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$7.8 Million Penalty for Terrorism Sanctions Violations

Friday, February 28, 2020
Sandler, Travis & Rosenberg Trade Report

The Office of Foreign Assets Control reports that a Swiss company has agreed to pay $7.8 million to settle its potential civil liability for 9,256 apparent violations of the Global Terrorism Sanctions Regulations. According to OFAC, these violations relate to the company’s provision of commercial services and software that were subject to U.S. jurisdiction and benefitted certain airline customers after OFAC designated those airlines as specially designated global terrorists.

OFAC notes that this enforcement action highlights the benefits companies operating in high-risk industries can realize by implementing effective, thorough, and on-going risk-based compliance measures, especially when engaging in transactions concerning the aviation industry. For more information on avoiding and mitigating sanctions violations, please contact export attorney Kristine Pirnia.

OFAC states that prior to its investigation the company knew it was providing services to SDGTs and implemented periodic measures to comply with U.S. economic sanctions laws and regulations. In addition, the company had begun taking steps to mitigate its sanctions compliance-associated risks in light of a compliance program it described as “primarily reactive.” However, the company acknowledged that prior to these reviews it did not maintain a comprehensive and detailed compliance program.

The statutory maximum civil monetary penalty in this matter is $2.45 billion and the base penalty amount is $13.4 million. Aggravating factors include that the company knew it was providing services and software to SDGTs and its status as a commercially sophisticated entity that operates in virtually every country in the world.

Mitigating factors include the company’s cooperation with OFAC, implementation of extensive remedial efforts, and enhancements to its compliance program. In addition, the company has undertaken a number of measures to minimize the risk similar conduct will recur in the future. These include establishing a global trade board to expressly monitor and vet compliance risk involving customers, suppliers, and others; establishing a trade compliance committee; appointing a dedicated global head of ethics and compliance; implementing new sanctions legal compliance reviews when onboarding new customers and suppliers and extending or adding new products or services to existing customers in sanctioned countries; and updating and creating new compliance policies and guidelines.

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