Key Takeaways:
- After a 5-month pause, OFAC recently announced four sanctions enforcement actions, making clear it is rigorously enforcing sanctions violations across a wide range of programs (including Russia, Iran, Venezuela and Cuba), especially in cases involving willful misconduct, senior management involvement and failures in compliance and cooperation with OFAC. Interestingly, all of the announced enforcement actions by OFAC involved U.S. companies.
- In June 2025, OFAC announced the imposition of a $215,988,868 penalty on GVA Capital Ltd., a California-based venture capital firm, for willful violations of Russia/Ukraine-related sanctions and failure to comply with an OFAC subpoena.
- Also in June 2025, OFAC announced a $3,882,797 settlement with Unicat Catalyst Technologies, LLC, a Texas-based catalyst products supplier, for egregious violations of Iran and Venezuela sanctions, with additional penalties and settlements from other agencies.
- On July 2, 2025, OFAC announced a $608,825 settlement with Key Holding, LLC, a Delaware-based global logistics company, for non-egregious apparent violations of the Cuban Assets Control Regulations by its Colombian subsidiary that managed unlicensed shipments to Cuba.
- On July 8, 2025, OFAC announced a $1,454,145 settlement with Harman International Industries, Inc., a Connecticut-based multinational audio electronics company, for egregious violations of Iran sanctions.
- To mitigate enforcement risks, companies should maintain strong compliance programs, scrutinize ownership structures of counterparties, properly and promptly respond to regulatory inquiries and seek assistance from experienced counsel with navigating complex compliance matters.
Introduction
After a five-month pause, the U.S. Department of the Treasury's Office of Foreign Assets Control ("OFAC") has announced four very substantial enforcement actions, summarized below, demonstrating that sanctions enforcement is a top priority for the Trump administration. It also highlights the administration's commitment to the 2019 OFAC Compliance Commitments Framework and the rigorous application of OFAC's existing Enforcement Guidelines.
GVA Capital Ltd.: $215,988,868 Penalty for Russia/Ukraine Sanctions Violations
On June 12, 2025, OFAC announced a significant penalty action against GVA Capital Ltd. ("GVA Capital"), a San Francisco-based venture capital firm founded by two Russian nationals, for violations of Russia/Ukraine-related sanctions and for failing to comply with an OFAC administrative subpoena for over two years. According to the announcement, between April 2018 and May 2021, GVA Capital knowingly managed investments for Russian oligarch Suleiman Kerimov, who was designated as a Specially Designated National ("SDN") in April 2018 due to his status as a Russian government official. As a result of Kerimov's SDN designation, his property and property interests in the U.S. were blocked and could not be managed without OFAC's authorization. Despite this designation, GVA Capital continued to manage Kerimov's U.S. investments, taking instructions from individuals it had reason to believe were acting on Kerimov's behalf, including attempts to sell or distribute shares in a U.S. company for his benefit. Importantly, Kerimov held shares in a U.S. company through intermediary entities, including a Delaware trust formed in July 2017 to hold and maintain Kerimov's U.S. assets, a fact that GVA Capital was well aware of on the basis of extensive pre-designation interactions with Kerimov. This led OFAC to find that GVA Capital's violations were willful as its "senior management had actual knowledge" that the relevant funds and investments ultimately came from Kerimov and that Kerimov retained a property interest in the investments through the trust.
Moreover, OFAC noted a legal opinion that GVA Capital obtained regarding the applicability of U.S. sanctions to GVA Capital's investments. OFAC mentioned the opinion's "incorrect" conclusion that one investment (a Guernsey-based entity in which Kerimov retained an interest) was not blocked property because it was not nominally owned 50% or more by an SDN, and then focused on the fact that the opinion "explicitly cautioned GVA Capital that any sale or transfer of the shares could not directly or indirectly involve Kerimov. Despite this advice, GVA continued to manage Kerimov's investments, taking direction from individuals it had reason to believe were acting for Kerimov – which OFAC viewed as further demonstrating the willfulness of the violations.
