OFAC announces settlements with wholesale refrigeration distributor and its US affiliate for ITSR violations

On July 19, 2021, the US Department of the Treasury’s Office of Foreign Assets Control announced a $415,695 settlement with Alfa Laval Middle East Ltd. (AL Middle East), a subsidiary of Sweden-based Alfa Laval AB located in Dubai that provides wholesale refrigeration equipment including fluid handling containers for the energy industry, and a $16,875 settlement with Alfa Laval Inc. (AL US) its US affiliate, to resolve their potential civil liability for apparent violations of the Iranian Transactions and Sanctions Regulations, 31 CFR part 560 (ITSR).  According to the settlement, AL Middle East conspired with two Iran-based firms and one Dubai-based company between 2015 and 2016 to cause AL US to export US-origin Gamajet tank products, worth more than $18,000, to Iran by falsely listing the end-user on invoices as a Dubai company.  Shortly after the shipment to Iran was complete, AL Middle East allegedly began preparing additional sales of Gamajet tank products to the same Iranian company using the same protocols utilized in the original sale.

The ITSR violation was allegedly discovered by the US Department of Commerce's Bureau of Industry and Security (BIS) in 2016 when the BIS reviewed AL US’s post-shipment verification for the Gamajet tank product sales and discovered that the Dubai company had re-exported the products to Iran.  After the BIS inquiry, AL US conducted an internal investigation and submitted the findings, including information regarding the conspiracy, to OFAC in early 2017, at which point the planned sales to Iran that were contemplated by AL Middle East were terminated, and all employees who participated in the conspiracy were fired.

In determining the penalties, OFAC considered the failures of AL Middle East and AL US to voluntarily self-disclose their apparent violations; however, OFAC found that only AL Middle East’s violations constituted an egregious case.  Consequently, in addition to the monetary penalty, AL Middle East is required to adhere to strict OFAC-approved sanctions compliance procedures that include improved risk assessment protocols and enhanced internal controls.  AL Middle East must also submit annual certifications to OFAC for a period of five years to ensure that that its enhanced sanctions compliance program continues.  

OFAC Recent Action | OFAC Enforcement Release I | OFAC Enforcement Release II | Settlement Agreement

 
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