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Training Vital to Prevent Transactions in Regions at High Risk for Sanctions Violations, OFAC Says

Monday, February 08, 2016
Sandler, Travis & Rosenberg Trade Report

The Treasury Department’s Office of Foreign Assets Control announced Feb. 4 an enforcement action that it says highlights the need for U.S. companies, particularly large, sophisticated entities dealing primarily in international transactions, to ensure that their employees are properly trained on OFAC regulations, especially managers who oversee sales to regions that pose a particularly high risk for violations of the sanctions programs administered by OFAC.

This case involves five shipments of goods from Egypt to Sudan that were coordinated and supervised by a general manager who was unfamiliar with U.S. sanctions and received no training on compliance with OFAC regulations despite being responsible for sales in the Middle East and North Africa. Based on the following factors, OFAC decided to issue a finding of violation instead of a civil penalty against the responsible company.

Aggravating factors – the company acted with reckless disregard for U.S. sanctions requirements when it made two exports to Sudan after being made aware that it might be subject to restrictions under U.S. sanctions; the general manager was both aware of and involved in the conduct giving rise to the violations; the company is part of a large, sophisticated corporation that has extensive experience in international trade but did not properly take into consideration the implications of OFAC regulations when it restructured its consumer business and placed a U.S. company in charge of sales to Sudan; and the company’s OFAC compliance program did not include any training on OFAC regulations for its general manager

Mitigating factors – the company took remedial action, including conducting an internal investigation of the violations and instituting additional compliance training; the harm to sanctions programs objectives was limited because the products exported were consumer hygiene products; the company has no prior OFAC sanctions history; and the company cooperated with OFAC’s investigation, including by providing detailed and well-organized information.

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