OFAC Collects $133k from a US Individual for Violations of Iran Sanctions Program
In May 2019, OFAC released its Framework for a Sanctions Compliance Program. OFAC announced that it intended to increase the prosecution of individuals for sanctions violations. OFAC has brought two cases against individuals, and last week settled its third case against an individual since its May 2019 announcement.
The latest case involves prohibited transactions with Iran relating to the cement clinker business. The individual, a natural United States person (“U.S. Person-1”), accepted four payments in the United States, during the period of February and March 2016, from an Iranian-origin cement clinker company. U.S. Person-1 accepted the payments on behalf of the Iranian company selling the Iranian-origin cement clinker to another company for a project in a third country.
For our own education, clinker is a binder powder used in many cement products. Clinker is traded internationally in large quantities. Cement manufacturers use it to make various cement-based products.
In a two-month period of 2016, U.S. Person-1 arranged for and received four payments from an Iranian cement company totaling $133,860 in his personal bank account in the United States. The payments were for Iranian-origin clinker that the Iranian company supplied to a project in a third country. U.S. Person-1 arranged and facilitated the sale of the clinker with a family member working at the Iranian cement company. In particular, U.S. Peron-1 arranged logistical and shipping information to the purchasing company.
Previously, U.S. Person-1 submitted a license request to OFAC to authorize other transactions that was denied. U.S. Person-1 also received information from the Iranian company that identified the sanctions imposed against Iran and described complications the Iranian company had suffered when attempting to receive U.S. dollar payments in the past. Therefore, OFAC noted that U.S. Person-1 knew or hand reason to know that accepting payments for or on behalf of the Iranian cement company and facilitating the export of goods from Iran was prohibited.
As detailed by OFAC, U.S. Person-1 violated the Iranian Sanctions Program by: (1) exporting financial services to a company in Iran; (2) engaging in transactions or dealings related to the sale of Iranian-origin clinker on behalf of an Iranian company; and (3) facilitating four transactions that violate the Iran Sanctions Program.
While the financial transactions involved a family member, OFAC noted that the transactions did not constitute “personal remittances” but were commercial in nature and therefore fell outside the scope of permissible “personal remittances under § 560.550.
U.S. Person-1 did not voluntarily disclose the violations. OFAC cited as aggravating factors the fact that U.S. Person-1 was aware of, and actively participated in, the violations. As a mitigating factor, OFAC noted that U.S. Person-1 received minimal if any economic benefits from the transactions and presented evidence regarding financial difficulties affecting the person’s ability to pay.
OFAC underscored that the enforcement action highlights the broad range of prohibitions on dealings with Iran and apply broadly to actions by intermediaries between non-U.S. parties.