An Italian company settled potential civil liability for alleged violations of the Iranian Transactions and Sanctions Regulations ("ITSR").
According to OFAC, the Italian company sought to purchase gas boiler components from a U.S. company with the intention of re-exporting the goods to Iran, and misled the U.S. company by claiming that the end-user would be its own Italian affiliate. OFAC alleged that the Italian company engaged in various obfuscations, including: using code words in its communications with the U.S. company to avoid referencing Iranian end-users; rebuffing an offer from the U.S. company to ship directly to the stated end-user; and requesting the removal of "Made in USA" labels.
In all, between March 23, 2013 and March 31, 2017, OFAC found that the company (i) re-exported 27 shipments of U.S. product and (ii) indirectly implicated a U.S. company in its violations, which total to $2,526,783 in transaction value. Through this conduct, the Italian company allegedly violated Sections 203 ("Evasions; attempts; causing violations; conspiracies") and 204 ("Prohibited exportation, re-exportation, sale, or supply of goods, technology, or services to Iran") of the ITSR.
OFAC determined that the violations were not voluntarily self-disclosed and constituted an egregious case.
To settle the charges, the company agreed to pay a $950,000 civil monetary penalty, of which $650,000 will be suspended pending completion by the Italian company of enhanced compliance commitments, including - for the next five years - an annual report to OFAC detailing how the company is meeting compliance commitments described in the settlement agreement.
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