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California Company Fined Over Shipment of Recreational Chairs to Iran

Monday, July 28, 2014
Sandler, Travis & Rosenberg Trade Report

The Treasury Department’s Office of Foreign Assets Control reports that a California company has paid $21,375 to settle potential civil liability for an alleged violation of the Weapons of Mass Destruction Proliferators Sanctions Regulations. According to OFAC, this company engaged a bank to process a blocked letter of credit transaction representing payment for a shipment of recreational chairs with a substitute bill of lading omitting reference to the Islamic Republic of Iran Shipping Lines, an entity whose property and interests in property are blocked. This took place after another bank refused the transaction due to IRISL’s involvement.

The maximum statutory penalty amount for this apparent violation was $250,000 and the base penalty amount was $25,000. OFAC states that the company’s action demonstrated reckless disregard for U.S. sanctions requirements, represented a deliberate step to evade or avoid those requirements, and reflected the company’s knowledge that IRISL was involved in the transactions. Further, the company did not make a voluntary self-disclosure and did not appear to have an OFAC compliance program in place at the time of the apparent violation. On the other hand, the company has no prior sanctions history with OFAC and appears to be a small company lacking the sophistication of a larger company conducting international trade, and the alleged violation did not constitute an egregious case.

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