Enforcement Release: March 15, 2021
UniControl, Inc. Settles Potential Civil Liability for Apparent Violations of the Iranian Transactions and Sanctions Regulations
UniControl, Inc. (“UniControl”), a Cleveland, Ohio-based entity that manufactures process controls, airflow pressure switches, boiler controls, and other instrumentation, has agreed to pay $216,464 to settle its potential civil liability for apparent violations of the Iranian Transactions and Sanctions Regulations (ITSR). As a result of its failure to act on multiple apparent warning signs, UniControl exported 19 shipments of its goods from the United States to two European companies with reason to know that the goods were intended specifically for supply, transshipment, or reexportation to Iran by the two European companies. Additionally, UniControl had actual knowledge that an additional two shipments would be reexported to Iran. The settlement amount reflects OFAC’s determination that UniControl’s apparent violations were non-egregious and voluntarily self-disclosed, and further...
1) Notable Application of the “Reason to Know” Standard
560.204(a) of the ITSR prohibits the exportation of goods from the U.S. to non-sanctioned third country persons when the U.S. person knows or has a “reason to know” that “Such goods, technology, or services are intended specifically for supply, transshipment, or reexportation, directly or indirectly, to Iran…”
This enforcement action is notable not so much for the theory of liability, which has been well established, but instead for the “warning signs” that, per OFAC, were sufficient to establish a “reason to know” of the ultimate destination of the items shipped at the time they were shipped from the U.S. This may be the most notable application of the “reason to know” standard since the publication of the 2002