- within International Law topic(s)
- with readers working within the Banking & Credit industries
On December 9, 2025, the U.S. Department of the Treasury's
Office of Foreign Assets Control (OFAC) announced a $1,092,000 settlement with a former
U.S. government official and attorney (the U.S. Person) for
apparent violations of Ukraine-/Russia-related sanctions. The
apparent violations stem from the U.S. Person serving as fiduciary
of a U.S.-based trust for a sanctioned Russian oligarch (the
Specially Designated National (SDN)) between 2018 and 2022.
According to OFAC, the U.S. Person agreed to serve in a fiduciary
capacity for a U.S.-based trust (the Trust), which was funded
almost entirely by the SDN before the SDN's designation. In
this role, the U.S. Person had broad authority over the Trust's
operations, including appointing fiduciaries, managing investments,
and making distributions. On April 6, 2018, OFAC designated the
Russian oligarch, which meant from that date forward, all U.S.
property and interests of the SDN —including the Trust
— were blocked, and U.S. persons were prohibited from
providing any services to or for the benefit of the SDN.
Notwithstanding the SDN designation, however, the U.S. Person
remained in their fiduciary role. Throughout this period, a family
member of the SDN continued to act as a proxy for the SDN,
including by meeting with investors and fiduciaries on the
SDN's behalf.
OFAC stated that the U.S. Person apparently consulted with counsel
regarding whether the Trust constituted blocked property as a
result of the designation. Based on the information provided,
counsel concluded that the Trust did not appear to be blocked
property. Notwithstanding this advice, OFAC determined that the
U.S. Person should have known — based on personal knowledge
— that a family member, acting as a proxy for the SDN,
continued to influence the Trust's activities after the
designation. OFAC stated that it had "reason to believe"
that the legal opinion was "predicated, at least in part, on
the understanding" that the SDN family member had no
substantive involvement in the Trust's management and
operations.
Under OFAC's Enforcement Guidelines, the base civil penalty
for the apparent violations was $6,245,136. The settlement amount
of $1,092,000 reflects OFAC's consideration of a number of
aggravating and mitigating factors. Aggravating factors included
(1) the U.S. Person's apparent knowledge of the SDN's
continued influence over the Trust through the family member proxy,
and (2) harm to regulatory objectives of the Russia-related
sanctions program by enabling the SDN to access the U.S. financial
system, allowing the Trust's assets to grow substantially, and
lending legitimacy to its operations. On the other hand, OFAC
determined that the U.S. Person's lack of prior OFAC
enforcement history and substantial cooperation during the
investigation were mitigating factors.
This settlement highlights OFAC's broad interpretation of the
terms "interest" and "property interest" when
determining what constitutes blocked property, including who has
actual control of the property, as well as the real-world ability
to influence or benefit from property. The settlement also
underscores the heightened sanctions risks that may arise for
"gatekeeper" professionals, which, according to OFAC,
include investment advisors, accountants, attorneys, and providers
of trust and corporate services. Gatekeeper professionals should
carefully assess any continuing influence a sanctioned person may
have over property and implement robust controls to prevent being
used as conduits for sanctions evasion.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
