Enforcement Release - NewTek, Inc.

Date issued: Sep. 10 2021

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TURBOFAC Commentary (1135 words)

Notes:

1) BASES FOR LIABILITY

a) No Apparent Stand-Alone Violations for the Distribution Agreements; Relationship Between Distribution Agreement Terms and “Inventory Exception”

This case should be read in conjunction with Ubiquiti Networks, which for practical purposes is a “companion case” to NewTek. See also Guidance on Transshipments to Iran, and comments thereto.

In Ubiquiti, a U.S. person technology company “entered into an agreement granting a distributor in the United Arab Emirates [] exclusive rights to distribute Ubiquiti’s goods in Iran,” and “then subsequently sold to the U.A.E. distributor and exported or shipped to the U.A.E. goods that were reexported to Iran.” For those UAE-related facts, OFAC charged violations of 560.206 and 560.208 of the ITSR, rather than 560.204. The violation appeared to focus...