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Enforcement Release: December 30, 2022
OFAC Settles with Danfoss A/S for $4,379,810 Related to Apparent Violations of the Iran, Syria, and Sudan Sanctions Programs
Danfoss A/S (“Danfoss”), a multinational Danish company that manufactures and sells refrigeration products, air conditioners, compressors, and other cooling products, has agreed to pay $4,379,810 to settle its potential civil liability for 225 apparent violations of multiple OFAC sanctions programs. The apparent violations occurred when Danfoss FZCO, Danfoss’s wholly owned UAE subsidiary, directed customers in Iran, Syria, and Sudan to make payments to its bank account at the UAE branch of a U.S. financial institution (“U.S. Branch Account”) and when Danfoss FZCO made payments from that same account to entities in Iran and Syria. As a result of this conduct, Danfoss FZCO caused the U.S. financial institution to facilitate prohibited financial transactions and export financial services to sanctioned jurisdictions. The settlement amount...
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1) “Directing” Customers to Make Prohibited Payments - an Unusual Application of the “Causing” Provision
Compare e.g. Civil Enforcement Information - Sojitz (Hong Kong) Limited, a similar case of a non-U.S. manufacturer “causing” violations of embargo regulations by routing payments through the U.S. financial system.
Note that is only the second case (as of the date on which the web post was published) in which OFAC charges “causing”-based violations as a result of non-U.S. persons issuing invoices to customers in USD/instructing customers to make payments through the U.S. financial system (Civil Enforcement Information - Toll Holdings Limited, where USD invoices were issued by non-U.S. persons). Here OFAC says that Danfoss “directed customers” to make otherwise prohibited payments, which presumably took the form of something similar to the issuance of an invoice requiring payment to a USD account....