Recent Settlements Portend More Vigorous, Coordinated Enforcement of Sanctions and Heavier Penalties for Violations

Recent settlements in enforcement actions involving U.S. economic and trade sanctions have increased―from roughly $5 million recovered in 2007 and 2008 to more than $1 billion in recoveries in 2009 and 2010 alone.1 The magnitude of this increase, and the diversity of the affected parties, signals more vigorous enforcement of sanctions, particularly in the current climate where more sanctions are being adopted, more conduct is covered, and the government's enforcement efforts are more extensive, more coordinated, and better resourced.

OFAC's Economic Sanctions Enforcement Guidelines

The Office of Foreign Assets Control ("OFAC") has implemented revised enforcement guidelines and is applying heavier penalties in its civil enforcement actions.2 In addition, where allegations of willful violations are involved, the U.S. Department of Justice ("DOJ"), U.S. Attorney's Offices, and state prosecutors have required more external control and extracted higher penalties under deferred criminal prosecution agreements.

OFAC's Economic Sanctions Enforcement Guidelines (the "Guidelines"), which took effect on November 9, 2009, reflect an increased effort to enforce U.S. sanctions and undergird OFAC's sanctions enforcement in a number of ways. The Guidelines, along with other OFAC guidance, outline compliance measures companies can implement to protect against violations, as well as the factors the government will consider in determining penalties in the event a violation has been determined to have occurred.3 For example, companies that are concerned about compliance with OFAC's economic and trade sanctions should implement broad compliance policies, robust compliance programs, and employee training programs to ensure compliance and avoid violations. Companies that implement these measures, regularly review them, and follow-up on compliance issues, should be significantly better able to avoid OFAC violations and secure lower penalties if violations occur.

If, despite adopting these compliance measures, a company discovers that it has committed a possible violation, the Guidelines are a useful resource to understanding potential penalties OFAC may assess. OFAC relies on the Guidelines in administrative civil enforcement actions, and companies should use them as guidance as well. For example, under the Guidelines, OFAC considers "voluntary self-disclosure" of an apparent violation favorably in its response to the violation. According to the Guidelines, the civil penalty amount that OFAC will assess is to be reduced to one-half the statutory maximum if the violator has voluntarily self-disclosed the violation.4 If the self-disclosure occurs after OFAC or another government agency discovers a violation, the company cannot receive credit for a voluntary self-disclosure under the Guidelines. Nevertheless, the OFAC penalty may still be reduced by 25 to 40 percent if the violator provides OFAC with "substantial cooperation."5 The Guidelines identify other factors that affect OFAC's administrative action on a case-by-case basis, including whether the violations were willful or reckless, whether there was concealment or management involvement, the commercial sophistication of the entity involved, and the existence of written compliance programs and policies.6 All of these factors are useful guides for presenting a potential violator's case to OFAC.

Selected Recent OFAC Enforcement Actions

The following recent cases are particularly instructive in demonstrating conduct to avoid both before and after a sanctions violation has occurred. They demonstrate the seriousness with which OFAC approaches violations, and the potentially large penalties OFAC and other government agencies may assess for violations of U.S. economic sanctions. They also provide insight into positive steps a company can take in the event it faces an OFAC enforcement action to mitigate the penalties that OFAC and other government agencies could assess.

Credit Suisse AG (2009)

Background: On December 16, 2009, Credit Suisse AG ("Credit Suisse"), a multi-national corporation based in Zurich, Switzerland, settled allegations by OFAC and other U.S. government agencies that it established affirmative policies and payment practices under which it knowingly processed payments in U.S. dollars and executed U.S. securities trades for the benefit of sanctioned entities in violation of U.S. law.7 Credit Suisse paid a total of $536 million in a global settlement of these allegations under deferred prosecution agreements with the DOJ and the New York County District Attorney's Office.8

Allegations: From 1996 through 2006, Credit Suisse implemented affirmative policies, payment methods, and procedures under which it processed payments in U.S. dollars while hiding the names and identities of sanctioned entities in violation of various OFAC sanctions programs. Credit Suisse used a number of methods to effect funds transfers processed to and through the U.S. on behalf of persons sanctioned under U.S. economic and trade sanctions programs implemented by OFAC. Credit Suisse effected these transactions for a number of sanctioned countries and entities, including Iran, Sudan, Burma, Cuba, and members of the former Liberian regime of Charles Taylor, and persons in those countries.

