The Evolving Use of Sanctions
From the war in Ukraine to Afghanistan and Myanmar, learn about key regimes, geopolitical trends, and sanctions evasion risks.
Download nowOn December 30, 2022, the United States Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced a settlement with Danish multinational Danfoss for apparent Iran, Syria, and Sudan sanctions violations. According to the enforcement release, Danfoss agreed to pay $4,379,810 for 225 violations that occurred between 2013 and 2017.
During this time, Danfoss’ United Arab Emirates subsidiary directed customers in sanctioned jurisdictions to make payments to its bank account at the UAE branch of a US financial institution. While Danfoss disclosed the apparent violations in October 2017, OFAC deemed its submission did not qualify as a voluntary self-disclosure because the agency was already in “possession of relevant information.”
However, the enforcement release notes that no evidence was found that Danfoss willfully used third-party payers to evade sanctions. The settlement amount reflects this, along with the fact that OFAC deemed the violations “non-egregious.”
Danfoss’ sanctions violations occurred due to deficiencies in its global sanctions compliance program. In addition to a lack of procedures to monitor subsidiary activities, management staff did not receive substantive training on US sanctions. OFAC highlights that these issues led to certain transactions not being escalated to the appropriate personnel, leading to violations of:
Following its investigation, OFAC determined a series of mitigating factors, including:
In May 2019, OFAC released a Framework for OFAC Compliance Commitments to provide organizations with the agency’s perspective on the essential components of a sanctions compliance program. The guidance notes that while each risk-based sanctions compliance program will vary depending on a variety of factors – such as the company’s size, products, and geographic location(s) – they should incorporate at least five essential components of compliance:
OFAC sanctions compliance also requires compliance teams to collect and analyze large amounts of data from various sources. Since managing this data manually is unfeasible and can lead to costly human errors, firms should seek to integrate suitable smart sanctions screening tools to help them achieve regulatory compliance.
From the war in Ukraine to Afghanistan and Myanmar, learn about key regimes, geopolitical trends, and sanctions evasion risks.
Download nowOriginally published 05 January 2023, updated 27 August 2024
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