SITA OFAC Settlement: $7.8M (2020)

SITA appears to have violated §§ 594.201 and 594.204 of the GTSR between April 2013 and February 2018 by providing commercial services and software subject to U.S. jurisdiction that benefitted five airlines designated as SDGTs under Executive Order 13224: Mahan Air (designated October 12, 2011), Syrian Arab Airlines (designated May 16, 2013), Caspian Air (designated August 29, 2014), Meraj Air (designated August 29, 2014), and Al-Naser Airlines (designated May 21, 2015). OFAC initiated its investigation upon identifying Mahan, Syrian, and Caspian as SITA member-owners; SITA identified Meraj and Al-Naser as additional SDGT customers during the course of the investigation.

The apparent violations involved three services: (1) Type B messaging (TBM) services, which enable users to communicate with others in the industry to order aircraft maintenance, refuel planes, arrange and change routes, facilitate baggage transfers, and book passengers — TBM messages were routed through mega-switches in Atlanta, Georgia, and all apparent violations involving TBM transited Atlanta; (2) Maestro DCS Local, a U.S.-origin software application allowing shared users of a common terminal to manage check-in and baggage management processes; and (3) WorldTracer, a global lost baggage tracing and matching system hosted on SITA's servers in the United States and maintained by a U.S. subsidiary. These services were subject to U.S. jurisdiction because they were provided from or transited through the United States, or involved U.S.-origin software with knowledge that SDGT customers would benefit.

Prior to OFAC's investigation, SITA knew it was providing services to SDGTs and implemented periodic measures to comply with U.S. economic sanctions laws. At or shortly after each SDGT designation, SITA terminated many services it knew were subject to U.S. jurisdiction — for example, in response to Mahan's designation, SITA terminated its ticketing, airfare, e-commerce, and other services — but continued providing TBM, Maestro, and WorldTracer to, or for the benefit of, the SDGT airlines. SITA acknowledged that prior to a global risk assessment initiated by management in 2016, it did not maintain a comprehensive compliance program to address U.S. sanctions laws and regulations, and described its prior approach as primarily reactive.

OFAC determined that SITA did not voluntarily self-disclose the apparent violations, and that the apparent violations constitute a non-egregious case. The statutory maximum civil monetary penalty applicable in this matter is $2,453,077,327. Pursuant to OFAC's Enforcement Guidelines, the base civil monetary penalty amount applicable in this matter is $13,384,000. The settlement amount of $7,829,640 reflects OFAC's consideration of the General Factors under the Enforcement Guidelines.

This enforcement action highlights the benefits companies operating in high-risk industries can realize by implementing effective, thorough, and on-going risk-based compliance measures, especially when engaging in transactions concerning the aviation industry. Companies engaging in international transactions more broadly should take note of, and respond accordingly to, sanctions-related warning signs. On July 23, 2019, OFAC issued an Iran-Related Civil Aviation Industry Advisory to the civilian aviation industry to warn of deceptive practices employed by Iran with respect to aviation matters. While that advisory was focused on Iran, participants in the civilian aviation industry should be aware that other jurisdictions and persons subject to OFAC sanctions may engage in similar deceptive practices. Companies can mitigate sanctions risks by conducting risk assessments and exercising caution when engaging in business transactions with entities that are affiliated with, or known to transact with, OFAC-sanctioned persons or jurisdictions, or otherwise pose high risks due to their joint ventures, affiliates, subsidiaries, customers, suppliers, geographic location, or the products and services they offer.

As part of its compliance commitments, SITA established a global trade board to monitor and vet compliance risk involving customers, suppliers, and other parties; established a trade compliance committee as an information sharing and advisory body on trade and sanctions law matters; appointed a dedicated global head of ethics and compliance; implemented new sanctions legal compliance reviews when onboarding new customers and suppliers and when extending or adding new products or services to existing customers in sanctioned countries; updated and created new compliance policies and guidelines; committed to periodically monitoring and auditing its messaging, Maestro, and WorldTracer systems to verify they are not being used to support SDGT airlines; and required annual sanctions compliance training for all employees.

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