Citibank’s London branch has been fined £4.73m after the UK sanctions watchdog found it processed 970 prohibited payments with a combined value of £19.72m, in a case centred largely on Russia-related controls after the invasion of Ukraine.
The Office of Financial Sanctions Implementation, the HM Treasury unit responsible for enforcing financial sanctions, imposed the £4,732,830.58 penalty on Citibank N.A. London Branch on 11 August. The action was published on 2 September following a settlement with the bank.
For a major cross-border payments and correspondent banking operation in London, the case shows the demands of rapidly changing sanctions lists. OFSI said the problems spanned payment processing, account restrictions and correspondent banking.
Failures followed rapid expansion of Russia sanctions
Most of the breaches occurred between February and November 2022, when the UK and its allies introduced sweeping measures after Russia’s full-scale invasion of Ukraine. OFSI acknowledged that the pace and scale of the new restrictions put considerable pressure on firms exposed to Russia, but concluded that the circumstances did not excuse the breaches.
The regulator said Citibank’s London operation had a heightened exposure to Russia-related risk at the time because of its Russian clients, links to Russian financial institutions through correspondent banking and payments connected to its Russian affiliate. Citibank N.A. London Branch is the UK branch of the US-headquartered Citibank N.A. and provides wholesale banking, cash management, cross-border payments, accounts and settlement services.
Among the issues identified were delays in restricting accounts connected to sanctioned people and companies. The regulator said 242 payments worth roughly £5.9m were processed after 24 commercial accounts held by 11 companies linked to a designated Russian individual were not restricted promptly. About £4.3m of that total moved within the first 24 hours after the individual’s designation, while further payments followed over subsequent weeks.
A separate screening problem meant the bank’s systems did not generate alerts for PJSC Sovcomflot because its own records used the prefix “PAO Sovcomflot”, rather than the name on the sanctions list. OFSI said this contributed to 328 transactions worth about £5.4m involving accounts of entities owned or controlled by Sovcomflot.
Systems, controls and reporting under scrutiny
The decision also describes automated processing and data shortcomings. In one group of cases, Russian correspondent banks could be added to a payment route after screening had occurred, without the full payment chain being screened again. In another, internal lists had not been updated with bank identification codes used in payment messages. The findings involved payments connected to institutions including Alfa-Bank, Gazprombank and Credit Bank of Moscow.
OFSI also cited manual review backlogs, errors in ownership-and-control assessments, incomplete handling of internal charges and individual alert-handling mistakes. It found that frozen assets were not reported as soon as practicable on 53 occasions; every delay exceeded six weeks, and 11 lasted 518 days. The regulator said the average time between the branch having reasonable cause to suspect it held frozen funds and filing the related report was 274 days.
Not every payment discussed by the regulator was a Russia-sanctions matter. Ten payments made in 2025 also breached the Global Anti-Corruption Sanctions Regulations, according to OFSI. The watchdog assessed the enforcement case as a whole rather than issuing separate penalties for each group of breaches.
OFSI rated the case as high severity, with aggravating conduct, placing it at the highest level of its seriousness framework. It said there was no intention by the London branch to breach sanctions, but judged combined failures material and significant. The regulator said the shortcomings allowed designated people, or entities they owned or controlled, to access funds, settle obligations or continue operations, undermining the purpose of the restrictions.
Settlement brings discounts but ends review rights
The branch voluntarily disclosed most of the issues and co-operated with the investigation, which earned a 20% reduction from OFSI’s baseline penalty. A further 20% settlement discount applied after an agreement was reached within the regulator’s settlement period. The baseline was £7.89m, against a statutory maximum of £9.86m.
OFSI said the bank had undertaken a remediation programme and shared corrective-action plans and progress updates. Citi said it welcomed the conclusion of the matter, takes sanctions compliance seriously and continues to invest significantly in its global compliance framework.
As part of the settlement, Citibank N.A. London Branch agreed to pay the penalty and waived its rights to a ministerial review and an appeal to the Upper Tribunal on the matters covered. For City firms, the published decision offers a detailed warning that alert queues, screening configurations, payment-routing data and prompt reporting of frozen assets will be scrutinised closely when sanctions risk intensifies.
