The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has imposed a penalty of $7,139,305 on Gracetown Inc., a property management company based in New York. The penalty is for violations of Russia-related sanctions and for failing to report blocked assets to OFAC.
According to OFAC, between April 2018 and May 2020, Gracetown received 24 payments totaling $31,250 on behalf of a company ultimately owned by sanctioned Russian oligarch Oleg Deripaska. This occurred after Gracetown had received explicit notice from OFAC that any direct or indirect dealings with Deripaska were prohibited under U.S. law.
Gracetown was founded in 2006 to manage three luxury real estate properties in New York and Washington, D.C., which were acquired by Deripaska through various legal entities around the same time. From its founding until 2018, Deripaska was the ultimate beneficial owner of Gracetown.
In April 2018, when OFAC sanctioned Deripaska, all his assets subject to U.S. jurisdiction were blocked. U.S. persons were generally barred from engaging in transactions related to him or his interests in properties. After this designation, OFAC sent Gracetown a notice detailing the compliance obligations and consequences for non-compliance with these sanctions.
Despite receiving this notice, Gracetown continued an arrangement with an entity owned by Deripaska to receive regular monthly payments within the United States on behalf of that entity. This violated U.S. sanctions against Russia because it involved dealing in property where Deripaska held an interest. Additionally, Gracetown did not report its possession or control over these blocked assets for more than 45 months as required by OFAC regulations.
“Treasury will act firmly against those who ignore our sanctions and aid our adversaries,” said Treasury Under Secretary for Terrorism and Financial Intelligence John K. Hurley. “Under Secretary Bessent’s leadership, we will continue to investigate and hold accountable those who enable sanctioned actors."
This enforcement action resulted in a penalty close to the statutory maximum and underscores the importance of adhering to guidance issued by OFAC as well as reporting requirements regarding blocked assets.
For further details about this case or related enforcement actions, visit the Enforcement Release.
