A Guide to Anti-Money Laundering for Crypto Firms

Alfa Laval Subsidiaries and OFAC Settle Apparent Sanctions Violations

Sanctions Latest News

Two subsidiaries of Swedish company Alfa Laval AB will pay a combined total of just over $432,000 for apparent violations of the Iranian Transactions and Sanctions Regulations (ITSR), the US Treasury’s Office of Foreign Assets Control announced Monday, July 19.

Alfa Laval and its subsidiaries are providers of heat transfer, separation, and fluid handling equipment for the energy, environment, food, and marine industries. According to OFAC, an Iranian oil distributor, Alborz Pakhsh Parnia, had approached US-based Alfa Laval Tank Equipment in May 2015 to ask about buying Gamajet automated tank cleaning machines from the company. The US-based subsidiary ultimately declined to move forward with any direct transaction, citing prohibitions on selling US-made equipment to Iranian businesses. Yet Alfa Laval Tank’s portfolio manager referred Alborz to another Alfa Laval subsidiary, Alfa Laval Middle East.

This Middle Eastern subsidiary then allegedly conspired with Alborz to complete the sale of Alfa Laval Tank’s US-made Gamajet equipment by routing it through a company in Dubai with whom Alfa Laval had an existing relationship. Although the export documents would name the Dubai-based company as the end-user, the Gamajet equipment would ultimately be delivered to Alborz in Iran. It seems that the US subsidiary was kept out of the loop for the most part, although a few emails were purportedly sent with a subject line that made it clear the Gamajet’s final destination would be Iran. The rest of the individuals involved from Alfa Laval, according to OFAC, were made aware that any such transaction would violate US sanctions via a general memo sent to all employees in January 2016. The sale was completed two months later.

After that, according to OFAC, Alfa Laval Middle East and Alborz had started to coordinate the sale/purchase of additional Gamajet equipment using the same scheme. But before any further transactions could be completed, the US Bureau of Industry and Security intervened.

The US-based Alfa Laval Tank and Alfa Laval Middle East agreed to pay $16,875 and $415,695, respectively, to OFAC to settle their potential civil liability as a result of the apparent violations. In addition, Alfa Laval Middle East has agreed to implement and maintain sanctions compliance measures, such as conducting regular risk assessments, formalizing sanctions compliance policies and procedures, and having employees undergo additional training. The company must submit annual certifications to OFAC that confirm these measures have been implemented for the next five years.

In the published agreement and web notices about the settlement, OFAC took the opportunity to emphasize the importance of effective training measures to ensure sanctions compliance. US companies, it states, can minimize the risk of sanctions violations by ensuring all employees understand that sanctions compliance doesn’t simply stop at refusing the business directly; referring business opportunities involving sanctioned entities is also prohibited, and it’s imperative to heed any and all red flags that indicate that a foreign company is acting on behalf of sanctioned entities. Further, OFAC highlights that non-US companies must make sure their employees are aware of any compliance issues that might arise from working with US companies on business activities that may benefit sanctioned entities.

Originally published July 22, 2021, updated May 6, 2022

Disclaimer: This is for general information only. The information presented does not constitute legal advice. ComplyAdvantage accepts no responsibility for any information contained herein and disclaims and excludes any liability in respect of the contents or for action taken based on this information.

Copyright © 2022 IVXS UK Limited (trading as ComplyAdvantage).