The bulk of these improper funds transfers―4,775 electronic funds transfers, with an aggregate transaction value of over $480 million―were for the benefit of the Government of Iran and/or persons in Iran. Credit Suisse hand-checked messages from Iranian clients to avoid Credit Suisse's own U.S. sanctions filters, and provided Iranian clients with a brochure entitled "How to Transfer USD Payments" that described in detail how to avoid triggering those filters. Although Credit Suisse employees at the managerial and executive levels recognized that these procedures were not in accordance with OFAC's rules, Credit Suisse continued these prohibited practices and would become one of the main clearing banks for Iranian banks.

Between 2000 and 2006, Credit Suisse also executed various U.S. securities trades―authorized by Credit Suisse Asset Management London―for the benefit of a Libyan government-owned investment company and a bank in Sudan in violation of U.S. sanctions. Again, Credit Suisse used code names and sub-accounts to disguise the identities of sanctioned entities in the trades, processing 169 securities transactions with an aggregate value of over $150 million.

Enforcement Theory and Penalties: The government imposed criminal and civil liability on Credit Suisse for willfully violating OFAC's sanctions under the International Emergency Economic Powers Act ("IEEPA"), 50 U.S.C. §§ 1701-06, and the Trading with the Enemy Act ("TWEA"), 50 U.S.C. App. §§ 1-44.9 It considered the violations a "systemic pattern," that enabled sanctioned countries and entities to move hundreds of millions of dollars through the U.S. financial system.10 Credit Suisse entered into a global settlement of the criminal allegations brought by the DOJ and by the New York County District Attorney's Office as well as OFAC's civil allegations. Under the settlement, Credit Suisse forfeited $535 million, divided evenly between the United States and the State of New York.

In OFAC's civil action, OFAC considered the violations "egregious" under its Guidelines based on a number of factors, including "the substantial economic benefit to sanctioned parties, the scope and severity of the apparent violations and the awareness of the conduct within the bank."11 Although Credit Suisse voluntarily "self-disclosed" the securities trade violations under the Guidelines, the electronic fund transfer violations were not "self-disclosed" within the meaning of the Guidelines because Credit Suisse did not come forward with information about them until after the New York County District Attorney's Office began an investigation of some suspicious wire transfers.12 However, Credit Suisse's cooperation was "extensive and substantial," and this was considered to be a "first offense" as defined in the Guidelines because OFAC had not issued a penalty notice against Credit Suisse in the previous five years.13

Barclays Bank PLC (2010)

Background: On August 12, 2010, Barclays Bank PLC ("Barclays"), a major global financial services institution registered in the UK, settled criminal and civil allegations that it facilitated and concealed from U.S. financial institutions electronic transfers that violated economic and trade sanctions under the IEEPA and the TWEA.14 The transactions―1,285 in all, over a period of approximately 10 years― transferred U.S. dollars for the benefit of individuals and entities, including correspondent banks, in Burma, Cuba, Iran, Libya, and Sudan when U.S. sanctions against those countries were in effect. Barclays paid a penalty of $298 million under a global settlement of the allegations, which covered the civil OFAC enforcement action, the federal criminal case filed in the U.S. District Court in the District of Columbia,15 and related forfeiture claims brought by the New York County District Attorney's Office. A consent cease and desist order was also issued by the Federal Reserve Board and the New York Banking Department requiring Barclays to comply with U.S. sanctions on a global basis.16

Allegations: From about 1995 until 2006, Barclays circulated special instructions for handling the transactions of banking clients targeted by U.S. sanctions, including these special instructions in a memo from the Head Office to its international offices as well as in a list of correspondent bank clients used in its international transactions.17 This list of "special instructions" clients grew to include sanctioned correspondent bank clients in Burma, Cuba, Iran, Libya, and Sudan. Barclays used "cover payments" when processing U.S. dollars for the sanctioned clients so that their identities would not be detected. Barclays also routed U.S. dollar payments through an internal "sundry" account to hide their connection to sanctioned entities.

