Haverly Systems, Inc. OFAC Settlement: $75.4K (2019)

On August 19, 2015, Haverly issued two separate invoices to Rosneft related to the licensing of software and purchase of software support services. Although the invoices originally contained payment due dates of between 30 and 70 days from the date of issuance, approximately 70 days after issuance, Rosneft notified Haverly that it required certain corrected tax documentation in order to make the payment. It took Haverly several months to obtain the corrected tax documentation. Following receipt of the tax documentation, Rosneft made the payment on the first invoice, which Haverly received on May 31, 2016, approximately nine months after its issuance.

From on or about May 31, 2016, to on or about October 27, 2016, Rosneft made four attempts to remit payment related to the second invoice, each of which was rejected by financial institutions after determining the transaction was prohibited by OFAC's regulations as debt of greater than 90 days maturity of an SSI entity subject to Directive 2. At points during this period, Haverly received information from Rosneft, including copies of Society for Worldwide Interbank Financial Telecommunication messages amongst and between financial institutions regarding the rejected transactions — some of which contained information and instructions stating that the underlying activity may have a nexus to sectoral sanctions.

Haverly did not have a sanctions compliance program at the time and did not recognize that the delayed collection of payment was prohibited. Rather than approaching OFAC for guidance or authorization, Haverly explored various options to collect the payment. At Rosneft's suggestion, Haverly re-issued and re-dated the second invoice, and successfully received payment on January 11, 2017.

OFAC determined that Haverly did not voluntarily self-disclose the apparent violations, and the apparent violations constitute a non-egregious case. The statutory maximum civil monetary penalty for the apparent violations was $590,282 and the base civil monetary penalty was $125,000. The settlement amount of $75,375 reflects OFAC's consideration of the General Factors under OFAC's Economic Sanctions Enforcement Guidelines, 31 C.F.R. part 501, app. A.

As part of its settlement, Haverly committed to enhancing its compliance procedures by ensuring that it has a management team in place that: is committed to a culture of compliance; conducts regular risk assessments to ensure that its internal controls appropriately mitigate its sanctions-related risks; and provides ongoing sanctions compliance training throughout the organization.

This enforcement action highlights the risks associated with engaging in transactions involving sectors of the Russian economy subject to U.S. economic and trade sanctions. The development and implementation of a risk-based sanctions compliance program would provide such companies with an ability to assess prospective and real-time transactions for potential prohibitions and violations of OFAC's regulations. An effective sanctions compliance program includes policies, procedures, and controls capable of identifying at-risk transactions and customers or counter-parties for review; escalating such matters to a sanctions compliance officer or point-of-contact for proper analysis; an ability to respond and react to warning signs regarding potential violations, including transactions blocked or rejected by financial institutions in accordance with OFAC's regulations; and an adequate training program. OFAC encourages companies to exercise enhanced due diligence in business relationships with entities subject to the SSI List and to avoid the use of unorthodox business practices — such as the amendment or alteration of trade documents, or resubmission of payment information without a sanctions-related term, phrase, or location.

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