U.S. company to pay $473,000 to settle Iranian sanction violations by Finnish subsidiary

U.S. company to settle Iranian sanction violations

The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) today announced that a California company—on behalf of its former Finnish subsidiary—agreed to pay approximately $473,000 to resolve its potential civil liability for reexports of U.S. export-controlled test measurement equipment to Iran, an apparent violations of the Iranian transactions and sanctions regulations.

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According to an OFAC release [PDF 81 KB], after the company acquired the Finnish subsidiary in 2015 and implemented its policy to restrict sales to Iran, employees of the Finnish subsidiary continued sales to Iran and obfuscated such sales from the company. 

Summary

The companies designed and sold test and measurement instruments and related software products to the wireless industry.

The Finnish company was acquired by the U.S. (California) company in September 2015. The pre-acquisition due diligence and risk assessments showed that the Finnish company had conducted business with certain sanctioned countries, including Iran. Prior to completion of the acquisition by the U.S. company, the Finnish company agreed to cease all existing and future business with such countries, and about one month after the acquisition, the U.S. company again reiterated to the Finnish entity that sales to certain sanctioned countries, including Iran, must cease.

However, officers and employees of the Finnish company were reluctant to comply with the U.S. company’s directive, and decided instead to proceed with their business in Iran and the other sanctioned countries. These individuals then took measures to obfuscate from the U.S. company their dealings with Iran, and omitted references to “Iran” or locations in Iran in correspondence.

On discovering this misconduct, the U.S. company conducted an extensive internal investigation to determine the extent of the apparent violations; terminated the employees involved; and then voluntarily self-disclosed the apparent violations to OFAC and in its SEC filings. The statutory maximum civil monetary penalty applicable in this matter was over $2 million.

OFAC determined that the U.S. company, on behalf of its former Finnish subsidiary (the subsidiary was integrated into the U.S. company and no longer exists as a separate legal entity), voluntarily self-disclosed the apparent violations and that these violations constitute an egregious case.


For more information on this topic or to learn more about KPMG’s Trade & Customs Services, contact:

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Steve Brotherton
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Luis (Lou) Abad
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E: labad@kpmg.com

Irina Vaysfeld
Principal
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Amie Ahanchian
Principal
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Andy Doornaert
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E: adoornaert@kpmg.com

Jessica Libby
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