USA – WASHINGTON, DC Trends and Developments Contributed by: Stephanie L. Connor, Andrew K. McAllister, Matt Rosenbaum and Manny Levitt, Holland & Knight LLP
Increased Scrutiny of Non-Bank Financial Institutions and Digital Assets
counterparty’s business structures or transaction pat - terns suggest potential links to sanctioned persons or their interests. The trend towards gatekeeper accountability has continued in 2026, as OFAC signalled that advisers, attorneys, and service providers, including those who serve on the boards of sanctioned entities, and who facilitate sanctioned persons’ access to the US finan - cial system, whether wittingly or through wilful blind - ness, can face significant civil liability. Individual liability has featured prominently in recent enforcement actions involving “gatekeepers” and related personnel. Three publicly announced enforce - ment actions in 2025 were directed against individuals for dealings with sanctioned Russian oligarchs or their property, while an enforcement action announced in February 2026 was against an individual who alleg - edly provided managerial services to Syria in their role as an officer and board member for four Syrian real estate companies. OFAC Enforcement Focuses on “Sham Transaction” Red Flags In a new OFAC advisory on sham transactions and sanctions evasion, as well as in its public enforcement actions, OFAC warned companies about the risks of over-relying on corporate formalities, explicitly reject - ing the idea that complex ownership structures or legal opinions can insulate firms from liability when the underlying economic or practical reality suggests that a transaction involves sanctioned persons or persons acting on behalf of sanctioned persons and entities. OFAC has indicated that companies are expected to look through formal transaction mechanics in conduct - ing due diligence to assess the presence of certain “red flags” signalling sham transactions or sanctions evasion. Such red flags may include overly complex corporate structures involving high-risk jurisdictions, commercially unreasonable terms, the involvement of family members of sanctioned persons, transfers of property from parties occurring near the time of their designation, and evasive responses from transaction counterparties about a blocked person’s involvement.
OFAC’s enhanced scrutiny of non-bank financial insti - tutions, including digital asset businesses, acceler - ated in 2026 through a combination of enforcement actions, new regulatory guidance, and designations targeting the crypto-sanctions nexus. In January 2026, OFAC designated UK-registered dig - ital asset exchanges in connection with illicit finance activity, further demonstrating that the agency’s enforcement reach extends to crypto-adjacent busi - nesses regardless of where they are incorporated. Also in early 2026, the Financial Crimes Enforcement Network (“FinCEN”) published a Notice of Proposed Rulemaking establishing AML/CFT and sanctions compliance programme requirements for permitted payment stablecoin issuers, signalling that new cat - egories of digital asset participants will face explicit regulatory obligations. The use of digital assets like stablecoins in sanctions evasion schemes was high - lighted in detail in FinCEN’s advisory on the use of front companies, financial facilitators, and digital asset infrastructure by the IRGC to evade sanctions and launder proceeds, which was published in May 2026. The regulations implementing the GENIUS Act, a law to establish a regulatory framework around stable - coins, are just starting to take shape, and concerns around the use of digital assets in sanctions evasion persist. As such, companies operating in the digital asset ecosystem must ensure they have robust, risk- based sanctions screening, transaction monitoring, and geolocation controls tailored to the unique com - pliance challenges of blockchain-based finance. Targeting Shadow Fleets and Sanctions Evasion in the Maritime Sector Sanctions evasion through maritime shadow fleets remains a top priority, with OFAC and allied regula - tors targeting tankers and facilitators that enable sanctioned oil and gas trade from Russia and Iran. In enforcement actions, OFAC continues to highlight the multiple types of sanctions-evasion red flags that companies’ compliance procedures need to be mind - ful of, including trans-shipment via third countries, AIS spoofing and vessel tracking manipulation; fraudulent or manipulated trade documentation; or the use of
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