GVA Capital Ltd to pay fine for violations of OFAC sanctions and reporting obligations

On 12 June, the US Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) reported that it had a imposed a civil monetary penalty of USD 215,988,868 against GVA Capital Ltd for violations of US sanctions against Russia and related failures in reporting obligations.

GVA Capital Ltd is a venture capital firm based in San Francisco, California, USA. Between April 2018 and May 2021, the company managed an investment for a sanctioned individual, Mr Suleiman Kerimov (“Mr Kerimov”), despite being aware of his designation under US sanctions. GVA Capital Ltd started investing for Mr Kerimov in 2016, and despite his designation in April 2018, continued to manage these investments.

GVA Capital Ltd have engaged with Mr Kerimov via his nephew, Nariman Gadzhiev. Gadzhiev relayed guidance on behalf of “the Investor”, whom OFAC believed to be Mr Kerimov. Their correspondence included 2016 negotiations on the amounts Mr Kerimov would invest in the US company.

Gadzhiev and GVA Capital Ltd continued to engage until 2023 – long after Mr Kerimov’s designation in 2018.  Shortly after Mr Kerimov’s addition to the OFAC’s SDN List, GVA Capital Ltd sought a legal opinion which explicitly warned the company “that any sale or transfer of the shares could not directly or indirectly involve Kerimov.” Despite this warning, on four occasions between 2018-2021, GVA Capital Ltd either dealt or attempted to deal with either the property or the property interests, or provided a service to Mr Kerimov that was prohibited.

As part of OFAC’s investigation, it issued an administrative subpoena pursuant to 31 C.F.R. § 501.602 to GVA Capital in June 2021. The latter responded to OFAC on 30 June 2021, and certified in October 2021 that it had completed its subpoena response. For nearly two years afterwards, GVA Capital Ltd did not submit any additional responsive materials of relevance to OFAC’s inquiry, and gradually produced  approximately 1,300 records to OFAC on top of the original 173 documents provided in 2021. OFAC found GVA Capital guilty of committing 28 violations of § 501.602 of the Reporting, Procedures and Penalties Regulations, due to the continued failure to produce responsive records.

OFAC imposed the statutory maximum penalty of USD 215,988,868 due to egregious violations of US sanctions regime and non-compliance with reporting obligations.

Lessons to learn

There are a number of lessons companies can learn from this case.

• It is important that companies comply with existing sanctions laws and regulations. In their press-release on GVA Capital’s penalty, OFAC indicated that the company “wilfully violated U.S. sanctions” and senior management of the company were aware that they were dealing with a sanctioned individual.
• In case of uncertainty, companies should seek legal advice. Although GVA Capital received legal advice in May 2018, which expressly cautioned the company against engaging with assets of a designated person, they chose to ignore this advice and continued dealing with a sanctioned person, Mr Kerimov.
• Gatekeepers, including accountants, investment professionals, lawyers and trust services providers, among others, must understand the risks associated with the provision of their services. Risk mapping and risk assessments may help prevent sanctions breaches.
• An assessment of ownership and control, as well as an understanding of these concepts, is crucial as some ownership arrangements may obscure the true beneficiaries behind an entity or investment.
• Finally, companies should be reminded of the importance of timely compliance with regulators’ requests. Delays or complete avoidance of such requests may be considered as an aggravating factor, and may result in a hefty fine or imprisonment.

Updated: 17 June 2025

How Gherson can assist

The Gherson team have years of experience advising on compliance matters, including sanctions. We regularly advise clients on sanctions laws and can assist companies develop policies and systems aimed at prevention of sanctions risks.

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