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$1.5 Million Penalty Against Financial Institution for Iran Sanctions Violations

Wednesday, October 23, 2013
Sandler, Travis & Rosenberg Trade Report

An investment and advising company based in the United Arab Emirates that also appears to serve as a general trading company has been hit with a $1.5 million penalty for violating U.S. sanctions against Iran. According to the Office of Foreign Assets Control, this company originated at least six electronic funds transfers processed through financial institutions located in the U.S. for the benefit of persons in Iran in violation of the prohibition against the direct or indirect exportation of services from the U.S. to Iran.

The base penalty was not mitigated in light of the following facts and circumstances.

- The company acted at least recklessly, and apparently willfully, by concealing and/or omitting material information in funds transfers it originated for processing through the United States.

- The company’s management, likely including senior management, had actual knowledge and/or reason to know of the conduct that led to the violations because the company appears to be associated with multiple Iranian entities and facilitated Iranian-related payments through the U.S.

- The company’s conduct prevented U.S. financial institutions from assessing the permissibility of transactions by omitting references to OFAC-sanctioned countries or persons in transactions processed through the U.S.

- The company does not appear to have an OFAC compliance program and did not cooperate with OFAC during the course of its investigation.

- Assessing a civil monetary penalty against the company will have a compliance/deterrence effect by encouraging greater due diligence by foreign financial institutions that maintain accounts for third-country trading companies and/or money transmitters.

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