The Treasury Department’s Office of Foreign Assets Control reports that a U.S. company has agreed to pay $60,764 to settle its and its foreign subsidiary’s potential civil liability for eight apparent violations of OFAC sanctions on Iran.
According to OFAC, the apparent violations occurred when the subsidiary exported weighing equipment from Italy to Iran through a distributor in the United Arab Emirates with knowledge that these goods were ultimately destined for Iran. The parent company’s import-export coordinator had notified the subsidiary’s general manager that sales to Iran by foreign subsidiaries were prohibited; however, OFAC said, the company did not include any further explanation or translation and does not appear to have taken sufficient steps to ensure that its subsidiary understood the prohibitions, took steps to comply with them, or monitor their adherence to the restrictions.
OFAC determined that the apparent violations were voluntarily self-disclosed and constitute a non-egregious case. Aggravating factors include the subsidiary acting with reckless disregard for U.S. sanctions requirements, the parent company failing to exercise due caution or care for those requirements, and the subsidiary knowing or having reason to know that the goods sold were ultimately destined for Iran even if it mistakenly believed that such sales were permissible. Mitigating factors include that neither the parent nor the subsidiary has been the subject of any OFAC enforcement action in the past five years and the parent company’s prompt remedial measures, including designing and implementing compliance program improvements.
OFAC notes that this enforcement action highlights (1) the sanctions risks U.S. companies with global operations face with respect to the activities of their subsidiaries or affiliates, (2) the ongoing risk of goods being re-exported to Iran by the non-U.S. subsidiaries of U.S. companies, and (3) the importance of paying careful attention to developments in the sanctions programs OFAC administers and enforces.
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