Shearman & Sterling LLP
Issue link: https://digital.shearman.com/i/1422677
15 ENFORCEMENT ACTIONS On July 19, OFAC announced settlement agreements with two subsidiaries of Alfa Laval AB, UAE-based Alfa Laval Middle East Ltd. (AL Middle East) and U.S.-based Alfa Laval Inc. (ALUS), to settle apparent violations arising from the sale and export of approximately $185,000 worth of U.S.-made storage tank cleaning units to Iran between May 2015 and March 2016. According to OFAC, in May 2015 an Iranian oil distributor solicited ALUS with a request to purchase U.S.-manufactured equipment for cleaning fuel tanks. ALUS told the Iranian company that it could not sell and export its goods to Iran, and referred the company to its Middle East affiliate, AL Middle East. Afterward, AL Middle East agreed to the sale and placed an order for the equipment from ALUS but conspired with several companies to "actively mislead" ALUS about the Iranian identity of the ultimate customer, including by, among other things, falsely listing a Dubai-based affiliate as the end-user on the export documentation. AL Middle East agreed to pay $415,695 to settle the apparent violations, which OFAC noted were not voluntarily self-disclosed and constituted an egregious case. ALUS, meanwhile, agreed to pay $16,875 to settle its apparent liability for referring an Iranian business opportunity to a Middle East affiliate in violation of U.S. sanctions. OFAC noted that ALUS's violations were not voluntarily disclosed, but that the conduct was non- egregious. On July 23, OFAC announced a settlement agreement with U.S.-based online money transmitter, Payoneer, Inc. Payoneer agreed to pay over $1.4 million to settle potential civil liability for 2,260 violations of multiple sanctions regimes, including restrictions on dealings with the Crimea region of Ukraine, Iran, Syria, and Sudan. Between February 2013 and February 2018, Payoneer processed approximately $802,000 worth of commercial transactions on behalf of its corporate customers and card-issuing financial institutions. These transactions involved parties in restricted jurisdictions, as well as SDN-listed persons. According to OFAC, the violations resulted from gaps in Payoneer's sanctions compliance program, including weak algorithms that inadequately filtered names from the SDN List, failures to screen for Business Identifier Codes, and process failures that released flagged transactions without review. OFAC also determined Payoneer's sanctions compliance controls did not adequately focus on sanctioned regions, especially the Crimea region of Ukraine. In determining the settlement amount, OFAC noted that Payoneer had taken remedial measures to enhance its compliance program, and although only nineteen of the violations were self-reported, the conduct constituted a non- egregious case. On August 26, OFAC announced a settlement with Bank of China (UK) Limited to settle its potential civil liability arising from apparent violations of U.S. sanctions on Sudan. OFAC alleged that BOC (UK) had deficient know- your-customer compliance protocols, causing it to process commercial transactions totaling roughly $40.6 million with Sudan-related parties. Specifically, between September 4, 2014 and February 24, 2016, BOC UK processed 111 commercial transactions through the U.S. financial system on behalf of two customers with connections to Sudan. When those transactions were routed to BOC UK for processing, the bank's internal customer database did not include reference to Sudan in the name or address fields of either customer. As a