Barclays' employees raised concerns that these internal procedures breached and circumvented OFAC sanctions and that they "could lead to severe regulatory censure by the US Treasury."18 A 2004 internal assessment reported that the entire process of "cover payments" needed to be reviewed, but Barclays conceded its failure to develop a clear sanctions policy until 2006.

Enforcement Theory and Penalties: The DOJ's Asset Forfeiture and Money Laundering Section filed criminal charges against Barclays for willfully violating OFAC's sanctions under IEEPA and for willfully engaging in financial transactions for the benefit of sanctioned entities under TWEA.19 The government alleged that these violations occurred over a 10-year period, and that they resulted in the movement of hundreds of millions of dollars through the U.S. financial system. The government considered the harm "substantial" and the nature of the apparent violations "systemic."20 Barclays agreed to a global settlement encompassing the criminal case and OFAC's civil allegations, under which it paid a total of $298 million to the United States and the New York County District Attorney's Office. The federal portion of the global settlement was $149 million.

In its civil action based on this conduct, OFAC found that Barclays engaged in a total of 1,285 transactions that were apparent violations, with an approximate total value of $112,695,000. OFAC calculated that the base penalty amount on these violations was $218,971,000, but settled for $176 million.21 However, OFAC agreed that this amount was satisfied by the global settlement. The settlement credited Barclays for self-disclosing all violations and for a "first offense." Barclays also received credit for waiving indictment, accepting responsibility, and cooperating with OFAC by providing extensive, well-organized information about the violations and by entering into tolling agreements with OFAC. Another mitigating factor was that a number of the Sudan transactions involved export of agricultural products, for which OFAC might have granted a license had Barclays applied for one. Aggravating circumstances partially offset Barclays' mitigation, however, including the recklessness of the apparent violations in view of Barclays' sophistication as a banking institution and its managers' awareness of the wrongful conduct. Therefore, had Barclays not self-disclosed and fully cooperated with OFAC, the fine could have been much more onerous.22

Another important element of OFAC's civil settlement with Barclays is that it required Barclays to retain an independent corporate monitor to conduct "an appropriate risk-focused sampling of USD payments, to ensure that its OFAC compliance program is functioning effectively to detect, correct, and report OFAC-sanctioned transactions when they occur."23 This independent monitor requirement derives from DOJ's guidance to federal prosecutors providing for corporate monitors in deferred prosecution agreements with business organizations that have ineffective internal compliance programs.24 It is particularly noteworthy that this provision was included in the civil settlement with OFAC.

Balli Aviation LTD25 (2010)

Background: Balli Aviation LTD ("Balli"), a UK-based company, pled guilty on February 5, 2010 to economic and trade sanctions offenses involving the export of three Boeing 747 aircraft to Iran.26

Allegations: The government sued Balli both criminally and civilly, alleging that Balli conspired to export three aircraft from the U.S. to Iran in violation of the U.S. embargo, the IEEPA, and the Iranian Transactions Regulations ("ITR").27 Specifically, representatives of Mahan Air, an Iranian airline, allegedly met with Balli in an effort to acquire three Boeing 747s for use in commercial flights into, within, and from Iran. Mahan loaned the money for the purchase of the three aircraft to Balli's subsidiaries through Blue Sky Aviation FZE, a United Arab Emirates company. Without informing the U.S. sellers about the purpose of the sale, Balli purchased the three planes, and title was transferred to Balli under bills of sale executed by Wells Fargo Bank in September 2006. Balli then entered into lease agreements with Blue Airways, an Armenian company, under which Mahan began using the planes as early as December 2006. In July 2007, Boeing sent Balli a letter demanding that use of the 747s by the Iranian airline be stopped, and in October 2007, the Department of Commerce warned Balli by letter that export or re-export of the Boeing aircraft to Iran would violate export regulations. Despite these warnings, in November 2007, Balli agreed to extend the leases for another year.28

