On March 31, 2026, the U.S. Department of the Treasury's Office of Foreign Assets Control released an advisory that should be required reading for every compliance officer, general counsel, and professional service provider operating in the sanctions space. The guidance targets sham transactions — arrangements in which sanctioned individuals appear to divest their interest in an asset while, in reality, retaining control and economic benefit behind layers of legal structure.
This is not a new problem, but OFAC is signaling a new level of enforcement intensity around it.
What Counts as a Sham Transaction?
At its core, a sham transaction is one in which a blocked person gives up their property on paper only. The underlying economic reality does not change — the sanctioned individual continues to benefit from or direct the asset, typically through proxies, straw owners, front companies, or opaque multi-layered corporate structures including LLCs, partnerships, and trusts.
OFAC's guidance identifies several red flags that should trigger additional scrutiny:
Transactions involving entities with historical ties to sanctioned persons or jurisdictions
Opaque ownership structures where beneficial ownership cannot be verified
Transfer prices that are significantly below fair market value
Continued involvement of the sanctioned person in management or decision-making following the purported divestiture
Evasive or vague responses from intermediaries when questioned about ownership or control
No single indicator is determinative. OFAC emphasizes evaluating the totality of the circumstances — a standard that places the burden squarely on organizations to conduct meaningful, not perfunctory, due diligence.
Gatekeepers Under the Microscope
One of the most significant dimensions of this advisory is the explicit focus on gatekeepers: investment advisors, accountants, attorneys, and trust and corporate service providers. Throughout 2025, OFAC brought enforcement actions against intermediaries who facilitated transactions involving blocked persons by failing to look beyond corporate formalities.
This trend is intensifying. Professional service providers are no longer passive facilitators — they are expected to understand and mitigate the sanctions risks inherent in the services they provide. For law firms advising on cross-border M&A, private equity houses managing fund structures, and family offices with international portfolios, this is a direct and personal compliance obligation.
Practical Steps for Organizations
Organizations should take several immediate steps in response to this guidance. First, review existing know-your-customer and counterparty due diligence procedures with specific attention to beneficial ownership verification. Second, implement enhanced screening protocols for transactions involving jurisdictions or industries with elevated sanctions risk. Third, train front-line staff and decision-makers on the red flags OFAC has identified. Fourth, document all due diligence steps taken — the ability to demonstrate a reasonable compliance effort is critical in any enforcement proceeding.
Finally, recognize that this is not only an OFAC issue. The UK's Office of Financial Sanctions Implementation and EU member state enforcement bodies are pursuing parallel strategies. Organizations operating across multiple jurisdictions must harmonize their compliance programs to the highest common standard, not the lowest.
The Bigger Picture
This advisory lands against a backdrop of accelerating sanctions complexity. With over 15,000 active designations globally, frequent list updates, and enforcement actions that now regularly exceed eight-figure penalties, the cost of complacency is rising. OFAC's message is clear: transactions that merely appear to transfer ownership but do not genuinely extinguish a blocked person's interest remain prohibited — and the organizations that facilitate them will face consequences.
