On December 2, 2025, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) announced a $11,485,352 settlement with IPI Partners, LLC (“IPI”), a Chicago-based private equity firm that specializes in buying, developing, and operating data centers, for continuing to maintain investments indirectly on behalf of Russian oligarch Suleiman Kerimov after his designation by OFAC as a Specially Designated National (“SDN”) in 2018.[1]
OFAC stated that private equity firms must have a “a clear understanding of their sanctions risks and compliance obligations, and implement effective, risk-based controls,” including for “indirect” dealings with SDNs.[2] Coupled with OFAC’s $216 million penalty notice against GVA Capital Ltd., a Silicon Valley venture firm, for similar conduct,[3] this action signals that OFAC continues to focus on the role of non-bank financial institutions in facilitating sanctioned persons’ access to the U.S. financial system.
Summary of the OFAC Resolution
According to OFAC, prior to Kerimov’s designation, IPI solicited and received commitments totaling $50 million from a British Virgin Islands entity, Definition Services, Inc. (“Definition”).[4] Furthermore, according to OFAC IPI’s executives “knew that Kerimov was the source of funds for” the commitments made to Definition. These investments followed meetings between a senior IPI executive and Kerimov’s nephew, Nariman Gadzhiev (who was identified as Kerimov’s representative in investment-related matters and who was later sanctioned by OFAC in November 2022), which were arranged by “a former senior investment banker” (the “Banker”) identified as a representative of Kerimov.[5] The IPI executive also had an in person meeting with Kerimov himself to “discuss investment opportunities.”[6] OFAC determined based on this conduct that IPI should have known that Kerimov “ultimately made investment decisions for Definition.”[7]
Following Kerimov’s designation by OFAC in April 2018, IPI continued to deal directly with Gadzhiev and his employees in managing Definition’s investment in the IPI fund. IPI also consulted with outside counsel to determine if IPI needed to block Definition’s account. IPI provided its counsel with diligence materials that showed that Kerimov was the “initial source” of the funds, through a Delaware trust, but IPI did not inform counsel that it had engaged with Kerimov’s representatives and Kerimov himself. Based on this limited information, IPI’s counsel determined that Kerimov did not formally own 50% or more of Definition, and that IPI did not need to block Definition’s accounts. IPI also conducted other screening of individuals and entities identified in the diligence documents and obtained an attestation from Definition that neither Definition nor any affiliated person had been designated by OFAC.[8] However, according to OFAC, IPI “had reason to know that the attestation was inaccurate, in light of the IPI Senior Member’s introduction to and continued conversations with Gadzhiev, his in-person meeting with Kerimov, and IPI’s understanding that Kerimov was the original source of Heritage’s funds, and IPI did not inquire further.”[9]
Thus, while IPI took certain steps after Kerimov’s designation to assess its relationship with Definition, OFAC found that those measures were insufficient given that IPI had engaged directly with Kerimov’s representatives and Kerimov himself to obtain the investments and, furthermore, IPI did not provide “all material information available” to counsel.[10]
As a result of IPI’s decision to maintain the investments from Definition, between July 2018 and June 2022, IPI engaged in 51 transactions with Definition—18 capital calls, 20 distributions, and 13 management‑fee payments—that OFAC viewed as dealings in the property or interests in property of a blocked person, in apparent violation of the regulations.[11]
OFAC’s Penalty Assessment
Notably, OFAC determined that this conduct was non-egregious and not voluntarily self‑disclosed—resulting in a reduction of the base penalty amount—unlike the conduct of GVA Capital, which OFAC deemed egregious (and which resulted in a penalty notice, not a settlement).
OFAC identified the following aggravating factors:
- Knowledge and reason to know of Kerimov’s role: IPI employees, including senior executives, knew Kerimov funded Definition and “should have known at the time the funds were committed that he ultimately made investment decisions for Definition”; despite outside counsel’s advice that Definition’s account need not be blocked, IPI “had reason to know that it was dealing with Kerimov indirectly,” including via his identified representative.
- Contrary to U.S. foreign policy interests: IPI facilitated “a sanctioned Russian oligarch’s access to, and use of, the U.S. financial system,” that enabled Kerimov to “participate in a lucrative investment and to grow his wealth after he was designated.”
- Firm sophistication: IPI was a “sophisticated private equity firm managing billions of dollars in committed capital from international investors.”
OFAC identified the following mitigating factors:
- OFAC enforcement history: IPI had no recent OFAC enforcement action in the five years preceding the earliest transactions at issue.
