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OFAC reaches settlement with New Jersey corporation for alleged Ukrainian sanctions violations

Financial Crimes OFAC Department of Treasury Sanctions Of Interest to Non-US Persons Settlement Ukraine

Financial Crimes

On April 25, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a $75,375 settlement with a New Jersey corporation for two alleged violations of the Ukraine Related Sanctions Regulations. The settlement resolves potential civil liability for the company’s alleged issuance of two separate invoices for software licensing and software support services to an entity previously identified on OFAC’s Sectoral Sanctions Identification List. According to OFAC, the designated entity’s attempts to remit payment were rejected by financial institutions after it was determined that the transaction by prohibited by OFAC regulations on certain debts. However, the corporation—which allegedly failed to have in place a sanctions compliance program and failed to “recognize that the delayed collection of payment was prohibited”—explored possible options to collect the payment and did not seek guidance or authorization from OFAC.

In arriving at the settlement amount, OFAC considered various aggravating factors, such as the corporation “demonstrated reckless disregard for U.S. economic sanctions requirements by repeatedly ignoring warning signs that its conduct constituted or likely constituted a violation of OFAC’s regulations.” Moreover, OFAC claimed that the corporation did not voluntary self-disclose the apparent violations to OFAC, and that senior management had knowledge of the alleged conduct.

OFAC also considered numerous mitigating factors, including that (i) the alleged violations “resulted in minimal actual harm to the sanctions programs” and constituted a non-egregious case; (ii) the corporation has not received a penalty or finding of a violation in the five years prior to the transactions at issue; and (iii) the corporation has implemented a risk-based compliance program to minimize the risk of recurring conduct.

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