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$518,000 Penalty for Iran Sanctions Violations

Thursday, August 24, 2017
Sandler, Travis & Rosenberg Trade Report

The Office of Foreign Assets Control reports that a U.S. company has agreed to pay $518,063 to settle potential civil liability for transshipping used and junked cars and parts from the U.S. via Iran to Afghanistan on 140 occasions in apparent violation of the Iranian Transactions and Sanctions Regulations.

The maximum statutory civil monetary penalty amount for the apparent violations was $35 million and the base penalty amount was $1.54 million. OFAC found the following to be aggravating factors: (1) the company demonstrated a reckless disregard for U.S. sanctions requirements by failing to exercise a minimal degree of caution or care in transshipping goods through Iran, (2) the company’s president and co-owner knew and approved of the transshipments, (3) the company provided an economic benefit to Iran through its pattern of conduct and the volume of transactions in which it engaged, and (4) the company is a sophisticated international full-service freight forwarder with experience with U.S. export laws and OFAC regulations.

On the other hand, OFAC found the following to be mitigating factors: (1) the goods were transshipped through Iran and do not appear to have had an end use in Iran; (2) the company has no prior OFAC sanctions history and has not received a penalty notice or finding of violation in the five years preceding the earliest date of the transactions giving rise to the apparent violations, making it eligible for “first violation” mitigation of up to 25 percent (even though the company did not voluntarily self-disclose the apparent violations); (3) the company is a small business and the apparent violations constituted less than one percent of its total shipments during the period in question; (4) the company had an OFAC compliance program in place at the time of the apparent violations, although it was silent on transshipments via Iran; (5) the company took remedial steps, including ceasing transshipments via Iran before the inception of OFAC’s investigation and amending its compliance policy to address the conduct at issue; and (6) the company cooperated with OFAC’s investigation, including by agreeing to toll the statute of limitations for a total of 804 days.

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