On March 31, 2026, OFAC released a stark warning: blocked persons are getting clever about hiding their interests in property through intermediaries and complex deal structures. Importers and freight forwarders are on the front line of this risk. Here's what you need to know to protect your company—and your bottom line.
On March 31, 2026, the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) published an advisory that should wake up every importer, freight forwarder, and customs broker in America. It wasn't an enforcement action against a single company. It was a warning about a tactic: sham transactions.
A sham transaction is when a blocked person—someone OFAC has sanctioned—arranges what looks like a legitimate transfer of assets or business control, but actually retains hidden ownership or control underneath. They're doing what the trading community calls "keeping the bones but transferring the meat." Transfer the property on paper while keeping the operational interest in practice. And here's the part that matters to you: if you're the importer, freight forwarder, or broker processing the shipment, you can become criminally and civilly liable for sanctions violations you never knew about.
The stakes are enormous. In 2025 alone, OFAC issued $265 million in penalties—more than five times the $49 million levied in 2024. A single case against GVA Capital resulted in a $215.9 million penalty for managing assets of a Russian oligarch. Interactive Brokers paid $11.8 million for thousands of apparent violations. A real estate investor settled for $4.68 million for simply handling property connected to a blocked Russian oligarch.
This is no longer theoretical. OFAC is aggressively targeting intermediaries—the very players importers rely on to source goods, arrange shipments, and manage logistics. And they're doing it not just with criminal intent, but with negligence and willful blindness.
What OFAC Actually Means by "Sham Transaction"
A sham transaction is deceptively simple in concept: blocked persons arrange transfers that conceal—rather than genuinely extinguish—a continuing interest in property.
Think of it like this. A Russian oligarch on OFAC's Specially Designated Nationals List (SDN List) owns a metals trading company. He can't trade directly (he's blocked). So he "transfers" the company to a family member or trusted associate. On paper, it's sold. Contracts are signed. Ownership changes hands. The blocked person is no longer listed on the corporate registry.
But operationally? The blocked person still calls the shots. He still approves shipments. He still takes the profits. The new "owner" is a shell—someone with skin in the game theoretically, but who defers to the blocked person on every real decision.
From the importer's perspective, this looks normal. You're sourcing materials from a company that isn't on the SDN List. The paperwork is clean. The shipper's name doesn't trigger any screening alerts. So you import the goods.
Congratulations. You've now violated OFAC regulations. You've conducted a transaction with a blocked person without authorization. And OFAC doesn't care that you didn't know.
The 7 Red Flags OFAC Wants You to Watch
On March 31, 2026, OFAC published seven specific indicators that should trigger scrutiny. These aren't legal requirements—they're behavioral warning signs. If you see them, you need to dig deeper before completing the transaction.
1. Commercially Unreasonable Terms
Does the deal have sound business rationale? Or is something off?
Real example: A supplier offers you metal coils at 8% below market rate with a 6-month payment term (when 30 days is standard). The terms don't make business sense. Why would someone undercut this aggressively? The answer might be because a sanctioned person is directing operations and doesn't care about margins—they just want to move product.
What to do: Ask hard questions. Why are the terms so favorable? What's the supplier's business model? If they can't explain why they're undercutting the market, that's a red flag.
2. Transfers to Connected Parties
This is the "shell company" indicator. Look at ownership changes.
Real example: A longtime supplier suddenly announces a "change in ownership." The new owner is a family member, business partner, or newly incorporated entity with limited operating history. The company's operations don't change. The same people work there. The same contacts handle your orders. But the ownership structure did.
OFAC's analysis: Why transfer to family? Why transfer to a closely connected party? Often because a sanctioned person is trying to hide their interest while maintaining control.
What to do: Perform enhanced due diligence when ownership changes. Use tools like the OFAC Sanctions List Search to screen the new owner and key family members and business associates. Use open-source intelligence (LinkedIn, corporate records, news archives) to understand who the new owner is and their history.
3. Unclear Transaction Purpose
Every legitimate business transaction has a clear "why." Sham transactions often don't.
