Episode 319 — Deep Dive into SCG Plastics $20 Million Settlement with OFAC to Resolve Violations of Iran Sanctions Program

OFAC is capable of extending a long-arm of enforcement, reaching sometimes non-U.S. companies that may “cause” another company to violate U.S. Sanctions laws.  If you need to find an example of this long reach, look no further than OFAC’s recent settlement with SCG Plastics (“SCG”), in which SCG, a Thailand company, which sells plastic resins, agreed to pay $20 million for violations of the Iran Sanctions Program.

From 2017 to 2018, SCG “caused” U.S. financial institutions to process $291 million in wire transfer sales of Iranian-origin high-density polyethylene resin (“HDPE”) manufactured by a joint venture in Iran owned by, SCG’s parent company and the National Petrochemical Company of Iran (“NPC”), a part of the Iran government. HDPE is used to create a wide-variety of injection-molded plastics, including food and beverage containers, shampoo and cleaning product bottles, and other industrial items.

During this time when SCG received wire payments for Iranian-origin HDPE, it initiated U.S. dollar transactions on behalf of the Iran-based joint venture to pay the joint venture’s outstanding debts to third-party vendors. To attempt to disguise the transactions, SCG used shipping and documentation practices that obfuscated the product’s Iran origin and the parties involved, which caused U.S. financial institutions to process these wire transfers in violation of the Iran Sanctions Program.

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