OFAC Fines Manufacturer for Iran Sanctions Violations

The US Department of the Treasury's Office of Foreign Assets Control ("OFAC") fined a Connecticut-based audio electronics manufacturer for facilitating the indirect export of US-origin goods to Iran through a distributor in the United Arab Emirates ("UAE").

According to an OFAC Enforcement Release, employees of the company's US subsidiary knowingly supported a longstanding UAE distributor in diverting shipments to Iranian customers during a specified period. OFAC found that thirteen UK-based employees, including mid-level managers in sales, finance and operations, were involved in enabling at least 11 product shipments to Iran, valued at "approximately $148,261." OFAC stated that internal records showed that employees deliberately masked the Iranian destinations using coded language such as "North Dubai," "the northern region" and "up north." OFAC noted that at least one of the end users was the Government of Iran.

OFAC found the violations to be "egregious" under current enforcement guidelines due to the willful nature of the conduct, the deliberate concealment of sanctioned destinations and the absence of adequate internal compliance controls. OFAC also found that the company had only one employee with sanctions oversight responsibilities and lacked systematic monitoring of high-risk international transactions.

To settle the charges, the company agreed to pay a civil penalty of $1,454,145. OFAC noted that the US parent company (i) voluntarily self-disclosed the violations after initiating an internal investigation, (ii) terminated its relationship with the UAE distributor, (iii) hired external counsel and auditors, (iv) implemented global sanctions training and (v) committed $400,000 to enhanced compliance measures.