Real example: A freight forwarder asks you to route a shipment through an unusual transshipment point. When you ask why (the direct route is cheaper and faster), you get vague answers: "It's just how we do it," or "Trust me, this is the best way," or no answer at all.
Why would someone obscure the transaction path if the purpose was legitimate?
What to do: Require written explanation of transaction purpose. If your counterparty can't or won't articulate a clear business rationale, escalate the transaction internally.
4. Unnecessarily Complex Structures
Simple transactions are easy to audit. Complex ones hide things.
Real example: A company sells through a distributor, which sells through another distributor, which sells to a broker, which sells to you. That's four layers of intermediaries for a commodity product. Each layer adds cost. None of it adds value.
OFAC's read: Complexity is a classic evasion tactic. Multiple layers of intermediaries make it harder to trace the beneficial owner.
What to do: Insist on direct relationships where possible. If your supplier uses intermediaries, understand why. Request a detailed transaction flow diagram showing all parties and their roles. Screen every entity in the chain, not just the direct counterparty.
5. Continued Involvement by the Previous Owner
This is the "on paper only" indicator. The person who "sold" the property is still running things.
Real example: A company's founder and long-time director "retires" and sells the company. But he's still listed as an advisor. He still has an office. He still approves major purchases. He's still the public face of the company at trade shows. He just doesn't have his name on the articles of incorporation anymore.
What to do: Request an organizational chart showing decision-making authority. When disputes arise, who signs off? When shipments are approved, who's the decision-maker? If the "previous owner" retains operational control, OFAC views that as evidence of continued interest.
6. Timing Concerns
When did the transfer happen? Relative to what?
Real example: A company announces a change in management structure three weeks after an individual was designated by OFAC. The timing is too convenient. A businessman had been in the news for weeks regarding sanctions risk. Then suddenly, his company restructures to cut him out.
OFAC's analysis: If you transfer assets right before you're designated, or immediately after, that's evasion—not business evolution.
What to do: Research your counterparties' news history. If someone was recently in the news regarding sanctions, trade investigations, or regulatory issues, that's a timing red flag. Require more thorough due diligence for companies that have undergone ownership changes coinciding with sanctions-related developments.
7. Uncooperative or Evasive Responses
The simplest red flag: they won't answer your questions.
Real example: You ask for documentation of a new owner's background and decision-making authority. You get delays, incomplete documents, or non-answers. When you push back, they get defensive: "Why do you need all this? Don't you trust us?"
OFAC's read: Transparency is cheap and easy for legitimate businesses. Evasion costs you time and money. If someone's avoiding your due diligence, assume they have something to hide.
What to do: Make due diligence transparency a contractual requirement. If a supplier or intermediary won't provide documentation, don't do business with them. It's not worth the risk.
Why This Matters to You: The Penalty Landscape
The penalties for OFAC violations are criminal and civil, and they're staggering.
In 2025, OFAC enforcement cases resulted in $265 million in total penalties. That's an 440% increase over 2024. And the agency is specifically targeting intermediaries—brokers, freight forwarders, advisers, attorneys, and real-estate professionals who should have "known better" than to facilitate transactions involving blocked persons.
Here's what happened to real companies:
| Company | Industry | Year | Violation | Penalty |
|---|---|---|---|---|
| GVA Capital | Asset Management | 2025 | Managing assets of Russian oligarch (2018-2021) | $215.9 million |
| Interactive Brokers | Financial Services | 2025 | Iran, Cuba, Syria, Russia, and other sanction violations | $11.8 million |
| Real Estate Investor (Individual) | Real Estate | 2025 | Property dealings with blocked Russian | $4.68 million |
| Unknown (Syrian Violations) | Unknown | 2026 | Syrian sanctions violations | $3.78 million |
Notice the pattern: these aren't dramatic, obviously-illegal cases. GVA Capital managed money for someone who was an oligarch, but they didn't know he was sanctioned until he was designated. Interactive Brokers had systems failures that let transactions through. The real estate investor acquired property that later turned out to belong to a blocked person.
OFAC doesn't require criminal intent. Negligence, recklessness, and even honest mistakes can result in massive civil penalties. And if OFAC determines you should have known, the penalties climb higher.
