Background

The Office of Foreign Assets Control reports that an Italian company has agreed to pay $950,000 to settle its potential civil liability for apparent violations of the Iranian Transactions and Sanctions Regulations. OFAC states that over about four years the company knowingly reexported 27 shipments of air pressure switches procured from a U.S. company intended for as many as ten customers in Iran and caused a U.S. company to indirectly export its goods to Iran.

The base civil monetary penalty in this matter is $7.7 million. OFAC determined that the apparent violations were egregious and not voluntarily self-disclosed, and aggravating factors included that the company engaged in willful conduct after being informed that it would violate U.S. sanctions laws and company management had reason to know of the conduct. Mitigating factors included the company’s remedial actions, such as implementing a sanctions compliance program and agreeing to enhanced compliance commitments. In view of these factors as well as the company’s financial circumstances, OFAC is suspending $650,000 of the settlement amount.

OFAC states that this action demonstrates the risks foreign companies assume when involving U.S. persons and goods procured from the U.S. in dealings with U.S.-sanctioned jurisdictions and entities. Foreign companies involved in such trade should understand that OFAC’s prohibitions can extend not just to U.S. persons but to their foreign trading activities as well. Additionally, ineffective management or poor oversight of employees and sales may present a sanctions risk when company or employee sales or business practices violate U.S. economic sanctions.

Accordingly, OFAC encourages foreign companies engaging in business with U.S. partners to institute risk-based sanctions compliance programs. For more information on developing and implementing such programs, please contact attorney Kristine Pirnia via email.

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