Accused of Russian Sanctions Violation – OFAC vs DOJ

Accused of Russian Sanctions Violation – OFAC vs DOJ

You received a letter from OFAC. Or maybe federal agents showed up at your business. Or maybe your bank just froze your accounts and told you there’s a “compliance issue.” However you found out, you’re now facing the terrifying reality that the United States government believes you violated sanctions against Russia. And you have no idea what happens next.

If you’re a Russian-American business owner, this situation is particularly frightening. You’ve watched the news. You’ve seen the headlines about oligarchs having their yachts seized, about businesses being shut down, about people going to prison for sanctions violations. And now you’re wondering: is that going to be me?

Here’s what nobody tells you upfront: there are two completely different enforcement tracks for sanctions violations, and the difference between them can mean the difference between a civil fine and 20 years in federal prison. OFAC handles civil enforcement. DOJ handles criminal prosecution. Understanding which track you’re on – and why – is the first step to defending yourself.

OFAC Doesn’t Need to Prove You Knew – Strict Liability

OK so lets start with the thing that shocks most people. OFAC operates on what lawyers call “strict liability.” That means OFAC dosent need to prove you knew about the sanctions. They dosent need to prove you intended to violate them. They just need to prove the violation happened.

Read that again. Even if you had absolutly no idea a person was on the sanctions list, even if you made a genuine mistake, even if your compliance department screwed up – OFAC can still hit you with civil penalties. Intent dosent matter for civil enforcement.

This is fundamentaly different from most federal crimes, were the government has to prove you knew what you were doing. With OFAC, ignorance is not a defense. Mistake is not a defense. The violation itself is enough.

And heres why thats so dangerous for Russian-Americans. The sanctions lists are incredibly complex. Theres the SDN list (Specially Designated Nationals). Theres the Sectoral Sanctions list. Theres various executive orders. The lists change constantly – new people are added, designations are updated. Even compliance professionals struggle to keep up.

Your cousin back in Russia might be on a list. A business partner you’ve known for 20 years might have been designated last month. A company you’ve dealt with for a decade might now be blocked. And if you transact with any of them – even innocently, even without knowing – your facing penalties.

The civil penalties can be devastating. Under current inflation-adjusted rates, OFAC can assess up to $368,136 per violation. Or twice the transaction amount, whichever is greater. And heres the kicker – thats PER VIOLATION. If you made 10 transactions, thats 10 violations. 100 transactions? The penalties can climb into the millions very quickly.

OFAC dosent care that you didnt know. They care that the violation happened.

When OFAC Becomes DOJ – The Criminal Referral Trigger

So if OFAC handles civil penalties and dosent require intent, how do cases become criminal? Heres were it gets scary.

When OFAC investigates a case and beleives the violation was “willful” – meaning you knew what you were doing – they can refer the case to the Department of Justice for criminal prosecution. Suddenly your not just facing fines. Your facing federal prison.

Under IEEPA (the International Emergency Economic Powers Act), willful sanctions violations carry:

• Up to $1 million in criminal fines per violation
• Up to 20 years in federal prison per violation

Thats not a typo. Twenty years. Per violation. If prosecutors can prove multiple willful violations, the potential prison time adds up fast.

So what makes OFAC decide to refer a case criminally? They look for evidence of “willfulness” – evidence that you knew about the sanctions and violated them anyway. And the evidence they look for is devastatingly simple: your emails, your text messages, your communications.

Did you ever write an email discussing sanctions? Did you ever text someone about “avoiding” compliance issues? Did you ever search for how to move money despite restrictions? All of that becomes evidence of willfulness. All of that can turn a civil penalty into criminal prosecution.

And heres the thing most people dont understand. OFAC and DOJ share information. If your under OFAC investigation, prosecutors may already be looking at your case. You might face BOTH civil penalties from OFAC AND criminal prosecution from DOJ for the exact same conduct.

Task Force KleptoCapture – Why Russian-Americans Are Targeted

In March 2022, Attorney General Merrick Garland announced the creation of Task Force KleptoCapture. This is an inter-agency law enforcement task force specifically designed to enforce sanctions against Russia.

Lets be clear about what that means. The federal government created a dedicated team of prosecutors, agents, and investigators whose entire job is finding and prosecuting Russia sanctions violations. Thats there full-time focus. Thats all they do.

In the years since its creation, Task Force KleptoCapture has charged more than 70 individuals and five corporate entities. They’ve seized over $700 million in assets. They’ve prosecuted cases involving everything from oligarch property to military technology exports.

If your a Russian-American and your under investigation for sanctions violations, theres a good chance Task Force KleptoCapture is involved. And they have resources, experiance, and motivation that typical prosecutors dont have.

The task force dosent just investigate obvious cases. They investigate transactions that might look legitimate on the surface. They investigate family remittances. They investigate business deals that crossed dates when new sanctions were imposed. They investigate relationships with people who got designated after you knew them.

