Family International Realty: In January, Family International Realty, a Miami-based real estate brokerage, and its owner, Roman Sinyavsky, settled allegations that they facilitated the transfer of ownership of two luxury condominiums in Miami on behalf of two individuals targeted under OFAC’s Ukraine/Russia sanctions. Family International Realty and several law firms allegedly participated in transferring the real estate interests of the sanctioned individuals to non-sanctioned family members, and companies owned by those family members. Family International Realty and Sinyavsky agreed to pay OFAC a settlement amount of $1,076,923. In parallel civil and criminal proceedings, the two condominiums were ordered forfeited, and Sinyavsky pleaded guilty to IEEPA violations and money laundering and was sentenced to a year and a day in prison. These enforcement actions demonstrate OFAC’s and the DOJ’s continued focus on “gatekeepers” such as realtors, investment advisors, and attorneys, and the risks that dealing with blocked property pose to the various parties to, and service providers involved in, a transaction.

Unicat Catalyst Technologies: In June, Unicat Catalyst Technologies agreed to pay $3.9 million to settle alleged violations of OFAC’s Iran and Venezuela sanctions programs. Through third parties and its subsidiaries outside of the U.S., Unicat supplied industrial catalyst products valued at $2.6 million to sanctioned end-users in Iran and Venezuela. In a parallel criminal action, a private equity firm that acquired Unicat discovered the sales to Iran and Venezuela, promptly disclosed the conduct, and cooperated fully with the DOJ, receiving the first-ever declination against an acquirer under the DOJ’s NSD M&A Safe Harbor Policy, which we previously discussed in our second quarter update. The case underscores the importance of supply-chain compliance processes, and the DOJ’s willingness to decline prosecutions against acquiring companies that self-report misconduct and cooperate.

GVA Capital: Also in June, OFAC imposed a $216 million civil penalty—the statutory maximum—on GVA Capital, a San Francisco-based venture capital firm, after OFAC found that the firm had knowingly managed an investment for a sanctioned Russian national. OFAC found that GVA’s senior management dealt with an individual they knew was a sanctioned Russian individual’s proxy, thereby indirectly dealing with, and acting for, the sanctioned Russian individual. GVA also obtained a legal opinion that incorrectly determined that it was not dealing in blocked property. OFAC found that GVA’s violations were not self-disclosed and were egregious. In addition, GVA failed to respond fully to an OFAC subpoena for more than two years, resulting in 28 violations of OFAC’s Reporting, Procedures, and Penalties Regulations. This rare, non-settled public enforcement action highlights OFAC’s willingness to take enforcement action against persons who deal with proxies for sanctioned persons and expectation of fulsome compliance with its investigations.

Interactive Brokers: In July, Interactive Brokers agreed to pay OFAC $12 million to settle allegations that over several years, the brokerage processed thousands of transactions involving sanctioned countries, including China, Cuba, Iran, Russia, Syria, and Venezuela. Although Interactive Brokers blocked access from IP addresses linked with sanctioned countries, a bug in the company’s IT systems allowed customers located in Iran, Cuba, and Syria to access the brokerage’s services. In addition, the brokerage failed to include Crimea, a sanctioned territory, in its IP address blocking list, leading to additional apparent violations. Notably, the brokerage also processed transactions with blocked Russian banks believing, incorrectly, that a wind-down license authorized the transactions. This enforcement action highlights the complexity and dynamic nature of U.S. sanctions and the challenges associated with maintaining up-to-date knowledge of changing law, and appropriately tuned IT compliance systems.