Bank of Scotland has recently been fined £160,000 for a breach of financial sanctions. The cause? The Bank failed to identify a sanctioned individual due to several subtle variations in the spelling of name as it appeared on the sanctions list. The variations included an additional character in the forename, a missing middle name, and a changed character in the Surname. These character changes are (apparently) common where translating the name from Russian to English and were recorded on their British passport.
According to the penalty notice this still could have been picked up two weeks later by the Bank as part of their Politically Exposed Persons (PEPs) screening process. However, during the manual adverse media check, a member of staff erroneously assessed the person as being removed from the UK Sanctions List as well as an EU list. By the time an internal investigation identified this mistake a few days later the sanctioned individual’s account had been credited with £75,000. As the bank self-reported to the OFSI (Office of Financial Sanctions Implementation) the fine was cut in half from £320,000.
Like Bank of Scotland, credit unions are also prohibited from dealing with or making funds available to individuals who are subject to UK financial sanctions, and some follow a similar process of comparing prospective member names as stated on their ID against a list* of sanctioned people before admitting them into membership. This case demonstrates that if your sanctions screening system is not configured to ‘fuzzy match’, that is, to flag up any individuals that have a name that is somewhat close to a sanctioned individual, then you may be liable for a financial penalty. These ‘fuzzy matches’ should be manually reviewed to ensure that the credit union is both not dealing with sanctioned individuals or turning away new members unnecessarily.
Some electronic ID/V systems will perform this check during onboarding and should facilitation identification and rejection of sanctioned individuals. However, it may be worth double checking that these features are both turned on, and allow for a level of fuzzy matching that cases such as the one described above cannot slip through the net.
In addition to the onboarding checks, it is worth remembering that UK Sanctions List is not static and therefore credit unions should be periodically screening their entire membership to detect anyone who has been sanctioned since joining.
Finally, the case continues to highlight that there will often be a human factor interacting with automatic systems. Even where processes successfully identify sanctioned individuals, errors can occur, and therefore credit unions should ensure that any potential flags are escalated to an appropriate person for review.
*Please note that the “UK Sanctions List” is now the only source for UK sanctions designations. The slightly less pithy ‘OFSI consolidated list of asset freeze targets’ closed on 28 January 2026 and is no longer being updated.