The FCPA Blog | By: Roberto J. Gonzalez and Michael E. Gertzman | August 1, 2017:
Last week the U.S. Treasury Department’s Office of Foreign Assets Control announced a $12 million settlement with CSE Global Limited and its subsidiary, CSE TransTel Pte. Ltd., both based in Singapore.
TransTel entered into contracts to install telecommunications equipment for several Iranian energy projects. According to the settlement, TransTel apparently violated U.S. sanctions by using its U.S. dollar account at a Singapore-based bank to make over $11 million in payments to various third-party vendors – including several Iranian companies – that were providing goods and services in connection with the Iranian contracts.
These payments (which did not indicate their relation to Iran) were processed through the U.S. financial system and caused multiple financial institutions to violate U.S. sanctions by engaging in the prohibited exportation of financial services (i.e., processing U.S. dollar payments) from the United States to Iran or for the benefit of Iran.
This action is significant because it appears to be the first time OFAC has penalized a non-U.S., non-financial company for “causing” sanctions violations by initiating U.S. dollar payments involving a sanctioned country.
Historically, OFAC has focused its enforcement resources on penalizing non-U.S. banks that processed such U.S. dollar transactions involving sanctioned countries, especially where the banks were alleged to have knowingly removed (or helped their customers to remove) information indicating a link to the sanctioned country. OFAC has chosen not to pursue the banks’ customers that initiated these transactions.
While this particular case involves Iran sanctions – and could reflect the Trump Administration’s policy of more aggressively confronting Iran – it likely signals a broader enforcement trend that applies across the range of U.S. sanctions programs.
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