Italian Company Settles OFAC Charges for Iranian Sanctions Violations

An Italian company settled potential civil liability for alleged violations of the Iranian Transactions and Sanctions Regulations ("ITSR").

According to OFAC, the Italian company sought to purchase gas boiler components from a U.S. company with the intention of re-exporting the goods to Iran, and misled the U.S. company by claiming that the end-user would be its own Italian affiliate. OFAC alleged that the Italian company engaged in various obfuscations, including: using code words in its communications with the U.S. company to avoid referencing Iranian end-users; rebuffing an offer from the U.S. company to ship directly to the stated end-user; and requesting the removal of "Made in USA" labels.

In all, between March 23, 2013 and March 31, 2017, OFAC found that the company (i) re-exported 27 shipments of U.S. product and (ii) indirectly implicated a U.S. company in its violations, which total to $2,526,783 in transaction value. Through this conduct, the Italian company allegedly violated Sections 203 ("Evasions; attempts; causing violations; conspiracies") and 204 ("Prohibited exportation, re-exportation, sale, or supply of goods, technology, or services to Iran") of the ITSR.

OFAC determined that the violations were not voluntarily self-disclosed and constituted an egregious case.

To settle the charges, the company agreed to pay a $950,000 civil monetary penalty, of which $650,000 will be suspended pending completion by the Italian company of enhanced compliance commitments, including - for the next five years - an annual report to OFAC detailing how the company is meeting compliance commitments described in the settlement agreement.