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$780,000 Penalty for Conspiracy to Transfer Funds to Iraq

Monday, March 30, 2015
Sandler, Travis & Rosenberg Trade Report

The Treasury Department’s Office of Foreign Assets Control has announced that a Michigan company has agreed to pay $780,000 to settle potential civil liability for apparent violations of the former Iraqi Sanctions Regulations. According to OFAC, this company appears to have knowingly and willfully formed a conspiracy for the purpose of transferring funds from the U.S. to Iraq through Jordan and appears to have made funds transfers pursuant to this conspiracy.

The base penalty amount for the apparent violations, which were not voluntarily self-disclosed, was $1.3 million. Aggravating factors include the following: the company appears to have willfully violated U.S. economic sanctions regulations; prior to the relevant transactions the company had written notice from OFAC that such transfers were prohibited and that OFAC did not authorize them; the company’s highest management levels (i.e., its president) knew of the conduct giving rise to the apparent violations and directed the funds transfers to Iraq via Jordan; and U.S. economic sanctions program objectives were harmed because funds were successfully transferred to Iraq. On the other hand, the company does not have prior OFAC sanctions history, undertook a remedial response to the transactions and agreed to establish an OFAC compliance program, and cooperated by waiving the statute of limitations regarding the apparent violations. In addition, the civil settlement with OFAC is an element of the company’s cooperation agreement with the Department of Justice.

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