Enforcement Release: August 16, 2023
OFAC Settles with Construction Specialties Inc. for $660,594 Related to Apparent Violations of the Iranian Transactions and Sanctions Regulations
Construction Specialties Inc. (“CS”), a company headquartered in New Jersey that sells specialized building materials, has agreed to pay $660,594 to settle its subsidiary’s potential civil liability for three apparent violations of OFAC sanctions on Iran. The conduct at issue occurred when CS’s wholly controlled United Arab Emirates (UAE) subsidiary, Construction Specialties Middle East L.L.C. (“CSME”), imported building materials from the United States to the UAE and then knowingly reexported them to Iran. In doing so, CSME’s general manager and another senior manager disregarded CS company policy and falsified trade documents. The settlement amount reflects OFAC’s determination that CSME’s apparent violations were egregious and voluntarily self-disclosed.
Description of the Apparent Violations
During a June 2016 visit by CS...
1) From a legal standpoint, this is an unusually straightforward settlement agreement/enforcement release combination, breaking no new ground that we can discern. Compare e.g. Kollmorgen Corporation, Whitford Worldwide Company, and PACCAR Inc., which are all similar cases in which non-U.S. subsidiaries of U.S. companies “went rogue” and acted in violation of the ITSR, thereby subjecting the U.S. person parent company to liability.
In this case, actions taken by the Dubai entity, i.e. ordering goods from the U.S. for shipment to Iran, were straightforward violations of the ITSR (i.e. “causing” the exportation of goods from the U.S. to a third country when they were specifically intended for Iran). Due to the peculiarities of section 560.215 of the ITSR, OFAC’s charges were limited to the 560.215 violations,...