UniControl agrees to pay fine to settle case for violations of OFAC’s Iran Sanctions Program

UniControl, Inc., a Cleveland, Ohio manufacturer of process controls, airflow pressure switches, boiler controls and other instruments, agreed to pay OFAC $216,464 to settle its liabilities for violation of the Iran Sanctions Program. UniControl exported 19 shipments of its goods to two European countries with reason to know that the goods were intended for delivery to Iran end users. In addition, UniControl exported two shipments to the two European companies with actual knowledge that the products were intended for Iranian customers. UniControl voluntarily disclosed the violations to OFAC.

From July 2013 to March 2017, UniControl exported a total of 21 shipments of air pressure switches, valued at $687, 189, to two European companies, which in turn reexported the items to Iran. UniControl failed to take appropriate steps in response to clear red flags created by the European companies that gave UniControl reason to know (and in two cases actual knowledge) that the air pressure switches were being reexported to Iran.

The OFAC settlement document provided specific information on the red flags:

– Customer Interest in Iranian Market. One of the European companies told UniControl in May 2010 that it had a significant market for UniControl’s goods in Iran. UniControl originally rejected the offer to supply the European company. Despite this early intelligence, UniCOntrol never took any steps to confirm that the European company was not reexporting its products to Iran.

– Iran as an Authorized Sales Territory. UniControl and a European trade partner entered into a sales representative agreement in February 2014. The agreement explicitly listed Iran as a country to which the European country could re-sell UniControl goods. UniControl never sought to update or clarify the agreement to state that reexports to Iran were prohibited.

– Obfuscation of End User. When one of the European companies informed UniControl of a delay in reexportation to the end user, UniControl soffered to ship the goods directly to the end user. The European company rebuffed the offer and UniControl did not question or follow up on this issue

– Meetings with Iranians at Trade Shows. UniControl management attended European trade shows and met with Iranian customers at a European company’s trade partner’s booth. Even after this meeting, UniControl never questioned its trade partner about the Iran interest in its products. At a subsequent trade conference, UniControl met directly with potential Iran customers.

– Removal of Made in USA Label. UniControl’s European trade partner requested in a February 23, 2017 email that UniControl remove its “Made in the USA” label from the switches that it planned to export to the partner. The trade partner explained that the Iranian end-user may object to the stated origin of the products. UniControl sought guidance from outside counsel concerning the proposed transactions but still went ahead and completed the shipments.

Following completion of the transaction, outside counsel assisted UniControl in the voluntary disclosure of the violations and acknowledged that UniControl had actual knowledge of the violations from the final two shipments. UniControl requested that its trade partners return the last shipment. One European trade partner returned the goods to UniControl and was reimbursed, while the other ignored UniControl’s request and reexported the goods it received to Iran. UniContrfol forfeited the payment of $66,900 for the shipment that was ultimately made to Iran. UniControl ceased all shipments to its European trade partners at the time of its disclosure.

UniControl strengthened its sanctions compliance and export policies and procedures. It also required customers to sign end-user and end-use certificates to ensure that buyers do not resell UniControl products to prohibited end users. For re-exports, UniControl requires end-user certificates from secondary and tertiary buyers of reexported products. Finally, UniControl added a destination control statement to the footer of certain trade documents, including sales orders, accounting forms, order acknowledgements, and invoices to remind recipients of the restrictions on reselling, transferring, manipulating or otherwise disposing of their products.

Source » jdsupra

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