OFAC Update – New Sanctions Red Flags andSanctions Evasion Risk
עדכון OFAC - דגלים אדומים חדשים בנוגע לסנקציות וסיכון להתחמקות מסנקציות עדכון אכיפה בבריטניה ובאיחוד האירופי ועקרונות מעשיים בנוגע לציות
Question: What does OFAC’s latestadvisory mean for non-U.S. companies, and how should they adjust their sanctions compliance programs?
Answer: OFAC’s latest advisory[1]reinforces a clear enforcement trend: sanctions risk is increasingly indirect and often arises through third parties and complex transaction structures. The focus is not only on direct dealings with sanctioned parties, but also on activities that may facilitate or obscure such dealings. In particular, OFAC highlights the use of intermediaries, transshipment points, and opaque ownership structures to evade sanctions. OFAC has identified a range of red flags that show that it is prioritizing actual control and economic reality over formal ownership structures:
* Proxy transfers to close associates: Assets moved to family members or affiliates who likely act on behalf of the sanctioned person.
* Continued control despite transfer: The designated person still manages, directs, or benefits from the asset after the transfer.
* Non-arm’s-length transactions: Deals structured on commercially irrational terms suggesting they are not genuine.
* Complex structures masking ownership: Multi-layered entities or trusts used to obscure true beneficial ownership.
* Timing around designation: Transfers occurring shortly before or after sanctions designation indicating asset shielding.
Sanctions risk increasinglyarises from how transactions are structured and executed, not only from who is involved. Therefore, companies should ensure their compliance frameworks are calibrated to identify and mitigate these evolving risks.
Practical Takeaways:
* Update red flag indicators: incorporate OFAC-identified evasion patterns into monitoring and escalation.
* Focus on control, not just ownership: require identification of ultimate beneficiaries and individuals exercising actual influence, beyond formal shareholding.
* Enhance due diligence on ownership changes and relationships: scrutinize recent transfers and connections (family, business) to detect proxy or nominee arrangements.
* Flag non-standard transactions and require justification: escalate deals with unusual structure or terms that lack clear commercial rationale.
[1] OFAC Sanctions Advisory:Guidance on Sham Transactions and Sanctions Evasion, March 31, 2026: https://ofac.treasury.gov/media/935441/download?inline
*The contents of this message, current at the date of publication, are for reference and general informational purposes only and do not constitute legal advice. You should contact your attorney to obtain advice with respect to any particular legal matter. You should not act or refrain from acting on the basis of information in this publication without first seeking legal advice from counsel in the relevant jurisdiction. Only your individual attorney can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation.
עדכון OFAC - דגלים אדומים חדשים בנוגע לסנקציות וסיכון להתחמקות מסנקציות עדכון אכיפה בבריטניה ובאיחוד האירופי ועקרונות מעשיים בנוגע לציות
Question: What does OFAC’s latestadvisory mean for non-U.S. companies, and how should they adjust their sanctions compliance programs?
Answer: OFAC’s latest advisory[1]reinforces a clear enforcement trend: sanctions risk is increasingly indirect and often arises through third parties and complex transaction structures. The focus is not only on direct dealings with sanctioned parties, but also on activities that may facilitate or obscure such dealings. In particular, OFAC highlights the use of intermediaries, transshipment points, and opaque ownership structures to evade sanctions. OFAC has identified a range of red flags that show that it is prioritizing actual control and economic reality over formal ownership structures:
* Proxy transfers to close associates: Assets moved to family members or affiliates who likely act on behalf of the sanctioned person.
* Continued control despite transfer: The designated person still manages, directs, or benefits from the asset after the transfer.
* Non-arm’s-length transactions: Deals structured on commercially irrational terms suggesting they are not genuine.
* Complex structures masking ownership: Multi-layered entities or trusts used to obscure true beneficial ownership.
* Timing around designation: Transfers occurring shortly before or after sanctions designation indicating asset shielding.
Sanctions risk increasinglyarises from how transactions are structured and executed, not only from who is involved. Therefore, companies should ensure their compliance frameworks are calibrated to identify and mitigate these evolving risks.
Practical Takeaways:
* Update red flag indicators: incorporate OFAC-identified evasion patterns into monitoring and escalation.
* Focus on control, not just ownership: require identification of ultimate beneficiaries and individuals exercising actual influence, beyond formal shareholding.
* Enhance due diligence on ownership changes and relationships: scrutinize recent transfers and connections (family, business) to detect proxy or nominee arrangements.
* Flag non-standard transactions and require justification: escalate deals with unusual structure or terms that lack clear commercial rationale.
[1] OFAC Sanctions Advisory:Guidance on Sham Transactions and Sanctions Evasion, March 31, 2026: https://ofac.treasury.gov/media/935441/download?inline
*The contents of this message, current at the date of publication, are for reference and general informational purposes only and do not constitute legal advice. You should contact your attorney to obtain advice with respect to any particular legal matter. You should not act or refrain from acting on the basis of information in this publication without first seeking legal advice from counsel in the relevant jurisdiction. Only your individual attorney can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation.