What Happens If You Get It Wrong
Violating OFAC sanctions has three consequences:
Civil Penalties
OFAC can impose civil penalties of up to $100,000 per violation or 20% of the transaction value, whichever is higher. For a company processing thousands of transactions, this compounds quickly.
Criminal Penalties
Criminal violations can result in up to 20 years in prison and $1 million in fines (per 50 U.S.C. § 1705). Knowingly violating OFAC regulations is a felony.
Reputational Damage
Your business relationships evaporate. Banks cut you off. Customers flee. Even after settling with OFAC, you're marked as a sanctions violator—a scarlet letter in international trade.
How to Operationalize the 7 Red Flags
You can't prevent what you don't see. Here's a practical playbook:
Step 1: Screen Everyone at Entry
Use OFAC's Sanctions List Service to screen every supplier, distributor, freight forwarder, and direct party to a transaction. Screening should happen before you commit to the deal, and should be refreshed regularly (at least quarterly for ongoing relationships).
Many companies use third-party compliance vendors (Thomson Reuters, Dow Jones Risk & Compliance, Accuity) to automate this. The cost of a screening tool is negligible compared to the risk of a violation.
Step 2: Document the "Why"
For every transaction, especially with new counterparties or where terms are unusual, document the business rationale. Save that documentation. In an enforcement action, OFAC will ask: "What did you know? When did you know it? What did you do about it?" Written documentation of your due diligence is your legal shield.
Step 3: Map the Ownership Structure
Request organizational charts, beneficial ownership documentation, and board rosters. For ongoing suppliers, require annual updates to ownership and management. If someone new shows up in the org chart, update your due diligence.
Step 4: Build a Compliance Calendar
Track ownership changes, sanctions designation news, and trade investigations involving your suppliers. Use free tools like Google Alerts, corporate registries, and news archives. When something changes, trigger an escalated review.
Step 5: Train Your Team
Your procurement team, customs brokers, and freight forwarders all need to understand OFAC red flags. A single employee who doesn't know the risks can expose your entire company. Annual training is minimum. Quarterly updates during high-risk periods are better.
Step 6: Create an Escalation Path
If a supplier fails screening, or if you spot red flags, don't ignore it. Create a formal process: (1) Flag the issue, (2) Document it, (3) Escalate to compliance/legal, (4) Make a clear decision: proceed with enhanced due diligence, or decline the transaction.
What's Coming Next
OFAC's March 31, 2026 advisory signals an enforcement direction. The agency is moving from catching egregious violations to catching sophisticated evasion schemes—the kinds that use legitimate-looking intermediaries and restructured ownership to hide blocked persons.
In the coming months, expect:
- More actions against intermediaries. OFAC is treating brokers, freight forwarders, and advisers as gatekeepers. If you facilitate transactions involving blocked persons (even unknowingly), you're a target.
- Broader beneficial ownership scrutiny. OFAC is increasingly focused on who actually controls a company, not just who's listed as the owner. Expect more questions about decision-making authority and operational control.
- Supply chain investigations. As OFAC targets imports and goods transiting through the U.S., customs brokers and importers are on the front line. A single sham transaction in your supply chain can trigger an investigation into all your transactions with that supplier.
The Real Cost of Complacency
You can think of OFAC compliance as regulatory box-checking. Or you can think of it as business survival.
The difference between a company that screens suppliers properly and one that doesn't is $50,000 and five years of peace of mind versus $215 million in penalties, criminal prosecution of your executives, and the end of your business relationships.
OFAC's March 31 advisory isn't theoretical. It's a roadmap for where they're looking next. They've identified sham transactions as a major vector for sanctions evasion. They're training investigators to spot them. And they're aggressively penalizing intermediaries who miss them.
Your job is simpler: don't be that intermediary. Know your counterparties. Understand transaction flow. Ask hard questions. Document your diligence. And when something doesn't add up, stop the transaction—don't rationalize it.
The risk of being wrong is too high. The cost of doing it right is minimal.
This article is for informational purposes only and does not constitute legal, tax, or customs advice. Consult a licensed trade attorney or customs compliance specialist for guidance on OFAC compliance and sanctions risk in your specific supply chain.