OFAC forgets to tell us about an enforcement action…

For some reason, this isn’t on the Recent Actions page, and there was no email notification. Mind you, it’s not a big one, and it’s only the 2nd one of the year…

So, Epsilon Electronics agreed to a $1,500,000 settlement for alleged violations of the Iranian Transactions and Sanctions Regulations (ITSR). The company fought OFAC, which is a relative rarity:

On July 21, 2014, OFAC issued Epsilon a Penalty Notice alleging that, from on or about August 26, 2008 to May 22, 2012, Epsilon had violated § 560.204 of the ITSR when it issued 39 invoices for sales to Asra International LLC, a/k/a Asra Electronic Trading Co., a company that Epsilon knew or had reason to know that distributed most, if not all, of its products to Iran (the “Alleged Violations”).2

Epsilon challenged OFAC’s Penalty Notice in the U.S. District Court for the District of Columbia (“D.C. District Court”), which issued an order granting summary judgment in favor of OFAC. See Epsilon Electronics, Inc., v. U.S. Department of the Treasury, Office of Foreign Assets Control, 168 F. Supp. 3d 131 (D.D.C. 2016). Epsilon appealed this order to the U.S. Court of Appeals for the District of Columbia (“D.C. Circuit”), which affirmed in part and reversed in part the D.C. District Court’s order, remanding the case to the D.C. District Court with instructions to remand the case to OFAC for further consideration. See Epsilon Electronics, Inc., v. U.S. Department of the Treasury, Office of Foreign Assets Control, 857 F.3d 913 (D.C. Cir. 2017).

This settlement amount reflects OFAC’s further consideration of the case, in light of the D.C. Circuit’s decision and pursuant to the General Factors under OFAC’s Economic Sanctions Enforcement Guidelines, 31 C.F.R. part 501, app. A.

And here’s OFAC’s calculations of how the final settlement was arrived at:

OFAC considered the following to be aggravating factors: 

  1. the Alleged Violations constituted or resulted in a systematic pattern of conduct;
  2. Epsilon exported goods valued at $2,823,000 or more; and
  3. Epsilon had no compliance program at the time of the Alleged Violations.

OFAC considered the following to be mitigating factors:

  1. Epsilon has not received a Penalty Notice or a Finding of Violation in the five years preceding the transactions that gave rise to the Alleged Violations;
  2. Epsilon is a small business; and
  3. Epsilon provided some cooperation to OFAC, including entering into an agreement to toll the statute of limitations for one year.

And, finally:

OFAC and Epsilon have agreed to settle the civil liability arising from the Alleged Violations, including the issuance of the prior Penalty Notice and the subsequent litigation in the D.C. District Court and the D.C. Circuit. OFAC also notes that, following litigation of the Alleged Violations, Epsilon took additional remedial actions to address the conduct that led to the Alleged Violations, including terminating its relationship with Asra International LLC and instituting an OFAC sanctions compliance program.

Facinating – only “some cooperation,” they took OFAC to court, and apparently won, in part. Maybe that’s why OFAC “forgot” to tell us about this?

Or maybe it was just a mistake… hmmmm

[UPDATE] I knew that name looked familiar – see this previous post. Apparently they appealed this and won, at least in part. Perhaps, since the original was posted, OFAC felt no need to bring attention to this…

Link:

OFAC Enforcement Information

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