This week the UK government announced the settlement of an enforcement action against Petrofac Facilities Management Limited, an energy services firm, for breaching Russian sanctions when divesting its operations in Russia in 2022 and 2023 (click here).
Given the case relates to the violation of trade sanctions and strategic export controls, the case falls within the purview of HM Revenue and Customs (HMRC) and not the OFSI, the HM Treasury department responsible for overseeing the UK’s financial sanctions regime. Note that the announcement refers to a “compound settlement”. The term “compound settlement” is referenced in the announcement. For those unfamiliar with HMRC parlance, this simply refers to a civil settlement agreement between the company and HMRC that allows resolution through a financial penalty rather than criminal prosecution.
The announcement itself did not contain a detailed notice outlining the offences. The following details can, however, be gleaned from the announcement:
Petrofac Facilities Management (Petrofac) breached the Russia (Sanctions) (EU Exit) Regulations 2019. The firm breached Regulation 46Y(2)(c) on two occasions in relation to industrial goods, sanctioned under the G7 Dependency and Further Goods chapter of the Russia Regulations. The first offence was for making the sanctioned goods available to a person connected to Russia and the second was for making available sanctioned goods for use in Russia. Petrofac also breached Regulation 46Z(1)(b) by providing technical assistance in respect of the goods they made available. The offences were committed while Petrofac was divesting its operations in Russia in 2022 and 2023. The case was brought to HMRC’s attention following a voluntary disclosure by Petrofac, which has fully cooperated with HMRC’s investigation.
As a notable side point, the case is noteworthy as Petrofac is the first company to be publicly named by HMRC for accepting such a penalty. This move was likely spurred by the UK Government’s March 2026 cross-government review of sanctions implementation and enforcement where there was widespread support for publicising cases to increase the deterrent effect of enforcement (click here). One of the agreed actions was to take advantage of “teachable moments” by publishing enforcement cases starting in the financial year 2025/2026. The announcement notes that HMRC will now include company naming as a condition when offering such compound settlements for strategic export and sanctions offences where appropriate.