The UK government has fined Deutsche Bank’s London branch £165,000 after it processed payments linked to a Russian company owned by a sanctioned entity.

The penalty was issued by the Office of Financial Sanctions Implementation (OFSI), the Treasury body responsible for enforcing UK financial sanctions. The case relates to two payments made in June and July 2022 worth a combined £635,618.75.

The payments were sent to Okko LLC, a Russian streaming platform that had recently come under the ownership of JSC New Opportunities, a company sanctioned by the UK over its links to Russia.

According to OFSI, Deutsche Bank processed the payments on behalf of a customer even though UK sanctions rules prohibit making funds available to companies owned or controlled by sanctioned entities.

The case also shows how difficult sanctions screening became after Russia’s invasion of Ukraine, particularly as ownership structures shifted quickly and access to Russian corporate information became more limited.

OFSI said Deutsche Bank’s screening systems checked the beneficiary name, but failed to flag the payments because the bank’s third-party data provider did not include ownership information linking Okko to the sanctioned company.

One of the payments was processed on the same day the sanctions designation became public. However, OFSI said it took enforcement action partly because a second payment to the same company was processed a month later.

The regulator described the case as “serious”, though not “most serious”. It also noted that Deutsche Bank voluntarily disclosed the issue in September 2022 and later strengthened its sanctions controls and oversight processes.

OFSI originally set the penalty at £300,000, but reduced it by 45% after taking into account the bank’s disclosure and a settlement reached under OFSI’s new enforcement framework.

In its guidance following the case, OFSI warned firms not to rely too heavily on third-party screening providers and said banks operating in higher-risk markets need strong customer reviews and a clear understanding of how sanctions risks are managed throughout payment chains.