ENFORCEMENT INFORMATION FOR August 16, 2011
Société Générale, New York Settles Allegations of Violations of the Iranian Transactions Regulations: Société Générale New York Branch, New York, NY ("SGNY") has remitted $111,359 to settle allegations of violations of the Iranian Transactions Regulations, 31 C.F.R. part 560 (the "Regulations") occurring on or about December 27, 2006, and on or about May 9, 2007.
OFAC alleged that SGNY dealt in Iranian-origin services and/or facilitated transactions by a foreign person where the transactions by the foreign person would have been prohibited by the Regulations if performed by a United States person. Specifically, OFAC alleged that SGNY, as the issuing bank of two letters of credit between two non-sanctioned parties, processed two payments under those letters of credit involving the shipment of cargo transported aboard vessels owned and/or managed by the Islamic Republic of Iran Shipping Lines of Tehran, Iran, an Iranian entity. The value of the payments was $329,954. SGNY voluntarily self-disclosed the alleged violations and OFAC has determined that the alleged violations constituted a non-egregious case. The base penalty amount for the alleged violations was $164,977. The settlement amount reflects OFAC’s consideration of the following General Factors under OFAC’s Economic Sanctions Enforcement Guidelines: SGNY improved its compliance program in response to the apparent violations by enhancing its internal controls related to screening trade finance transactions, and provided additional training to staff involved in processing such transactions; SGNY cooperated with OFAC’s investigation and resolution of this matter; and OFAC has not issued a penalty notice or Finding of Violation against SGNY in the five years preceding the transactions at issue.
OFAC states that "SGNY dealt in Iranian-origin services and/or facilitated transactions."
The IRISL was not yet blocked under the WMDPSR at the time of the alleged violations.
Bearing that in mind, it is odd for OFAC to have characterized this, partially, as a "dealing in Iranian origin services." In all likelihood, the reference was meant to be to 560.206, which prohibits the facilitation of transactions "related to" Iranian origin services, which dealing in the letters of credit obviously was. OFAC also suggests that these actions were characterizable as ordinary facilitation (560.208), which makes sense and is consistent with OFAC's position that the processing of payments in connection with prohibited underlying transactions constitutes a "facilitation" of those transactions. Here, OFAC essentially says that "process[ing] payments under [] letters of credit involving the shipment of cargo transported aboard vessels owned and/or managed by the Islamic Republic of Iran Shipping Lines [but no other sanctioned person]" constitutes the "facilitation" of the transaction involving the Iranian shipper.