On December 8, 2021, the US Treasury Department’s Office of Foreign Assets Control (OFAC) announced a $133,860 settlement with an unnamed individual for apparent violations of the Iranian Transactions and Sanctions Regulations (ITSR). According to OFAC’s settlement notice, the individual, who was located in the United States, received four payments in his personal bank account on behalf of an Iranian company for the sale of Iranian-origin cement clinker to a company in a third country.
OFAC also found that the individual coordinated the payment and the shipment of goods with a family member at the Iranian company. The settlement notice remarks that, although the payments involved a family member, they fell outside of the general license for personal remittances, at 31 CFR § 560.550, which only applies to “noncommercial” activity.
OFAC found that the activity constituted apparent violations of 31 CFR § 560.204, which prohibits US persons from exporting goods and services (including financial services) to Iran; 31 CFR § 560.206, which prohibits US persons from engaging in transactions in relation to Iranian-origin goods; and 31 CFR § 560.208, which prohibits US persons from facilitating transactions of non-US persons that would violate the ITSR if undertaken by a US person.
OFAC determined that the case was egregious under its Economic Sanctions Enforcement Guidelines and that the individual did not self-disclose the apparent violations to OFAC, resulting in a base civil monetary penalty amount of $1,210,336. The significantly reduced final settlement amount reflects OFAC’s consideration of mitigating factors including that the individual “received minimal if any economic benefits from the transactions” and “evidence regarding financial difficulties affecting the person’s ability to pay.”
The settlement notice also notes, however, that the individual knew or had reason to know that the ITSR prohibited receiving the payments on behalf of an Iranian company because OFAC had previously provided the individual a detailed list of the ITSR’s prohibitions, in the course of denying the individual’s request for a specific license to undertake other Iran-related activity. Additionally, the individual was aware that the Iranian company had difficulty receiving USD-denominated payments as a result of US sanctions.
The settlement offers a reminder of the potential liability for individuals under the US sanctions regimes, including individuals in the United States who assist family members or friends with commercial activities outside the United States involving comprehensively sanctioned territories, even if there is no or little economic benefit conferred on the US person.
This case—and a prior settlement with an individual in August 2020—illustrates that even in cases involving individuals, OFAC will not hesitate to categorize the case as “egregious” under its Enforcement Guidelines when warranted by the facts. OFAC has the authority to impose substantially higher penalties in egregious cases.
Lastly, this enforcement case underscores that OFAC’s general authorizations must be carefully reviewed and understood before utilizing them for otherwise prohibited activity, and they are not to be stretched beyond their obvious bounds. While the ITSR and other OFAC regulations contain general licenses for personal remittances as well as various other activities, OFAC cautions that individuals “must ensure that their conduct is consistent with their scope.”
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