Keysight Technologies settles with OFAC for Violations of Iran Sanctions Program

OFAC is a steady enforcement agency. As the COVID-19 pandemic settled down, OFAC resumed aggressive enforcement of economic sanctions.

In its latest action, OFAC announced a settlement with Keysight Technologies (“Keysight”), a Santa Rosa, California, for conduct stemming from its former subsidiary, Anite Finland (“Anite”) for re-exports of US export-controlled test measurement equipment to Iran.

In a familiar fact pattern surrounding OFAC compliance and acquisitions, Keysight was held liable for Anite’s post-acquisition sales to Iran despite Keysight’s instructions and efforts to ensure Anite discontinued sales to Iran after Keysight’s acquisition of the company. To disguise its continuing sales to Iran, Anite sought to hide such sales from detection by Keysight.

Anite designed and sold test and measurement instruments, along with software products to the wireless industry. In August 2015, Keysight acquired Anite. Interestingly, Keysight’s pre-acquisition due diligence and risk assessments identified that Anite conducted business with certain sanctions countries, including Iran. Anite committed to cease all existing and future business with sanctioned countries.

In September 2015, Keysight reiterated to Anite that sales to certain sanctions countries, including Iran, must cease. Anite’s Vice President informed its regional director for the Middle East of Keysight’s directive to cease all such orders. Both the Vice President and the Regional Director expressed reluctance to comply with Keysight’s directive.

The Regional Director along with two colleagues and with the knowledge of the Vice President agreed amongst themselves to proceed with the business in Iran and other sanctions countries.

The three Anite employees took measures to hide the Iran transactions. In their correspondence and paperwork, they omitted any reference to Iran or locations in Iran. In one instance, an Anite employee referred to Iran in an email to the Regional Director, and the Regional Director changed the reference to “United Arab Emirates” in the email. Once Keysight discovered the ongoing violations, Keysight conducted an extensive internal investigation to determine the extent of the violations, terminated the employees involved and then voluntarily disclosed the violations to OFAC and the SEC.

As recounted in the OFAC announcement, after the acquisition, from January 2016 to June 2016, Anite completed six orders for a total of approximately $331,089 of goods that incorporated 10 percent or more of US-export controlled content exported from the US that were destined for end users in Iran.

Although during the subject period 2016, OFAC’s General License H authorized certain direct sales to Iran through foreign owned or controlled entities, General License H did not authorize reexportation of such goods from a third country.

In crediting its remediation efforts, OFAC cited the fact that Keysight enhanced its sanctions compliance program by integrating detailed trade compliance policies, procedures and resources into its compliance program, conducting annual trade compliance training for sales representatives and their supervisors, and additional training for Anite legal, management, logistics, sales and customer service personnel, and implementing enhanced screening of each Anite transaction for trade compliance.

Source » jdsupra

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