Gracetown violated U.S. sanctions despite notice from OFAC that dealings with Kremlin-connected oligarch were unlawful
WASHINGTON – Today, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) imposed a $7,139,305penalty on Gracetown Inc., a property management company in New York, for violating OFAC’s Russia-related sanctions and for failing to report blocked assets to OFAC. This enforcement action, which resulted in a penalty near the statutory maximum, highlights the importance of following OFAC-issued guidance and the significant consequences that can occur from failing to do so.
“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.”
OFAC’s investigation revealed that 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, despite having received explicit prior notice from OFAC that direct and indirect dealings with Deripaska were prohibited. Additionally, Gracetown failed to report blocked assets in its possession or control for over 45 months.
Gracetown was established in 2006 to manage three luxury real estate properties in New York and Washington, D.C., which Deripaska acquired around the same time through various legal entities. From 2006 to 2018, Deripaska was the ultimate beneficial owner of Gracetown.
When OFAC sanctioned Deripaska in April 2018, all of Deripaska’s assets subject to U.S. jurisdiction were blocked, and U.S. persons were generally prohibited from dealings related to Deripaska, his properties, and his interest in properties. Due to Gracetown’s ties with Deripaska, OFAC served it with a notice explicitly alerting Gracetown of Deripaska’s designation, Gracetown’s sanctions compliance obligations, and the consequences of non-compliance.
After receiving the OFAC notice, Gracetown maintained an ongoing arrangement with an entity owned by Deripaska to receive regular monthly payments in the United States on that entity’s behalf, in violation of U.S. sanctions against Russia. In doing so, Gracetown dealt in property in which Deripaska held an interest. Gracetown also failed to report its possession of the property to OFAC in a timely manner, as is mandated by OFAC’s reporting requirements.