A U.S. industrial tool manufacturer, and its China-based subsidiary, agreed to settle alleged violations of the Iranian Transactions and Sanctions Regulations.
According to the OFAC, Jiangsu Guoqiang Tools Co., Ltd. ("GQ") - the subsidiary of Stanley Black & Decker, Inc. ("Stanley") - exported 23 shipments of power tools and spare parts directly to Iran, or to other destinations, with knowledge that such goods were "intended specifically for supply, transshipment, or reexportation" to Iran.
OFAC stated that while Stanley voluntarily self-disclosed the alleged violations, they are considered to constitute an "egregious case." This was due, OFAC stated, to efforts allegedly undertaken by GQ senior management to conceal that company's Iranian dealings, and to Stanley's alleged failure to implement procedures to monitor and audit GQ's compliance with applicable sanctions policies after Stanley acquired GQ, on or around 2011.
To settle the charges, GQ and Stanley agreed to pay a civil monetary penalty of $1,869,144 and enact a number of compliance enhancements.
Commentary / James Treanor
This settlement echoes other recent OFAC enforcement actions, both in terms of its focus on the actions of recently-acquired foreign subsidiaries of non-U.S. companies (see here), and the inclusion of detailed compliance undertakings agreed to by the settling companies (see here). Indeed, the Stanley settlement agreement includes more than three pages of sanctions-related compliance undertakings, covering tone at the top, regular risk assessments, robust internal controls, testing and auditing, and training for employees and relevant third parties. Many of these compliance undertakings are broadly applicable across industries and geographies. While not explicitly identified as such, they almost certainly comprise the "hallmarks of an effective compliance program" previewed by Under Secretary of the U.S. Treasury for Terrorism and Financial Intelligence Sigal Mandelker in December 2018 (see here).
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