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Civil Enforcement Information - ZAG IP, LLC

Date issued: Feb. 21 2019

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ENFORCEMENT INFORMATION FOR February 21, 2019

ZAG IP, LLC Settles Potential Civil Liability for Apparent Violations of the Iranian Transactions and Sanctions Regulations: ZAG IP, LLC (formerly known as ZAG International, LLC) ("ZAG"), a U.S. company with its business address in Newtown, Connecticut, has agreed to pay $506,250 to settle its potential civil liability for five apparent violations of § 560.206 of the Iranian Transactions and Sanctions Regulations, 31 C.F.R. part 560 (ITSR). Specifically, between on or about July 11, 2014 and on or about January 15, 2015, through five separate transactions, ZAG purchased a total of 263,563 metric tons of Iranian origin clinker from a company located in the United Arab Emirates, with knowledge that the cement clinker was sourced from Iran, and then resold and transported it to a company in Tanzania. The aggregate value of the five transactions was $14,495,961.
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TURBOFAC Commentary (542 words)

Notes:

1) This is a relatively rare case of an enforcement action that was based solely on a "dealing in" Iranian-origin goods, where there appears to be no other Iranian person involvement in the underlying transaction. While 560.206 prohibits transactions "related to" a variety of actions that themselves violate other prohibitions of the ITSR (e.g. a transaction "related to" an import of Iranian goods to the U.S.), 560.206 also provides a stand-alone prohibition against dealing in Iranian-origin goods, irrespective of who actually has title to them and whether Iran or any Iranian party are actually involved with the transaction.

2) The fact pattern is notable for OFAC going out of its way to highlight that the violation arose from the company being caught in a difficult commercial situation, while at the...