In addition, GVA Capital failed to fully and timely respond to an OFAC administrative subpoena. As part of OFAC's investigation, the agency issued a subpoena in 2021. About two months later, GVA Capital provided a response in which it produced 173 documents and certified that it had completed its subpoena response. However, two years later, after receiving a Pre-Penalty Notice in 2023, GVA Capital informed OFAC that it still possessed information "relevant to OFAC's inquiry" that had not yet been provided to OFAC, and subsequently produced approximately 1,300 additional records responsive to the subpoena. In 2024, GVA Capital re-certified the completion of its subpoena response. This "prolonged failure to produce responsive records led to 28 months of non-compliance with OFAC's subpoena," resulting in 28 violations of GVA Capital's reporting obligations.
Determining that GVA Capital's conduct was egregious and not voluntarily self-disclosed, OFAC imposed the statutory maximum penalty of $215,988,868—$214,000,000 for the Russia/Ukraine-related violations and $1,988,868 for the subpoena violations (note that no settlement was reached between GVA Capital and OFAC). This represents the largest civil monetary penalty imposed by OFAC since the record-breaking penalty on Binance in 2023 ($968,618,825) and far exceeds the total penalties imposed by the agency in 2024 ($48,790,404).
Unicat Catalyst Technologies, LLC: $3,882,797 Settlement for Iran and Venezuela Sanctions Violations
On June 16, 2025, OFAC announced a $3,882,797 settlement with Unicat Catalyst Technologies, LLC ("Unicat"), a Texas-based supplier of catalyst products for petrochemical and steel operations. According to the announcement and settlement agreement, from 2016 to 2021, Unicat, through its former CEO, certain directors and employees, engaged in sales of catalyst products and technical services for the use of catalyst products to customers in Iran and sold catalyst products to a blocked Venezuelan entity owned by the Venezuelan government. The company used third-party intermediaries, including a Dutch affiliate and the company's China-based office, to facilitate and conceal these transactions. Payments for some services were made in cash to avoid detection, and employees were instructed to obscure references to Iran in communications. OFAC viewed this conduct as heightening the egregiousness of the violations.
OFAC's explanation of its penalty calculations is instructive. Starting with the statutory maximum penalty applicable to this matter of $8,035,626, OFAC noted that while the apparent violations were egregious, Unicat voluntarily self-disclosed them. Thus, based on OFAC's Economic Sanctions Enforcement Guidelines, OFAC reduced the base civil monetary penalty to one-half of the statutory maximum, (i.e., $4,017,813). OFAC then made a further very modest reduction (to $3,882,797), based on OFAC's detailed consideration of all the various other aggravating and mitigating factors. The aggravating factors included: willfulness of the violations; attempts to conceal illicit dealings; and significant harm to OFAC's foreign policy and national security objectives. The mitigating factors included: cooperation with OFAC during its investigation; engagement with outside counsel to file voluntary self-disclosures with U.S. authorities within one month of discovering the violations; termination of personnel involved in the improper transactions; and implementation of compliance policies and programs with periodic audits and risk assessments. In the end, the extensive cooperation and remedial actions by the company's new management was barely enough to outweigh the significant aggravating conduct engaged in by the culpable former management, netting the company only modest benefit – without the mitigating factors it appears the penalty could have been considerably higher due to the conduct of prior management.
In addition to the monetary penalty, Unicat is required to maintain a comprehensive sanctions compliance program for at least five years under the terms of the settlement with OFAC. This will include establishing management commitment to sanctions compliance, conducting internal risk assessments, implementing internal controls, performing periodic testing and audits and providing comprehensive training for employees and relevant stakeholders. Unicat must also submit annual certifications to OFAC detailing its compliance efforts and promptly report any future violations or deficiencies.
