The Treasury Department's Office of Foreign Assets Control (OFAC) implements and enforces US economic sanctions. These sanctions proscribe certain transactions with various governments, businesses, groups, and individuals. OFAC issued its latest enforcement update on November 8, 2011; the two civil penalties identified in the update are quite modest, but the circumstances described underscore noteworthy trends in published OFAC enforcement cases.
In the first case, Wilson Tool International agreed to pay $15,000 to settle an alleged violation of the Iranian Transactions Regulations. Without a license, Wilson allegedly sold approximately $10,304 worth of tooling equipment to an entity in Iran in 2005. In the second case ASF, Inc. agreed to pay $5,400 to settle an alleged violation of the Iranian Transactions Regulations. Without a license, ASF allegedly facilitated the exportation of goods from a third country to Iran in 2006 (OFAC did not disclose the type or value of the goods).
Both Wilson and ASF voluntarily cooperated with OFAC's investigation of the transactions. Neither company, however, voluntarily reported the alleged violations to OFAC. In OFAC's enforcement guidelines, OFAC has emphasized the importance of voluntary disclosures by stating that the penalty amount generally will be only 50% of what it would be had the company not made a voluntary disclosure.
OFAC has published 19 enforcement actions in 2011. In every published case, the allegations have involved: (1) violations of the Iranian Transactions Regulations and/or (2) lack of voluntary disclosure by the alleged violator. Sixteen of the 19 published cases have involved violations of the Iranian Transactions Regulations; only in five of the 19 published cases did the companies make full voluntary disclosures to OFAC.
There are many OFAC enforcement cases that are not published, so one should be wary of relying too heavily on the published cases. But, at a minimum, the trends in the published cases indicate that OFAC takes a very grim view of any violation of the Iranian Transactions Regulations, regardless of how minor the transaction might appear, and that OFAC similarly takes a grim view of any other violation that is not voluntarily reported to OFAC.
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