A U.S. company agreed to settle OFAC charges for violating Iranian Transactions and Sanctions Regulations ("ITSR").
According to OFAC, the apparent violations arose from the conduct of DAF Trucks N.V. ("DAF"), a wholly owned, Netherlands-based subsidiary of PACCAR Inc. ("PACCAR") involved in the manufacture and sale of trucks. OFAC found that, on three separate occasions between approximately October 2013 and February 2015, DAF sold a combined total of 63 trucks to Europe-based dealers and other middlemen with knowledge or reason to know that the trucks were ultimately intended for buyers in Iran. In one case OFAC cited, a DAF subsidiary rejected an Iran-related purchase order from a Hamburg-based dealer, only to approve a nearly identical order from the same dealer later the same day. The dealer falsely claimed the order was intended for an unnamed party in Russia.
OFAC determined that PACCAR voluntarily disclosed the apparent violations. The company agreed to pay $1,709,325.
Commentary
This enforcement action fits squarely within the recent pattern of U.S. companies being penalized for the actions of their foreign subsidiaries (for example, see here and here). The message conveyed by OFAC's summary of the PACCAR settlement could not be clearer, concluding as it does with the admonition that "[f]oreign subsidiaries of U.S. companies are subject to the ITSR, and their U.S. parent companies may face potential exposure to civil monetary penalties for the actions of such entities." At the same time, OFAC left no doubt as to the surest route to mitigating sanctions risk arising from foreign subsidiaries: "by proactively establishing and enforcing a robust sanctions compliance program[,]" and by "conducting sanctions-related training and [] taking appropriate steps to audit and monitor foreign subsidiaries for OFAC compliance."
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