OFAC's enforcement action was coordinated with the U.S. Department of Justice ("DOJ") and the Department of Commerce's Bureau of Industry ("BIS"). On June 16, 2025, DOJ's National Security Division and the U.S. Attorney's Office for the Southern District of Texas announced that they declined the prosecution of Unicat's new owner—a private equity firm—after the firm discovered and voluntarily self-disclosed Unicat's criminal violations of U.S. sanctions and export laws. DOJ simultaneously entered into a Non-Prosecution Agreement with Unicat, in which Unicat agreed to forfeit $3.325 million. Unicat's former CEO pled guilty to violating U.S. sanctions as well as concealment and international promotional money laundering, and agreed to pay $1.6 million. On June 23, 2025, BIS announced an administrative settlement with Unicat consisting of a civil penalty in the amount of $391,183. OFAC, DOJ and BIS agreed that the DOJ forfeiture payments would be credited against the penalties imposed by the other agencies. In a separate administrative resolution with U.S. Customs and Border Protection ("CBP"), Unicat agreed to pay $1,655,189.57, in "underpaid duties, taxes, and fees."
Key Holding, LLC: $608,825 Settlement for Cuban Sanctions Violations
On July 2, 2025, OFAC announced a settlement with Key Holding, LLC ("Key Holding"), a Delaware-based global logistics company, for apparent violations of the Cuban Assets Control Regulations ("CACR"). The violations stemmed from the activities of Key Holding's Colombian subsidiary, Key Logistics Colombia S.A.S. ("Key Colombia"), which provides brokering and cargo transportation services.
Key Holding acquired Key Columbia in December 2021. As Key Holding is a U.S. person subject to the CACR, Key Columbia became subject to U.S. sanctions as a result of the acquisition (under 31 C.F.R. § 515.329, CACR applies to entities organized under U.S. laws, as well as entities owned or controlled by such U.S. entities). However, Key Colombia did not understand that it was now subject to the CACR, and it managed the logistics for 36 unlicensed freight shipments to Cuba—approximately $3 million in total value—between January 2022 and July 2023. The majority of the shipments consisted of foodstuffs not eligible for OFAC licensing, while three shipments included safety-related oil well machinery components, towels and electric forage choppers. Notably, the oil well machinery was shipped via Comercial Cupet S.A., a Cuban government-owned entity. Neither Key Holding nor Key Colombia had a sanctions compliance program in place at the time of the shipments.
In 2023, Key Holding was contemplating being acquired by another U.S. company. During due diligence in connection with that potential sale, Key Holding discovered the violations in January 2024. Key Holding then voluntarily self-disclosed the apparent violations to OFAC, ceased all Cuba-related shipments and implemented significant remedial measures. These included issuing its first trade sanctions and export control compliance policy (which covered both Key Holding itself and its subsidiaries), instituting mandatory company-wide sanctions training and adopting a platform for automatic continuous screening of shipments for sanctions and export control compliance.
The shipments resulted in 36 apparent CACR violations. OFAC considered the applicable statutory maximum civil penalty for these violations to be $4,007,088. However, OFAC determined that the violations were self-disclosed and non-egregious and instead applied the base civil monetary penalty of $1,217,651, which equals the sum of one-half of the transaction value for each apparent violation. The case ultimately settled for $608,825, which reflects OFAC's consideration of various aggravating and mitigating factors. The aggravating factors included: the failure by Key Colombia and Key Holding to exercise due caution or care for their compliance obligations when the acquisition of Key Colombia by Key Holding subjected Key Colombia to U.S. primary sanctions; Key Columbia knew, and Key Holding had reason to know, that the transactions were occurring (even if they did not sufficiently appreciate the applicability of the CACR); and the unlicensed shipments caused harm to and undermined the CACR's foreign policy objectives. The mitigating factors included: most of the shipments were of benign consumer products; Key Holding took various remedial measures upon discovery of the shipments; and Key Holding was highly cooperative and responsive to OFAC's requests for information and documentation.
