Alliance Steel, Inc. OFAC Settlement: $435K (2021)

From on or about October 1, 2013 to on or about October 22, 2018, Alliance appears to have violated §§ 560.201 and 560.206 of the Iranian Transactions and Sanctions Regulations on at least 61 occasions by engaging with an Iranian engineering company for the importation of Iranian-origin engineering services.

Alliance conducted the majority of its engineering work internally. When demand for engineering services exceeded Alliance's available resources, Alliance outsourced the remaining work to third-party subcontractors. This process was overseen by a senior Alliance employee serving as the company's Chief Engineer and Vice President of Engineering. At his direction, Alliance outsourced a significant portion of its engineering work to an Iranian engineering company owned by his brother. The total amount Alliance paid to the Iranian company during the relevant time period is approximately $1,450,008.

Although the VP of Engineering initiated and oversaw these transactions, at least 12 other members of Alliance senior management had actual knowledge that these transactions were taking place and that the subcontractor was an Iranian company. Numerous senior Alliance officials were also involved in approving each transaction and issuing checks to the Iranian engineering company. Alliance asserts that its lack of familiarity with U.S. sanctions requirements caused its management to allow the apparent violations to continue until a new Chief Executive Officer was hired in October 2018, at which point Alliance halted all work with the Iranian engineering company.

The statutory maximum civil monetary penalty applicable in this matter is $17,335,192. OFAC determined that Alliance voluntarily self-disclosed 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 is $725,004. The settlement amount of $435,003 reflects OFAC's consideration of the General Factors under the Enforcement Guidelines.

This enforcement action demonstrates the importance of developing and maintaining effective, risk-based sanctions compliance controls, even for companies operating predominantly within the United States. U.S. companies can risk violating OFAC regulations if they undertake even isolated or sporadic international business or contracting activities and do not conduct basic regulatory diligence or have adequate personnel or policies to comply with U.S. sanctions requirements. It is particularly important for U.S. businesses to understand the sanctions risks attendant to doing business in comprehensively sanctioned jurisdictions such as Iran. Moreover, this enforcement action demonstrates the need to train and enable staff, including senior management, to identify and address potential violations of U.S. sanctions.

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