Keysight Technologies OFAC Settlement: $473.2K (2020)

From on or about January 2016 to on or about June 2016, Anite completed six orders, without OFAC authorization, valued at $331,089, of goods that incorporated 10 percent or more of U.S.-export controlled content exported from the United States, with knowledge that such goods were destined for end-users in Iran, in apparent violation of § 560.205 of the Iranian Transactions and Sanctions Regulations, 31 C.F.R. part 560 (ITSR). Although General License H of the ITSR authorized certain transactions by foreign entities owned or controlled by U.S. persons between January 16, 2016, and June 27, 2018, that general license did not authorize reexportation from a third country of goods prohibited by § 560.205.

Anite and its parent companies designed and sold test and measurement instruments and related software products to the wireless industry. Keysight's pre-acquisition due diligence identified that Anite had conducted business with sanctioned countries, including Iran, and Anite committed to cease all such business before the acquisition closed in August 2015. Approximately one month after the acquisition, on or about September 14, 2015, Keysight reiterated to Anite that sales to sanctioned countries, including Iran, must cease. Anite's Vice President for Europe, Middle East, and Africa informed Anite's Regional Director for the Middle East of the directive. Both immediately expressed reluctance to comply, and the Regional Director, along with two colleagues and with the Vice President's full knowledge, agreed to proceed with their Iran business to preserve their credibility in local markets.

The three employees then took measures to obfuscate their Iran dealings from Keysight, including omitting references to "Iran" or locations in Iran in correspondence. In at least one instance, the Regional Director altered an email to reference the United Arab Emirates in place of Iran. The apparent violations occurred as a direct result of this scheme. Upon discovering the misconduct, Keysight conducted an internal investigation, terminated the employees involved, and voluntarily self-disclosed the apparent violations to OFAC and in its SEC filings.

The statutory maximum civil monetary penalty applicable in this matter is $2,102,920. OFAC determined that Keysight, on behalf of its former subsidiary Anite, voluntarily self-disclosed the apparent violations and that the apparent violations constitute an egregious case. Accordingly, under OFAC's Economic Sanctions Enforcement Guidelines, the base civil monetary penalty amount is $1,051,460. The settlement amount of $473,157 reflects OFAC's consideration of the General Factors under the Enforcement Guidelines.

This case highlights the potential benefits of implementing proactive and ongoing sanctions compliance controls in foreign companies that source U.S.-export controlled content from the United States, including when U.S. persons, directly or indirectly, acquire foreign companies with preexisting relationships with sanctioned persons and jurisdictions. As part of a risk-based approach, U.S. persons are encouraged to assess the sanctions risk associated with newly acquired foreign subsidiaries and ensure that those subsidiaries adopt and maintain the compliance controls necessary to mitigate that risk. This may include appropriately integrating newly acquired foreign subsidiaries into an organization's sanctions compliance program and promoting a culture of compliance across the organization.

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