OFAC Economic Sanctions Violations

May 16, 2017

In 2016, $21,609,315 in civil penalties and settlements were assessed by the U.S. Treasury Department Office of Foreign Assets Control (OFAC) for violations of U.S. economic sanctions.

Economic sanctions are designed to further U.S. national security, foreign policy, and economic stability interests. The U.S. government takes violation of them very seriously. This dollar amount represents 9 cases for 2016. Three of the nine cases involved medical end use products.  Another three involved the oil and gas industry. Two of the nine involved entities providing services (financial and engineering/architectural) and one involved distribution of an agricultural product. So, no industry is safe. If you have not heard of the Foreign Assets Control Regulations (FACR) you should get some training to help your company spot issues and avoid risk.

U.S. economic sanctions are targeted against certain foreign countries, terrorist organizations, weapons of mass destruction (WMD) proliferators, narcotics traffickers and others. You may think, you don’t have to worry about the FACR because your company doesn’t export or you don’t do business with drug traffickers or criminals, but you should think again. There are certain “no go” countries, entities and persons regarding trade.

Here is one example from 2016PanAmerican Seed of West Chicago, IL, Company a division of Ball Horticultural Company, indirectly exported flower seeds on 48 occasions to companies in Europe or the Middle East. From there, the seeds were reexported to two Iranian distributors. Aggravating factors included the company’s continued sales to its Iranian distributors for nearly 8 months after the company’s Director of Finance learned of OFAC’s investigation. $4.32 Million settlement for violation of Iran sanctions program (Sept. 2016).

Here is one example from 2015.  Paypal faced significant fines and penalties for processing money services transactions for persons on U.S. restricted party lists.  The Settlement Agreement noted Paypal did not have effective compliance procedures or processes to identify and prevent FACR violations. $7,658,300 settlement (March 2015).

Now you know the FACR exists. You also know that fines and civil penalties for violating the applicable laws can be large (and willful violations can result in imprisonment).

The Michigan Chamber of Commerce supports exporting through the CertifyMichiganTM program, which provides electronic Certificate of Origin services through an online portal that is secure, simple and fast. You can trust the Michigan Chamber to serve your export documentation needs.