Enforcement Theory and Penalties: The government's criminal action against Balli was based on the conspiracy to unlawfully export U.S.-origin goods in violation of the IEEPA and the ITR, and on the willful violation of BIS's Temporary Denial Order and the Export Administration Regulations ("EAR"). Balli pled guilty in the criminal action, and under the plea agreement, Balli paid the maximum criminal fine of $2 million and agreed to corporate probation of five years. 29 In addition, Balli agreed to maintain a permanent compliance and ethics office that complied with Section 8B2.1 of the U.S. Sentencing Guidelines, and to implement a permanent training and education program on U.S. export control laws, putting a specifically identified person in charge of these programs who reports directly to the CEO and board of directors on at least an annual basis.30

OFAC and BIS also proceeded against Balli, seeking the imposition of civil penalties for its violations of the ITR and EAR. Balli was fined $15 million under the settlement of the civil enforcement action, with $2 million suspended if no further violations occurred. Under a suspended Denial Order issued by BIS, Balli's export privileges were made subject to denial for five years, but that denial was suspended provided Balli paid the civil penalty and refrained from further export violations.

Maersk Line Ltd. (2010)

Background: Maersk Line Ltd. ("Maersk"), a Delaware corporation, is the world's largest container shipping company and a subsidiary of A.P. Moller-Maersk A/S ("A.P. Moller-Maersk"), a Danish conglomerate. Maersk paid a penalty to OFAC in settlement of a civil administrative enforcement action alleging that, over a four-year period beginning in January 2003, Maersk shipped cargo in or out of Sudan and Iran without the requisite OFAC license.31 The allegations were that, in the course of providing foreign flag transportation services to and from Sudan and Iran, A.P. Moller-Maersk time-chartered Maersk's U.S. flagged vessels to carry the cargo for part of its journey into or out of those sanctioned countries. A company spokesman conceded that Maersk's cargo-management systems "did not identify that the cargo should not go aboard the U.S.-flag ships, and it did."32

Enforcement Theory and Penalties: In the civil enforcement action, OFAC found that Maersk's transportation of cargo bound to or from Sudan without a license violated the Sudanese Sanctions Regulations 33 and that its transportation of cargo to and from Iran violated the ITR. According to information published by OFAC, Maersk made 4,714 such unlicensed shipments into or out of those countries on at least one leg of the cargo's journey.

OFAC determined that the base penalty amount for Maersk's violations was $61,768,000. However, under the settlement, Maersk paid only $3,088,400 in penalties. Significantly, the base penalty was based on gross freight charges, but because the sanctioned cargo violated the sanctions made up only a portion of those charges, the penalty reflected that fact. The settlement also reflected the fact that Maersk undertook remedial measures throughout the corporation on a global basis to ensure that corporate affiliates did not violate these sanctions in the future, including updating its booking system. Maersk did not self-disclose the violations, but it fully cooperated with OFAC's investigation, and received substantial credit for providing well-organized data on the shipments over a five-year period, including information not requested about its use of relay vessels for certain legs of the cargo's journey to or from the sanctioned countries. Maersk also entered into tolling agreements with OFAC which further mitigated the penalties.

On the other hand, OFAC took into account that Maersk was part of a sophisticated shipping conglomerate experienced in operating under license requirements. Although OFAC considered that the economic benefit of the shipments to Sudan and Iran actually undermined the sanctions programs, it did not consider the violations egregious.

Key Lessons for the Future

1. First and foremost, meaningful compliance activities are essential to avoiding violations and mitigating penalties.

As noted previously, a robust compliance program is an effective way to limit the possibility of OFAC violations occurring within your company. A robust compliance program includes policies and procedures for ensuring that a company's regular business activities do not violate the OFAC guidelines. It is important that the compliance program not only be well-documented, but that it is implemented as well. OFAC looks extremely favorably on the implementation of a compliance program. In the event a violation does take place, OFAC's Enforcement Guidelines consider the existence of an effective compliance program in determining the size of any penalty issued. In addition, an effective, operational compliance program can enhance the marketability of an enterprise, by giving confidence to potential acquirers that a company does not have export violations lurking in its past. Liability for such violations can carry forward to new owners under the well-established doctrine of successor liability.

