Foreign firm hit with $1.5 million fine for sanctions violations & failing to have compliance regime

By Christine Duhaime | October 21st, 2013

The Office of Foreign Asset Control (“OFAC“) has assessed a penalty of $1.5 million against Alma Investment LLC, a foreign investment firm and fund, for violating U.S. sanctions by sending electronic wires totaling $103,283 through U.S. financial institutions for the benefit of persons in Iran. The electronic wires are a prohibited export to Iran under §560.204 of the Iranian Transactions and Sanctions Regulations, 31 C.F.R. 560 (the “Regulations“).

Since a 1997 Presidential Executive Order, virtually all trade and investment activities with Iran by U.S. persons, wherever located, are prohibited. With respect to exports to Iran, unless licensed by OFAC, goods, technology, or services may not be exported, re-exported, sold or supplied, directly or indirectly, from the U.S. or by a U.S. person, wherever located, to Iran or the Government of Iran. The ban on providing services includes any brokering or financing function from the U.S. or by U.S. persons, wherever located, and that includes, inter alia, a foreign entity if it has a U.S. arm, subsidiary or JV.

Criminal penalties for violations of the sanctions include a fine of up to $1 million and a term of imprisonment of up to 20 years. Civil penalties do not exceed the greater of $250,000 or an amount that is twice the amount of the transaction that resulted in the violation.

The gravity of the penalty against the foreign firm reflected the fact that OFAC found that it: acted recklessly or willfully by concealing information on the wire transfers that associated it with Iran; significantly harmed the  U.S. sanctions enforcement; and did not have a compliance program.

OFAC administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals against targeted foreign countries and regimes, terrorists, international narcotics traffickers, those engaged in activities related to the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy or economy of the U.S.

Foreign persons, associations, firms, funds and JVs may be subject to OFAC sanctions under U.S. law by virtue of having a branch office in the U.S., or an entity incorporated in a U.S. jurisdiction.

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