Treasury’s Office of Foreign Assets Control (OFAC) has imposed a $215,988,868 civil penalty on GVA Capital Ltd., a San Francisco-based venture capital firm, for egregious violations of U.S. sanctions targeting Russia and Ukraine, and for failing to comply with a federal subpoena.
OFAC found that GVA Capital knowingly managed a $20 million investment on behalf of Russian biznesmen Suleiman Kerimov between 2018 and 2021, despite Kerimov’s April 2018 designation as a Specially Designated National (SDN).
The firm continued engaging with Kerimov’s designated proxy, Nariman Gadzhiev, to administer the investment in a U.S. company, even after receiving legal guidance warning of potential violations.
The case stems from OFAC’s broader investigation into Heritage Trust, a Delaware-based entity holding more than $1.3 billion in assets for Kerimov. OFAC blocked the trust in 2022, preventing the liquidation of its holdings, which included GVA Capital-managed assets. According to OFAC, GVA Capital’s actions facilitated Kerimov’s indirect access to the U.S. financial system and allowed his investment to appreciate in value to over $436 million.
The violations included multiple attempts to transfer or distribute shares to entities beneficially owned by Kerimov and communications soliciting approval from Gadzhiev on investment decisions. OFAC determined these efforts constituted direct or attempted dealings in blocked property and prohibited services to a designated person under the Ukraine-/Russia-related Sanctions Regulations (31 C.F.R. Part 589).
Additionally, GVA Capital was cited for failing to comply with a 2021 OFAC administrative subpoena. After certifying compliance in October 2021, the firm revealed in 2023 that it had withheld over 1,300 responsive documents. OFAC counted 28 separate violations under the Reporting, Procedures, and Penalties Regulations (31 C.F.R. § 501.602).
The civil monetary penalty—OFAC’s statutory maximum—was calculated at $214 million for sanctions violations and $1.99 million for reporting failures. OFAC concluded that GVA Capital did not voluntarily self-disclose the misconduct and that the case was “egregious” under its Economic Sanctions Enforcement Guidelines.
In its enforcement release, OFAC emphasized that GVA Capital’s senior management had actual knowledge of Kerimov’s involvement and continued to act on his behalf post-designation, including efforts to confer substantial economic benefit through attempted sales and distributions. OFAC also underscored the critical role of “gatekeepers” in upholding U.S. sanctions compliance, particularly in the venture capital and investment advisory sectors.
“Non-bank financial institutions must develop robust, risk-based sanctions compliance programs,” OFAC stated, warning against reliance on formalistic ownership structures that obscure true beneficial interests.
GVA is a subsidiary of Global Venture Alliance, a privately held VC and innovation platform founded by Magomed Musaev. GVA Capital served as its investment vehicle into U.S. startups. There is no public evidence that Musaev is currently subject to sanctions by the U.S. or other governments:
OFAC reiterated that U.S. persons have an affirmative obligation to block and report assets in which sanctioned individuals hold any property interest, and that noncompliance—even by omission—carries substantial enforcement risk.
Collection hinges on GVA Capital’s ability to pay. If the firm lacks sufficient accessible assets, OFAC may pursue asset freezes or judgments. As OFAC often blocks or seizes assets tied to sanctioned individuals, GVA’s link to Heritage Trust and Kerimov may facilitate identification and seizure of assets held in U.S. jurisdictions.
In a client alert, Ken Nunnenkamp and Eli Rymland-Kelly with Morgan Lewis in Washington conclude that OFAC’s expansive view that “property interest” includes “any interest whatsoever,” including beneficial ownership and control—even when layered through intermediaries.
GVA’s reliance on a narrow legal opinion failed to shield it from liability, as OFAC found the firm knowingly engaged in prohibited dealings tied to sanctioned individual Suleiman Kerimov.
The authors note OFAC also penalized GVA for its “prolonged failure to produce responsive records,” treating the 28-month delay as multiple violations under 31 C.F.R. § 501.602. They warn that OFAC expects strict diligence from investment managers and “gatekeepers” in identifying and blocking assets tied to SDNs, regardless of formal ownership structures.
[Updated 6/17 with Morgan Lewis analysis]
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