Working with individuals and organizations outside the United States can often lead to complications when it comes to maintaining compliance.
However, certain regions pose a unique risk, and Turkey is certainly among them.
While the country isn’t specifically sanctioned, it does have deep ties to other countries that do—most notably, Turkey’s energy sector has a number of deals with Iran. In fact, the connections are so complex that they are one of eight countries that were granted a six month exemption to sanctions re-imposed by the U.S. in November of 2018 as a result of Washington’s withdrawal from the Joint Comprehensive Plan of Action (JCPOA)—more commonly known as the Iran nuclear deal.
However, even with the grace period in place, Turkey’s President Recep Tayyip Erdogan has made it clear he intends for the country to maintain their relationship with Iran, stating “We will absolutely not abide by such sanctions. We buy 10 billion cubic meters of natural gas. We cannot freeze our people in the cold.”
Erdogan’s position reflects a long-standing belief of some members of the Turkish business community. Even before the JCPOA was agreed to—and subsequently withdrawn from—by the U.S., there were a number of cases of sanctions evasion that involved Turkish nationals.
Evading sanctions against Iran
In the last few years, at least three prominent Turkish businessmen have faced punishment from the U.S. for willful evasion of Iranian sanctions. In 2016, Reza Zarrab was arrested in relation to allegations of helping to facilitate deals between Turkey and Iran to trade gold for gas. He subsequently pled guilty and became a key witness against fellow Turkish citizen—and co-conspirator—Hakan Atilla. Atilla was found guilty of conspiring to violate US sanctions law, and sentenced to 32 months in prison.
More recently, the Department of Treasury’s Office of Foreign Assets Control (OFAC) announced they had sanctioned Turkish businessman Evren Kayakiran for violations that occurred between the years 2013 and 2015. Kayakiran willfully violated Iranian sanctions and falsified records to make it appear as though his company remained compliant. His case is especially notable, as it represents the “first time OFAC has named an individual a Foreign Sanctions Evader in relation to a civil enforcement action.”
Proceed with caution
As always, when doing business with anyone in areas with strong ties to sanctioned countries, you should proceed with caution. In addition to screening your business partners, you need to be on the lookout for risk country alerts, and make sure you’re working with an extra layer of due diligence so that you can be sure you’ve done your best to know your customer, vendor, or supplier.
While finding yourself doing business with those who are willfully violating U.S. sanction programs may be rare, when partnering with organizations in regions where the relationships with sanctioned countries run deep—like with Turkey and Iran—it never hurts to make sure you dig a little deeper, just in case.