Thursday, March 13, 2014


Large international trading companies that refuse to create and maintain an effective compliance program are playing with fire; OFAC repeatedly cites the total absence of an operational compliance program in most of the cases where it levies a major civil penalty for sanctions violations. When will the senior management of these companies learn that compliance, in 2014, is effectively mandatory ?

 In the most recent case, OFAC hit Ubiquiti Networks, of San Jose, California with a civil penalty of $504,225, for violations of Iran Transactions & Sanctions Regulations. What the company reportedly did:
(1) Set up a UAE firm as the company's exclusive distributor for Iran, then a sanctioned jurisdiction, and thereafter shipped sufficient quantities of its broadband wireless connectivity technology to Dubai, so that the UAE firm could fill orders.

(2) Shipped wireless broadband equipment to greece, having reason to know that the intended end user was Iran.

The total arrogance of such companies amazes me; do sales staff honestly believe that regulators, or law enforcement ,do not track and trace such orders, or does greed take over ? There will certainly be reputation damage, which will directly affect the company's future earnings, standing in its industry, and prospects for government contracts; dollars and cents lost forever.

 In any event, this case provides an abject lesson in the need for compliance, irrespective of whatever industry you are working in. Readers who wish to review the complete text of the Civil Penalties Enforcement information of this case, issued on  March 6, 2014, can access it here.*

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