By: Brooke Driver
On September 6, the Office of Foreign Assets Controls announced its decision to settle with the California-based company Communications and Power Industries for $346,530. OFAC claims that CPI violated the Iranian Transactions and Sanctions Regulations, 31 C.F.R. part 560, on numerous occasions between the dates of March 31, 2006 and October 22, 2010.
Supposedly, the Switzerland branch office of the company’s U.S. subsidiary, Communications and Power Industries International Inc., sold or attempted to sell—on 32 occasions during this time period—unlicensed x-ray generators and a medical digital imaging workstation to an entity in Tehran, Iran. OFAC also accused Communications and Power Industries of directing its Canadian affiliate to make three shipments of x-ray generators and one shipment of automatic exposure control field kits to an entity in Istanbul, Turkey.
The base penalty for the combined charges is a whopping $1,100,096; however OFAC significantly lowered this penalty and determined that the case was non-egregious. OFAC states that its settlement amount of $346,530 was based on the following:
- CPI’s delay in assessing and addressing the effect of U.S. sanctions laws on the Switzerland branch office demonstrated a reckless disregard of those laws.
- Obviously, the company lacked an effective OFAC compliance program at the time of the violations.
- CPI voluntarily disclosed its apparent violations upon discovery.
- CPI has since implemented a number of remedial procedures to improve its compliance program.
- CPI has no history of prior OFAC violations.
- The successful and attempted transactions involved in the OFAC violations represent an insignificant percentage of the company’s overall sales.
- CPI cooperated with OFAC by executing a tolling agreement and one extension of that tolling agreement.
- The exports resulting in the alleged violations would likely have been licensed by OFAC had they been properly submitted for review.