OFAC Issues Finding of Sanctions Violation Against Dissolved Texas Company
A Texas aviation consultant violated U.S. terrorism sanctions when it entered into a contract with Mahan Air, Iran’s sanctioned airline, the Treasury’s Office of Foreign Assets Control said in a Dec. 12 notice. The company, Aero Sky Aircraft Maintenance, was issued a finding of violation by OFAC after it violated U.S. Global Terrorism Sanctions Regulations in 2016 for “dealing in the property and interests in property” of Mahan Air, the notice said. Aero Sky eventually filed for bankruptcy and dissolved, Treasury said. OFAC released details of the violations because they would have “justified a strong civil monetary penalty.”
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After “multiple rounds of negotiations” with Mahan Air in 2016, Aero Sky entered into a memorandum of understanding with the airline and two other parties, Treasury said. The MOU called for the parties to provide “future non-exclusive maintenance and repair services” to Mahan Air and included an appendix that stated the MOU was contingent on Mahan Air being removed from OFAC’s Specially Designated Nationals List, the notice said.
Although Aero Sky knew Mahan Air was designated under U.S. sanctions, it “mistakenly determined” that its contract with Mahan Air was authorized through a general license, OFAC said. The general license authorized certain transactions related to “contingent contracts” under the then-Joint Comprehensive Plan of Action, but the license “specifically excluded” certain people and entities, including Mahan Air, OFAC said.
Aero Sky did not voluntarily disclose the violations. Aggravating factors included Aero Sky’s “reckless violation of the law,” the fact that a senior executive “had actual knowledge” of the sanctions and the fact that the company “undermined” the policy objectives of the U.S.'s sanctions regime against terrorism. Mitigating factors included the fact that Aero Sky had not committed a violation in the previous five years and that Aero Sky was a “small company in poor financial condition.”
OFAC said the action highlights that companies should “carefully review” all the terms of a general license before acting on them. It also highlights OFAC’s commitment to pursuing enforcement actions against violators of U.S. sanctions against Iran.