The Treasury Department’s Office of Foreign Assets Control reports that a German company has agreed to pay $14.6 million to settle its potential civil liability for one apparent violation of OFAC sanctions on Iran.
OFAC states that between 2015 and 2019 the company conspired to cause a U.S. company to indirectly sell and supply a decommissioned Australian polypropylene plant to Iran and to remit related payments through U.S. financial institutions. Among other things, the company repeatedly sought to conceal the true end-user, including by falsifying shipping documents, making false statements, and instructing its freight forwarders to report to customs authorities that the final destination was a non-sanctioned country.
According to OFAC, the statutory maximum civil monetary penalty applicable in this matter is $19.4 million. OFAC determined that the company did not voluntarily self-disclose the apparent violation, which constitutes an egregious case. Other aggravating factors include the willful nature of the violation, the direct involvement of the company’s senior management, and the fact that the transaction provided Iran with “a lucrative asset that would otherwise be difficult for it to build or obtain.”
Mitigating factors include the company’s previously clean compliance history and its agreement to implement sanctions compliance commitments designed to minimize the risk that similar misconduct will recur. This includes implementing a sanctions compliance program with written policies and procedures, hiring a dedicated compliance officer responsible for implementing that program, and undergoing annual compliance audits by a third party.
Compliance Considerations
According to OFAC, this case demonstrates the risks and potential costs when non-U.S. persons conduct transactions involving a sanctioned jurisdiction and U.S. persons, directly or indirectly. Even though the company at issue is German and the plant and its original owner were located in Australia, the transactions at issue were subject to U.S. jurisdiction due to the involvement of a U.S. company reseller.
Further, OFAC states, this matter highlights the particular damage apparent conspiracies can cause when multiple actors work in concert to undermine the sanctions controls of an unwitting third party. In this instance, the U.S. company employed a sanctions compliance program and took multiple steps to confirm the true destination of the plant to keep it from being exported to a sanctioned jurisdiction, but despite these efforts the German company and its apparent co-conspirators were able to deceive the U.S. company by falsifying documents and making repeated false statements.
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