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Financial Services Law Insights and Observations

OFAC reaches settlement with Texas technology company

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

Financial Crimes

On September 9, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a roughly $190,000 settlement with a Texas-based company for allegedly knowingly exporting goods, technology, and services in violation of the Iranian Transactions and Sanctions Regulations. According to OFAC’s web notice, between December 2013 and May 2018, the company exported 49 products from the U.S. to two third-country distributors with prior knowledge, or reason to know, that its products were intended specifically for a reseller in Iran. The Iranian reseller then sold three of the exported products to an entity on OFAC’s SDN List, at the time of the relevant exports. On at least three occasions, the company also allegedly provided support, software updates, reseller training, or other services in support of sales to customers located in Iran.

In arriving at the settlement amount, OFAC considered various aggravating factors, including, among other things, that the company: (i) demonstrated reckless disregard for U.S. sanctions regulations by authorizing distribution and support of its goods; (ii) possessed knowledge of the conduct; and (iii) “caused harm to U.S. sanctions objectives by facilitating access to the bank’s products and support services by resellers and users in Iran.”

OFAC also considered various mitigating factors, including, among other things, that the: (i) “volume and total amount of payments underlying the Apparent Violations was not significant compared to [the company’s] overall revenue”; (ii) the company demonstrated remedial actions, including establishing export controls and sanctions compliance policies and procedures; and (iii) the company cooperated with OFAC’s investigation.

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