2. Taking remedial activities in the wake of a potential violation can limit the extent of the penalties OFAC assesses.

Under OFAC's Enforcement Guidelines, companies that take prompt corrective action in response to potential OFAC violations can obtain additional mitigation credit from OFAC in an enforcement action. Remedial activities can include implementing or revising a compliance program to respond to the potential violation that occurred, disciplining employees who violated company policy in a way that resulted in a violation, and implementing training programs to help employees better understand how to comply with OFAC sanctions.

3. Self-disclosure and cooperation play vital roles in enforcement actions against sophisticated businesses.

An important implication of the Barclays settlement is that, after apparent violations have occurred, prompt and thorough self-disclosure of all violations as well as continued cooperation throughout the investigation may be the best investment that a business can make in the enforcement process. OFAC's Guidelines clearly reinforce this point by providing for at least a 50-percent reduction in the base penalty for self-disclosure, and by offering further reductions for substantial cooperation.34 This issue is particularly important for sophisticated entities that have more difficulty in demonstrating that violations were inadvertent rather than willful. Where sophisticated managers actually participate in the violations, their participation could be considered an indication of recklessness or willfulness, which weighs more heavily against the violator in OFAC's penalty assessment. Self-disclosure and cooperation are very important in such cases. Barclays self-disclosed, and its civil penalty was reduced as a result. Credit Suisse self-disclosed its OFAC violations, but because it was slower in disclosing the electronic transfer of funds violations, it was not given credit for self-disclosing those violations. The best mitigation credit available to Credit Suisse was to cooperate fully and receive a penalty reduction of between 25 and 40 percent. (Maersk, a sophisticated entity with awareness of sanctions, did not self-disclose, but its penalties were limited for other reasons addressed below.)

4. Non-U.S. companies can be and have been targeted.

Three of the cases above involve OFAC enforcement actions taken against non-U.S. entities. Two of these cases resulted in some of the largest fines OFAC has assessed to date. The U.S. government takes trade sanctions compliance seriously, and businesses that have any nexus to the U.S. are at risk if they fail to comply with OFAC sanctions. Although the connections between the U.S. and Credit Suisse and Barclays described above were limited to processing U.S. dollar transactions and making U.S. securities trades, the U.S. government asserted jurisdiction over them and assessed fines of hundreds of millions of dollars. These cases demonstrate that non-U.S. businesses need to exercise the same level of care and caution in OFAC compliance as their U.S. counterparts.

5. Egregious, willful violations can lead to high-profile federal prosecution.

The government's ability to mount a concerted effort in the Credit Suisse, Barclays, and Balli cases warns against committing willful violations, prolonging violations, and drawing-out criminal investigations. In Barclays' case, the alleged criminal conduct spanned 10 years, and government agencies involved in the investigation and settlement of the allegations, in addition to OFAC, included DOJ Criminal Division's Asset Forfeiture and Money Laundering Section, the FBI, the IRS, the New York County District Attorney's Office, the Federal Reserve Bank of New York, and the New York State Banking Department.

The fact that an external monitor provision of the type normally found in criminal deferred prosecution agreements was placed in OFAC's civil settlement with Barclays reflects the cross-over effect that the DOJ's extensive involvement had in that case. In the Balli case, the government agencies that played an active role in the investigation and settlement, in addition to OFAC and BIS, were the U.S. Attorney's National Security Section and the DOJ's Counterespionage Section. The smaller penalty in the Maersk settlement, on the other hand, was levied by OFAC alone in a civil administrative enforcement action.

6. Transparency is important; active deception is dangerous.

The severity of the criminal and civil fines in the Balli case was based on the "level of deception" Balli used to mislead the government and the "maze" of complex transaction used to conceal the unlawful character of its activities.35 Therefore, some of the most significant factors in computing the civil penalty amount were that Balli did not self-disclose the violations, that it knew that the re-exportation of the U.S. aircraft was intended for Iran, that it attempted to conceal the transactions and end-user using subsidiaries and third parties, and that its violation of BIS's orders was willful. The heavy penalties in that case also were intended to warn others against circumventing U.S. sanctions on Iran. Government officials issued that warning directly to both foreign and domestic entities in public comments announcing the penalties.36

7. Try to demonstrate the modest actual harm done to the objectives of the sanctions program, and where possible, show that the harm was only a portion of the transaction's value.

