Sanctions, Gatekeepers, and Trust Structures - Lessons for Israeli Companies from the Recent OFAC Settlement
סנקציות, שומרי סף ומבנים של קרן נאמנות - לקחים לחברות ישראליות מההסדר האחרון של OFAC
Question: Can professionals such as lawyers, trustees, or professional advisors face sanctions liability even if they relied on external legal advice?
Answer: A December 2025 enforcement action by the U.S. Treasury’s Office of Foreign Assets Control (OFAC) [1] illustrates that professional gatekeepers may face sanctions compliance exposure even where conduct is non-egregious and undertaken in reliance on external sanctions legal advice. In this case, OFAC settled with an individual, a U.S.attorney, who served as the fiduciary of a family trust of a sanctioned Russian oligarch, for USD 1.092 million for apparent violations of U.S. economic sanctions regulations.
In this case the U.S. person served in a fiduciary capacityfor a U.S. based trust funded almost entirely by a Russian oligarch, who at thetime was not sanctioned. Following the oligarch’s addition to OFAC’s List of Specially Designated Nationals and Blocked Persons, the attorney obtained external sanctions advice concludinע that the trust was not blocked property under OFAC regulations.
Nonetheless, OFAC determined that the underlying facts demonstrated that the sanctioned individual continued to exercise control and economic influence over the trust through family members and proxies. OFAC emphasized that sanctions analysis focuses on economic reality and control, rather than formal legal ownership structures. The continued provision of fiduciary and administrative services—such as authorizing transfers, payments, and accountactivity—was treated as the provision of prohibited services to a sanctionedperson, notwithstanding the absence of direct dealings and despite reliance on adviceof counsel.
This enforcement action reinforces OFAC’s view thatlawyers, trustees, advisors and other professional intermediaries occupy acritical “gatekeeper” role and are expected to identify and mitigate sanctions-evasion risks, particularly when an existing client becomes designated. Importantly, U.S. sanctions laws are enforced on a strict liability basis: good faith and advice of counsel may mitigate penalties but will note liminate liability where sanctions red flags arise. This OFAC settlement serves as a reminder that sanctions compliance for professional service providers requires ongoing, fact-intensive scrutiny and a conservative approach when sanctions risksemerge.
For Israeli companies operating globally, U.S. sanctions compliance is no longer a purely “U.S. law” issue. It is a commercial, banking,and reputational risk that requires proactive governance—especially where activities involve U.S. persons, international finance institutions, or complex structures, private wealth, or high-risk jurisdictions. Although the December 2025 enforcement action involved a U.S. attorney, its lessons are directly relevant to Israeli companies, professionals, and financial intermediaries that interact with U.S. persons, U.S.dollar clearing, or global counterparties subject to OFAC sanctions expectations and international sanctions compliance standards.
[1]U.S. Department of Treasury Office of Foreign Assets Control, EnforcementRelease: December 9, 2025: https://ofac.treasury.gov/media/934806/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.
סנקציות, שומרי סף ומבנים של קרן נאמנות - לקחים לחברות ישראליות מההסדר האחרון של OFAC
Question: Can professionals such as lawyers, trustees, or professional advisors face sanctions liability even if they relied on external legal advice?
Answer: A December 2025 enforcement action by the U.S. Treasury’s Office of Foreign Assets Control (OFAC) [1] illustrates that professional gatekeepers may face sanctions compliance exposure even where conduct is non-egregious and undertaken in reliance on external sanctions legal advice. In this case, OFAC settled with an individual, a U.S.attorney, who served as the fiduciary of a family trust of a sanctioned Russian oligarch, for USD 1.092 million for apparent violations of U.S. economic sanctions regulations.
In this case the U.S. person served in a fiduciary capacityfor a U.S. based trust funded almost entirely by a Russian oligarch, who at thetime was not sanctioned. Following the oligarch’s addition to OFAC’s List of Specially Designated Nationals and Blocked Persons, the attorney obtained external sanctions advice concludinע that the trust was not blocked property under OFAC regulations.
Nonetheless, OFAC determined that the underlying facts demonstrated that the sanctioned individual continued to exercise control and economic influence over the trust through family members and proxies. OFAC emphasized that sanctions analysis focuses on economic reality and control, rather than formal legal ownership structures. The continued provision of fiduciary and administrative services—such as authorizing transfers, payments, and accountactivity—was treated as the provision of prohibited services to a sanctionedperson, notwithstanding the absence of direct dealings and despite reliance on adviceof counsel.
This enforcement action reinforces OFAC’s view thatlawyers, trustees, advisors and other professional intermediaries occupy acritical “gatekeeper” role and are expected to identify and mitigate sanctions-evasion risks, particularly when an existing client becomes designated. Importantly, U.S. sanctions laws are enforced on a strict liability basis: good faith and advice of counsel may mitigate penalties but will note liminate liability where sanctions red flags arise. This OFAC settlement serves as a reminder that sanctions compliance for professional service providers requires ongoing, fact-intensive scrutiny and a conservative approach when sanctions risksemerge.
For Israeli companies operating globally, U.S. sanctions compliance is no longer a purely “U.S. law” issue. It is a commercial, banking,and reputational risk that requires proactive governance—especially where activities involve U.S. persons, international finance institutions, or complex structures, private wealth, or high-risk jurisdictions. Although the December 2025 enforcement action involved a U.S. attorney, its lessons are directly relevant to Israeli companies, professionals, and financial intermediaries that interact with U.S. persons, U.S.dollar clearing, or global counterparties subject to OFAC sanctions expectations and international sanctions compliance standards.
[1]U.S. Department of Treasury Office of Foreign Assets Control, EnforcementRelease: December 9, 2025: https://ofac.treasury.gov/media/934806/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.
