The US has dropped a bid to extradite a British businessman accused of conspiring to violate sanctions imposed by the US government on a Russian oligarch.

Graham Bonham-Carter, 62, was arrested by the National Crime Agency (NCA) last October, accused of funding properties bought by Oleg Deripaska and expatriating his artwork.

Mr Deripaska, an industrialist who founded the Rusal aluminium company and is considered an ally of Russian President Vladimir Putin, has an estimated wealth of more than £2 billion.

The US Department of Justice (DoJ) said Mr Bonham-Carter was wanted to face three charges – conspiring to violate and evade US sanctions in violation of the International Emergency Economic Powers Act (IEEPA), violating IEEPA, and wire fraud – each of which carries a maximum sentence of 20 years in prison.

The court received an email from the Home Office on behalf of the US authorities requesting the extradition order be withdrawn

Mr Bonham-Carter appeared at Westminster Magistrates’ Court on December 12 last year, when the court heard he would argue he should not be extradited because Mr Deripaska was not subject to UK sanctions at the time.

His barrister Gavin Irwin said one of the issues in the case was “whether the breaches of sanctions properly constitute extradition offences because the individual to whom alleged assistance was supplied was not designated in the UK at the time”.

District Judge Sarah Turnock set a two-day hearing for May 22 and said Mr Bonham-Carter would next appear for a case management hearing on March 3.

However, the court on Friday told the PA news agency the case was concluded on February 9.

“The court received an email from the Home Office on behalf of the US authorities requesting the extradition order be withdrawn,” a spokeswoman said.

Mr Deripaska was initially sanctioned by the US for “having acted or purported to act on behalf of, directly or indirectly, a senior official of the government of the Russian Federation, and for operating in the energy sector of the Russian Federation economy”.

We do not routinely comment on individual cases

After an investigation conducted with “substantial assistance” from the NCA, Mr Bonham-Carter was accused of engaging in more than one million dollars (£900,000) of illicit transactions to fund real estate properties in the US for Mr Deripaska’s benefit.

It was alleged the businessman was instructed by Mr Deripaska to set up a company, GBCM Limited, to manage his properties, including two in New York City and one in Washington DC.

The DoJ said money was sent from a GBCM Limited account in Russia to pay for staff salaries and property taxes and to maintain the oligarch’s properties.

Mr Deripaska was one of seven oligarchs hit with sanctions by the UK on March 10 last year. He was described as being “closely associated” with the Russian government and its leader and “involved in destabilising and threatening” Ukraine.

Four days after the sanctions were imposed, four protesters broke into one of Mr Deripaska’s properties in Belgravia Square, London, before declaring it “belongs to Ukrainian refugees”.

Mr Bonham-Carter had his bank accounts frozen at Westminster Magistrates’ Court last March after it was alleged they contained money linked to Mr Deripaska.

A Home Office spokesman said: “We do not routinely comment on individual cases.”

The DoJ and NCA have been contacted for comment.