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Private Equity Firm Pays Over $11 Million To Settle Russia-Related Sanctions With OFAC
12/17/2025On December 2, 2025, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) announced an $11,485,352 settlement with a Chicago-based private equity firm (the “Company”) to resolve alleged violations of Ukraine- and Russia-related sanctions due to continued indirect investment by the Company on behalf of a Russian oligarch, Suleiman Kerimov, designated by OFAC as a Specially Designated National (“SDN”) in 2018.
According to OFAC, from January 2017 through March 2018, the Company solicited and received approximately $50 million from a British Virgin Islands (“BVI”) entity, which the Company knew came from Kerimov. Specifically, OFAC alleged that, prior to receiving the funds, a senior Company executive met with Kerimov’s representatives, including Kerimov’s nephew, and later with Kerimov himself to secure the investments, and that two payments of approximately $25 million each were made to the Company in the months following those meetings.
On April 6, 2018, OFAC designated Kerimov as an SDN because he was an official of the Government of the Russian Federation. After Kerimov’s designation, OFAC alleged the Company retained outside counsel who—based on an incomplete factual record—advised that the Company was not required to block the BVI entity’s account because Kerimov did not formally own 50% or more of the entity. OFAC concluded, however, that the Company failed to disclose to its counsel its meetings with Kerimov and his representatives and that, in light of those meetings, the Company should have known that Kerimov directed the BVI entity’s investment decisions. Despite this, the Company continued to maintain investments with the BVI entity.
OFAC determined that the conduct constituted dealings in the property or interests in property of a blocked person, in violation of 31 C.F.R. part 589. OFAC calculated a base penalty of $14,356,690 under its enforcement guidelines but settled for $11,485,352 after weighing aggravating and mitigating factors.
Aggravating factors included:
- Company Knowledge: The Company’s senior executive met with Kerimov and his representatives in person to obtain the investments, knew that Kerimov was the source of funds for the BVI entity, and had reason to know that it continued to deal with Kerimov indirectly following his designation by OFAC.
- U.S. Foreign Policy Interests: The Company acted contrary to U.S. foreign policy interests and allowed a sanctioned individual to access the U.S. financial system.
- Firm Sophistication: The Company is a private equity firm that manages billions of dollars in capital from investors.
Mitigating factors included:
- Lack of OFAC Violation: The Company has not received a penalty notice or a violation finding from OFAC in the past five years.
- Eventual Substantial Cooperation: While the Company’s initial cooperation was deficient, OFAC highlighted its retention of new counsel, waiver of privilege, and production of records as mitigating factors.
In announcing the settlement, OFAC stressed that private equity sponsors and other U.S. market participants should focus not just on “legal formalities” but also “practical and economic realities” in assessing the sanctions risk of its investors, and that firms should implement controls capable of a “more exhaustive analysis” when dealing with trust or proxy structures that can obfuscate a blocked person’s interest. In announcing its action, OFAC emphasized that, while legal advice “can help entities fulfill their sanctions compliance obligations, it does not absolve them from liability if they violate U.S. sanctions,” particularly when the advice is based on incomplete facts provided to counsel.
