Background

The Treasury Department’s Office of Foreign Assets Control reports that a global transportation and logistics company has agreed to pay $257,690 to settle potential civil liability relating to 82 apparent violations of sanctions against Iran and Cuba by five of its non-U.S. subsidiaries.

OFAC states that for more than three years these subsidiaries provided freight brokerage or transportation services for shipments to or from Iran of Iranian- or Cuban-origin goods or dealing with an Iranian airline. OFAC notes that the vast majority of the apparent violations appear to have occurred because the subsidiaries’ brokerage management systems had not yet been incorporated into the parent company’s system or otherwise updated to include the latest sanctions compliance controls and did not screen for potentially violative transactions.

According to OFAC, the statutory maximum civil monetary penalty applicable in this matter is $28.6 million. Aggravating factors include the company’s failure to exercise due caution or care for its sanctions compliance obligations after acquiring overseas firms and the fact that the company had reason to know that the conduct at issue was occurring. Mitigating factors include the company’s prompt remedial measures, including imposing a manual hold on any shipments indicating potential export or sanctions compliance issues pending review and approval by compliance staff, creating a trade compliance task force to improve system tools available to compliance managers, and developing additional OFAC-specific training mandatory for all relevant employees. The company also voluntarily self-disclosed the conduct after discovering it during regular sample audits.

OFAC notes that this case highlights (1) the importance for U.S. companies acquiring non-U.S. firms of establishing appropriate compliance controls and training as soon as possible after acquisition, (2) the benefits of foreign subsidiaries of U.S. companies having a compliance program that takes OFAC sanctions into account, and (3) that implementing systems and escalation protocols to ensure the careful review of all shipping documents can help prevent violations.

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