July 21, 2021

OFAC announces settlements with wholesale refrigeration distributor and its US affiliate

On July 19, 2021, the US Department of the Treasury’s Office of Foreign Assets Control announced a $415,695 settlement with Dubai-based Alfa Laval Middle East Ltd. (AL Middle East), a subsidiary of the Swedish company Alfa Laval AB, which provides wholesale refrigeration equipment for the energy industry.  OFAC also announced a $16,875 settlement with Alfa Laval Inc. (AL US), the company’s US affiliate.  The settlements resolve the companies’ 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 alleged ITSR violation was 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 alleged conspiracy, to OFAC in early 2017.  The planned sales to Iranwere 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 the apparent violations; however, OFAC viewed only AL Middle East’s apparent violations as egregious.  Consequently, in addition to the monetary penalty, AL Middle East is required to adhere to strict OFAC-approved sanctions compliance procedures, including enhanced risk assessment protocols and internal controls.  AL Middle East must also submit annual certifications to OFAC for a period of five years.  

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