Skip to main content
Menu Icon Menu Icon
Close

InfoBytes Blog

Financial Services Law Insights and Observations

Filter

Subscribe to our InfoBytes Blog weekly newsletter and other publications for news affecting the financial services industry.

  • OFAC reaches $2.1 million settlement with German software company

    Financial Crimes

    On April 29, OFAC announced a more than $2.1 million settlement with a Germany-based software company for 190 apparent violations of the Iranian Transactions and Sanctions Regulations. According to OFAC’s website notice, between June 2013 and January 2018, the company “authorized 13 sales of [company] software licenses, 169 sales of related maintenance services and updates, and eight sales of cloud-based subscription services.” Third-party resellers, which the company allegedly referred to as “pass-through entities” in Turkey, the United Arab Emirates (UAE), Germany, and Malaysia, sold the software licenses and related maintenances services and updates, OFAC noted.

    In arriving at the settlement amount, OFAC considered various aggravating factors, including that the company (i) demonstrated reckless disregard and failed to exercise sufficient caution or care for U.S. economics sanctions by failing to act on audit findings regarding sanction risk or warnings from compliance, and by ignoring whistleblower complaints; (ii) failed to have an adequate compliance program for a company of its size; (iii) had information to conclude that the software and cloud services were being utilized by entities and end-users in Iran and were supported from the US; and (iv) “is a sophisticated software company with significant international operations and has numerous foreign subsidiaries.”

    OFAC also considered various mitigating factors, including that the company (i) cooperated with OFAC’s investigation; (ii) has undertaken remedial measures, including terminating the users connected to the third-country entities, the partners who participated in the sales to Iranian companies, and five employees who were found to have “knowingly engaged in the sale of. . . products to Iran”; (iii) has prohibited downloads of software, support, and maintenance from embargoed countries; (iv) implemented a risk-based export control framework for partners that requires a stringent review of proposed sales by a third-party auditor; (v) created an upgraded compliance program; and (vi) hired new employees responsible for export control and trade sanctions compliance.

    Separately, the DOJ announced that the company agreed to pay a $8 million fine and entered into a Non-Prosecution Agreement as a result of its voluntary disclosure to the DOJ and “extensive cooperation and strong remediation.” Pursuant to the agreement, the company “will disgorge $5.14 million of ill-gotten gain.”

     

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

    Share page with AddThis
  • U.S. steel manufacturer settles with OFAC for violating Iranian sanctions

    Financial Crimes

    On April 19, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a $435,003 settlement with an Oklahoma-based steel manufacturer to resolve alleged violations of the Iranian Transactions and Sanctions Regulations. According to OFAC’s accompanying web notice, between 2013 and 2018, the company allegedly engaged with a third-party Iranian engineering company on at least 61 occasions to import engineering services. The company asserted that, while several senior officials “were involved in the process of approving each transaction and issuing checks to the Iranian engineering company,” the company’s “lack of familiarity with U.S. sanctions requirements caused its management to allow the Apparent Violations to continue until a new Chief Executive Officer was hired in October 2018.” Once management learned of the alleged violations, the company stated it ceased working with the Iranian engineering company and took several remedial measures to prevent the conduct from reoccurring.

    In arriving at the settlement amount, OFAC considered various aggravating factors, including that (i) the company failed to conduct basic due diligence regarding the transactions with the Iranian engineering company; (ii) senior management “had actual knowledge” that the company was outsourcing work to the Iranian engineering company; and (iii) the conduct caused more than $1 million in benefits to Iran.

    OFAC also considered various mitigating factors, including that the company (i) had not received a penalty notice from OFAC in the preceding five years; (ii) voluntarily self-disclosed the alleged violations and cooperated with OFAC’s investigation; (iii) ceased the conduct at issue; and (iv) took remedial measures, including terminating the employee responsible for initiating and overseeing the transactions at issue, and developing and implementing an export compliance policy to provide, among other things, staff training and a requirement that all international contracting opportunities be approved by the company’s president.

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

    Share page with AddThis
  • Italian company settles with OFAC for violating Iranian Transactions and Sanctions Regulations

    Financial Crimes

    On March 26, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a $950,000 settlement to resolve alleged violations of the Iranian Transactions and Sanctions Regulations with an Italian company that produces and reexports air pressure switches. According to OFAC’s accompanying web notice, between 2013 and 2017, the company allegedly “knowingly reexported 27 shipments of air pressure switches procured from a U.S. company intended for as many as ten customers in Iran and caused a U.S. company to indirectly export its goods to Iran.” OFAC also alleged that the company engaged in efforts to obfuscate its reexportation of goods from the U.S. to Iranian end-users by, among other things, having employees use deceptive replacement terms for Iran in communications with the U.S company in order to avoid referencing Iranian end-users, and requesting that the term “Made in USA” be removed from the switches to disguise their origin.

