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  • OFAC Settles Alleged Iran Sanction Violations with Singapore-Based Oilfield Services Company

    Financial Crimes

    On August 24, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced that it had reached a $415,350 settlement with a Singaporean oilfield services company for an alleged 55 violations of Iran sanctions regulations. OFAC asserted that the company “exported or attempted to export 55 orders of oil rig supplies from the [U.S.] to Singapore and the United Arab Emirates, and then re-exported or attempted to re-export these supplies to four separate oil rigs located in Iranian territorial waters” from approximately October 2011 through February 2013. OFAC alleged that each instance of this conduct, which the company did not voluntarily self-disclose, violated OFAC’s Iranian Transactions and Sanctions Regulations. Had the company not settled, OFAC determined that civil monetary penalties ranged from approximately $923,000 to $13.75 million. In establishing the penalty, OFAC considered that the company: (i) failed to act with an appropriate level of caution by exporting goods to oil rigs located in Iranian territorial waters; (ii) aided the development of Iran's energy resources; (iii) “is a large, sophisticated company with 14 offshore drilling rigs doing business throughout the world;” and (iv) “did not have an OFAC compliance program in place at the time of the transactions.” As for mitigating factors, OFAC determined that: (i) the company has no prior sanctions history with OFAC; (ii) the company took remedial action by implementing an OFAC compliance program; and (iii) the company cooperated with the investigation and entered into a tolling agreement with OFAC.

    Financial Crimes OFAC Sanctions Department of Treasury

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  • OFAC Settles Alleged Iran Sanction Violations with International Freight Forwarder

    Financial Crimes

    On August 17, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced it had reached a $518,063 civil settlement with a California-based international freight forwarder for alleged violations of sanctions against Iran. OFAC claimed that the company shipped “used and junked cars and parts” from the U.S. to Afghanistan, via Iran, on 140 separate occasions from approximately April 2010 through June 2012. OFAC alleged that each instance of this conduct, which the company “did not voluntarily self-disclose,” violated OFAC’s Iranian Transactions and Sanctions Regulations (ITSR). See 31 C.F.R. § 560.204.

    Had the company not settled, OFAC determined that civil monetary penalties ranged from approximately $1.5 million to $35 million. In establishing this range, OFAC alleged that the following were aggravating factors: (i) the company “demonstrated a reckless disregard for U.S. sanctions requirements by failing to exercise a minimal degree of caution or care in transshipping goods through Iran”; (ii) the company’s “President and co-owner knew and approved of the transshipments via Iran”; (iii) the company “provided an economic benefit to Iran through its pattern of conduct and the volume of transactions in which it engaged”; and (iv) the company is “sophisticated” and has “experience with U.S. export laws and OFAC regulations, particularly the ITSR.”

    As for mitigating factors, OFAC alleged that: (i) the goods “did not appear to have an end use in Iran”; (ii) the company “has no prior OFAC sanctions history”; (iii) the company is a “small business,” and the alleged violations “constituted less than one percent of its total shipments” during the relevant time period; (iv) the company “had an OFAC compliance program in place” during the relevant time period; (v) the company “took remedial steps”; and (vi) the company “cooperated with OFAC’s investigation.”

    Financial Crimes OFAC Sanctions Department of Treasury

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  • OFAC Fines Global Risk Mitigation Firm for Violating Iranian Sanctions

    Financial Crimes

    On August 10, the Treasury’s Office of Foreign Assets Control (OFAC) announced it had reached a settlement with a global company that provides services in regulatory risk mitigation for alleged violations of OFAC sanctions against Iran. OFAC claimed that, beginning in 2012, on 44 separate occasions, the firm imported Iranian-origin services into the U.S., and on 28 different occasions, engaged in “transactions or dealings related to Iranian-origin services by approving and facilitating its foreign subsidiaries’ payments to providers of Iranian-origin services.” In establishing the penalty, OFAC considered that the firm failed to exercise a minimal degree of caution—and senior management allegedly knew or had reason to know the transactions related to services of Iranian-origin—and that the transactions giving rise to the apparent violations were not eligible for OFAC authorization and yielded economic benefits to Iran. Furthermore, OFAC claimed the “frequency and duration of the apparent violations constitute a pattern or practice of conduct,” and that the firm’s ineffective compliance program failed to recognize the risks of engaging in the aforementioned transactions. OFAC maintained the firm violated the Iranian Transactions and Sanctions Regulations, 31 C.F.R. part 560. OFAC also considered the company’s prior history of not being sanctioned; its significant remedial measures; and substantial cooperation with OFAC’s investigation.

