April 25, 2019

OFAC settles first enforcement action for Russia sectoral sanctions

An agreement has been reached between Haverly Systems, Inc., a petrochemical and energy systems software company, and the Office of Foreign Assets Control of the US Department of the Treasury, to settle Haverly’s potential civil liability for apparent violations of the Ukraine Related Sanctions Regulations, 31 CFR part 589.  According to OFAC, Haverly apparently violated 31 CFR § 589.201  and Directive 2 under Executive Order 13662 when, in May 2016 and January 2017, it collected payments with greater than 90 days maturity on a contract with JSC Rosneft, without seeking guidance or authorization from OFAC. Rosneft was added to the Sectoral Sanctions Identification List in July 2014.

OFAC found that Haverly had demonstrated reckless disregard for US economic sanctions requirements because it ignored warning signs that its conduct could violate sanctions regulations; that the company did not have a formal OFAC sanctions compliance program; and that its management had actual knowledge of the conduct that gave rise to the apparent violations.  As mitigating factors, however, OFAC determined that the apparent violations resulted in minimal harm to the objectives of the sanctions program (and OFAC would likely have authorized the transactions, had Haverly requested a license).  OFAC also found that the company is small, has not received a penalty notice from OFAC in the past five years, and has engaged in remedial efforts since the incidents took place.

Haverly has agreed to pay $75,375 to settle its potential civil liability, and to enhance its compliance procedures by ensuring that the company’s management is committed to a culture of compliance, conducts regular sanctions-related risk assessments, and provides sanctions compliance training to its employees.

OFAC press release |

US Treasury Dept. Enforcement Information