Article
Sanctions compliance isn’t just for banks: Why continuous monitoring is critical
July 7, 2025 · Authored by Crystal Trout
In June 2025, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) levied a $216 million penalty against a Silicon Valley venture capital firm for violating U.S. sanctions. This wasn’t a global bank or crypto exchange. It was a private fund manager – a reminder that no financial institution is immune from sanctions enforcement, regardless of size, sector or perceived risk profile.
This case should serve as a serious wakeup call for every venture capital firm, private equity fund, registered investment advisor (RIA), wealth manager, fintech company and corporate treasury operation.
We cannot emphasize enough that compliance expectations extend well beyond traditional banks. U.S. entities have a legal obligation to comply with sanctions regulations, whether or not you hold customer deposits or operate across borders.
The risks of a “check-the-box” approach
At its core, the venture capital firm failed to properly screen investors and counterparties against OFAC and other global sanctions lists. As a result, the firm inadvertently facilitated business with a sanctioned Russian entity through one of its investments.
Many firms conduct sanctions screening only at the time of onboarding, or perform cursory annual reviews. But sanctions risk is dynamic – new entities and individuals are added to global watchlists regularly, sometimes overnight, in response to shifting geopolitical events. A name that cleared compliance last quarter could be prohibited today.
This is why compliance can’t be a “set it and forget it” process. Perpetual know your customer (pKYC) and continuous sanctions screening should be standard operating procedures for any business engaged in capital markets, financial services or international commerce. A comprehensive compliance program not only reduces risk, but also builds trust among employees, investors and other stakeholders.
Compliance obligations are industry-agnostic
One of the most important takeaways from this case is that sanctions compliance isn’t industry-specific. Every U.S. business, regardless of sector, is legally bound to avoid dealings with restricted persons, entities and jurisdictions. This includes not only financial institutions, but also manufacturers, supply chain operators and any company with global exposure.
