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Enforcement Release: April 19, 2024
SCG Plastics Co., Ltd. Settles with OFAC for $20,000,000 for Apparent Violations of the Iranian Transactions and Sanctions Regulations
SCG Plastics Co., Ltd. (“SCG Plastics”), part of a multinational enterprise headquartered in Bangkok, Thailand that sells plastic resins, has agreed to pay $20,000,000 to settle its potential civil liability for 467 apparent violations of OFAC sanctions on Iran. From 2017 to 2018, SCG Plastics caused U.S. financial institutions to process $291 million in wire transfers for sales of Iranian-origin high-density polyethylene resin (HDPE) manufactured by a joint venture in Iran owned by, among others, SCG Plastics’ parent company and the National Petrochemical Company of Iran (“NPC”), an entity that is part of the Government of Iran. HDPE is a strong resin commonly used to manufacture a wide variety of injection-molded plastics, including food and beverage containers, shampoo and cleaning...
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1) LEGAL BASES FOR LIABILITY
From a legal basis standpoint, the SCG Plastics case breaks no new legal ground, though it is the first case in which violations were based on a non-U.S. person “causing” a dealing in / facilitation of a dealing in Iranian origin goods when there may have been no other Iranian nexus to the transaction. More specifically, the Thai entity issued invoices that called for payments to a USD bank account where such payments were related to Iranian-origin goods. This constitutes a violation of 560.203 since the Thai entity “caused” U.S. person banks to facilitate dealings in Iranian-origin goods (560.206 and 560.208). This logic is consistent with cases such as Enforcement Release - Danfoss A/S (as it relates to causing through the issuance of invoices) and ZAG IP, LLC...