The US Department of the Treasury’s Office of Foreign Assets Control issued a Finding of Violation to Aero Sky Aircraft Maintenance, Inc. for entering a contract with Mahan Air in violation of the Global Terrorism Sanctions Regulations, 31 C.F.R. part 594 (GTSR). On October 12, 2011, OFAC designated Mahan Air, an Iranian commercial airline company, pursuant to Executive Order 13224 for providing support to the Islamic Revolutionary Guard Corps-Qods Force. OFAC determined that in 2016, Aero Sky violated § 594.201(a) of the GTSR by dealing in the property and interests of Mahan Air when Aero Sky entered into a contract and a second contingent contract with Mahan Air. Aero Sky subsequently entered into bankruptcy proceedings and has since dissolved. According to OFAC, the facts presented in this matter would have justified a strong civil monetary penalty if the company had not previously dissolved.
In determining an appropriate monetary penalty, OFAC considered as aggravating factors the company’s reckless violation of the law by failing to exercise a minimal degree of caution by entering a contract with an entity on the SDN List; a senior executive knew of, and participated in, the conduct that led to the Violations; and that the company undermined the policy objectives of the GTSR by dealing in blocked property interests of a high-profile entity identified on the SDN List. OFAC’s determination was mitigated by the fact that Aero Sky has not been subject to a Finding of Violation or penalty notice from OFAC in the five years preceding the date of the transaction giving rise to the Violations, and Aero Sky was a small company in poor financial condition that dissolved after the violations.
Per OFAC’s A Framework for Compliance Commitment, risks in sanctions compliance are potential issues that can lead to violations of OFAC’s regulations if not properly handled. OFAC noted that US companies can mitigate sanctions risk by conducting risk assessments and exercising caution when doing business with entities that are affiliated with, or known to transact with, OFAC-sanctioned persons or jurisdictions.