Harman International Industries, Inc.: $1,454,145 Settlement for Iran Sanctions Violations
On July 8, 2025, OFAC announced a settlement with Harman International Industries, Inc. ("Harman"), a Connecticut-based multinational audio electronics company, whereby Harman agreed to pay $1,454,145 to settle potential civil liability for 11 apparent violations of the Iranian Transactions and Sanctions Regulations ("ITSR"). The violations occurred over a more than two-year period, during which overseas employees of Harman's U.S. subsidiary facilitated the diversion of products to Iran through a United Arab Emirates distributor. The case was deemed egregious by OFAC, but Harman's voluntary self-disclosure and subsequent remedial actions were taken into account in determining the settlement amount.
From May 22, 2018, to October 27, 2020, Harman's UAE distributor sold products to customers in Iran with the knowledge and support of 13 British employees of Harman Professional, Inc., a U.S. subsidiary, and thus their conduct was attributable to Harman. These employees, who held various managerial positions, used deceptive terms such as "the northern region," "North Dubai" and "up north" in internal communications to obscure references to Iran. The products were shipped on an "ex works" basis from Harman's distribution center in Denmark, after which the distributor assumed responsibility for onward shipment, ultimately diverting the goods to Iran, including at least one sale to the Iranian government.
The violations were facilitated by significant deficiencies in Harman's compliance program. The company lacked a formal system for monitoring or auditing sanctions-related risks and relied heavily on business units to identify potential issues. Only one employee was responsible for managing U.S. economic sanctions and export control risks, and this individual lacked the necessary expertise and resources. Similarly, according to OFAC, Harman's in-house counsel team lacked sanctions and export controls expertise. OFAC identified several aggravating factors, including the willful conduct of the British Sales Team who had actual knowledge of sales to Iran, their efforts to conceal the sales, the fact that Harman is a large, sophisticated multi-national company and the harm caused to U.S. sanctions objectives by allowing unauthorized access to U.S. goods in Iran.
OFAC cited several mitigating factors that resulted in a settlement amount below the base civil monetary penalty ($2,077,350) and maximum civil penalty ($4,154,700). First, Harman had not received a penalty notice or finding of violation from OFAC within the past five years. Further, upon discovery of the violations, Harman undertook a rigorous internal investigation, hired outside counsel and auditors and made substantial investments in enhancing its sanctions compliance resources. The company adopted new internal reporting guidelines, empowered its Legal and Global Trade Compliance Departments and implemented targeted employee training. Finally, OFAC praised Harman, through outside counsel, for being "highly cooperative and responsive to OFAC's requests for information."
Enforcement Priorities and Themes
These four OFAC actions shed important light on the Trump administration's approach to sanctions enforcement:
- Continued enforcement of Russia-related sanctions: Despite public speculation that Russia-related sanctions could be relaxed or lifted, OFAC's recent action against GVA Capital demonstrates a continued commitment to enforcing Russia sanctions. The agency's imposition of a $215M penalty for violations involving a sanctioned Russian oligarch makes clear that, at least for now, Russia-related sanctions remain a top priority for U.S. authorities. This is reinforced by the fact that although the GVA Capital investigation was commenced by the Biden administration, the Trump administration made the decision to approve the penalty and announced the enforcement action.
- Focus on willful and egregious conduct: Both the GVA Capital and Unicat actions involved willful violations of U.S. sanctions laws, with senior management or key personnel knowingly facilitating or concealing prohibited transactions. OFAC continues to treat such conduct as especially serious, which can result in higher penalty calculations that may only be partially offset by subsequent remedial efforts, such as a voluntary self-disclosure. In contrast, OFAC treated the Key Holding matter as non-egregious, where the subsidiary Key Colombia's management was not aware that it was subject to U.S. sanctions jurisdiction at the time the unlicensed shipments occurred and thus did not act willfully.