    The settlement requires the firm to pay more than $250,000 to settle the claims, which the firm did not voluntarily self-disclose to OFAC.

    Financial Crimes OFAC Sanctions Department of Treasury

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  • OFAC Fines International Technology Subsidiary More Than $12 Million for Violating Iranian Sanctions

    Financial Crimes

    On July 27, the Treasury’s Office of Foreign Assets Control (OFAC) announced it had reached a settlement with a subsidiary of a Singapore-based international technology group for alleged violations of OFAC sanctions against Iran. OFAC claimed that between August 25, 2010 and November 5, 2011, the subsidiary entered into contracts with multiple Iranian companies, engaged several third-party vendors to provide goods and services for the contracts, and caused “at least six separate financial institutions to engage in the unauthorized exportation or re-exportation of financial services from the [U.S.] to Iran.” Furthermore, the subsidiary made a statement to a non-U.S. financial institution in Singapore (the Bank) stating, “In consideration of [the Bank] agreeing to continue providing banking services in Singapore to our company, we . . . hereby undertake not to route any transactions related to Iran through [the Bank], whether in Singapore or elsewhere.” However, the subsidiary began originating USD funds transfers through the Bank related to Iranian business transactions. Moreover, its actions provided “significant economic benefit” to Iran and individuals on OFAC’s List of Specially Designated Nationals and Blocked Persons. Specifically, OFAC maintained the subsidiary violated the following sanctions programs: (i) the International Emergency Economic Powers Act and (ii) the Iranian Transactions and Sanctions Regulations, 31 C.F.R. part 560.

    The settlement requires the company to pay more than $12 million to settle the claims, which the company did not voluntarily self-disclose to OFAC.

    Financial Crimes OFAC Sanctions Department of Treasury

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  • OFAC Settles with International Insurance Group over Charges of Violating Sanctions Programs

    Financial Crimes

    On June 26, the Treasury’s Office of Foreign Asset Control (OFAC) reached a settlement with an international financial services and insurance company based in New York for alleged violations of OFAC sanctions programs. OFAC claimed that the company “issued policies and insurance certificates, and/or processed claims and other insurance-related transactions that conferred economic benefit to sanctioned countries or persons and undermined the policy objectives of several U.S. economic sanctions programs.” Specifically, OFAC maintained the company violated the following sanctions programs: (i) Iranian Transactions and Sanctions Regulations, 31 C.F.R. Part 560 (ITSR); (ii) Weapons of Mass Destruction Proliferators Sanctions Regulations, 31 C.F.R. Part 544 (WMDPSR); (iii) Sudanese Sanctions Regulations, 31 C.F.R. Part 538 (SSR); and (iv) Cuban Assets Control Regulations, 31 C.F.R. Part 515 (CACR). The settlement requires the company to pay $148,698 to settle the claims, which the company voluntarily self-disclosed to OFAC.

    For others to avoid these issues, OFAC suggested that “the best and most reliable approach for insuring global risks without violating U.S. sanctions law is to insert in global insurance policies an explicit exclusion for risks that would violate U.S. sanctions laws.”

    Financial Crimes Federal Issues OFAC Insurance Sanctions Risk Management Cuba Iran Sudan

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  • OFAC Reaches $1.192 Billion Resolution with Chinese Telecommunication Equipment Corporation

    Financial Crimes

    On March 7, the Treasury’s Office of Foreign Asset Control (OFAC) announced a combined $1.192 billion resolution with other federal agencies against a Chinese telecommunications equipment corporation and its subsidiaries and affiliates to settle alleged violations of the Iranian Transactions and Sanctions Regulations. The resolution is pending approval of the company’s criminal plea in federal court. OFAC’s settlement agreement  resolves its investigation into the company’s practice of “utilizing third-party companies to surreptitiously supply Iran with a substantial volume of U.S.-origin goods, including controlled goods appearing on the Commerce Control List.” As noted by Steven T. Mnuchin, Secretary of the Treasury, this “settlement is OFAC’s largest ever against a non-financial entity and sends a powerful message that Treasury will aggressively pursue any company that willfully violates U.S. economic sanctions laws and obstructs federal investigations of such violations.”

