OFAC Settlement Underscores Risks for Fiduciaries and Gatekeepers

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.

For questions about sanctions matters, contact the authors or any of their colleagues in Arnold & Porter’s White Collar Defense & Investigations or Export Control & Sanctions groups.

© Arnold & Porter Kaye Scholer LLP 2025 All Rights Reserved. This Blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.