The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) on March 31, 2026 issued a sanctions advisory warning that sham transactions are being used to evade U.S. sanctions while concealing continued ownership of assets.
The advisory outlines how blocked persons transfer assets through proxies, trusts, and complex legal structures while retaining control, posing risks to financial systems and compliance enforcement.
OFAC Issues New Sanctions Advisory
The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) released the advisory to highlight emerging sanctions evasion risks. The guidance is directed at financial institutions, compliance professionals, and entities dealing with potentially blocked property.
Advisory Scope and Timing
According to OFAC, the March 31, 2026 advisory focuses on sham transactions that disguise ongoing ownership interests. These transactions occur when blocked persons appear to divest assets on paper but retain control in practice.
Additionally, OFAC stated that such activity undermines U.S. foreign policy and national security objectives. The advisory reinforces that property subject to sanctions cannot be transferred or used without explicit authorization.
How Sham Transactions Enable Sanctions Evasion
OFAC identified that blocked individuals often use intermediaries and legal mechanisms to obscure their involvement. These methods allow continued economic benefit from assets despite formal transfer of ownership.
Common Evasion Methods Identified
Examples provided by OFAC include transfers of private jets, bank accounts, and investment holdings into trusts or family-controlled entities. In one cited case, a sanctioned oligarch transferred a jet into a trust benefiting a spouse while continuing to use it.
Meanwhile, OFAC also noted cases involving narcotics traffickers and investment advisors using proxies or layered companies. These arrangements enabled continued control over funds and business operations despite sanctions restrictions.
Red Flags Highlighted by OFAC
The advisory outlines specific indicators that may signal a sham transaction. These red flags are intended to support compliance teams in identifying potential sanctions evasion risks.
Risk Indicators for Compliance Teams
| Indicator | Recent Movement | Context |
|---|---|---|
| Transfers to family members | Increased scrutiny | OFAC notes transfers to relatives may indicate proxy ownership and continued control |
| Complex ownership structures | Ongoing concern | Multi-layered entities and offshore structures may conceal beneficial ownership, according to OFAC |
| Commercially unreasonable deals | Flagged transactions | Below-market or unclear transfers may indicate sham arrangements, per OFAC guidance |
- Unclear transaction purpose: OFAC states transfers lacking clear business rationale may signal attempts to obscure ownership
- Timing near designation: Transfers occurring shortly before or after sanctions designation raise compliance concerns, according to OFAC
- Continued involvement: Ongoing management or use of assets by a blocked person indicates retained interest, per OFAC findings
Enforcement Actions and Case Examples
OFAC highlighted enforcement actions demonstrating how sham structures are identified and disrupted. These cases involve both individuals and financial institutions.
Notable Enforcement Cases
In June 2022, OFAC blocked a Delaware-based trust linked to sanctioned Russian oligarch Suleiman Kerimov, stating he retained a property interest through layered structures. Additionally, the U.S. Department of the Treasury reported that funds entered the U.S. system through entities controlled by the oligarch.
Also, in December 2025, OFAC reached a settlement involving a fiduciary who facilitated trust operations tied to a blocked person. The agency concluded that the fiduciary should have recognized indicators of proxy control and sanctions evasion.
Compliance Expectations for Financial Institutions
OFAC emphasized that entities must apply a risk-based approach when evaluating transactions involving previously sanctioned property. The advisory states that institutions should assess the totality of circumstances rather than relying solely on legal ownership structures.
Stakeholder Comments
OFAC stated that it will continue enforcement and designation actions against those facilitating sanctions evasion. The agency also noted that legitimate transactions conducted in good faith remain permissible when no blocked interest exists.
In Conclusion
The OFAC advisory underscores increasing scrutiny of complex financial arrangements used to bypass sanctions. It reinforces that compliance obligations extend beyond formal ownership to underlying economic realities.
Financial institutions and intermediaries are expected to strengthen due diligence processes, ensuring that concealed interests do not undermine sanctions enforcement.
Sources: U.S. Department of the Treasury.
Prepared by Ivan Alexander Golden, Founder of THX News, an independent news organization delivering timely insights from global official sources.
Research combines AI-assisted analysis with human-edited accuracy and context.
