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Enforcement Release: April 6, 2023
OFAC Settles with Microsoft Corporation for $2,980,265.86 Related to Apparent Violations of Multiple OFAC Sanctions Programs
Microsoft Corporation (“Microsoft”) is a multinational technology company headquartered in Redmond, Washington. On behalf of itself, and its subsidiaries Microsoft Ireland Operations Ltd. (“Microsoft Ireland”) and Microsoft Rus LLC (“Microsoft Russia”) (collectively, the “Microsoft Entities”), Microsoft has agreed to pay $2,980,265.86 to settle its potential civil liability relating to the exportation of services or software from the United States to comprehensively sanctioned jurisdictions and to Specially Designated Nationals (“SDNs”) or blocked persons in violation of OFAC’s Cuba, Iran, Syria, and Ukraine-/Russia-Related sanctions programs. The majority of the apparent violations involved blocked Russian entities or persons located in the Crimea region of Ukraine, and occurred as a result of the Microsoft Entities’ failure to identify and prevent the use of its products by prohibited parties. The...
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1) BACKGROUND, RELATIONSHIP WITH BIS PENALTY
On April 6, 2023, OFAC announced its settlement with Microsoft, and BIS concurrently announced its own settlement for violations arising out of the same facts. See Settlement Agreement (BIS) - Microsoft Corporation, which provides some factual information useful for a better understanding of some aspects the of the OFAC Enforcement Release, but note that the BIS penalty only covers seven violations occurring over a one-year period, while the OFAC Enforcement Release covers many violations. It is not clear why there were so few charged BIS violations, i.e. it is not clear whether only seven of the 1,339 OFAC violations were also BIS violations.
2) LEGAL BASES FOR LIABILITY
a. JURISDICTION
Microsoft Corp. is a U.S. person, directly subject to all of...