Companies Disclose Potential Sanctions, Export Control Violations

Four companies said they may have violated U.S. sanctions and export controls after providing products to blocked parties or not complying with licensing requirements, according to their Securities and Exchange Commission filings. The potential violations involve illegal exports of software, providing services to people in embargoed countries, and sanctioned airline activities.

Track Group, a location-tracking device manufacturer, said it likely violated export controls after discovering that some of its products required export licenses. The company's Dec. 23 filing said it began an internal review of its export compliance program in 2018 and found it may not have “properly classified” certain software and technology subject to license restrictions. Track Group hired an outside attorney to help investigate the company’s “export practices” and submitted a voluntary self-disclosure to the Bureau of Industry and Security.

BIS told the company that “violations of certain export regulations had occurred” but only issued a warning letter instead of a fine “given the facts and circumstances,” the filing said. Track Group said it eventually received BIS licenses to export certain products to all of its international customers. The company also received a BIS authorization “for all of its internal customers, contractors and subsidiaries” -- including foreign national employees in Sweden and Mexico -- “to continue using electronic devices and the associated software and technology.”

Asana, a company behind a team-management and organization app, said in its Dec. 10 filing it may have “inadvertently” provided services to sanctioned parties and illegally exported software and source code before receiving BIS authorizations. Asana said it submitted a voluntary self-disclosure to BIS and the Treasury Department’s Office of Foreign Assets Control regarding the potential violations. The company said it received a warning letter from BIS in June with no fine, but its disclosure with OFAC remains under review. “It is possible that the matters disclosed in the voluntary self-disclosure to OFAC may result in administrative fines or other penalties being assessed against us,” Asana said.

Smartsheet, a software company that offers a work management platform, in its Dec. 8 filing said a “small number” of people may have accessed its platform from embargoed countries in 2018. The company submitted a voluntary self-disclosure to OFAC and received a “cautionary letter” as a “final enforcement response,” Smartsheet said. “While our controls are designed to prevent similar activity from occurring in the future, these controls may not be fully effective.”

In an update to its October SEC filing (see 1911190017), Avianca, the South American airline that said it may have violated U.S. sanctions against Cuba, said it has “commenced the termination of all of its Cuba-related activities,” its Nov. 30 filing said. The airline previously said it planned to request OFAC authorizations to continue its flights to Cuba during a wind-down period. “The Group no longer operates any flights to Cuba, nor does the Group sell any passenger or cargo tickets involving Cuba (including via its codeshare and interline partners),” Avianca said.

The airline also said it “no longer maintains a physical presence” in Cuba and “issued termination notices for all of its legacy Cuba-related contracts and employees,” including ground services and ticket sales. Avianca said it has kept OFAC “apprised of these actions” and is cooperating with the agency as it assesses the airlines’ voluntary self-disclosure. The airline also said it has “embarked on a comprehensive effort” to improve its compliance program, sanctions screening process and sanctions training for employees.