And heres something else uncomfortable. Since 2024, the statute of limitations for sanctions violations was extended from 5 years to 10 years. That means conduct from a decade ago can still be prosecuted. Old transactions, old relationships, old business deals – all of them are potentially on the table.

The Evidence That Turns Civil Into Criminal

If your facing a sanctions investigation, understanding what evidence they look for can help you understand your exposure. The difference between civil and criminal often comes down to specific types of evidence.

Emails and text messages are the most important. Prosecutors search for any communication were you discussed sanctions, discussed compliance, discussed ways to structure transactions, or discussed concerns about legality. Even casual references can be devastating.

Internet search history matters. Did you ever Google “how to send money to Russia” or “sanctions compliance” or “OFAC list”? Those searches suggest you were aware of the issue.

Timing is critical. Did you rush transactions right before new sanctions took effect? Did you change how you structured deals after sanctions were announced? That timing suggests awareness.

Intermediaries and shell companies raise red flags. If you used third parties to facilitate transactions, prosecutors will argue thats evidence of trying to evade sanctions.

Documentation gaps can hurt you. If your records are suspiciously incomplete, prosecutors may argue you destroyed evidence or structured transactions to avoid paper trails.

All of this evidence goes toward proving “willfulness” – that you knew about the sanctions and violated them deliberately. The more evidence of awareness they find, the more likely OFAC refers your case to DOJ for criminal prosecution.

Your emails from five years ago could be the difference between a fine and prison.

Dual-Track Nightmare – Civil AND Criminal Penalties

Heres something most people dont realize. You can face BOTH civil enforcement from OFAC AND criminal prosecution from DOJ for the exact same conduct. These are not alternatives. There not mutually exclusive. You can get hit with both.

The government calls this “parallel proceedings.” OFAC investigates civilly. DOJ investigates criminally. Sometimes they coordinate. Sometimes they run seperatly. Either way, your facing two fronts at once.

And heres the irony. Civil penalties from OFAC can sometimes be MORE financially devastating than criminal fines from DOJ. Because OFAC calculates penalties on a per-violation basis, multiple transactions can result in penalties far exceeding the criminal fine limits.

In 2023, OFAC settled with Binance for over $968 million. British American Tobacco settled for over $508 million. These are civil penalties, not criminal fines. The numbers can be astronomical.

At the same time, you might face criminal prosecution were the penalties include prison. So your looking at potentially millions in civil fines PLUS years in federal prison. Both tracks. Simultaneously.

This is why defense strategy in sanctions cases is so complicated. What you say in response to OFAC can be used against you in criminal proceedings. How you cooperate with one agency affects what happens with the other. Every decision has implications for both tracks.

Voluntary Self-Disclosure – Salvation or Trap?

You may have heard that “voluntary self-disclosure” can help in sanctions cases. This is true – but its also dangerous if you dont understand how it works.

Under OFAC’s enforcement guidelines, voluntary self-disclosure can reduce your penalty by up to 50%. In some cases, OFAC may issue just a cautionary letter or take no action at all. Self-disclosure signals good faith and cooperation.

But theres a trap. For voluntary self-disclosure to work, it has to come BEFORE any government inquiry. If OFAC or DOJ has already started investigating – if theyve already sent you a letter, already contacted your bank, already started looking – then your disclosure isnt really “voluntary.” You dont get the credit.

And heres another trap. The disclosure has to be complete, accurate, and truthful. If you leave things out, if you spin the facts, if you minimize what happened – that can be used against you. A bad voluntary self-disclosure can actually make things worse by providing the government with evidence and a roadmap.

The decision wheather to self-disclose requires careful analysis. How serious are the violations? What does the government already know? Are they already investigating? What evidence exists? These questions need to be answered before you decide wheather self-disclosure helps or hurts.

And theres one more complication. In 2023, DOJ made clear that self-disclosure to OFAC alone isnt enough to get credit under DOJ’s policy. If you want protection from criminal prosecution, you may need to self-disclose to DOJ seperately. The agencies have different policies.

The Whistleblower Threat You Dont See Coming

Heres something that terrifies Russian-American business owners when they learn about it. Since 2020, federal law provides financial rewards to whistleblowers who report sanctions violations. If the resulting penalties exceed $1 million, the whistleblower can receive between 10% and 30% of what the government collects.

Think about what that means. Your employees have a financial incentive to report you. Your business partners have a financial incentive to report you. Your competitors have a financial incentive to report you. Anyone who knows about potential sanctions violations can make hundreds of thousands – or millions – of dollars by turning you in.

The whistleblower dosent need to have clean hands themselves. They can be involved in the same conduct and still collect the reward. They can have personal grudges. They can be disgruntled former employees. The motivation dosent matter – only the information.

