Several weeks have passed since the U.S. and its allies first imposed sanctions on Russia’s biggest companies and its business and political leaders, all the way up to President Vladimir Putin.

Yet one person has been spared, in a last-minute decision: Alina Kabaeva, the woman the U.S. government believes to be Mr. Putin’s girlfriend and the mother of at least three of his children.

Ms. Kabaeva, a former Olympic champion rhythmic gymnast known in the sport for her extreme flexibility and an international doping scandal, is suspected of playing a role in hiding Mr. Putin’s personal wealth overseas, U.S. officials said, and remains a potential sanctions target.

The belief among U.S. officials debating the move is that sanctioning Ms. Kabaeva would be deemed so personal a blow to Mr. Putin that it could further escalate tensions between Russia and the U.S. The 69-year-old Mr. Putin has never acknowledged a relationship with Ms. Kabaeva, a 39-year-old former cover model for Russian Vogue.

Russian President Vladimir Putin and Alina Kabaeva during a meeting with the Russian Olympic team at the Kremlin on Nov. 4, 2004.

Photo: itar-tass/Reuters

The U.S. Treasury Department, which according to U.S. officials prepared the sanctions package against Ms. Kabaeva, now on hold, declined to comment. U.S. officials said that the action against Ms. Kabaeva isn’t off the table.

The Kremlin has long denied any relationship between Mr. Putin and Ms. Kabaeva. Mr. Putin’s spokesman, Dmitry Peskov, didn’t respond to requests for comment. Ms. Kabaeva, who has denied a relationship with Mr. Putin, couldn't be reached for comment.

In 2008, Mr. Putin said in response to newspaper reports of his alleged relationship with Ms. Kabaeva: “I have always disliked those who, with their snotty noses and erotic fantasies, break into other people’s private affairs.”

Mr. Putin lives a near-monastic lifestyle dedicated to public service and with almost no time for a personal life, according to portrayals of him in Russian state media. The Russian leader has two daughters from his past marriage to Ludmilla Shkrebneva —Katerina Tikhonova, 35, and Maria Vorontsova, 36.

On Saturday, Ms. Kabaeva made a rare public appearance at Moscow’s VTB Arena to present a rhythmic gymnastics performance for the “Alina” festival, a gymnastics exhibition named for her. She stood in front of a billboard covered in “Z” logos, the symbol for support of Russia’s military operations in Ukraine.

“Every family has a war-related story, and we must pass these stories to next generations,” she said. Russian gymnastics would become stronger because of international isolation, she added: “We will only win from this.”

The Alina festival is scheduled to be broadcast in May, part of celebrations to commemorate Russia’s victory over Nazi Germany in World War II. Russian analysts have said Mr. Putin could use the celebration to proclaim a military victory in Ukraine.

The U.S. has imposed sanctions on Mr. Putin’s two adult daughters. Moving against Ms. Kabaeva, described by the U.S. government as Mr. Putin’s “mistress,” is among the actions deemed confrontational enough to further complicate efforts for a negotiated peace in Ukraine, officials said.

The Treasury and State departments typically work together to prepare sanctions packages, incorporating intelligence and other information. The National Security Council often has to sign off before a package is announced. In Ms. Kabaeva’s case, the Treasury department had prepared the sanctions against her, but the NSC made an 11th hour decision to pull her name from a list set to be announced.

“We have prepared sanctions on a number of people who haven’t yet been sanctioned, and we continue to think about when to impose those sanctions for maximum impact,” a U.S. official said in response to questions from The Wall Street Journal.

Ms. Kabaeva and her family have been enriched by connections to people in Mr. Putin’s inner circle, according to U.S. officials. A classified U.S. intelligence assessment during the investigation into alleged Russian interference in the 2016 U.S. election, names Ms. Kabaeva as a beneficiary of Mr. Putin’s wealth, according to a U.S. official familiar with the report.

