14 agosto 2025 Jane Larner  - Olivia James-Hough BusinessCrimeLinks

Learning from other people’s mistakes: OFSI’s latest enforcement action highlights importance of robust sanctions controls

The UK Office of Financial Sanctions Implementation (OFSI) has imposed a monetary penalty for sanctions breaches on Markom Management Limited (MML), a UK-incorporated company providing fiduciary, management, administration, book-keeping and accounting services to companies across multiple jurisdictions. In doing so, OFSI highlighted the importance for businesses of knowing the sanctions risks they face and provided key takeaways for firms exposed to potential sanctions issues.

Background

MML was part of the Markom Group, which included Markom Management Cyprus (MMC), a company providing services for companies registered in Cyprus. On 19 February 2018, an individual (DP), who was designated under The Ukraine (European Union Financial Sanctions) (No.2) Regulations 2014 (the Regulations), made a payment to a client of MMC (Company A). The funds were transferred between two accounts at Gazprombank in Moscow, a non-EU bank, and the transfer itself was not prohibited under the UK sanctions regime.

On 20 February 2018, following notification that the transfer had included an overpayment to Company A of £416,590.02, MML instructed Gazprombank to transfer that sum back to the DP. The transfer was carried out, meaning that the funds were transferred directly to a designated person’s account and became available to them, in breach of the Regulations. MML had failed to recognise that the recipient was sanctioned before they instructed Gazprombank to make the transfer. This was in part because Company A was a previous client of MML (although not at the time of the breach), and members of staff within MML remained a point of contact on matters for Company A due to being able to communicate in Russian.

MML notified OFSI of the breach in October 2018, having identified it during an internal review commissioned as a result of third party activity. However, as a result of its own engagement with that third party, OFSI didn’t begin its investigation until June 2021.

Penalty

OFSI found that MML had lacked appropriate processes and controls and had an inadequate knowledge of sanctions compliance, particularly in relation to payments regarded as refunds. OFSI considered MML’s misunderstanding of sanctions regulations to be an aggravating factor, noting that MML chose not to seek legal advice and prioritised making the payment quickly.

OFSI initially notified MML of its intention to impose a penalty of £400,000, representing almost 100% of the value of the transfer and reflecting what OFSI deemed to be a “serious” breach. Following representations from MML, OFSI revised this figure downwards to £300,000. After discovering the breach, MML had taken steps to improve its sanctions compliance to avoid repeated failures, and OFSI considered the breach to be a one-off. In addition, MML had co-operated fully throughout OFSI’s investigation. Notably, however, although MML had submitted a materially complete initial disclosure to OFSI, it was not considered to have met the criteria for a voluntary discount reduction in penalty.

Key Takeaways

This penalty is the latest enforcement action by OFSI for financial sanctions breaches. Firms with exposure to sanctions-sensitive jurisdictions and higher-risk clients will benefit from a close reading of the decision, particularly as sanctions are likely to remain central to the UK’s foreign policy for some time.

Key takeaways from this decision include that:

  • OFSI expects all firms – regardless of size - to understand their levels of exposure to sanctions risks. In particular, this case highlights the significant sanctions risks that can arise when informal transnational working practices are in place, such as the ones that had developed between MML and MMC in this case.
  • The existence of sanctions policies and processes will not be a mitigating factor if, as here, OFSI does not consider them fit for purpose.
  • The timely identification and reporting of suspected breaches is crucial. Voluntary disclosure in “serious” cases can result in a discount of up to 50% under OFSI’s current policy (although as we note below, OFSI is currently consulting on proposed changes that may see this discount reduce to 30%).
  • This case also highlights the importance of seeking professional advice in situations where companies may not fully understand the relevant sanctions regimes or the sanctions risks.
Proposed changes to OFSI’s enforcement regime

OFSI announced in July 2025 that it is consulting on proposed measures to enhance the effectiveness of its enforcement processes, including changes to its statutory penalty maximums and the introduction of a settlement scheme for monetary penalty cases.

The changes proposed in this consultation would apply only to cases where the relevant enforcement powers are OFSI's civil enforcement powers in connection with breaches of financial sanctions (including Russia-related designated person asset reporting) and the UK Maritime Services Ban and Oil Price Cap exception (Oil Price Cap). The consultation does not propose to make any changes to the criminal enforcement of financial sanctions breaches or to the civil enforcement of breaches of non-financial sanctions, such as trade or transport sanctions, which are the responsibility of other government departments and agencies.

For further information on the consultation, which closes on 13 October 2025, see OFSI's enforcement processes.

For OFSI’s publication notice on the Markom fine, see here: Penalty Publication Notice - MML