The penalty was imposed by the Office of Financial Sanctions Implementation (OFSI) against the Moscow subsidiary of the firm, which operates as Herbert Smith Freehills (CIS) LLP.

The global law firm reported turnover of £713m for its last financial year and is the sixth largest law firm in the UK, according to the Legal 500.

Six payments totalling £3.93m were made by Herbert Smith Freehills (CIS) to sanctioned entities who were subject to an asset freeze after sanctions were imposed by the British government after Russia invaded Ukraine.

The designated persons were Alfa-Bank JSC, PJSC Sovcombank, and PJSC Sberbank.

Assets were then made available to an individual sanctioned person, who was not named, in a direct breach of the rules.

The largest payment was made on the final day that the Russian office was open after sanctions had been announced with a payment to a non-sanctioned payee who had an account at a sanctioned bank. The sanctioned individual then transferred the money to a non-sanctioned bank once they realised the mistake. Sources said the funds were only held ‘very briefly’ by the sanctioned bank.

Almost £4m was transferred in just seven days before the firm closed its Russian offices.

Herbert Smith Freehills London voluntarily disclosed the breaches to the OFSI, which led to a 50% reduction in the penalty, but the OFSI has made clear the sanctions were broken by HSF Moscow and not the parent company, HSF London made no fault.

A spokesperson for Herbert Smith Freehills in London said: ‘These payments were made as a result of human error, in the final week of the winding up of our former Moscow office’s operations.

‘They do not relate to the firm’s clients or client work, or to any of the firm’s offices other than our former office in Moscow, Herbert Smith Freehills (CIS) LLP.

‘The firm self-reported these incidents to the Office of Financial Sanctions Implementation promptly and has cooperated fully throughout their investigation.

‘Given the firm’s self-reporting and cooperation, OFSI’s recognition that these payments occurred as a result of good faith errors made during our withdrawal from Russia, and the prompt recovery of the only substantial payment, we were disappointed by the fine that has been imposed.

‘Nonetheless, we are pleased that this matter has now been resolved. The firm is committed to complying in full with its obligations.’

278 persons were designated under the Russia sanctions regime for the purposes of an asset freeze, including160 individuals and 108 entities. There was 347 suspected breaches of the Russia sanctions in 2023/4.