    In addition to the monetary penalty, the company must maintain policies and procedures designed to minimize future risk of violations of U.S. economic sanctions and export control violations.

    Financial Crimes Sanctions OFAC

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  • OFAC Sanctions More than Two Dozen Firms and Individuals in Connection with Iran's Ballistic Missile Program

    Federal Issues

    On February 3, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced that it was imposing new sanctions against several entities and individuals involved in procuring technology and/or materials to support Iran’s ballistic missile program, as well as for acting for or on behalf of, or providing support to, Iran’s Islamic Revolutionary Guard Corps-Qods Force. The sanctions block “all property and interests in property of those designated today subject to U.S. jurisdiction are blocked, U.S. persons are generally prohibited from engaging in transactions with” the identified firms and individuals.

    International Anti-Money Laundering Sanctions OFAC Miscellany

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  • OFAC Settles with Canadian Bank for Apparent Violations of Cuban Assets Control Regulations and Iran Sanctions

    Courts

    On January 13, Treasury’s Office of Foreign Asset Control (OFAC) announced a $516,105 settlement agreement with a Canadian-based bank and its online-brokerage subsidiaries in connection with accounts held and transactions processed on behalf of certain Specially Designated Nationals and Blocked Persons located in Cuba, Iran and other locations in the Middle East. OFAC also identified general “shortcomings in the bank’s OFAC compliance policies, procedures, and programs” including the bank’s failure to screen for any potential nexus to an OFAC-sanctioned country or entity prior to processing related transactions through the U.S. financial system and occurring due to shortcomings in the banks policies and procedures. The settlement agreement does, however, note that the Apparent Violations constituted a non-egregious case, that the Bank voluntarily self-disclosed the Apparent Violations, and that the applicable total base penalty amount for the apparent violations was $955,750—well above the $516,105 amount OFAC assessed.

    Notably, in the agreement’s concluding paragraph, OFAC highlights, as a general matter, the risks associated with both “subsidiaries in high-risk industries–such as securities firms” and, in particular “online payment platforms when the financial institution is unable to restrict access for individuals and entities located in comprehensively sanctioned countries.”

    Courts Banking Sanctions OFAC Cuba

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  • OFAC Settles With Non-U.S. Company for Apparent Violation of Iran Sanctions

    Courts

    On January 12, Treasury’s Office of Foreign Asset Control (OFAC) announced a $17,500 settlement agreement with Aban Offshoe Limited ("Aban") of Chennai, India, in connection with an alleged violation of Iranian Transactions and Sanctions Regulations. The alleged violation arises out of events that occurred in June 2008, when Aban's Singapore subsidiary allegedly placed an order for oil rig supplies from a vendor in the United States with the intended purpose of re-exporting these supplies from the United Arab Emirates to a jack-up oil drilling rig located in the South Pars Gas Fields in Iranian territorial waters. OFAC noted, among other things, that the alleged violation constitutes a non-egregious case, but that Aban did not voluntarily self-disclose the apparent violation.

    Courts International Sanctions OFAC

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  • OFAC Release Further Updates to Iran Sanctions Rules

    Federal Issues

    On December 23, OFAC announced it has issued a final rule amending existing Iranian Transactions and Sanctions Regulations to expand the scope of medical devices and agricultural commodities generally authorized for export or re-export to Iran. The amendment also includes new or expanded authorizations relating to training, replacement parts, software and services for the operation, maintenance, and repair of medical devices, as well as certain items that are broken or subject to product recalls or other safety concerns. In addition, this amendment revises the definition of the terms “goods of Iranian origin” and “Iranian-origin goods.” OFAC concurrently published new and updated FAQs pertaining to the amendment.

    International Sanctions OFAC Miscellany

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