Russia-related OFAC review closed with cautionary letter and no penalty
On September 2, 2026, OFAC closed its enforcement review of our clients’ dealings in blocked property under the Russia sanctions program with a cautionary letter and no civil monetary penalty. The clients, non-U.S. investment holding companies, held U.S. real estate and bank accounts blocked because a designated individual briefly served as trustee of the trusts above them. We reported the blocked property, applied for specific licenses, sued OFAC after more than a year without a decision, and obtained five licenses unblocking the property.
- Program: Russia — Executive Order 14024; 31 C.F.R. part 587
- Enforcement response: Cautionary letter, September 2, 2026 — no civil monetary penalty, no Finding of Violation, no settlement
- Licensing: Five specific licenses unblocking every property at issue, after three interim licenses issued within two months of filing suit
- Litigation: APA unreasonable-delay suit, 5 U.S.C. §§ 555(b) and 706(1), D.D.C.; dismissed after the licenses issued, roughly eight months after the complaint
- Clients: Non-U.S. holding companies owned by foreign trusts; blocked accounts and U.S. real estate (identities withheld)
Situation:
In 2023, OFAC designated a non-U.S. individual and a foreign trust company under Executive Order 14024 in a Russia-related action. The individual was then a trustee of the foreign trusts that owned our clients, affiliated investment holding companies, and a director of their corporate directors. He resigned from every position the same day. It did not matter. Because a designated person held an indirect interest in the companies’ U.S. property at the moment of designation, that property was blocked: bank accounts, a tenant-in-common interest in a commercial property, and a residential condominium. One U.S. bank blocked an account within days; the companies reported their real estate as blocked that October.
This is a common fact pattern: a designated person sits somewhere in a foreign trust or corporate structure, the U.S. assets beneath him block at the moment of designation, and removing him does not release them. Blocked property stays blocked until OFAC authorizes its release. 31 C.F.R. § 501.801(b)(2).
Stakes:
Blocked property cannot be maintained, insured, or used to pay taxes without OFAC authorization. While the applications sat unadjudicated, the companies could not pay federal and state taxes, service-provider invoices, or condominium charges. A state revenue department issued a final assessment and threatened collection; the condominium board gave notice of a lien and foreclosure; the property’s insurer canceled coverage. Each apparent violation in OFAC’s separate enforcement review carried a statutory maximum civil penalty of the greater of $377,700 or twice the transaction value.
Result:
We reported the blocked property to OFAC under 31 C.F.R. § 501.603 and, between October 2023 and February 2024, filed five specific license applications to unblock it, each showing that no sanctioned person remained in the structure. Through 2024 we supplemented the applications with the tax notices, invoices, lien threat, and insurance cancellation, requesting expedited processing.
After more than a year without a decision, we sued in the U.S. District Court for the District of Columbia under the Administrative Procedure Act, 5 U.S.C. §§ 555(b) and 706(1), to compel OFAC to act. Within a month of the complaint, OFAC issued a request for information; within two months, three interim licenses authorizing maintenance-related transactions; and the court entered an agreed schedule fixing deadlines for OFAC’s questions and decisions. Three rounds of follow-up questions later, roughly eight months after the complaint, OFAC granted all five licensing requests and unblocked every property at issue. We voluntarily dismissed the action.
On September 2, 2026, OFAC closed its enforcement review of the companies’ dealings in the blocked property with a cautionary letter. After considering the General Factors in its Enforcement Guidelines, the agency elected not to pursue a civil monetary penalty or any other enforcement action. No Finding of Violation was issued and no settlement was required. Under the Enforcement Guidelines, a cautionary letter is the most favorable final enforcement response OFAC issues short of a no-action letter.
Prior results do not guarantee a similar outcome; every matter turns on its own facts. Client-identifying details have been omitted. This outcome summary is informational only and not legal advice.
CHRONOLOGY
2023: OFAC designates a non-U.S. individual and a foreign trust company under E.O. 14024. The individual, then a trustee of the trusts that own the clients, resigns every position the same day. The clients’ U.S. property blocks at the moment of designation; a U.S. bank blocks an account within days.
October 2023 – February 2024: Blocked property reported to OFAC under 31 C.F.R. § 501.603. Five specific license applications filed to unblock it, each showing that no sanctioned person remains in the structure.
2024: Applications supplemented with the tax notices, invoices, lien threat, and insurance cancellation; expedited processing requested.
After more than a year without a decision: APA unreasonable-delay suit filed in the U.S. District Court for the District of Columbia, 5 U.S.C. §§ 555(b) and 706(1). OFAC issues a request for information within a month.
Within two months of the complaint: Three interim licenses authorize maintenance-related transactions. The court enters an agreed schedule fixing deadlines for OFAC’s questions and decisions.
Roughly eight months after the complaint: After three rounds of follow-up questions, OFAC grants all five licensing requests and unblocks every property at issue. The action is voluntarily dismissed.
September 2, 2026: OFAC closes its enforcement review with a cautionary letter: no civil monetary penalty, no Finding of Violation, no settlement.
FREQUENTLY ASKED QUESTIONS
What is an OFAC cautionary letter?
One of the enforcement responses in OFAC’s Economic Sanctions Enforcement Guidelines, 31 C.F.R. part 501, Appendix A, § II.C. OFAC issues one when a Finding of Violation or civil monetary penalty is not warranted but wants to put the recipient on notice about the conduct or its compliance practices. It is a final enforcement response, not a determination that a violation occurred, and carries no monetary penalty.
Can you sue OFAC when a license application sits unadjudicated?
Yes. The Administrative Procedure Act requires an agency to conclude matters presented to it within a reasonable time, 5 U.S.C. § 555(b), and lets a court compel agency action unlawfully withheld or unreasonably delayed, 5 U.S.C. § 706(1). Our case never reached judgment: interim licenses issued within two months of filing, the court entered an agreed schedule for OFAC’s review, and full licenses issued within eight months, after which we dismissed it. Whether a delay is unreasonable, and what a suit yields, depend on the facts of each case.