    In arriving at the settlement amount, OFAC considered various aggravating factors, including that (i) the company willfully reexported air pressure switches even though it knew it was violating U.S. sanctions; (ii) company management “either failed to provide effective oversight of its employees and operations or chose to ignore these prohibited trade practices”; and (iii) the conduct caused over $2.5 million worth of goods to be diverted from the U.S. to Iran.

    OFAC also considered various mitigating factors, including that the company (i) has not received a penalty notice from OFAC in the proceeding five years; (ii) ceased the conduct at issue and took remedial measures, including implementing a sanctions compliance program and agreeing to enhanced compliance commitments; and (iii) cooperated with OFAC’s investigation.

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

    Share page with AddThis
  • OFAC settles with manufacturer for violating Iranian Transactions and Sanctions Regulations

    Financial Crimes

    On March 15, the U.S. Treasury Department’s Office of Foreign Assets Control announced a $216,464 settlement with an Ohio-based manufacturer for alleged violations of the Iranian Transactions and Sanctions Regulations (ITSR). According to OFAC’s web notice, between 2013 and 2017, the company allegedly failed to act on multiple apparent warning signs and exported multiple shipments of goods to two European companies despite having “reason to know that the goods were intended specifically for supply, transshipment, or reexportation to Iran by the two European companies.” OFAC noted that the company voluntarily self-disclosed the apparent violations and acknowledged that it “had actual knowledge” that some of the transactions were intended specifically for reexportation to Iran.

    In arriving at the settlement amount, OFAC considered various aggravating factors, including that (i) the company failed to follow up on multiple warning signs that the European companies were reexporting goods to Iran; (ii) senior leadership knew or should have known the goods were being reexported to Iran; and (iii) the company and senior leadership “had actual knowledge” that the two final shipments were to be reexported to an Iranian end-user.

    OFAC also considered various mitigating factors, including that the company (i) has had no prior sanctions history with OFAC; (ii) ceased all shipments to the European companies when it made its disclosure and requested that the goods be returned; (iii) cooperated with OFAC’s investigation and entered into tolling agreements; and (iv) strengthened its trade compliance and export policies and procedures to minimize the risk of similar violations from occurring in the future. 

    Financial Crimes Department of Treasury OFAC Enforcement Settlement Sanctions OFAC Designations Iran

    Share page with AddThis
  • OFAC sanctions organizations controlled by the Supreme Leader of Iran

    Financial Crimes

    On January 13, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against two purportedly charitable organizations controlled by the Supreme Leader of Iran, as well as their leaders and subsidiaries, for, among other things, allegedly controlling assets expropriated from political dissidents and religious minorities in order to benefit senior Iranian government officials. The OFAC sanctions were taken pursuant to Executive Order 13876 and follow sanctions issued last November against a conglomerate of roughly 160 holdings in key sectors of Iran’s economy (covered by InfoBytes here). As a result of the sanctions, all property and interests in property belonging to the sanctioned persons subject to U.S. jurisdiction are blocked and must be reported to OFAC. U.S. persons are generally prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons. OFAC further warned foreign financial institutions that knowingly conducting or facilitating significant transactions for or on behalf of the designated persons could subject them to U.S. correspondent account or payable-through sanctions.

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

    Share page with AddThis
  • OFAC sanctions additional actors in Iranian steel sector

    Financial Crimes

    On January 5, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against a Chinese supplier of graphite electrodes, 12 Iranian producers of steel and other metal products, and a major Iranian metals and mining holding company’s three foreign-based sales agents. OFAC’s actions are taken pursuant to Executive Order 13871 (covered by InfoBytes here), which authorizes the imposition of sanctions on persons determined to operate in Iran’s iron, steel, aluminum, and copper sectors, which OFAC identified as providing “funding and support for the proliferation of weapons of mass destruction, terrorist groups and networks, campaigns of regional aggression, and military expansion.” As a result of the sanctions, “all property and interests in property of these persons that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC.” OFAC further noted that its regulations “generally prohibit all dealings by U.S. persons or within (or transiting) the United States that involve any property or interests in property of blocked or designated persons,” and warned foreign financial institutions that knowingly conducting or facilitating significant transactions for or on behalf of the designated persons could subject them to U.S. correspondent account or payable-through sanctions.

