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On 10 September 2025, the Office of Financial Sanctions Implementation (OFSI), part of HM Treasury, announced a monetary penalty of £152,750 against Colorcon Limited, a UK-registered company and subsidiary of Colorcon Inc. The case highlights how UK businesses remain exposed to financial sanctions risks, even when operating overseas.
What Happened?
Colorcon operated a representative office in Moscow. Between March and December 2022, the company authorised 123 payments (worth £191,290.57) to staff and service providers. These payments were made through accounts held with sanctioned Russian banks – including Alfa Bank, Promsvyazbank, Sberbank, and VTB.
While some payments (worth £63,012.85) fell under a temporary general licence allowing firms to wind down Russian operations, the remainder – totalling £128,277.72 – were made in breach of UK sanctions.
Why the Fine Was Imposed
OFSI found that Colorcon made funds available to designated entities, in contravention of the Russia (Sanctions) (EU Exit) Regulations 2019. Importantly:
- The payments continued after the relevant general licence expired.
- Reporting requirements under the general licence were not met.
- Colorcon delayed disclosure, waiting four months before notifying OFSI.
Although Colorcon cooperated fully once the investigation began, the delay in disclosure meant the maximum voluntary disclosure discount (50%) was reduced to 35%. OFSI initially assessed a penalty of £235,000, reduced to £152,750 after the discount.
Lessons for Businesses
OFSI categorised this case as “serious”, though not the most serious tier. The penalty notice sets out several clear compliance lessons:
- Do not rely solely on third parties – Companies remain responsible for ensuring payments comply with sanctions, even if processed via banks or agents.
- Update sanctions policies regularly – Policies must reflect the evolving geopolitical environment. In Colorcon’s case, procedures had not been materially updated since 2018.
- Understand and report under general licences – Failure to comply with reporting obligations is an offence in itself.
- Disclose breaches promptly – OFSI values early, full disclosure. Delays can reduce the available discount and increase penalties.
- Recognise the breadth of UK sanctions – UK financial sanctions apply globally to all UK persons and entities, including overseas branches and offices.
Key Takeaway
This case is a stark reminder that sanctions compliance is not optional. Even seemingly routine payments, such as staff salaries or insurance premiums, can create liability if routed through designated institutions.
At LondonCDD, we help businesses identify and mitigate sanctions risks before they result in costly enforcement action. Firms operating internationally must ensure that their compliance frameworks extend beyond customers and suppliers to cover all financial interactions – including employees, contractors, and service providers.
For guidance on strengthening your sanctions compliance programme, contact LondonCDD today.
