Two subsidiaries of the same Sweden-based company settled potential civil liability with OFAC for apparent violations of the Iranian Transactions and Sanctions Regulations ("ITSR").
In the first action, OFAC alleged that one of the subsidiaries, located in Dubai (the "Dubai subsidiary"), colluded with other companies based in Dubai and Iran to export certain energy industry storage tank cleaning units into Iran from the United States in violation of the ITSR. Between May 2015 and March 2016, the Dubai subsidiary was alleged to have falsely listed the intended end-user of the cleaning units as another Dubai-based company, thus causing a U.S.-based affiliate (the "U.S. subsidiary") indirectly to export the cleaning units from the United States to Iran. OFAC found that the Dubai subsidiary was conspiring to employ the same scheme to engage in additional export transactions with Iran.
OFAC found that (i) the Dubai subsidiary violated the ITSR by deliberately facilitating the export of U.S. goods to an Iranian end-user, (ii) multiple company managers were aware of the scheme and (iii) the conduct economically benefited Iran's energy sector. The Dubai subsidiary did not voluntarily self-disclose the violations. OFAC concluded that the Dubai subsidiary's actions constituted egregious violations. To settle the potential civil liability, the company agreed to pay $415,695.
In the second action, OFAC alleged that the U.S. subsidiary, located in Virginia, violated the ITSR by referring a known Iranian business opportunity to the Dubai subsidiary - thus facilitating transactions that would have been prohibited for the U.S. subsidiary to engage in itself.
OFAC found that the U.S. subsidiary (i) failed to acknowledge several warning signs that it was exporting products to an Iranian end-user and (ii) succeeded in exporting U.S. goods to Iran's energy sector. The U.S. subsidiary did not voluntarily self-disclose the violations. OFAC concluded that the U.S. subsidiary's actions constituted a non-egregious case. To settle the charges, the U.S. subsidiary agreed to pay $16,875.
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