking Group, parent of Bank of Scotland, voluntarily reported the payments in March 2023.

As a result of that disclosure, the final penalty was reduced by half, reflecting the regulator’s policy to incentivise timely self-reporting and remediation.

In a statement responding to the fine, a Lloyds spokesperson said the group had “acted swiftly and transparently, proactively referring this one-off, isolated matter to OFSI”.

The spokesperson added that the bank had further strengthened its controls to continue meeting “the highest standards of risk management and governance”. A lawyer for Ovsyannikov did not immediately respond to a request for comment.

Ovsyannikov has been on the UK sanctions list since 2017. The CPS said he was granted a British passport in January 2023, shortly before the account activity that triggered the regulator’s action.

The case highlights ongoing challenges for financial institutions in screening sanctioned individuals who may present documents with name variations, transliterations, or alternative spellings, particularly in high-risk geopolitical contexts.

The enforcement emphasizes regulators’ increasing focus on the effectiveness of sanctions screening, customer due diligence, and name-matching systems.