Background

A Dubai-based subsidiary of a Swedish company will pay more than $415,000 to settle its potential civil liability for apparent violations of the Iranian Transactions and Sanctions Regulations. A separate U.S. subsidiary will pay $16,875 for its role in the apparent violations. The Office of Foreign Assets Control states that this penalty highlights the importance of global business organizations ensuring that their subsidiaries and affiliates are trained on U.S. sanctions requirements, can effectively identify red flags, and are empowered to report prohibited conduct to management.

According to OFAC, the Dubai subsidiary conspired with Dubai- and Iran-based companies to export goods from the U.S. to Iran knowing that such shipments were prohibited under U.S. sanctions. As part of this conspiracy the subsidiary falsely listed a Dubai-based company as the end-user on its export documentation, which caused its U.S.-based affiliate to indirectly export goods from the U.S. to Iran. The U.S.-based affiliate failed to heed or largely ignored several warning signs that its goods were at risk of diversion to Iran.

OFAC states that the willful nature of the violations and the involvement of senior managers were among the aggravating factors. On the other hand, the use of outside counsel to conduct an internal investigation that resulted in several remedial measures was among the mitigating factors.

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