Russian President Vladimir Putin greeting Olympic gymnast Alina Kabaeva. center, during a meeting in 2004.

Photo: SERGEI CHIRIKOV/AFP/Getty Images

A representative of jailed Russian opposition leader

Alexei Navalny urged U.S. lawmakers on April 6 to impose sanctions on Ms. Kabaeva, claiming she was allegedly helping to hide Mr. Putin’s personal wealth. The representative didn’t provide any evidence during her congressional testimony.

Western officials say they don’t know Ms. Kabaeva’s exact position in the Kremlin power structure. Debate over imposing sanctions on her reflects the view by many Western officials about Mr. Putin’s personal grip on power—that a former gymnast could be one of the country’s most influential figures because of her proximity to the Russian leader.

Ms. Kabaeva has stayed in Switzerland for long stretches of time, according to U.S. and European security officials. U.S. officials briefed on Ms. Kabaeva’s movements said she had lived in a high-walled mansion with a helipad in Cologny, near Geneva. A U.S. official said Mr. Putin’s associates conducted business there, arriving and leaving by helicopter.

Ms. Kabaeva was rarely spotted in Cologny, a secluded spot for billionaires and sports stars in the hills above Lake Geneva, officials said.

The Ukraine government has stepped up calls on the West to pursue actions against her. Ukraine’s parliament this month wrote to the government of Switzerland demanding it ban Ms. Kabaeva from the country and seize any real estate she owns. The Swiss government said it had no indication she was in the country.

Signature move

Ms. Kabaeva was born in Uzbekistan and left high school early to pursue her sport. She was 21 when she won a gold medal in rhythmic gymnastics at the 2004 Olympics in Athens. She became a national star, known for a signature move, which was named the “Kabaeva” in the rhythmic gymnastics rulebook. That earned her the informal title of “Russia’s most flexible woman.”

Some of the sport’s purists viewed her extreme contortions as a gimmick. Yet she won 21 European Championship medals, 14 World Championship medals and two Olympic medals, including a bronze at the 2000 Sydney Games.

In 2001, Ms. Kabaeva was stripped of her medals at the world championships in Madrid after testing positive for a banned diuretic. She claimed the substance came from tainted pills she bought at a nearby pharmacy. Ms. Kabaeva served a one-year ban and returned to win the following World Championships and the gold medal in Athens.

Russian gymnast Alina Kabaeva performing a signature move during her routine in the rhythmic gymnastic individual exercise competition at the 1998 Goodwill Games held in Uniondale, N.Y.

Photo: TIMOTHY A. CLARY/AFP/Getty Images

Her name was first mentioned on the Kremlin website in 2001. Mr. Putin attended a sports show and was photographed with Ms. Kabaeva, who was 18.

The Moskovsky Korrespondent, a Russian tabloid, reported in 2008 that Mr. Putin, who was married at the time, and Ms. Kabaeva were engaged. The daily newspaper was shut down days later by its owner, National Media Co. after Mr. Putin furiously denied the story.

Around that time, Ms. Kabaeva retired from gymnastics and entered politics as a lawmaker for Mr. Putin’s ruling United Russia party. She received a salary of 11 million rubles, about $140,000.

Ms. Kabaeva left parliament in 2014 to become chairwoman of Russia’s New Media Group, which controls major pro-government TV, radio and news websites. She was appointed by NMG owner Yuri Kovalchuk, the largest shareholder in Rossiya Bank.

U.S. officials have sanctioned Rossiya, alleging it was used by Mr. Putin’s close associates. Ms. Kabaeva’s annual salary in 2018 was the equivalent of around $12 million, according to leaked documents from Russia’s Federal Tax Service.

NMG removed her name and picture from its website on April 6, shortly before the latest round of sanctions. NMG didn’t respond to requests for comment, and Ms. Kabaeva didn’t respond to questions submitted to the company.

