On November 27, the Treasury Department’s Office of
Foreign Assets Control (“OFAC”) announced a settlement agreement with a Virginia-based
global technology and services company operating in the aviation,
electronics, communications and defense sector. The settlement
concerned apparent violations of the Ukraine Related Sanctions
Regulations, 31 C.F.R. part 589. According to the settlement
agreement, the company had shipped products through its
distributors in Canada and Russia to an entity in Russia that,
although not identified on the OFAC’s List of Specially
Designated Nationals and Blocked Persons (“SDN List”),
was majority owned by an SDN entity. The company relied on
third-party software to screen its counterparty, but the software
failed to generate an alert for the subsidiary. OFAC’s
announcement appears intended to raise a number of compliance
lessons relating to the use of and reliance on third-party
screening software for OFAC sanctions compliance.
