The Treasury Department’s Office of Foreign Assets Control reports that a company has agreed to pay $20 million to settle its potential civil liability for 467 apparent violations of OFAC sanctions on Iran.
OFAC states that this case highlights the risks and potential costs that non-U.S. companies are exposed to when using the U.S. financial system for transactions that may involve U.S. sanctioned persons or jurisdictions, even when those transactions might not otherwise violate OFAC regulations. For more information on how to ensure that your company avoids these risks, please contact attorney Kristine Pirnia at (202) 730-4964 or via email.
According to an OFAC press release, the company caused U.S. financial institutions to process $291 million in wire transfers for sales of high-density polyethylene resin manufactured by a joint venture in Iran. It did so by employing certain shipping and documentation practices that obfuscated the product’s Iranian origin and the involvement of Iranian parties. The company also initiated U.S. dollar wire transfer transactions on behalf of the Iranian-based joint venture to pay its debts to third-party vendors. OFAC states that these practices are “hallmarks” of the acts it has previously found to be used to obscure Iranian involvement and engage in prohibited transactions.
The base civil monetary penalty applicable in this matter is $597.6 million and the statutory maximum penalty is $600.4 million. Aggravating factors include that the company willfully engaged in a persistent, multi-year pattern of misconduct, that the violations conferred substantial economic benefits to an entity partially owned by the government of Iran, and that a significant amount of the company’s total revenue arose from the violations. In addition, OFAC determined that the violations were egregious and, with only a handful of exceptions, were not voluntarily self-disclosed.
On the other hand, mitigating factors include the company’s otherwise clean record, substantial cooperation with OFAC, and implementation of remedial measures, including creating and adopting a sanctions compliance policy, hiring a new sanctions compliance officer, implementing sanctions screening policies and procedures, conducting regular compliance training for employees, and ensuring regular auditing of sanctions compliance procedures. OFAC also took into account that the company was acquired by another company and will therefore not engage in further business activities.
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