OFAC Fines Oklahoma Steel Manufacturer for Violating Iran Sanctions

The Office of Foreign Assets Control fined an Oklahoma steel manufacturer about $435,000 for violating U.S. sanctions against Iran, OFAC said April 19. Alliance Steel committed 61 sanctions violation by maintaining a “business relationship” with an Iranian company for five years, OFAC said.

Although Alliance conducts most of its engineering services internally, it outsourced some of that work to an Iranian engineering company owned by the brother of Alliance's vice president of engineering, OFAC said in an enforcement notice. Alliance paid the Iranian company about $1.45 million for engineering services from 2013 to 2018, which was overseen by the Alliance executive and 12 other senior managers. OFAC said “numerous” Alliance officials “were involved in the process of approving each transaction and issuing checks” to the Iranian company.

Because Alliance doesn’t export goods and only provides products to domestic customers, it told OFAC that its senior officials were “not attuned to the laws and regulations administered by OFAC” and were unfamiliar with sanctions obligations. The company only stopped the transactions after it hired a new chief executive officer in 2018, who “halted all work” with the Iranian company and took steps to implement sanctions compliance controls.

Alliance self-disclosed the violations, which constituted a non-egregious case, OFAC said. Mitigating factors included the fact that Alliance had not received a penalty notice within the previous five years and cooperated with OFAC’s investigation. Alliance also took several remedial measures, including stopping all work with the Iranian company, firing the official who oversaw the transactions and implementing an export compliance policy.

Aggravating factors included Alliance’s failure to “exercise a minimal degree of caution or care” by conducting due diligence investigations into the transactions and the fact that its senior managers had “actual knowledge” that they were outsourcing work to an Iranian company. OFAC also said Alliance “harmed the objectives” of its Iran sanctions program by conferring more than $1 million to Iran.

OFAC said this case highlights the importance of maintaining compliance controls even for companies that operate only in America. “U.S. companies can risk violating OFAC regulations if they undertake even isolated or sporadic international business or contracting activities, and do not conduct basic regulatory diligence or have adequate personnel or policies to comply with U.S. sanctions requirement,” OFAC said.