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OFAC settles with telecommunications company over sanctions violations

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

Financial Crimes

On September 17, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a $894,111 settlement with a New York-based telecommunications systems and software company for four apparent violations of the Sudanese Sanctions Regulations (SSR). According to OFAC’s web notice, between June 2014 and October 2015, the company—through its wholly owned subsidiary—allegedly “indirectly exported warrantied satellite equipment and facilitated services and training to a government-owned entity in Sudan” in apparent violation of the SSR. Among other things, OFAC noted that the company and its subsidiary knew that the end-user of the equipment and services was the Sudan Civil Aviation Authority (SCAA), but the companies still organized the shipment of equipment through a Canadian company despite receiving multiple warnings about OFAC’s export restrictions for Sudan. Once it became known that the SCAA was the ultimate end-user, OFAC contended that the subsidiary’s former Director of Logistics and Export Compliance Official allegedly “attempted to transfer OFAC compliance obligations from [the subsidiary] to the Canadian [c]ompany.” Additionally, OFAC denied the subsidiary’s license application to provide certain warranty services.

In arriving at the settlement amount, OFAC considered various aggravating factors, including that (i) the subsidiary “demonstrated reckless disregard for U.S. sanctions requirements and failed to exercise a minimal degree of caution or care by approving warranty services for equipment provided to SCAA while an OFAC license was still pending”; (ii) the subsidiary did not heed warning signs indicating the transactions could have led to the apparent violations; and (iii) the subsidiary’s explanations in response to OFAC subpoenas and a request for information were inconsistent, which required OFAC expending “significant additional time and resources” building an accurate record of the apparent violations. OFAC also considered that it had not issued a violation against the company or its subsidiary in the five years preceding the earliest transaction at issue.

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