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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.”
OFAC sanctions IRGC-connected entities
On March 30, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order (E.O.) 13224, as amended, as well as E.O. 13382, against an Iran-based procurement agent and his network of companies that supported the Islamic Revolutionary Guard Corps Research and Self Sufficiency Jihad Organization (IRGC), the IRGC unit responsible for the research and development of ballistic missiles, as well as Iran’s Parchin Chemical Industries (PCI), an element of Iran’s Defense Industries Organization. Additionally, OFAC sanctioned an Iranian intermediary involved in the procurement of parts used to develop missile propellant on behalf of PCI.
According to OFAC, the sanctions follow Iran’s missile attack on March 13 in Erbil, Iraq and an Iranian-enabled Houthi missile attack against a Saudi Aramco facility on March 25, in addition to other missile attacks by Iranian proxies against Saudi Arabia and the United Arab Emirates. As a result of the sanctions, all property and interests in property belonging to the sanctioned persons that are in the U.S. or in the possession or control of U.S. persons, and “any entities that are owned, directly or indirectly, 50 percent or more” by the targeted persons 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 reaches $5.2 million settlement with Hong Kong company for apparent Iranian sanctions violations
On January 11, the U.S. Treasury Department’s Office of Foreign Assets Control announced a $5.2 million settlement with a Hong Kong, China-based company for allegedly processing certain transactions related to goods of Iranian origin through U.S. financial institutions in violation of the Iranian Transactions and Sanctions Regulations (ITSR). According to OFAC’s web notice, from August 2016 through May 2018, certain company employees violated company-wide policies and procedures by causing the company to purchase Iranian-origin goods from a supplier in Thailand for resale to buyers in China. Under the terms of the trading arrangement, the company made 60 separate U.S. dollar payments from its bank in Hong Kong to the Thai supplier’s banks in Thailand, transferring a total of $75.6 million. Each of these payments were allegedly “processed and settled through multiple U.S. financial institutions, including the U.S. correspondent banks of the Hong Kong and Thai banks.” Due to the noncompliant employees’ misconduct, the funds transfer instructions omitted references to Iran. As a result, U.S. financial institutions were unable to flag the transfers as violating the ITSR, which would have “caused them to reject and report each of these U.S. dollar denominated funds transfers.”
In calculating the settlement amount, OFAC considered the following aggravating factors: (i) the noncompliant employees omitted Iranian country of origin references from all relevant transactional documents over a period of two years, despite knowing and having been advised repeatedly that this conduct violated the ITSR and company policy; (ii) the noncompliant employees “had actual knowledge about the [supplier’s] relation to Iran”; (iii) the company’s actions conferred significant economic benefits to Iran, specifically with respect to Iran’s petrochemical sector; and (iv) the company “is a sophisticated offshore trading and cross-border trade financing company with ready access to experience and expertise in international trade, investment, financing, and sanctions compliance.”
OFAC also considered various mitigating factors, including that (i) the company repeatedly reminded noncompliant employees not to make U.S. dollar payments in connection with Iran-related business transactions; (ii) senior management and compliance personnel were unaware of the violations due to the concealment of the information internally; (iii) the company has not received a penalty notice from OFAC in the preceding five years; and (iv) the company voluntarily self-disclosed the apparent violations, cooperated with OFAC’s investigation, and has undertaken significant remedial measures to ensure sanctions compliance.
OFAC reaches $133,860 settlement in Iranian sanctions matter
On December 8, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a $133,860 settlement against an individual for allegedly facilitating four payments on behalf of an Iranian company using a personal bank account in the U.S., in violation of the Iranian Transactions and Sanctions Regulations (ITSR), 31. C.F.R. part 560. According to OFAC’s web notice, between February 2016 and March 2016, the individual accepted $133,860 in the U.S., which went to a personal bank account, on behalf of an Iran-based company selling Iranian-origin cement to another company for a project in a third country.
In arriving at the settlement amount, OFAC considered various aggravating factors, including, among other things, that the individual: (i) willfully was in violation of or recklessly ignored U.S. sanctions on Iran when receiving payments on behalf of an Iranian company; (ii) was aware of, and actively participated in, the violations; and (iii) “harmed the objectives of the ITSR by enabling the evasion of sanctions by an Iranian company.” OFAC also considered various mitigating factors, including that the individual did not receive a penalty notice, finding of violation, or cautionary letter from OFAC in the past five years, and is a natural person with a limited ability to pay.
