ENFORCEMENT INFORMATION FOR September 6, 2013
Communications and Power Industries LLC Settles Potential Civil Liability for Apparent Violations of Iranian Transactions and Sanctions Regulations: Communications and Power Industries LLC ("CPI"), Palo Alto, CA, has agreed to pay $346,530 to settle potential civil liability for apparent violations of the Iranian Transactions and Sanctions Regulations, 31 C.F.R. part 560 (the "Regulations"),[1] occurring on or about March 31, 2006, to on or about October 22, 2010. The Switzerland branch office of CPI’s U.S. subsidiary, Communications and Power Industries International Inc., sold, on 30 occasions, x -ray generators to an entity in Tehran, Iran; attempted to sell, on two occasions, x-ray generators and a medical digital imaging workstation to an entity in Tehran, Iran; at the request of an entity in Tehran, Iran, directed its affiliate in Canada, Communications & Power Industries Canada Inc. ("CPI Canada"), to make three shipments of x-ray generators and one shipment of automatic exposure control field kits to an entity in Istanbul, Turkey; and referred to CPI Canada an order that it had received from an entity in Tehran, Iran for a medical digital imaging workstation and one x-ray generator.
The base penalty amount for the apparent violations was $1,100,096. OFAC determined that CPI voluntarily self-disclosed this matter to OFAC and that the apparent violations constitute a non-egregious case.
This 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: CPI’s delay in assessing the applicability of U.S. sanctions laws to the Switzerland branch office of its subsidiary demonstrated a reckless disregard of these laws; CPI lacked an adequate risk-based OFAC compliance program at the time of the apparent violations; upon discovering the apparent violations, CPI, with the support of its senior management, undertook a thorough investigation and implemented significant remedial measures; CPI has no history of prior OFAC violations; the apparent violations represent a very small percentage of CPI’s overall sales; the exports at issue likely would have been licensed by OFAC under existing licensing policy; and CPI cooperated with OFAC by executing a tolling agreement and one extension of that tolling agreement.
[1] On October 22, 2012, OFAC changed the heading of 31 C.F.R. part 560 from the Iranian Transactions Regulations to the Iranian Transactions and Sanctions Regulations ("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.
Rare fact pattern insofar as liability turned on fact that Swiss entity was a branch. The basis for jurisdiction over the actions of the Swiss branch is that it was a U.S. person subject to U.S. jurisdiction as if it were operating in the U.S. The actions described are exports to Iran in violation of 560.204 and 560.206. The referral to the Canadian subsidiary, at the time of the violation not subject to the ITSR, would have been facilitation in violation of 560.206 and 560.208. The actions by the Canadian affiliate, presuming no U.S. ownership or control, appear not to have violated any provision of the then-applicable Iranian sanctions.