There are a few places around the world that you know you can’t do business with. Iran and North Korea have very strict limitations. If it pops up that your business partner wants to ship your products to one of these countries, it’s time to get legal and compliance on the phone before you agree to that sale.
UniControl, Inc., a manufacturer of process controls, airflow pressure switches, boiler controls, and other instrumentation, based in Ohio ran into this problem and violated the Iranian Transactions and Sanctions
Regulations.
From 2013 to 2017, UniControl exported 21 shipments of air pressure switches, valued at $687,189,
to European company that were subsequently reexported the shipments to Iran. U.S. Department of the Treasury’s Office of Foreign Assets Control took action against UniControl because it failed to take appropriate steps in response to multiple warning signs that its goods were being reexported to Iran.
Early in their relationship, one of these European trade partners told UniControl that it had a significant market for UniControl’s goods in Iran and inquired whether UniControl could serve as a supplier. UniControl rightfully said “no.” It otherwise didn’t take any steps to ensure the re-shipment to Iran would not actually happen.
UniControl really screwed up when it entered into a sales representative agreement with a European trade partner that explicitly listed Iran as a target for sales. UniControl employees met with the partner at a trade conference and met with Iranian nationals at the partner’s booth.
The last step was a request from the trade partner to remove the “Made in the USA” label from the products. “The European trade partner explained that the Iranian end-user may have problems with the stated origin of the products.” The company engaged outside counsel to figure out how much trouble it was in. Sadly, it still sent some of the shipments.
What saved the company was largely self-reporting the problem and investing in a more robust compliance program.
Sources:
- UniControl, Inc. Settles Potential Civil Liability for Apparent Violations of the Iranian Transactions and Sanctions Regulations
- A Framework for OFAC Compliance Commitments
- Failure to Address “Red Flags” Results in U.S. Manufacturer Settling with OFAC for Apparent U.S. Sanctions Violations
- Ohio Firm Failed To Catch Its European Partners’ Iran Trade Despite Warning Signs, U.S. Says
- OFAC Fines Manufacturer Over Iran Resellers
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