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$2.9 Million Penalty for Multiple Export Sanctions Violations

Tuesday, July 02, 2013
Sandler, Travis & Rosenberg Trade Report

The Treasury Department’s Office of Foreign Assets Control announced June 28 that an Italian bank has agreed to remit $2.95 million to settle potential civil liability for apparent violations of the Cuban Assets Control Regulations, the Sudanese Sanctions Regulations and the Iranian Transactions Regulations.

OFAC states that as early as the late 1990s the bank maintained a customer relationship with an Italian company owned or controlled by the government of Iran. Despite that company’s ownership and line of business as an exporter of goods to Iran and its financial and commercial associations with Iranian state-owned financial institutions, companies, and projects, the bank failed to identify it as meeting the definition of the government of Iran under the ITR and, at the time of the apparent violations, did not take appropriate measures to prevent itself from processing transactions for or on behalf of the Italian company that terminated in the U.S. and/or with U.S. persons. Separately, the bank processed approximately 120 transactions to or through the U.S. that involved Cuba or Sudan and does not appear to have implemented or utilized special procedures or payment practices in order to process these payments.

The base penalty amount for the apparent violations was $9.36 million. Aggravating factors considered by OFAC include that the bank had reason to know that the activity specified above constituted apparent violations, engaged in conduct resulting in harm to the integrity of U.S. economic sanctions programs, is a commercially sophisticated international financial institution, did not maintain an adequate program to ensure that it was in compliance with U.S. economic sanctions, and did not voluntarily self-disclose the apparent violations. However, substantial mitigation was provided because the apparent violations did not constitute a willful or reckless violation of the law, none of the bank’s managers or supervisors had actual knowledge or awareness of these matters, and the bank provided substantial cooperation to OFAC, took remedial action in response to the apparent violations and now has a more robust compliance program in place, and had not received a penalty notice or finding of violation from OFAC in the five years preceding the date of the transactions at issue.

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