United States: Enforcement Actions

On November 19, OFAC and other US authorities announced a $1.34 billion settlement agreement with Société Générale S.A. for violations of US sanctions. According to OFAC, between 2007 and 2012, Société Générale S.A. processed over 1,000 transactions through US financial institutions through deceptive means, including the removal, omission, obfuscation, or failure to include the name of sanctioned parties when submitting transactions for processing. The transactions, totaling just over $5.56 billion, allegedly circumvented multiple US sanctions programs, including the Cuban Assets Control Regulations, the Iranian Transactions and Sanctions Regulations, and the Sudanese Sanctions Regulations. According to the settlement, Société Générale alerted OFAC that transactions processed through one its retail banking branches in France were conducted on behalf of an entity majority-controlled by the Government of Sudan. That disclosure led to a more expansive review of all USD transactions processed by business lines across the world, which uncovered the 1,077 transactions at issue.

Société Générale discovered 251 violations of the Sudanese Sanctions Regulations. According to the settlement, one of Société Générale's Paris branches processed transactions for a Sudanese government-owned entity that referenced an address in France, rather than the company's address in Sudan, thereby evading Société Générale's sanctions screening software. Additionally, Société Générale learned that its employees further concealed payments by manually resubmitting them with the French mailing address, even after the payments had been flagged by Société Générale's screening software. Société Générale also participated in numerous credit facilities involving Iranian and Cuban parties. Société Générale processed loans, routed payments, and cleared transactions though the United States financial system in violation of US sanctions. The global settlement was paid to US authorities, including the Federal Reserve, the US Department of Justice, the state and county divisions of the New York district attorney's office, as well as the New York State Department of Financial Services. The $1.34 billion sanctions penalty is the largest under the Trump Administration, and the second largest sanctionsrelated settlement in US history.

On November 27, OFAC announced a second sanctions related settlement with US-based Cobham Holdings, Inc. The settlement, which included a penalty of $87,507, addressed three violations of US sanctions allegedly committed by Cobham's former subsidiary Aeroflex/Metalics, Inc. Aeroflex sells various components related to commercial air traffic control radar equipment. According to OFAC, Aeroflex used distributors in Canada and Russia to ship the components to Almez Antey Telecommunications LLC, a Russia-based purchaser subject to blocking sanctions pursuant to EO 13661. Although Aeroflex performed SDN screening, its processes were deficient and failed to detect Almez Antey. Cobham discovered the violation and self-reported the transactions to OFAC, which considered the three sales to be non-egregious.

On December 12, OFAC and the US Department of Commerce announced a $2,774,972 joint settlement with China-based Yantai Jereh Oilfield Services Group Co. Ltd. and its affiliates and subsidiaries worldwide 18 (collectively, the "Jereh Group"). The Jereh Group agreed to settle potential civil liability for 11 apparent violations of the Iranian Transactions and Sanctions Regulations ("ITSR"). The alleged violations concern the actual and attempted exportation or re-exportation of US-origin goods intended for end-users in Iran by way of China from 2014 through 2016. OFAC also alleges that the Jereh Group exported certain US-origin items when it knew, or had reason to know, that the items would be produced, commingled with, or incorporated into other goods made in China, before being shipped to Iran. The goods in question include oilfield equipment, such as spare parts, coiled tubing strings, and pump sets. In determining the penalty, OFAC determined that the alleged violations were an egregious case, and penalized the Jereh Group for failing to voluntarily selfdisclose the violations.

On December 20, OFAC announced a $7,772,102 settlement with Zoltek Companies, Inc. Zoltek is a US holding company headquartered in Bridgeton, Missouri that owns subsidiaries that operate in the both the US and in Hungary. The settlement results from 26 alleged violations of OFAC's Belarus Sanctions Regulations between January 2012 and October 2015. The apparent violations involved Zoltek's US subsidiaries' approval of 26 purchases of acrylonitrile — a chemical used in the production of carbon fiber — between Zoltek's Hungary-based subsidiary and J.S.C. Naftan, a Belarusian entity designated by OFAC in 2011. In determining the penalty, OFAC noted that Zoltek voluntarily self-disclosed the alleged violations. OFAC noted that Zoltek' senior management was alerted to the prohibited nature of the transactions in February 2015, at which point it opted to continue sales to Naftan via a third-party intermediary. OFAC considered the alleged violations that occurred prior to February 2015 to constitute a non-egregious case, and the apparent violations that occurred after February 2015 to constitute an egregious case.

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