OFAC warns sham transfers do not extinguish blocked interests in property
The U.S. Treasury’s Office of Foreign Assets Control issued fresh guidance warning that sham transfers to relatives, trusts and proxies can leave sanctioned property blocked and expose parties to enforcement.
WASHINGTON, March 31, 2026 — The U.S. Treasury’s Office of Foreign Assets Control on Tuesday published a sanctions advisory on sham transactions, warning that blocked persons may try to shift assets on paper while retaining the underlying economic benefit or control. OFAC said such arrangements are a form of sanctions evasion and do not terminate a blocked interest in property.
The advisory says sanctioned persons often use trusts, family members, close associates, shell companies and other opaque structures to disguise continuing interests in assets including bank accounts, real estate, private jets, yachts and companies. OFAC said U.S. persons must treat property tied to sham transfers as blocked unless the agency authorizes a transaction or removes the sanctions restrictions.
OFAC highlighted several red flags for compliance teams. They include transfers on commercially unreasonable terms, transfers to relatives or close associates, transactions with no clear business purpose, overly complex ownership structures in higher-risk jurisdictions, continuing involvement by the blocked person, transfers timed near a designation, and evasive responses to questions about ownership or control.
The agency tied the guidance to prior cases involving Russian oligarchs and narcotics traffickers, including structures linked to Suleiman Kerimov and Vladimir Potanin. It also pointed to recent enforcement actions, including a June 2025 penalty notice against GVA Capital Ltd. and a December 2025 settlement with IPI Partners, as examples of the risks of dealing indirectly with blocked persons through nominees or intermediaries.
The advisory is likely to sharpen expectations for sanctions due diligence, particularly in transactions involving trusts, family offices, private investment vehicles and legacy holdings once connected to designated persons. Firms reviewing ownership changes involving formerly blocked interests may now face added pressure to test whether a transfer was bona fide in substance, not just in legal form.
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