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

    Share page with AddThis
  • OFAC sanctions entities supporting the sale of Iranian petrochemicals

    Financial Crimes

    On December 16, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13846 against four entities for facilitating the export of Iranian petrochemical products on behalf of a previously designated petrochemical company. According to OFAC, the designated entities—China- and United Arab Emirates-based companies—have allegedly provided the previously designated company “with critical shipping services or conducted financial transactions on” its behalf, which has enabled the previously designated company to “continue brokering and moving Iranian petrochemical exports.” As a result of the sanctions, all property and interests in property of the designated persons subject to U.S. jurisdiction are blocked, and any “entities that are owned, directly or indirectly, 50 percent or more by such persons, are also blocked.” OFAC noted that its regulations “generally prohibit” U.S. persons from participating in transactions with the designated persons. OFAC further warned foreign financial institutions that knowingly facilitating significant transactions or providing significant support to the designated persons may subject them to sanctions and could sever their access to the U.S. financial system.

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

    Share page with AddThis
  • OFAC sanctions entities connected to IRGC-QF

    Financial Crimes

    On December 8, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order (E.O.) 13224 against an official in the Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF), along with the Iranian regime’s envoy to the Houthi rebels in Yemen, for allegedly “acting for or on behalf of the IRGC-QF.” OFAC also announced sanctions against an Iranian university and a separate individual for providing support to IRGC-QF operations. As a result, all property and interests in property belonging to the designated persons subject to U.S. jurisdiction are blocked, and any “entities that are owned, directly or indirectly, 50 percent or more by such persons, are also blocked.” U.S. persons are “generally prohibited from engaging in transactions” with the designated persons. OFAC further warned foreign financial institutions that if they knowingly facilitate significant transactions for the designated persons they “risk exposure to sanctions that could sever their access to the U.S. financial system or block their property and interests in property under U.S. jurisdiction.”

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

    Share page with AddThis
  • OFAC sanctions supporter of Iranian chemical weapons research

    Financial Crimes

    On December 3, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against a subordinate to the Iranian Organization of Defensive Innovation and Research and its director for its involvement in Iran’s chemical weapons research. The government made the sanctions designations pursuant to Executive Order 13382, which aims to freeze the assets of proliferators of weapons of mass destruction along with their supporters. As a result, all property and interests in property belonging to, or owned by, the designated persons subject to U.S. jurisdiction are blocked, and U.S. persons are also generally prohibited from engaging in transactions with them. OFAC further warned foreign financial institutions that knowingly facilitating significant transactions or providing significant support to the designated persons may subject them to U.S. sanctions.

    Additionally, OFAC updated and issued several Iran-related FAQs.

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

    Share page with AddThis
  • OFAC sanctions network for financially contributing to the Supreme Leader of Iran

    Financial Crimes

    On November 18, the U.S. Treasury Department’s Office of Foreign Assets Control announced sanctions against “a key patronage network for the Supreme Leader of Iran” (Foundation)—a conglomerate of roughly 160 holdings in key sectors of Iran’s economy, including finance, energy, construction, and mining—along with Iran’s Minister of Intelligence and Security. The Foundation is being designated pursuant to Executive Order (E.O.) 13876, which also targets the Supreme Leader of Iran, the Iranian Supreme Leader’s Office (SLO), as well as their affiliates. According to OFAC, the Foundation, among other things, allegedly transferred large amounts of money to the SLO and made financial contributions to candidates for Iran’s presidential election. The Foundation also allegedly “maintains control of its economic empire through a network of holding companies touching nearly every sector of the Iranian economy.” Seven of these companies have also been designated, “along with dozens of their owned-or-controlled subordinate entities, as well as a number of “independent” Foundation owned-or-controlled subsidiaries and their owned-or-controlled subordinate companies.” The Iranian Minister of Intelligence and Security is being designated pursuant to E.O. 13553 for “having acted or purported to act for or on behalf of, directly or indirectly, the [Ministry of Intelligence and Security],” which plays “a key role in the Iranian regime’s brutal human rights abuses against the Iranian people.”

    As a result, all property and interests in property belonging to, or owned by, the designated persons subject to U.S. jurisdiction are blocked, and U.S. persons are also generally prohibited from engaging in transactions with them. OFAC further warned foreign financial institutions that knowingly facilitating significant transactions or providing significant support to the designated persons may subject them to U.S. correspondent account or payable-through account sanctions.

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

    Share page with AddThis

Pages