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Company Penalized for Shipping Goods on Blocked Vessel

Tuesday, July 28, 2015
Sandler, Travis & Rosenberg Trade Report

The Office of Foreign Assets Control has announced that an Oklahoma company has agreed to pay $214,000 to settle potential civil liability for alleged violations of sanctions against proliferators of weapons of mass destruction. Specifically, OFAC states that this company sold goods that its Chinese vendor shipped from China to a customer in the United Arab Emirates aboard a vessel that was identified as blocked property. OFAC further states that the company engaged in transactions that appear to have been intended to evade or avoid the sanctions when it requested the creation of new trade documents with references to the blocked vessel removed and then transferred the altered documents to its customer to facilitate the release of goods held at port in the UAE.

The statutory maximum penalty amount for the alleged violations was $500,000 and the base penalty amount was $340,000. The settlement amount reflects OFAC' s consideration of the following facts and circumstances.

- Aggravating factors: with respect to the charges of evasion, the company appears to have acted willfully by obtaining an altered bill of lading that concealed the involvement of a blocked vessel and by disregarding verbal and written guidance from OFAC stating that the company should consult with OFAC's Licensing Division before engaging in additional transactions involving the shipping documents, and the company was aware that the conduct giving rise to certain alleged violations was prohibited without an OFAC license given that the company submitted a license application to OFAC seeking authorization for the same conduct; and the company did not have a compliance program in place at the time of the alleged violations.

- Mitigating factors: the company has not received a penalty notice or finding of violation from OFAC in the five years preceding the date of the first transaction giving rise to the alleged violations, had no reason to know that a blocked vessel was to be used for the shipment until the vessel's sailing date, is a small company and took remedial measures to prevent a recurrence of the alleged violations.

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