InfoBytes Blog
OFAC reaches $6 million settlement with logistics company
On April 25, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a roughly $6 million settlement with a freight forwarding and logistics company for allegedly processing transactions in violation of Iran-Related Sanctions Regulations, among others. According to OFAC’s web notice, between approximately January 2013 and February 2019, the company processed payments through the U.S. financial system in connection with sea, air, and rail shipments to the Democratic People’s Republic of Korea (DPRK), Iran, and Syria, involving the property or interests in property of an entity on OFAC’s Specially Designated Nationals and Blocked Persons List (SDN List) in apparent violation of OFAC sanctions. Specifically, in processing such payments, the company allegedly “failed to adopt or implement policies and controls that prevented it from conducting transactions that involved designated parties or persons in sanctioned jurisdictions.”
In arriving at the settlement amount, OFAC considered various aggravating factors, including, among other things, that (i) the company “acted with reckless disregard for U.S. economic sanctions laws when, over the period of six years, it caused at least 2,958 payments involving shipments from, to, or through sanctioned jurisdictions or the blocked property or an interest in blocked property of entities on the SDN List to be routed through U.S. financial institutions”; (ii) the company had knowledge “of the apparent violations”; and (iii) nearly “14 percent of the apparent violations were for transactions involving entities blocked by OFAC for terrorism or [weapons of mass destruction (WMD)] concerns.” OFAC also considered various mitigating factors, including that the company (i) has not received a penalty notice from OFAC in the preceding five years; (ii) “voluntarily self-disclosed the apparent violations to OFAC and cooperated with OFAC’s investigation”; and (iii) “ultimately took extensive actions to remedy its compliance gaps.”
Providing context for the settlement, OFAC stated that this “action highlights the importance of instituting strong internal controls and procedures to govern payments involving affiliates, subsidiaries, agents, or other counterparties when any of them conduct business with sanctioned jurisdictions or persons.”