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$515,000 Penalty for Iran Sanctions Violations Mitigated Due to Financial Woes

Thursday, March 02, 2017
Sandler, Travis & Rosenberg Trade Report

The Office of Foreign Assets Control announced Feb. 28 that a California company will pay $515,400 to settle potential civil liability for alleged violations of the Iranian Transactions and Sanctions Regulations. However, the company’s obligation to pay this penalty will be satisfied by its compliance with the terms of a Sept. 24, 2013, settlement with the Bureau of Industry and Security and its payment of $15,400 to the Treasury Department.

OFAC alleges that on at least 56 occasions the company made sales of medical imaging equipment with knowledge or reason to know that the goods were intended specifically for supply or re-exportation to buyers in Iran and facilitated the sales of medical imaging equipment from a company in the United Arab Emirates to Iran. The total value of the goods associated with these transactions was approximately $2.5 million.

OFAC considered the following to be aggravating factors: (1) the company willfully exported goods to Iran with actual knowledge and prior notice that such shipments constituted or likely constituted a violation of U.S. law; (2) the company had actual knowledge that it required a license to send and/or export its products to Iran, as demonstrated by a November 2003 license application the company submitted to OFAC; and (3) the company failed to effectively manage and enforce its compliance program.

OFAC considered the following to be mitigating factors: (1) the alleged violations occurred due to the actions of a single employee rather than a systemic pattern of company-wide conduct; (2) the company took remedial action in response to the alleged violations, including voluntarily ceasing transactions involving Iran, implementing new procedures, and updating its compliance program to prevent the recurrence of similar violations; (3) the company has not received a penalty notice or finding of violation from OFAC in the five years preceding the earliest date of the transactions giving rise to the alleged violations; (4) the company cooperated with OFAC’s investigation by providing timely responses to OFAC’s correspondence and entering into multiple statute of limitations tolling agreements; (5) the company is a small business; and (6) based on the financial condition of the company, including significant financial difficulties in recent years, additional mitigation is warranted.

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