OFAC Fines Ohio Manufacturer for Violating Iran Sanctions
The Office of Foreign Assets Control fined a Cleveland process controls and instrument manufacturer more than $215,000 for violating U.S. sanctions against Iran, OFAC said in a March 15 notice. The company, UniControl, Inc., exported goods to European companies despite knowing they would ultimately be sent to Iran, OFAC said. The agency said the company failed to “act on multiple apparent warning signs.”
From 2013 to 2017, UniControl exported 21 shipments worth about $687,000 to European companies, all of which were reexported to Iran, OFAC said. UniControl “failed to take appropriate steps in response to multiple warning signs,” including when one of the European companies asked UniControl to “serve as supplier” of goods to Iran because of the “significant market” in Iran for UniControl’s products. OFAC said UniControl “initially rebuffed the opportunity” but never took steps to “ensure that sales to its European trade partner” weren’t being sent to Iran.
In another case, a European company said in a contract that it planned to sell UniControl’s goods to Iran, but UniControl never tried to make clear that its products couldn't be sent to Iran. UniControl managers also met with Iranian nationals in 2016 at a European trade conference and were asked by a European company to remove the “Made in USA” label from its products, OFAC said. The European company wanted the labels removed because it said Iranian end-users “may have problems with the stated origin of the products.” Although this request “raised questions” within UniControl and they sought “guidance” from an outside lawyer, the company “nonetheless sent two subsequent shipments to the European trade partner for reexport to Iran.”
UniControl voluntarily disclosed the violations and said it “had actual knowledge” that two of the 21 transactions were destined for Iran. OFAC said the company’s violations were non-egregious and UniControl’s status as a “modest-sized company” with no prior sanctions history were mitigating factors. OFAC also said the company stopped all shipments to the European companies when it disclosed its violations and asked the companies to return some of the goods. Although one of the companies did return the goods, the other “rebuffed” UniControl, and OFAC said UniControl lost about $67,000 “rather than accept funds involving an Iranian end customer.” OFAC also said UniControl cooperated with OFAC’s investigation and improved its compliance program, which now includes an outside lawyer, requirements for customers to sign end-user and end-use certificates and the addition of a ‘Destination Control Statement” in certain trade documents.
Aggravating factors included UniControl’s failure to follow up on “multiple warning signs,” the fact that its senior leadership was aware or “should have been aware” of the reexportation of its goods to Iran and the fact that it exported air pressure switches to Europe while knowing they would be sent to Iran.
OFAC said the settlement highlights the importance of “assessing multiple warning signs” that may indicate a customer is reexporting goods ro sanctioned regions. The agency said companies have a responsibility to “actively communicate” with its customers about trade restrictions. “In particular, U.S. businesses should seek transparency when dealing with foreign trade partners and follow up on activities that raise concerns or suspicion,” OFAC said.