OFAC Fines Pennsylvania Manufacturer for Violating Iran Sanctions
A Pennsylvania cookware coating manufacturer was fined about $824,000 after its foreign subsidiaries violated U.S. sanctions against Iran, the Office of Foreign Assets Control said in a July 28 notice. OFAC said Whitford Worldwide Company subsidiaries in Italy and Turkey illegally exported coatings to Iran, and U.S. company employees oversaw the transactions.
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OFAC said the foreign subsidiaries, Whitford S.r.l. in Italy and Whitford Yuzey Kaplamalari Sanayi ve Ticaret Limited Sirketi in Turkey, “historically” sold the coatings to Iran before the country was sanctioned. In 2013, about a year after the sanctions took effect, the company realized the sales may be “problematic,” but a manager who did not specialize in sanctions compliance “incorrectly advised” that Whitford’s foreign subsidiaries could continue selling to Iran “so long as there were no direct connections between a Whitford subsidiary and Iran.”
Soon after, Whitford’s Europe managing director, who was also a “U.S. person,” helped develop a plan to continue the sales through third-party distributors. The company also avoided referencing Iran in documents and continued the sales in 2014 and 2015. The company eventually hired outside counsel to investigate the sales after seeing a 2016 OFAC general license and realizing the company may have violated U.S. sanctions, OFAC said. The company ultimately submitted a voluntary disclosure.
OFAC said Whitford’s actions constituted a non-egregious case. Mitigating factors included the company’s cooperation with OFAC’s inquiry, its own thorough investigation, its lack of a penalty notice in the previous five years and its “significant remedial measures.” The company appointed an external compliance monitor, made changes to its board of directors, established annual compliance reporting requirements, adopted a new export controls and sanctions compliance policy, and created an export controls and sanctions training program.
Aggravated factors included the company’s “lengthy history” of sales to Iran, its failure to “implement compliance policies commensurate with selling to a high-risk jurisdiction,” and its continued sales after being “warned that foreign subsidiary sales to Iran were problematic.” Other factors included Whitford senior managers having “actual knowledge” of the violations and that the company “conferred an economic benefit” to Iran of more than $3 million through 74 transactions over three years.
OFAC said the settlement highlighted the importance of dedicating “sufficient resources” to sanctions compliance, staying aware of changes to sanctions regulations and understanding the “full scope” of the prohibitions. OFAC also said sanctions compliance personnel should have “appropriate technical knowledge and expertise,” especially when dealing with high-risk countries like Iran.