- Cooperation: Although IPI’s cooperation was “initially unsatisfactory,” it retained new counsel, reengaged with OFAC, waived privilege to allow OFAC to consider the legal advice received, and produced additional records. However, “IPI’s substantial delay in cooperating resulted in limited mitigation credit for cooperation.”
Key Takeaways
This settlement and the prior enforcement action against GVA Capital highlight that OFAC expects private equity firms to have a “clear understanding of their sanctions risks and compliance obligations, and implement effective, risk-based controls to prevent violations.”[12] OFAC noted that it expects firms to “look beyond legal formalities to underlying practical and economic realities” in assessing the sanctions risk of its investors, including “indirect dealings” with a blocked person.[13] In dealing with “situations involving opaque legal structures or the use of proxies that may obscure a party’s interest in an entity or property,” OFAC noted that “a more exhaustive analysis may be appropriate” that goes beyond the application of OFAC’s 50 Percent Rule.[14]
In this action, OFAC also cited longstanding guidance about the need to exercise “caution when considering dealing with an entity in which a blocked person may be involved” and noted the risk for indirect dealings with blocked persons are heightened when dealing with “proxies or legal structures that may conceal a blocked person’s interest.”[15]
OFAC also emphasized that legal and compliance advice from outside experts must be “based upon a full and complete understanding of all relevant facts and circumstances.”[16] OFAC noted that while such advice “can help entities fulfill their sanctions compliance obligations, it does not absolve them from liability if they violate U.S. sanctions,” because effective advice “must be based upon a complete picture of all material information available from across an organization.”[17]
In light of the recent OFAC enforcement focus on non-bank financial institutions, private equity firms and hedge funds may wish to consider reviewing their sanctions compliance programs to ensure that they have “effective, risk-based controls” for identifying indirect exposure to sanctioned persons. In particular, firms that have received investments from “opaque legal structures” should consider taking steps to ensure that they are reviewing the “practical and economic realities” regarding control and influence—not just formal ownership—that may tie an investor to a sanctioned party. This should include post-onboarding diligence given the possibility that an investor may, as here, be tied to a person who is designated after the initial investment.
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[1] OFAC, “IPI Partners, LLC Settles with OFAC for $11,485,352 Related to Apparent Violations of Ukraine-/Russia-Related Sanctions,” (Dec. 2, 2025) (“Settlement Release”), available here.
[2] Settlement Release at 4.
[3] See OFAC, “OFAC Imposes $215,988,868 Penalty on GVA Capital Ltd. for Violating Ukraine/Russia-Related Sanctions and Reporting Obligations,” (June 12, 2025) at 6, available here; see also Paul, Weiss, “OFAC Imposes $216 Million Penalty on Silicon Valley Venture Capital Firm for Russian Sanctions Violations,” (June 30, 2025), available here.
[4] Definition is ultimately owned by Heritage Trust, a Delaware-based family trust established by Kerimov. On June 23, 2022, OFAC issued a Notification of Blocked Property directed at Heritage Trust, subjecting it to the same prohibitions applied to Kerimov. OFAC determined that Heritage Trust, which at the time held approximately $1.3 billion in assets, had been formed in July 2017 for the purpose of holding and managing Kerimov’s U.S.-based assets, and that Kerimov had retained a property interest in the trust following his designation. See U.S. Department of the Treasury, “U.S. Treasury Blocks Over $1 Billion in Suleiman Kerimov Trust,” (June 30, 2022), available here.
[5] Settlement Release at 1.
[6] Id. at 2.
[7] Id. at 4.
[8] Definition reaffirmed its compliance with IPI’s subscription agreement, which included an attestation that neither Definition “nor any of its Affiliates or any holder of any beneficial interest in the Interest … [nor] any Related Person, is or will be, nor will any amounts contributed by [Definition] to the Partnership be directly or indirectly derived from, invested for the benefit of, or related in any way to the activities of” a person subject to any sanctions program administered by OFAC or named on the SDN List. See id. at 3.
[9] Id. at 3.
[10] Id. at 5.
[11] Id. at 3.
[12] Id. at 4.
[13] Id.
[14] See U.S. Department of the Treasury, “Revised Guidance on Entities Owned by Persons Whose Property and Interests in Property Are Blocked,” (August 13, 2014) (“Ownership Guidance”), available here.
[15] See Ownership Guidance; see also FAQ 398 (Aug. 11, 2020), available here; FAQ 400 (Aug. 13, 2014), available here; FAQ 402 (Aug. 13, 2014), available here.
[16] Settlement Release at 5.
[17] Id.
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