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U.S. company settles violations of Ukraine sanctions

U.S. company settles violations of Ukraine sanctions

The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) today announced that a New Jersey corporation (a “small company with a limited number of employees”) with offices in Texas and California agreed to pay just over $75,000 to settle its potential civil liability for apparent violations of the Ukraine sanctions regulations.

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According to today’s OFAC release [PDF 18 KB], the U.S. company in August 2015 issued invoices relating to the licensing of software and software support services to a Russian energy company (an entity that was eventually listed by OFAC on a sanctions identification list). Although the invoices originally contained payment due dates of between 30 and 70 days from the date of issuance, approximately 70 days after the issuance of the invoices, the Russian company notified the U.S. company that it required certain corrected tax documentation in order to make the payment. The U.S. company took several months to obtain the corrected tax documentation. After receiving the tax documentation, the purchasing entity made the payment on the first invoice (which the U.S. company received in late May 2016, some nine months after its issuance).

From May 2016 to late October 2016, the Russian company made four attempts to remit payment related to the second invoice; each payment was rejected by financial institutions after determining the transaction was prohibited by OFAC’s regulations as debt of greater than 90 days maturity of an entity subject to the Ukraine sanctions regulations and an executive decree. At points during the period associated with these rejected payment attempts, the U.S. company received information from the purchasing entity regarding the rejected transactions. 

OFAC identified the U.S. company as having transacted or dealt in new debt of greater than 90-days maturity of an entity on the sanctions identification list. OFAC further determined that the U.S. corporation did not voluntary self-disclose the apparent violations to OFAC, and the apparent violations constitute a non-egregious case.

 

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

Doug Zuvich
Partner and Global Practice Leader
T: 312-665-1022
E: dzuvich@kpmg.com

John L. McLoughlin
Principal and East Coast Leader
T: 267-256-2614
E: jlmcloughlin@kpmg.com

Andy Siciliano
Partner and National Practice Leader
T: 631-425-6057
E: asiciliano@kpmg.com

Luis (Lou) Abad
Principal, Washington National Tax
T: 212-954-3094
E: labad@kpmg.com

Irina Vaysfeld
Principal
T: 212-872-2973
E: ivaysfeld@kpmg.com

Amie Ahanchian
Managing Director
T: 202-533-3247
E: aahanchian@kpmg.com

Robert Waldrop
Principal
T: 212-954-8117
E: rwaldrop@kpmg.com

Gisele Belotto
Managing Director
T: 305-913-2779
E: gbelotto@kpmg.com

Christopher Young
Principal
T: 312-665-3229
E: christopheryoung@kpmg.com

Andy Doornaert
Managing Director
T: 313-230-3080
E: adoornaert@kpmg.com

George Zaharatos
Principal
T: 404-222-3292
E: gzaharatos@kpmg.com

Jessica Libby
Managing Director
T: 612-305-5533
E: jlibby@kpmg.com

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