The United States Department of Treasury’s Office of Foreign Assets Control (OFAC) recently announced a settlement agreement with a multinational aviation industry telecommunications company for apparent violations of global terrorism sanctions regulations.
At issue was the provision of messaging services by the Switzerland-based firm to several airlines that are on OFAC’s sanctions list. These include Mahan Air, Syrian Arab Airlines, Meraj Air, Al-Naser Airlines, and Caspian Air.
These messaging services enabled users to communicate with other airlines and aviation industry organizations to coordinate refueling and maintenance of aircraft, arrange routes, facilitate baggage transfers, and booking passengers.
The messages were routed through a switchboard in Atlanta, Georgia, which brought it directly under the purview of OFAC. Additionally, other software support and services offered were either of U.S.-origin, or maintained by its American subsidiaries, further exacerbating the violations.
What they did to make things right
At the time of these violations between 2013 and 2018, the telecommunications firm acknowledged that it did not have an extensive compliance program in place. As part of its settlement with OFAC, it implemented a series of wide-ranging remedial compliance measures, to help minimize the possibility of similar compliance lapses from occurring in the future.
The settlement with OFAC highlights the extent of the firm’s new compliance efforts. The measures include:
- Establishing a new global trade board to assess and vet compliance risks;
- Implementing new sanctions compliance reviews when onboarding new customers and suppliers;
- Creating new and updated existing compliance guidelines and policies to increase internal awareness of sanctions and compliance;
- Appointing a dedicated ethics and compliance champion;
- Committing to monitoring and auditing usage of its messaging and software solutions to help ensure they are not being leveraged by sanctioned entities; and
- Implementing a new sanctions compliance training program, required for all new employees, and once a year for all existing employees.
It was the firm’s willingness to bolster its compliance initiatives that ultimately helped mitigate the penalty it would otherwise have potentially faced. In the end, the settlement amount that it had to pay to OFAC was $7,829,640, which is almost half of the statutory base penalty of $13,384,000 for cases similar to these.
Some industries are simply at higher risk of compliance violations than others – and the firm in question, being a telecommunications firm dealing with the aviation industry, was in a unique position of being particularly vulnerable.
The firm admitted that its compliance program was primarily reactive prior to OFAC’s investigation for these alleged infractions. But it now knows that it has to adopt a proactive stance when it comes to export compliance, and this is where a robust screening and compliance program can help. A proper screening program can not only highlight denied and sanctioned parties before any business is conducted with them, but also document due diligence, which can help in case the government ever comes calling.
And as always, remember to keep an eye trained on government watch lists, and updates made to them, on an ongoing basis. If you suspect an entity you are doing business with may be on a denied party list, it may be best to look into the case further before proceeding.