Alfa Laval OFAC Settlement: $16.9K (2021)

On May 27, 2015, Alborz Pakhsh Parnia Company ("Alborz"), an Iranian distributor of oil products, emailed AL Tank to inquire about purchasing its Gamajet cleaning units — automated machines used to remove residual fuel, dirt, and sludge from storage tanks. The email explicitly stated Alborz was based in Iran. AL Tank's portfolio manager responded by providing product recommendations, pricing information, and an offer to prepare a quote. On August 7, 2015, AL Tank's portfolio manager forwarded the inquiry to Alfa Laval Denmark ("AL Denmark"), asking who would be the best contact for Iran for an oil-and-gas inquiry. AL Denmark recommended a sales manager at Alfa Laval Middle East Ltd. ("AL Middle East"), a subsidiary of Alfa Laval AB in Dubai. On August 17, 2015, after email exchanges with AL Middle East about whether AL Tank could sell U.S.-made items to Iran, AL Tank's portfolio manager referred the Iranian business opportunity to AL Middle East, replying to Alborz that it could not sell U.S.-made equipment to Iran but that AL Middle East's general manager would make contact.

This referral led to a conspiracy among AL Middle East, Iran-based Alfa Laval Iran Co. Ltd. ("AL Iran"), a Dubai-based company, and Alborz to reexport goods from AL Tank in the United States to Iran and to mislead AL Tank into believing its goods were destined for a UAE end-user. AL Tank failed to heed several warning signs that its goods were at risk of diversion. On or about February 23, 2016, AL Tank answered technical questions about its Gamajet units from a memo written by Alborz, forwarded via an email whose subject line stated "Gamajet for Alborz Pakhsh Parnia Company IRAN." On the same day, AL Tank provided AL Middle East with a "Gamajet Quotation Invoice" identifying the end user as Iran. When AL Tank subsequently asked for the end-user, AL Middle East's senior sales engineer replied that the machines were for the Dubai company in UAE. AL Tank exported two Gamajet cleaning machines and accessories worth $18,585 to the Dubai company on March 26, 2016; they were then reexported to Alborz in Iran.

AL Tank appears to have violated § 560.208 of the ITSR by referring the Iranian business opportunity to AL Middle East, thereby facilitating a transaction that would have been prohibited if performed by a U.S. person or within the United States. AL Tank additionally appears to have violated §§ 560.204 and 560.206 by exporting the two Gamajet cleaning units and accessories with knowledge or reason to know that they were intended for supply, transshipment, or reexportation, directly or indirectly, to Alborz in Iran.

The statutory maximum civil monetary penalty applicable in this matter was $307,922. OFAC determined that AL Tank did not voluntarily self-disclose the apparent violations and that the apparent violations constitute a non-egregious case. Accordingly, under OFAC's Economic Sanctions Enforcement Guidelines, the base civil monetary penalty amount applicable in this matter was $18,750. The settlement amount of $16,875 reflects OFAC's consideration of the General Factors under the Enforcement Guidelines.

This case highlights that U.S. persons are generally prohibited from referring business opportunities involving Iran, including to affiliated entities, and that such referrals may increase the likelihood of additional sanctions violations being committed. U.S. companies can mitigate such sanctions risks by establishing clear channels through which employees can report questionable activity and seek clarification when potential sanctions issues arise. U.S. persons should heed warning signs that may indicate a sanctions nexus to a given business opportunity; when such warning signs are present, additional compliance and due diligence checks should be implemented to confirm that the foreign person or company is not located in a sanctioned country or working for or on behalf of persons in sanctioned jurisdictions or blocked persons.

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