OFAC Announces Settlement After US-Based Company Violated Ukraine-Related Sanctions
The Treasury’s Office of Foreign Assets Control announced a settlement of $75,375 with Haverly Systems, a New Jersey software company with offices in Texas and California, for violations of the Ukraine Related Sanctions regulations, OFAC said in an April 25 enforcement notice. Haverly violated the sanctions twice between May 2016 and January 2017 when it “dealt in new debt of greater than 90 days maturity” with JSC Rosneft, a Russian oil company that was designated under Ukraine-related sanctions, OFAC said.
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
In 2016, Rosneft attempted to pay Haverly for an invoice related to a software license purchase and the purchase of software support services, the notice said. The payments were rejected by financial institutions after they discovered the transactions were prohibited by OFAC’s “regulations as debt of greater than 90 days maturity” by an entity on OFAC’s Sectoral Sanctions Identification List, according to the notice. Haverly then received from Rosneft copies of messages from the Society for Worldwide Interbank Financial Telecommunication about the rejected transactions that said the “underlying activity may have a nexus to sectoral sanctions,” OFAC said.
Because Haverly did not have a sanctions compliance program in place, it “did not recognize that the delayed collection of payment was prohibited,” OFAC said. “Haverly did not approach OFAC for guidance or authorization, however, and instead explored various options to collect the payment” from Rosneft, according to the notice. Haverly received the payment in January 2017.
Haverly did not self-disclose the violations, OFAC said, and the violations were considered a non-egregious case. OFAC listed several aggravating factors related to the settlement, including Haverly’s “reckless disregard” for U.S. sanctions and “repeatedly ignoring warning signs that its conduct constituted or likely constituted a violation of OFAC’s regulations.” OFAC also said Haverly’s management was aware of the conduct that led to the violations but did not have a formal compliance program.
Mitigating factors included the fact that the violations “resulted in minimal actual harm to the sanctions program objectives,” Haverly had not committed a violation in the previous five years, Haverly is a “small company with a limited number of employees,” and Haverly created a sanctions compliance officer position and implemented a compliance program after the violations.
As part of the settlement, Haverly agreed to several compliance conditions, including “regular risk assessments” of business dealings and to conduct “ongoing” sanction compliance training “throughout the organization.”