OFAC sanctions 15 international human rights abusers
On December 7, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13818 targeting fifteen actors across three countries under the Global Magnitsky Human Rights Accountability Act. According to OFAC, the sanctioned actors are associated with human rights abuse and repressive acts targeting civilians, political opponents, and peaceful protestors. As a result of the sanctions, all property and interests in property belonging to the sanctioned entities subject to U.S. jurisdiction are blocked and must be reported to OFAC. Additionally, “any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked.” OFAC noted that U.S. persons are prohibited from participating in transactions with these persons, which includes “the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person or the receipt of any contribution or provision of funds, goods or services from any such person.”
OFAC sanctions Iranians for attempting to influence 2020 U.S. presidential election
On November 18, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13848 against six Iranian individuals and one Iranian entity for allegedly attempting to influence the 2020 U.S. presidential election. According to OFAC, “state-sponsored Iranian cyber actors executed an online operation to intimidate and influence American voters, and to undermine voter confidence and sow discord” by obtaining or attempting to obtain U.S. voter information, sending threatening and intimidating emails to voters, crafting and disseminating “disinformation pertaining to the election and election security,” and illicitly accessing “content management accounts of several online U.S. media entities, which resulted in their ability to edit and create fraudulent content.” As a result, all property and interests in property of the sanctioned persons subject to U.S. jurisdiction are blocked, as well as any entities owned 50 percent or more by such persons. U.S. persons are also generally prohibited from entering into transactions with the sanctioned persons. Additionally, OFAC warned that “financial institutions and other persons that engage in certain transactions or activities with the sanctioned entity and individuals may expose themselves to sanctions or be subject to an enforcement action.”
The sanctions are part of a collective effort with the U.S. Department of State and the FBI. Concurrent with the designations, the DOJ unsealed an indictment against two of the sanctioned individuals. The DOJ charged the Iranian nationals with (i) conspiracy to commit computer fraud and abuse, voter intimidation, and transmission of interstate threats, (ii) voter intimidation, and (iii) transmission of interstate threats. One of the individuals was additionally charged with unauthorized computer intrusion and computer fraud.
OFAC sanctions IRGC-connected entities
On October 29, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order (E.O.) 13224, as amended, as well as E.O. 13382, against members of a network of companies and individuals that supported Iran’s Islamic Revolutionary Guard Corps (IRGC) and its expeditionary unit, the IRGC Qods Force (IRGC-QF). The IRGC-QF used and proliferated lethal Unmanned Aerial Vehicles (UAVs) for use by Iran-supported terrorist groups, and to Ethiopia, where a crisis threatens to destabilize the region. Additionally, deadly UAVs were utilized in attacks on international shipping and on the U.S. OFAC also announced sanctions against the commander of the IRGC Aerospace Force (IRGC ASF) UAV Command who allegedly directs the planning, equipment, and training for IRGC ASF UAV operations. As a result of the sanctions, all property and interests in property belonging to the sanctioned individual subject to U.S. jurisdiction are blocked. U.S. persons are also generally prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons.
OFAC updates Iran, Venezuela FAQs
On September 30, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced the publication of a new Iran-related FAQ. FAQ 932 clarifies that “transactions ordinarily incident to travel to or from Iran by U.S. persons are within an exemption under the Iranian Transactions and Sanctions Regulations (ITSR), 31 C.F.R. part 560, and therefore generally are not prohibited.” OFAC also noted that U.S. persons could be prohibited from engaging in transactions associated with persons blocked by sanctions programs or authorities outside the scope of the ITSR.
The same week, on October 1, OFAC announced the publication of a new Venezuela-related FAQ. FAQ 933 clarifies that authorizations in paragraph (a) of Venezuela-related General Licenses 7C and 20B, respectively, have not expired.
OFAC reaches settlement with Texas technology company
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.
OFAC sanctions Iranian officials in plot to kidnap American citizen in the U.S.
On September 3, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13553 against four Iranian intelligence operatives who allegedly targeted a U.S. citizen and Iranian dissidents in a wide-ranging campaign to silence critics of the Iranian government. According to OFAC, a senior official led a network that plotted to kidnap a U.S. journalist, which failed and led to the indictment of members of the network. OFAC also noted that this network has played a key role in the Iranian government’s brutal human rights abuses against Iranians. 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 facilitating significant transactions or providing significant financial services to the designated individuals may subject them to U.S. correspondent account or payable-through sanctions.