A subsidiary of tech giant Apple is being fined by the UK for breaching sanctions against Russia over payments it approved to a streaming service based in the country.

The Office of Financial Sanctions Implementation (OFSI) has issued a £390,000 fine on Apple Distribution International (ADI), based in Ireland, over its instruction of a UK-based bank to make payments to a country owned by a sanctioned Russian firm.

ADI, the subsidiary that sells Apple products in Europe and the Middle East, made payments worth over £645,00 to Okko, a streaming service.

Okko was previously owned by Sberbank, Russia’s biggest bank, but was sold to JSC New Opportunities following the Russian invasion of Ukraine by 2022. JCS New Opportunities was placed under UK sanctions in June 2022, with the payments enabled by ADI occuring in June and July of that year.

JSC New Opportunities was created in March 2022, and may have been an attempt by Okko and Sberbank to protect assets from sanctions following the invasion, Foundation for Defense of Democracies, a US thinktank, suggests.

The case also highlights that non-UK firms could be found in breach of UK sanctions if they use UK-based financial institutions for payments.

“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 in a statement.

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ADI voluntarily disclosed the payments to OFSI, which said that the Apple subsidiary had no reason to think the payments may be in violation of existing 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,” the regulator explained.

The fine was decided via settlement discussions between ADI and the watchdog.

Apple responded to the fine: “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.”

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