Treasury Fines New York Manager, $7.1 Million Over Ties to Deripaska
The U.S. Treasury slapped a $7.1 million penalty on Gracetown Inc. for operating luxury properties connected to sanctioned Russian oligarch Oleg Deripaska, a move that signals heightened enforcement of sanctions rules for real estate intermediaries. The action underlines the rising compliance risk for property firms and could prompt tighter vetting of foreign ownership and payment flows across the U.S. real estate sector.
The Treasury Department’s Office of Foreign Assets Control imposed a $7.1 million civil penalty on Gracetown Inc., a New York based property management company, declining to tolerate what officials called prohibited dealings with a sanctioned actor. OFAC said Gracetown accepted multiple payments on behalf of an entity owned by Oleg Deripaska between April 2018 and May 2020 despite warnings that dealings with the oligarch were barred under U.S. sanctions. Justice Department filings from 2022 tied the firm to a broader scheme that involved a U.K. businessman who was previously arrested for attempting to move Deripaska’s assets.
The enforcement action arrived amid sustained U.S. scrutiny of sanctions evasion channels that can run through professional intermediaries, including law firms, accountancy practices and property managers. By naming a New York company and levying a seven million dollar penalty, Treasury officials signaled a willingness to use financial remedies to compel compliance beyond traditional banking and trade sectors. The penalty statement noted that facilitating or concealing transactions for sanctioned parties carries tangible cost consequences and will remain a focus of enforcement efforts.
For the commercial and high end residential real estate market in New York, the decision raises practical questions about how firms manage client relationships and process payments. Property managers and brokers routinely collect and route rent and service fees, a function that can obscure beneficial ownership if not accompanied by rigorous due diligence. The Gracetown case underscores that those routine operations can become enforcement flashpoints when they involve parties linked to designated individuals.
Market participants are likely to face higher compliance costs as a result. Firms may need to invest more in know your customer systems, enhanced beneficial ownership screening, and transaction monitoring to avoid similar penalties. That in turn could raise operating expenses, and those costs are often passed through to property owners and renters. For lenders and insurers, the ruling highlights counterparty risk associated with properties that have opaque ownership structures and increases the need for more exhaustive title and beneficiary checks.
Policy implications extend to U.S. efforts to close gaps used for sanctions evasion. Regulators have stepped up enforcement since geopolitical events in recent years heightened the use of sanctions as a foreign policy tool. Treasury’s move is consistent with a broader strategy to target the service providers and networks that enable sanctioned actors to preserve assets and access markets. The involvement of Justice Department filings in this matter also suggests that civil penalties may accompany, or presage, criminal investigations when networks of intermediaries are implicated.
Longer term, the ruling may shift investor behavior. High net worth individuals and institutional buyers who value anonymity could find U.S. markets less hospitable if enforcement of ownership transparency becomes more aggressive. For New York, where foreign capital has been a significant market force, the decision places a premium on transparent transactions and strengthens the business case for firms to adopt best practices in compliance to sustain access to global capital.
