April 20, 2021

OFAC settles with Oklahoma-based steel manufacturer accused of conducting business with Iran

On April 19, 2021, the US Department of the Treasury’s Office of Foreign Assets Control announced that it reached a settlement with Alliance Steel, Inc., an Oklahoma-based manufacturer of prefabricated steel structures, in which the company agreed to pay $435,003 to resolve allegations related to 61 apparent violations of the Iranian Transactions and Sanctions Regulations (ITSR) for outsourcing engineering services to an Iranian company for approximately five years.  OFAC determined that a reduced civil penalty was appropriate because Alliance’s conduct was non-egregious, was voluntarily self-disclosed, and its remedial response and cooperation with OFAC throughout the investigation was substantial.

According to OFAC, Alliance performed a majority of its engineering work inside of the US, choosing only to outsource work to third-party subcontractors when demand exceeded available resources.  From 2013 to 2018, Alliance’s Chief Engineer and Vice President of Engineering allegedly outsourced $1.45 million worth of engineering work to an Iranian engineering company that was owned by his brother – work was that initiated with full knowledge and approval of numerous members of senior management.  Alliance asserted that it was not aware of any apparent violations until it hired a new CEO in 2018, and that its managers were not familiar with OFAC laws and regulations because most of its business was conducted within the US.  Upon learning of the apparent violations, Alliance halted all work and payments to the Iranian company, and took remedial steps to implement export compliance policies in an effort to prevent a reoccurrence of the offending conduct.

OFAC also emphasized how this case demonstrates how important it is to have an effective, risk-based sanctions compliance program even for companies that operate primarily within the US, and encouraged all organizations to go to its website for information related US sanctions, including its 2019 publication, A Framework for OFAC Compliance Commitments.

Department of Treasury Recent Action | OFAC Enforcement Release