On November 24, 2025, the Office of Foreign Assets Control (OFAC), part of the US Department of the Treasury, imposed a $4,677,552 (£3,458,193) penalty on a real estate investor for ‘violating Russia sanctions and reporting obligations’. ‘US Person-1’ was found to have willfully dealt in property which was owned by a blocked and sanctioned individual and to have failed to comply with OFAC’s sanctions regulations and orders.
Whilst the enforcement action was taken under US law, the landmark penalty has important lessons for UK property firms, investors and advisers. It is particularly relevant to people working in cross-border businesses, especially real estate professionals, investors and advisers, or those who deal in property within US jurisdiction, whether they are inadvertently exposed or not.
In March 2022, a Russian oligarch, who owned residential property in Atlanta, Georgia, was added to OFAC’s Specially Designated Nationals and Blocked Persons List (SDN List). This meant that all dealings in the property, including its transfer, sale or foreclosure, were prohibited and that any unauthorised transfer would be rendered null and void under OFAC’s regulations. This matter was publicised at the time. In late 2022, the property went into foreclosure and was purchased by a real estate development company, which was unaware of its blocked status.
Once OFAC discovered that the property had been foreclosed, it contacted US Person-1, who had planned to renovate and sell it, informing them that the transaction required authorisation, for which they could obtain a licence. However, this person continued with their plans without notifying or seeking approval from OFAC, even after a cease-and-desist order was issued.
OFAC subsequently determined that the violations committed by US Person-1 were ‘egregious’ and not voluntarily self-disclosed and, therefore, imposed the maximum financial penalty possible, making the fine one of the most considerable sanctions penalties so far.
While US sanctions action may not seem relevant to UK property markets, the enforcement action highlights a range of broader risks and compliance issues that are becoming increasingly common in this age of globalisation.
These include:
Geographical risks - even if a real estate transaction involved assets that are registered in the UK, US sanctions can apply to UK firms if:
The OFAC enforcement action makes it clear that the involvement of US citizens or organisations and the infringement of US law confirm the illegality of the action, rather than the location of the property.
Blocked property requirements – OFAC’s regulations render ‘null and void’ the unlicensed transfer of any unauthorised property and state that any interests in properties held by people on the SDN list must be blocked. In the UK, asset blocks and freezes come under the responsibility of the Office of Financial Sanctions Implementation (OFSI), which is part of HM Treasury, and which updated its UK financial sanctions general guidance in November 2025. In its most recent enforcement, a penalty of £465,000 was imposed on the Moscow branch of a UK-based law firm for failures in screening and payment processing, which amounted to breaches of the UK financial sanctions imposed on Russia. This action demonstrates that the highest standards of compliance are required in the UK for blocked or frozen assets, as well as international standards.
Due diligence and screening – the OFAC case highlights that, if a transaction involves sanctioned individuals or their assets, even inadvertent failures in due diligence can result in significant penalties. In the ‘Compliance Considerations’ section of the notice, OFAC specifically mentions that ‘blocked property interests may also be indirect, and the blocked party’s name may not appear on relevant deeds or transactional documents’ and urges all parties involved in real estate transactions to ‘exercise appropriate caution and conduct risk-based due diligence to avoid dealing in blocked property’. In the UK, this should translate as financial institutions, brokers, agents and law firms conducting robust screening of their clients, including the UK sanctions list, the US SDN list, and the EU sanctions list. They should also verify the property’s ownership history and any potential links (direct or indirect) to sanctioned people and ensure that any third-party entities or service providers have in place adequate sanction controls of their own.
Reporting obligations and transparency – this matter also emphasises the importance of reporting obligations and UK firms’ legal requirement to report suspected breaches or blocked assets to OFSI. US Person-1 received penalties not only for dealing in blocked property but also for failing to comply with an OFAC subpoena and, most importantly in this instance, for certifying information that was inaccurate. UK firms need to be aware of the importance of complete and prompt reporting, which, even if potential breaches are brought to light, can mitigate any possible penalties.
To avoid sanctions violations penalties, UK firms must:
● Ensure robust screening – all parties in any transaction should be thoroughly screened against UK, US and EU sanctions lists. This must be undertaken throughout the process, not just at its start, and monitored continually, using up-to-date screening tools
● Train staff to recognise risks – effective and practical training will enable staff at all levels to understand what sanction controls are, what ‘blocked property’ entails and how and when to escalate any concerns they have
● Check ownership and beneficial interests – cross-border portfolios pose a greater challenge than single-territory portfolios, so to avoid indirect links to blocked persons, ownership and beneficial interest checks must be undertaken.
● Reporting and cooperation – the OFSI and HM Treasury require UK firms to report suspected breaches of prohibitions or failures to comply with sanctions obligations. They must do so promptly and are expected to cooperate with investigations to fully increase transparency and improve outcomes.
The multi-million dollar penalty that OFAC imposed on US Person-1 is a reminder to UK professionals that complying with sanctions is not simply a matter for international organisations. Instead, it applies specifically to UK property transactions and financial dealings, and emphasises their obligations regarding reporting and compliance.
UK firms that operate internationally or have cross-jurisdictional links must ensure that sanctions screening and reporting are part of their core compliance obligations, not an optional addendum. In an age where geopolitical risks are heightened and the penalties are substantial, having robust sanctions controls not only protects your own organisation but also supports the integrity of the global property market.
Next time – Why a strong sanctions-compliance culture matters.
If you’d like more information on how we can help your organisation remain compliant amid international property sanctions, contact us.