Haas Automation, Inc. OFAC Settlement: $1M (2025)

Haas markets its products through a network of authorized third-party distributors called Haas Factory Outlets (HFOs), which sell and service Haas machines in specific regions and can place spare parts orders and obtain financial unlock codes on behalf of customers through a web-based portal called the Haas Business Center (HBC). Financial unlock codes are alphanumeric codes that, when entered into a machine, allow it to operate continuously; without them, machines automatically shut down when payments become past due. From 2002 through March 3, 2022, Abamet Management Limited ("Abamet") served as Haas's authorized HFO in Russia and Belarus.

Between August 19, 2019 and February 9, 2022, Haas indirectly exported via Abamet one CNC machine and 13 spare parts orders worth approximately $98,096 to or for the benefit of six blocked entities on, or owned 50 percent or more by entities on, OFAC's SDN List. One of the six blocked entities was itself identified on OFAC's SDN List as a producer of hydroacoustic equipment and a supplier to the Russian Navy. The remaining five were directly or indirectly owned 50 percent or more by persons designated for manufacturing armaments or electronic warfare equipment, or for being a senior official of the Government of the Russian Federation operating in the energy sector.

Additionally, on seven occasions between December 23, 2019 and March 22, 2022, Abamet obtained from Haas financial unlock codes for CNC machines owned by five of the blocked entities. Five of the seven codes were obtained by Abamet through the HBC portal on behalf of blocked parties; the remaining two were provided directly by Haas personnel to Abamet on behalf of blocked persons. The provision of these financial unlock codes was necessary for the Haas CNC machines purchased by the blocked end users to keep operating.

These 21 transactions constituted apparent violations of § 589.201 of the Ukraine-/Russia-Related Sanctions Regulations (URSR), 31 C.F.R. part 589, which prohibits U.S. persons from making any contribution or provision of funds, goods, or services by, to, or for the benefit of any person whose property and interests in property are blocked pursuant to Executive Order 13661 or 13662, including entities owned 50 percent or more by blocked persons under § 589.411(a). For seven of the eight blocked entity customers, Haas failed to conduct sufficient due diligence regarding the blocked entities' ownership structures. For the remaining entity, Haas failed to rescreen the designated customer against the SDN List for the relevant spare parts sale.

The statutory maximum civil monetary penalty applicable in this matter is $7,730,856 under OFAC's Economic Sanctions Enforcement Guidelines, 31 C.F.R. part 501, Appendix A. Although Haas reported the apparent violations to OFAC, its submissions did not constitute a voluntary self-disclosure under the Enforcement Guidelines.

OFAC determined that Haas's export of one CNC machine and its provision of unlock codes on seven occasions were egregious, while its exports of spare parts orders on 13 occasions were non-egregious. The base civil monetary penalty for the eight egregious apparent violations equals the sum of the statutory maximum civil monetary penalty amount for each apparent violation, totaling $2,945,088. The base civil monetary penalty for the 13 non-egregious apparent violations equals the sum of the applicable schedule amount for each, totaling $40,000. The total base civil monetary penalty is $2,985,088.

The settlement amount of $1,044,781 reflects OFAC's consideration of the General Factors under the Enforcement Guidelines, including Haas's significant remedial efforts and extensive cooperation with OFAC's investigation.

Concurrently with OFAC's action, the U.S. Department of Commerce's Bureau of Industry and Security (BIS) separately settled with Haas for $1,500,000.

This enforcement action highlights the importance of considering risks posed by customers with which companies maintain an ongoing relationship, including through the provision of after-sale services, such as through the selling of spare parts or other goods and services to sustain a product's continued operation. Companies conducting business through foreign-based subsidiaries, distributors, and resellers should ensure that their controls are sufficient to identify and address risks related to those relationships. Limiting direct business relationships alone may not be enough to guard against risks, especially in light of the dynamic nature of OFAC's sanctions and complex ownership interests that may not be readily apparent. Firms should implement effective measures to prevent both direct and indirect access to their goods and services by blocked persons, including those who are not identified on OFAC's SDN List, even after an initial transaction. One way to limit this access is by implementing sufficient due diligence measures for customers and end users.

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