UK authorities have fined Apple Distribution International (ADI), a subsidiary of iPhone maker Apple, £390,000 (roughly $515,000) for breaching sanctions related to Russia. This penalty was imposed as ADI (which is based in Ireland and handles sales across Europe and the Middle East) made payments to a company linked to a sanctioned Russian entity. The penalty was issued by the Office of Financial Sanctions Implementation (OFSI), part of the UK Treasury.
A report by The Guardian claims that ADI directed a UK-based bank to process two payments to the Russian streaming service Okko. A UK bank account directed the transactions, which totalled more than £635,000 (nearly $838,000), to a company owned by a sanctioned Russian entity. The case highlights the scrutiny placed on companies operating across jurisdictions as governments continue to enforce financial restrictions tied to Moscow.
Commenting on the UK fine, an Apple spokesperson told The Guardian, “We follow the laws in the countries where we operate and take sanctions compliance extremely seriously. After identifying two payments to a developer that days earlier had become affiliated with a sanctioned entity, we promptly and proactively reported our finding to the UK government. We are constantly working to enhance our already robust compliance protocols, which are consistent with industry standards.”
What UK watchdog OFSI said about penalising Apple’s subsidiary
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In a statement to The Guardian, the UK watchdog said, “OFSI imposed a monetary penalty on ADI because it was satisfied, in relation to these payments, that on the balance of probabilities ADI had breached prohibitions imposed by financial sanctions legislation.”
OFSI said ADI disclosed the payments voluntarily and that the penalty followed settlement discussions, adding that ADI had no reason to suspect the transactions breached sanctions.
“Whilst there were publicly available press articles stating that Okko was wholly owned by a designated person, there is no evidence that ADI was aware of those press articles at the relevant time or that third-party diligence providers were aware of this information,” OFSI added.
The regulator noted that non-UK companies can still breach sanctions if they use UK financial systems for payments. It also said companies should maintain due diligence frameworks to monitor clients and customers and that relying on third-party sanctions screening providers can carry risks.
Okko was acquired by Sberbank in 2018. Following Russia’s invasion of Ukraine in February 2022, it was sold to JSC New Opportunities, a company placed under UK sanctions in June 2022. The payments to Okko were made in June and July that year. Sberbank had earlier been added to the UK’s sanctions list after the invasion.
The Foundation for Defense of Democracies, a US think tank, said the transfer of Okko to an “obscure company” was likely an “attempt to shield those assets from western sanctions”. JSC New Opportunities was established in March 2022.