And heres why this is especialy dangerous for Russian-American businesses. Many of these businesses involve family relationships, community connections, people who know each others business intimately. Former employees, former partners, former associates – any of them might know about transactions that could be characterized as sanctions violations.

The whistleblower program is anonymous. You might never know who reported you. You might be under investigation for months before you find out. And by the time you learn about the investigation, the whistleblower has already provided detailed information about your business, your transactions, your communications.

This isnt hypothetical. OFAC has assessed over $1.6 billion in civil penalties since 2020. That means potentially hundreds of millions of dollars in whistleblower rewards. People are reporting. And the government is paying.

Defense Strategies That Actually Work

Sanctions cases are defensible. People do beat them, or at least minimize the damage significantly. But the defenses that work are specific to this area of law.

Due Diligence Defense

If you can show that you had reasonable compliance procedures in place, that you attempted to screen transactions, that you made good-faith efforts to comply with sanctions – that can mitigate both civil and criminal exposure. OFAC considers compliance efforts when calculating penalties. Prosecutors consider them when deciding wheather to charge criminally.

This dosent mean you need a perfect compliance program. It means you need to show you tried. Did you screen counterparties? Did you have written policies? Did you train employees? Did you update your procedures when new sanctions were announced? All of this evidence can help.

Challenging the Designation

Sometimes the government makes mistakes. People get linked to sanctioned entities incorrectly. Companies get confused with similarly-named blocked entities. If you can show that the alleged connection to a sanctioned party was wrong – that you werent actualy dealing with a blocked person or entity – that can be a complete defense.

Timing and Knowledge Arguments

For criminal cases, timing matters. When was the person or entity designated? When did you transact with them? If you dealt with someone before they were sanctioned, thats not a violation. If you dealt with them after – but before you reasonably could have known – that goes to willfulness.

The government has to prove you knew about the designation at the time of the transaction. If the designation was new, if the lists hadnt been updated, if your screening systems hadnt caught up – all of that can negate willfulness and prevent criminal prosecution.

License or Exemption Arguments

OFAC issues general licenses that permit certain categories of transactions that would otherwise be blocked. There are exemptions for humanitarian assistance, for certain informational materials, for personal remittances in some cases. If your transactions fall within a license or exemption, thats a complete defense.

Many people dont realize these licenses and exemptions exist. An experienced sanctions attorney will analyze wheather any of your transactions might be covered – even if you didnt know about the license at the time.

Three Mistakes That Make Sanctions Cases Worse

Ive seen Russian-Americans destroy there own sanctions cases by making preventable mistakes. Here are the three most common.

Mistake 1: Assuming “I didnt know” will protect you

For civil penalties, it wont. OFAC dosent need to prove intent. “I didnt know” might help avoid criminal prosecution, but it wont save you from civil penalties. And if theres any evidence you DID know – even circumstantial evidence – that defense evaporates completely.

Mistake 2: Continuing transactions during investigation

When your under investigation, every new transaction becomes a new potential violation. Every wire transfer, every payment, every business deal involving any Russian connection becomes evidence and potential additional charges. Freeze everything until you understand your exposure.

Mistake 3: Talking to investigators without counsel

OFAC investigators may seem like they just want to understand your business. DOJ agents may seem like they just want information. But everything you say becomes evidence. Misstatements become false statement charges. Explanations become admissions. Get an attorney before any substantive communication with any agency.

What To Do If Your Under Investigation

If your facing a sanctions investigation – wheather from OFAC, DOJ, or both – heres what you need to do immediatly.

Step 1: Hire specialized counsel.

Sanctions defense is a niche area. You need an attorney who understands OFAC enforcement guidelines, DOJ prosecution patterns, voluntary self-disclosure requirements, and the specific Russia sanctions programs. Your general business lawyer probly isnt enough.

Step 2: Preserve all records.

Do not delete emails. Do not destroy documents. Do not “clean up” files. Evidence destruction is obstruction of justice – a seperate federal crime. Preserve everything, even things that look bad.

Step 3: Stop all potentially problematic transactions.

Until you understand your exposure, stop any transaction that might involve Russia or Russian-connected parties. New violations during an investigation only make things worse.

Step 4: Analyze your exposure.

Your attorney needs to identify every potentially problematic transaction, assess the evidence of willfulness, evaluate wheather voluntary self-disclosure makes sense, and develop strategy for both civil and criminal tracks.

Step 5: Coordinate carefully across agencies.

If multiple agencies are involved, every response needs to be coordinated. What you tell OFAC affects what happens with DOJ. Inconsistent statements can be devastating.

The difference between a managable outcome and a catastrophic one often comes down to how you respond in the first weeks after learning of an investigation. Get the right help. Move carefully. Understand both tracks.

Being accused of sanctions violations is serious. But its defensible. People do navigate these cases successfully. The key is understanding the difference between OFAC and DOJ, understanding strict liability versus willfulness, and making informed decisions at every step.

Your freedom – and your financial future – depend on getting this right.