March 15, 2021

US aeronautics company discloses the end of an OFAC investigation into possible sanctions violations

In a securities filing on March 12, 2021, New York-based aeronautics company Frequency Electronics, Inc. disclosed that the Office of Foreign Assets Control had completed a review of the company’s transactions and decided to issue a cautionary letter rather than pursue an enforcement action or civil monetary penalty.

In its Form 10-Q, Frequency Electronics revealed that it had invested in Morion Inc., a privately-held Russian manufacturer of quartz resonators and crystal oscillators, that was also a less than wholly-owned subsidiary of Gazprombank, a state-owned Russian bank that had been designated by OFAC in 2014 pursuant to Executive Order 13662. This discovery prompted Frequency Electronics to conduct an internal investigation to determine if certain sales made to Morion and the timing of subsequent payments received from that company constituted an extension of credit in violation of Executive Order 13662.  According to the Form 10-Q, the internal investigation found that the Marion payments, a majority of which had occurred more than five years earlier, were not timely and likely not made in violation of OFAC sanctions.  In May of 2020, Frequency Electronics voluntarily disclosed their findings to OFAC, and on February 17, 2021 the company received OFAC’s cautionary letter informing it that the investigation was closed.  

Form 10-Q