A key implication of the Maersk settlement is that OFAC took care to ensure that the penalty was proportionate to the actual harm done. OFAC conceded that its base penalty calculation for Maersk was excessive because the transactions' total valuation far exceeded the proportion of the sanctioned cargo in each transaction. Under the Guidelines, OFAC made clear that it would value transactions and apparent violations on a case-by-case basis, and OFAC's concession on this particular point in the Maersk settlement was based on the familiar principle that a penalty should be proportionate rather than excessive.

Footnotes

1 See OFAC Enforcement Information for 2009, available at http://www.treasury.gov/resource-center/sanctions/CivPen/Pages/2009.aspx (last visited April 4, 2011) and OFAC Enforcement Information for 2010, available at http://www.treasury.gov/resource-center/sanctions/CivPen/Pages/2010.aspx (last visited April 4, 2011).

2 See Economic Sanctions Enforcement Guidelines, 74 Fed. Reg. 57593 (Nov. 9, 2009) (codified at 31 C.F.R. pt. 501, App. A) ("the Guidelines").

3 See, e.g., Federal Financial Institutions Examination Council, Bank Secrecy Act/Anti-Money Laundering Examination Manual (July 2006), available at http://www.treasury.gov/resource-center/Documents/ofac_sec_frb_080106.pdf

(last visited April 4, 2011).

4 Guidelines at 57605 (31 C.F.R. pt. 501, App. A, at § V(B)(2)(a)(i), (iii)).

5 Guidelines at 57606 (31 C.F.R. pt. 501, App. A, at § V(B)(2)(b)(i)).

6 Guidelines at 57602-03 (31 C.F.R. pt. 501, App. A, at § III).

7 Settlement Agreement dated Dec. 16, 2009 ("the CS Settlement"), available at http://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Documents/12162009.pdf (last visited April 4, 2011).

8 Credit Suisse disclosed some of the violations to OFAC in April 2006. However, in 2007, the New York District Attorney's Office began a separate investigation into suspicious wire transfers (that resulted in a later disclosure to OFAC by Credit Suisse). See CS Settlement at 3.

9 The CS Settlement did not specify the basis under which the U.S. government asserted jurisdiction over Credit Suisse, a Swiss company. The government might have taken the position that Credit Suisse's U.S. subsidiary participated in or facilitated violations, or that Credit Suisse caused U.S. banks to commit violations through their actions in hiding sources and beneficiaries of payments. This, however, is speculation. The key takeaway point for a non-U.S. company is that the U.S. did, in fact, assert jurisdiction over Credit Suisse.

10 DOJ Press Release, "Credit Suisse Agrees to Forfeit $536 Million in Connection with Violations of the IEEPA and New York State Law" (Dec. 16, 2009), available at http://www.justice.gov/opa/pr/2009/December/09-ag-1358.html(last visited April 4, 2011).

11 Press Release, Dep't of the Treasury, "Treasury Under Secretary for Terrorism and Financial Intelligence Stuart Levey Remarks at a Press Conference on Joint $536 Million Settlement with Credit Suisse AG" (Dec. 16, 2009), available at http://www.treasury.gov/press-center/press-releases/Pages/tg451.aspx (last visited April 4, 2011).

12 CS Settlement at 1; see also Guidelines at 57601 (31 C.F.R. pt. 501, App. A, at § I(I)).

13 CS Settlement at 6; see also Guidelines at 57606 (31 C.F.R. pt. 501, App. A, at § V(B)(2)(b)(ii)).

14 Settlement Agreement dated Aug. 18, 2010 ("Barclays Settlement"), available at http://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Documents/08182010.pdf (last visited April 4, 2011).

15 United States v. Barclays Bank PLC, No. 1:10-CR-00218-EGS (D.D.C.) (Information filed Aug. 16, 2010) ("Barclays Information").

