PACCAR Inc OFAC Settlement: $1.7M (2019)

The 63 apparent violations of § 560.215 of the ITSR occurred on three separate occasions between approximately October 2013 and February 2015, when DAF sold or supplied trucks to customers in Europe that it knew or had reason to know were ultimately intended for buyers in Iran. The transactional value of the 63 trucks was $5,426,428.

In June and October 2014, a DAF dealer based in Hamburg, Germany, placed two orders with DAF via DAF Germany for 51 trucks. Although the final paperwork identified the ultimate end-customer as an unnamed party in Russia, the Hamburg-based dealer resold the trucks to a buyer in Iran. The dealer had initially requested a price quotation from DAF Germany for trucks with particular specifications for an Iranian company. After DAF Germany refused that Iran-related order, the dealer submitted a new pricing request the same day for trucks purportedly destined for Russia, with virtually identical specifications, truck types, and delivery point as the rejected Iran order. A former employee/manager of DAF Germany had, at a minimum, reason to know the trucks were intended for Iran rather than Russia but failed to conduct an adequate inquiry and processed the order.

Separately, DAF Trucks Frankfurt, a directly owned DAF dealer, received two trucks from DAF in October 2013 for resale to a company in Germany. After the original buyer cancelled, DAF Trucks Frankfurt sold the trucks to a Netherlands-based trader, which resold them to buyers in Iran. An employee of DAF Trucks Frankfurt knew or had reason to know the trucks were intended for Iran; among other things, the trader sent draft invoices referencing the buyers in Iran to a DAF Trucks Frankfurt employee.

Additionally, in June 2014, DAF sold 10 trucks to an authorized dealer in Sofia, Bulgaria. The Bulgarian dealer subsequently sold the trucks to an affiliated rental company, which in turn sold them to a buyer in Iran. A used truck sales manager employed by DAF introduced the Bulgarian authorized dealer to the Iranian buyers and knew or should have known the trucks were intended for Iran prior to making the introduction. DAF's investigation found the sales manager ignored warning signs and failed to take reasonable steps in response.

OFAC determined that PACCAR voluntarily disclosed the apparent violations, and that the apparent violations constitute a non-egregious case. The base penalty amount for the apparent violations is $2,713,214. The settlement amount of $1,709,325 reflects OFAC's consideration of the facts and circumstances pursuant to the General Factors under OFAC's Economic Sanctions Enforcement Guidelines, 31 C.F.R. part 501, app. A.

PACCAR and DAF confirmed they have terminated the apparently violative conduct and have taken the following steps to minimize the risk of recurrence:

- DAF hired a full-time Compliance Director who reports to DAF's General Counsel and Chief Compliance Officer, responsible for developing compliance policies and procedures, advising employees about compliance, monitoring internal reports of compliance concerns and ensuring appropriate follow-up, and assisting with compliance investigations and audits - DAF updated its EU Trade Restrictions Compliance Manual to strengthen controls on dealer sales that might violate U.S. or other applicable trade restrictions, including by requiring more thorough end-customer and transaction due diligence - DAF implemented a policy that only allows direct sales agreements for sales to final end-customers and imposed a contractual ban on the resale of new trucks acquired under a direct sales agreement in the absence of an approved exception - DAF sent a letter to all dealers in its dealer network reminding them of their obligations to comply with U.S. and other trade sanctions and received certifications from each of its dealers regarding their compliance with all applicable trade sanctions - DAF has made trade sanctions compliance training an annual requirement and has conducted such trainings at DAF's headquarters and subsidiaries since 2016

This enforcement action highlights the benefits U.S. companies can realize in conducting sanctions-related training and in taking appropriate steps to audit and monitor foreign subsidiaries for OFAC compliance. U.S. parent companies can mitigate risk to sanctions exposure by proactively establishing and enforcing a robust sanctions compliance program. Foreign subsidiaries of U.S. companies are subject to the ITSR, and their U.S. parent companies may face potential exposure to civil monetary penalties for the actions of such entities.

This page summarizes an OFAC enforcement case based on the document archived below. SanctionsLookup assumes no liability for errors, omissions, or inaccuracies in the original documents, this summary, or any changes made to the source documents at any time.

Provided for informational purposes only and does not constitute legal or compliance advice. Always consult the source document directly rather than relying on this summary.