ENFORCEMENT INFORMATION FOR JANUARY 12, 2017
Aban Offshore Limited Settles Potential Civil Liability for an Apparent Violation of the Iranian Transactions and Sanctions Regulations: Aban Offshore Limited ("Aban"), of Chennai, India, has agreed to pay $17,500 to settle potential civil liability for an apparent violation of the Iranian Transactions and Sanctions Regulations, 31 C.F.R. part 560 (ITSR).[1] The apparent violation of § 560.204 of the ITSR occurred on the approximate date of June 27, 2008, when Aban’s Singapore subsidiary placed an order for oil rig supplies from a vendor in the United States with the intended purpose of re-exporting these supplies from the United Arab Emirates to a jack-up oil drilling rig located in the South Pars Gas Fields in Iranian territorial waters. The transactional value of the order was $10,127.
OFAC determined that Aban did not voluntarily disclose the apparent violation and that the apparent violation constitutes a non-egregious case. The statutory maximum civil monetary penalty amount for the apparent violation was $250,000, and the base penalty amount for the apparent violation was $25,000.
The settlement amount reflects OFAC’s consideration of the following facts and circumstances, pursuant to the General Factors under OFAC’s Economic Sanctions Enforcement Guidelines, 31 C.F.R. Part 501, app. A. OFAC considered the following to be aggravating factors: (1) Aban failed to exercise a minimal degree of caution when it re-exported U.S.-origin goods from the United States to a jack-up oil drilling rig while it was located in Iranian territorial waters; Aban’s re-exportation of equipment to the jack-up oil drilling rig aided in the development of Iran’s energy resources; (3) Aban is a large sophisticated company with approximately 15 jack-up oil drilling rigs doing business throughout the world; and (4) Aban did not have an OFAC compliance program in place at the time of the transaction despite conducting business with the United States and/or with U.S. companies in relation to the petrochemical and offshore drilling sectors. OFAC considered the following to be mitigating factors: (1) Aban has no prior sanctions history with OFAC and has not received a penalty notice or Finding of Violation in the five years preceding the date of this apparent violation; (2) Aban took remedial action by instituting an OFAC sanctions compliance program; and (3) Aban displayed substantial cooperation throughout the course of OFAC’s investigation, including by conducting an internal look-back investigation for potential ITSR violations, by providing OFAC with detailed and well-organized information, and by entering into multiple tolling agreements with OFAC and tolling the Statute of Limitations for a total of 1,134 days.
[1] In October 22, 2012, OFAC changed the heading of 31 C.F.R. Part 560 from the Iranian Transactions Regulations to the ITSR, amended the renamed ITSR, and reissued them in their entirety. See 77 Fed. Reg. 64,664 (Oct. 22, 2012). For the sake of clarity, all references herein to the ITSR shall mean the regulations in 31 C.F.R. Part 560 in effect at the time of the activity, regardless of whether such activity occurred before or after the regulations were renamed.
1) Iranian territorial waters constitute "Iran" for the purposes of the ITSR (560.303).
2) This was, at the time, a relatively rare case of a non-U.S. company being charged for “causing” a violation of 560.204 in a situation in which i) there was no relationship between the non-U.S. company ordering the goods and the U.S. exporter, and iwi) no allegation of actual knowledge that the destination of the items shipped from the U.S. were destined for Iran at the time they were shipped from the U.S. Such cases have become common over the years, with OFAC treating non-U.S. persons ordering U.S. goods from abroad much like non-U.S. banks routing payments through the U.S. For commentary on the legal basis for charging violations of 560.204 for transshipments initiated from abroad, see General Note on Causing Violations From Abroad (System Ed. Note).
Note that this case was presumably not charged as a violation of 560.205 because the items at issue were EAR99 and therefore outside the scope of 560.205, but even if they were within the scope of 560.205, 560.204 would have still applied.