16 See DOJ Press Release , "Barclays Bank PLC Agrees to Forfeit $298 Million in Connection with Violations of the IEEPA and the TWEA" (Aug. 10, 2010), available at http://www.justice.gov/opa/pr/2010/August/10-crm-933.html . (last visited April 4, 2011) ("DOJ's Aug. 2010 Press Release").

17 Barclays Settlement at 2; Barclays Information at 1-2.

18 Barclays Settlement at 3.

19 Again, the government's Settlement Agreement did not specify the basis for U.S. jurisdiction. However, once again, the government asserted jurisdiction over a non-U.S. company.

20 DOJ's Aug. 2010 Press Release.

21 Office of Foreign Assets Control, Release of Civil Penalties Information-Barclays Settlement (August 18, 2010), available at http://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20100818.shtml.aspx (last visited April 4, 2010).

22 IEEPA, 50 U.S.C. § 1705 (authorizing a maximum criminal penalty of $1 million per violation, and a maximum civil penalty of either twice the value of the transaction or a fine of $250,000 per violation, whichever is greater).

23 Barclays Settlement at 5.

24 See DOJ U.S. Attorneys Manual 9-28.1300, Principles of Federal Prosecution of Business Organizations (corporate monitors); , available at http://www.justice.gov/usao/eousa/foia_reading_room/usam/title9/28mcrm.htm#9-28.1000 (last visited April 4, 2011); Selection and Use of Monitors in Deferred prosecution Agreements and Non-Prosecution Agreements with Corporations ("Morford Memo") (Mar. 7, 2008), available at http://www.justice.gov/dag/morford-useofmonitorsmemo-03072008.pdf (last visited April 4, 2011).

25 Mr. Mancuso served as Undersecretary of Commerce for Industry and Security at the time this case was ongoing. This piece includes only publicly-available information related to this case.

26 Order Relating to Balli Aviation Ltd and Balli Group PLC (Feb. 5, 2010), available at http://efoia.bis.doc.gov/exportcontrolviolations/e2150.pdf (last visited April 4, 2011) ("Balli Order").

27 31 C.F.R. Part 560.

28 A second, separate allegation was that Balli willfully violated a Temporary Denial Order issued by BIS on March 21, 2008, under which Balli was specifically prohibited from engaging in negotiations or other transactions to export items subject to curtailment or prohibition under U.S. Export Administration Regulations without the grant of an exception by BIS. Balli Order at 3. Despite that order, Balli agreed to use funds provided by Mahan for the purchase of a third company that would acquire the three Boeing aircraft from Balli.

29 Government's Sentencing Memorandum, United States v. Balli Aviation LTD, No. 09-366 (ESH) (D.D.C.) (filed Apr. 20, 2010); see also 18 U.S.C. §3571(c)(3) (providing that the maximum criminal fine is $1 million per felony).

30 Government's Sentencing Memorandum, United States v. Balli Aviation LTD, No. 09-366 (ESH) (D.D.C.) (filed Apr. 20, 2010).

31 Press Release, OFAC Enforcement Information for July 29, 2010, available at http://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Documents/07292010.pdf (last visited April 4, 2011).

32 Peter T. Leach, Maersk's US-Flag Division Paid Reduced US Penalty, Journal of Commerce (Aug. 3, 2010), available at http://www.joc.com/maritime/maersk-pays-31-million-fine-breaking-us-sanctions (last visited April 4, 2011).

33 31 C.F.R. Part 538.

34 See Guidelines at 57598 (31 C.F.R. pt. 501, App. A, at §§V(B)(2)(b)(i), (ii)).

35 DOJ Press Release, "U.K. Pleads Guilty to Illegally Exporting Boeing 747 Aircraft to Iran" (Feb. 5, 2010), available at http://www.justice.gov/opa/pr/2010/February/10-nsd-131.html . (last visited April 4, 2011) (quoting Thomas Madigan, Acting Deputy Assistant Secretary of Commerce for Export Enforcement).

36 Id. (remarks by Adam J. Szubin, Director, Office of Foreign Assets Control).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.