Alina Kabaeva applauding the speech of Vladimir Putin to the United Russia Party on Nov., 27, 2011 in Moscow. Mr. Putin. prime minister at the time, was accepting the nomination to run again for president.

Photo: Sasha Mordovets/Getty Images

Since around 2013, Ms. Kabaeva and her relatives have acquired six apartments, two houses and acres of land in four of Russia’s most exclusive regions, according to data from Russia’s land registry, Rosreestr.

Among those properties, Ms. Kabaeva’s 87-year old grandmother and Ms. Kabaeva’s mother and sister took title of luxury homes from businessmen close to Mr. Putin, including a 2,300 square-foot property in St. Petersburg, as well as luxury apartments on a high-end Moscow street and in the resort town of Sochi, according to the land registry. The family members didn’t respond to a request for comment emailed to Ms. Kabaeva’s company.

Carrying a torch

In 2013, Mr. Putin announced he had separated from Ms. Shkrebneva, his wife of 30 years and a former Aeroflot cabin crew member. “It was a joint decision,” he said. “We hardly see each other, each of us has our own life.”

Their divorce was completed the following year. Ms. Kabaeva was interviewed on state television afterward and said she had met someone “whom I love very much.” She declined to share the person’s name.

Vladimir Putin and Ludmilla Shkrebneva, his wife at the time, during a service on May 7, 2012, to mark the start of his term as president.

Photo: ria novosti/Reuters

Media reports of a romantic relationship flared when Ms. Kabaeva was selected as a torchbearer at the 2014 Winter Olympics in Sochi. Mr. Putin, responding to media speculation that he had personally picked Ms. Kabaeva, told reporters he wouldn’t “interfere in the process.”

Swiss, U.S. and European officials said Ms. Kabaeva traveled to Switzerland and gave birth to Mr. Putin’s child in 2015. She stayed in one of Europe’s most expensive maternity clinics—the Sant’Anna—overlooking Lake Lugano. When Mr. Putin wasn’t seen in public for eight days around that time, his spokesman, Mr. Peskov, addressed rumors that the president was with Ms. Kabaeva: “Information about the birth of a baby fathered by Vladimir Putin doesn’t correspond to reality,” he said.

Following the birth, Ms. Kabaeva spent more of her time in Switzerland, at both a luxury residence in Lugano, overlooking the city’s mountain lake, and the high-walled compound in Cologny, U.S. and European officials said.

In 2019, Ms. Kabaeva gave birth to twins in Moscow, U.S. officials said, though it wasn’t officially reported. The website of newspaper Moskovsky Komsomolets, owned by one of Mr. Putin’s closest friends, published a news item about the twins. The article, which didn’t name a father, was quickly removed.

In the weeks following Russia’s invasion of Ukraine, media reports that Ms. Kabaeva had resided in Switzerland made big news in the historically neutral Alpine nation. The Swiss Federal Department of Justice and Police released a statement saying, “We have no indication of the presence of this person in Switzerland.” It made no mention of Ms. Kabaeva by name.

In March, Switzerland announced it had frozen $6.17 billion worth of Russian assets covered by sanctions, a fraction of the approximately $213 billion worth of Russian wealth in the country, according to estimates by Switzerland’s banking lobby. The State Secretariat for Economic Affairs, the agency overseeing sanctions, has faced criticism from the U.S. and Ukraine for not being able to handle calls to do more to bottle up Russian assets there.

The challenge is guessing what impact, if any, would come from imposing sanctions on Ms. Kabaeva, U.S. officials said of the continuing government deliberations in the matter. They acknowledged the sanctions wouldn’t change the battlefield dynamics in Ukraine.

There is also the chance, said an official from the U.S. Treasury’s Office of Foreign Assets Control, that Mr. Putin would “respond in an aggressive way.”

—Justin Scheck contributed to his article.

Write to Vivian Salama at vivian.salama@wsj.com, Joe Parkinson at joe.parkinson@wsj.com and Drew Hinshaw at drew.hinshaw@wsj.com