$450,000 in OFAC Fines for a $33,299 Prohibited Transaction

The Office of Foreign Assets Control (OFAC) today released its civil penalties for March.  The single case featured involved the sale of cosmetic nail care products by a U.S. company (Essie Cosmetics Ltd.) and its former CEO (a Mr. Max Sortino) to an Iranian purchaser.  These sales were made pursuant to a distribution agreement between the U.S. party and OFAC found intent to violate the sanctions.  The total fine was $450,000, part of which was satisfied a civil forfeiture.   Do the math – $450,000 is about 13.5 times the value of the business, clearly no small amount.

This case, which clearly involves goods that are not sensitive,  supports the opinion held by some that OFAC is ramping up enforcement of sanctions violations relating to Iran.  Not every violation is enforced, and not every penalty is necessary this high (proportionately), as OFAC considers many factors.  Nonetheless, this is a significant case.  You may remember a January post on this blog about doing business with Iran, which you can ready by clicking here.  OFAC takes these violations very seriously and it shows that companies should take exceptional care to comply with U.S. sanctions regulations.

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