Freight Forwarder Pays $139,650 for Affiliates’ Shipments to Cuba and Iran

2013/06/18

By: Brooke Driver

EGL, Inc. of Houston, Texas has agreed to pay $139,650 for alleged violations of the Cuban Assets Control Regulations, 31 C.F.R. part 515 (CACR) and the Iranian Transactions and Sanctions Regulations, 31 C.F.R. part 560 (ITSR). During 280 transactions between the dates of April 19, 2005 and December 15, 2008, EGL’s foreign affiliates provided freight forwarding services to and from Cuba, in violation of the CACR. The alleged violations of the ITR occurred between August 15, 2008 and October 27, 2008, when affiliates of EGL provided freight forwarding services for ten shipments that contained oil rig supplies to Aban VIII, an oil drilling rig off the Iranian coast owned by Petropars—an affiliate of the National Iranian Oil Company.
While the company voluntarily disclosed the CACR violations, it did not disclose the ITR violations, resulting in a base fine of $206,889. The lowered settlement amount and the case’s non-egregious classification reflect OFAC’s consideration of the following:

  • EGL had no history of prior sanctions violations
  • EGL substantially cooperated with OFAC’s investigation, including by entering into statute of limitations tolling agreements, and by producing responsive materials in a clear and organized fashion
  • EGL took remedial measures to prevent future OFAC violations

OFAC’s required fine of $139,650 was based on the facts that:

  • The alleged violations of the CACR and the ITR by EGL resulted in significant harm to OFAC’s sanctions programs
  • EGL had reason to know that the Aban VIII was an oil rig operated by an Iranian company in Iranian waters

So what have we learned?
1.    Be aware of the actions of your affiliates, because you are accountable for their mistakes.
2.    Speak up to pay less: The government will take your cooperation into consideration when determining consequences.
3.    Suspicion counts as knowledge: reason to believe that a violation may occur is reason enough for the government to dole out severe consequences.

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