ENFORCEMENT INFORMATION FOR FEBRUARY 7, 2019
Kollmorgen Corporation Settles Potential Civil Liability for Apparent Violations of the Iranian Transactions and Sanctions Regulations: Kollmorgen Corporation ("Kollmorgen"), a company based in Radford, Virginia, on behalf of its Turkish affiliate, Elsim Elektroteknik Sistemler Sanayi ve Ticaret Anonim Sirketi ("Elsim"), has paid $13,381 to settle potential civil liability for six apparent violations of the Iranian Transactions and Sanctions Regulations, 31 C.F.R. part 560 (ITSR). Specifically, between July 2013 and July 2015, Elsim appears to have violated § 560.215 of the ITSR when, on six occasions, Elsim serviced machines containing Elsim products located in Iran and provided products, parts, or services valued at $14,867 with knowledge they were destined for Iranian end-users (collectively referred to hereafter as the "Apparent Violations").[1]
Kollmorgen acquired control of Elsim in early 2013, thereby making Elsim subject to the ITSR’s prohibitions for any activity...
1) This is OFAC's first enforcement action based on 560.215, which, as noted in the web post, makes all U.S.-owned or -controlled foreign entities subject to many of the substantive prohibitions of the ITSR. While this case involves a company paying a fine on behalf of a foreign subsidiary that it acquired, note that it is not a "successor liability" case, since the alleged violations all took place subsequent to the acquisition. Prior to the acquisition, the subsidiary was seemingly not subject to the ITSR at all.
2) All violations of 560.215 require an underlying subsidiary violation; i.e. a prohibition that a U.S. person would have violated if a U.S. person had performed the actions the subject of the penalty. In this case, "dispatch[ing] employees to Iran to fulfill service agreements...