- Emphasis on gatekeeper responsibility: OFAC has reiterated the critical role of "gatekeepers"—such as investment professionals, accountants, attorneys, corporate formation service providers and financial institutions—in preventing sanctions evasion. The GVA Capital action, in particular, flags an expectation that these actors must identify and address indirect or beneficial ownership by sanctioned parties. As OFAC has cautioned: "Gatekeepers occupy crucial financial and legal positions that place them at particular risk of knowingly or unwittingly furnishing access by illicit actors to the licit financial system. Given that they often occupy positions of trust, gatekeepers are also often better positioned than others to monitor for and identify ways in which a blocked person may retain an interest in property. Accordingly, gatekeepers should remain vigilant of the risk that unscrupulous actors, including sanctioned parties or their proxies, may seek to use professional services to conceal a property interest or otherwise evade OFAC sanctions."
- Importance of robust, well-resourced compliance programs: Strong, centrally-managed compliance programs are critical, especially for global companies with foreign employees and operations in high-risk jurisdictions. These cases serve as cautionary examples of the risks associated with inadequate compliance oversight and the need for dedicated attention to subsidiaries and distributors in regions prone to sanctions violations.
- Importance of cooperation in investigations: All four enforcement actions demonstrate that OFAC continues to expect prompt, comprehensive and candid cooperation during sanctions investigations. Delays or incomplete responses, as well as false certification of completeness, are treated as separate violations and can significantly increase penalties, as seen in the GVA Capital case. In contrast, cooperation, as seen in the Unicat, Key Holding, and Harman cases, is treated as a mitigating factor.
- Value of voluntary self-disclosure and remediation: OFAC continues to reward companies, like Unicat, Key Holding, and Harman, that voluntarily self-disclose violations, cooperate fully and implement robust remedial measures with reduced penalties.
Best Practices/Lessons Learned
These four actions also provide companies with insights into best practices from OFAC's perspective that can be used to strengthen their compliance programs.
- Scrutiny of indirect and beneficial ownership: Consistent with its longstanding approach, OFAC takes a proactive stance in looking beyond formalistic ownership structures that may obscure the true parties in interest behind complex layers of intermediaries or proxies. The GVA Capital action, for example, highlights that actual knowledge of a sanctioned party's beneficial interest will trigger enforcement and liability, regardless of nominal ownership. Thus, U.S. companies should scrutinize indirect and beneficial ownership of those they deal with to minimize their sanctions risks, as they cannot claim ignorance even if the nominal counterparty is someone other than the sanctioned individual.
- Importance of awareness of sanctions obligations related to non-U.S. subsidiaries, employees and distributors, and extending compliance programs to such persons: The Key Holding case highlights that non-U.S. entities may be subject to U.S. sanctions jurisdiction after acquisition by U.S. entities. U.S. sanctions compliance obligations may, as under the CACR, extend to foreign entities owned or controlled by U.S. persons. Thus, companies should ensure that newly acquired subsidiaries, including entities organized and operating outside the United States, are aware of and comply with their obligations. The Harmon case reemphasizes a point OFAC has made many times in the past about the risks of failing to extend sanctions compliance oversight to non-U.S. employees and distributors.
- Sanctions obligations of non-bank financial institutions: The GVA Capital action highlights the expectations for non-bank financial institutions (such as venture capital firms, private funds and investment advisers) to develop and maintain effective, risk-based sanctions compliance programs. OFAC expects these entities to "have a clear understanding of their U.S. sanctions compliance obligations, as well as the risks posed by dealing with counterparties who are themselves sanctioned or who reside in sanctioned jurisdictions." Such entities must implement robust procedures for identifying ultimate beneficial owners, screening for direct and indirect links to sanctioned parties and monitoring for evolving risks, especially when existing investors become sanctioned.
- Importance of engaging experienced compliance counsel: GVA Capital's improper reliance on an incorrect legal opinion, failure to adequately respond to OFAC's administrative subpoena and false certification of completeness led to numerous violations and significant monetary penalties. Harman, on the other hand, was credited for hiring outside counsel to conduct a rigorous internal investigation and for being "highly cooperative and responsive" to OFAC's investigation. These cases demonstrate the need to use experienced sanctions compliance counsel to handle complex and sensitive government investigations involving U.S. foreign policy and national security considerations.
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