A common assumption in sanctions compliance is that ownership can be verified through documentation.

Share registers, trust deeds, corporate filings… if the legal title has changed, the risk is assumed to have moved with it.

The latest advisory from Office of Foreign Assets Control challenges that assumption rather directly.

In its recent guidance, OFAC focuses on what it calls sham transactions.

These are arrangements where a sanctioned individual appears to give up ownership of an asset on paper, while continuing to benefit from or control it in practice.

The mechanics are familiar:

The key point is simple.

If the underlying economic reality has not changed, then from a sanctions perspective, neither has the ownership.

The advisory lists a range of indicators, but they are less about isolated signals and more about patterns:

Transactions that do not make commercial sense.
Transfers at undervalue, or without clear arm’s-length terms, suggest the objective may not be genuine divestment.

Transfers to familiar hands.
Family members, close associates, or long-standing intermediaries often act as holding vehicles rather than true independent owners.

Complexity without purpose.
Layered structures, offshore entities, and trusts can be legitimate, but when they lack a clear business rationale, they often signal something else.

Continued involvement.
Perhaps the most telling indicator: the sanctioned individual is still effectively “in the room”, even if no longer on the documents.

Taken together, these are not new risks.
What is new is the clarity with which they are being framed.

For many institutions, ownership analysis still centres around:

The advisory suggests that compliance cannot stop at identifying who owns something, but must also consider:

This is a more nuanced and more demanding standard.

The timing is not accidental.

Recent enforcement actions illustrate the point.

In one case, a venture capital firm continued to manage investments for a sanctioned individual through a family member acting as a proxy.

In another, a private equity firm maintained exposure to sanctioned capital, despite knowing the true source of funds and ongoing influence behind it.

These are not failures of screening.

They are failures of interpretation.

The information was there.
The conclusion drawn from it was the problem.

For financial institutions and corporates, several implications follow.

First, documentation alone is no longer sufficient.
A clean ownership structure does not necessarily mean a clean risk profile.

Second, due diligence needs to extend beyond the transaction itself.
Understanding relationships, context, and behaviour becomes critical.

Third, escalation thresholds may need to shift.
Situations that previously felt “explainable” may now require deeper scrutiny.

And finally, internal conversations need to change. Compliance is not just verifying structure. It is challenging whether that structure reflects reality.

Sanctions compliance has always relied on identifying ownership.

The more relevant question is whether the structure reflects genuine economic separation, or whether it simply creates the appearance of it.

If you are seeing similar patterns, or thinking through how to incorporate this into your existing frameworks, I would be interested to hear how you are approaching it.

Thanks for reading,

Alexey