On December 2, 2025, OFAC announced an ~$11 million penalty settlement with IPI Partners, LLC (“IPI”), a Chicago-based U.S. private equity fund, to settle its civil liability for 51 potential violations of OFAC’s Russia sanctions. The enforcement action underscores the importance of diligence to guard against potential sanctions violations.  In brief, OFAC found that IPI solicited and received investments from a Russian oligarch, Suleiman Kerimov (“Kerimov”), via his representative, and should’ve blocked those funds following OFAC’s designation of Kerimov to its Specially Designated Nationals and Blocked Persons List (“SDN List”).

Facts: In September 2017, a Kerimov family trust signed an agreement to invest $25M in an IPI fund, which then led to a meeting between IPI and Kerimov and his representative, and an additional investment of $25M.  In April 2018, OFAC added Kerimov to the SDN List, which meant that all of his property and “interest in property” became “blocked”.  IPI’s legal counsel advised IPI that it did not have to block the funds in the family trust, based upon what seemed to be rationale grounds at the time; however, OFAC found that IPI never disclosed to its legal counsel the full role of the representative or the fact that IPI met with Kerimov, and IPI knew that its prior attestations weren’t accurate.  OFAC determined that Kerminov had an interest in the funds, and that IPI should have blocked them.

Penalties: IPI did not voluntarily disclose the transaction to OFAC, though OFAC settled with IPI for ~$11 million penalty, a reduction from the ~$14 million maximum penalty, noting the following aggravating factors: (i) IPI knew (or should have known) about Kerimov’s involvement, regardless of the legal guidance; (ii) the violations were against U.S. foreign policy interests; and (iii) IPI is a sophisticated PE fund.  OFAC highlighted two mitigating factors: (i) IPI did not have any penalties in the last five years; and (ii) IPI ultimately cooperated with OFAC.

Takeaways:

• U.S. Sanctions Obligations Cannot Be Contractually Modified: Written attestations that a party is not violating sanctions or subject to sanctions do not absolve any of the parties’ obligations to ensure there are no sanctioned dealings. In the enforcement action, OFAC explained that “individuals and companies with reason to know of such circumstances cannot later claim ignorance even if a blocked person has no nominal ownership or overt role.”  Accordingly, if a company has knowledge that any party with which it is dealing has direct or indirect ties to a sanctioned person, additional diligence should be performed.

• Diligence Should Be Calibrated on Perceived Risk: Screening and contractual controls can be sufficient mitigation measures when there is no identifiable risk. However, OFAC notes that “situations involving opaque legal structures or the use of proxies that may obscure a party’s interest in an entity or property—a more exhaustive analysis may be appropriate.”

• Importance of Disclosure of All Relevant Facts and Cooperation with OFAC: IPI did not provide all relevant information to its counsel, including critical information about the relationship between Kerimov and his representative, which ultimately led to guidance not tailored to the facts and an inability to adequately assess sanctions risks. Though the violation was not voluntarily disclosed, OFAC took into account IPI’s ultimate cooperation with the agency when exacting the penalty. A voluntary disclosure would have further reduced the penalty.