Corruption Crime & Compliance Deep Dive into SCG Plastics' $20 Million Settlement with OFAC to Resolve Violations of Iran Sanctions Program
May 6, 2024
13:07
OFAC is capable of extending a long arm of enforcement, reaching sometimes non-U.S. companies that may "cause" another company to violate U.S. Sanctions laws. If you need to find an example of this long reach, look no further than OFAC's recent settlement with SCG Plastics ("SCG"). In this settlement, SCG, a Thai company that sells plastic resins, agreed to pay $20 million for violations of the Iran Sanctions Program.
In this episode, Michael Volkov explores the series of actions that led to that $20 million dollar settlement, and the consequences.
- In a recent enforcement action, SCG Plastics paid OFAC $20 million to resolve violations of the Iran sanctions program, showcasing OFAC's far-reaching jurisdiction.
- SCG Plastics caused U.S. financial institutions to process $291 million in wire transfer sales of High-Density Polyethylene Resin (HDPE) of Iranian origin from 2017 to 2018, which violated the Iran sanctions program.
- SCG Plastics voluntarily disclosed 10 violations but did not disclose 457, which led to OFAC determining all 467 violations as egregious.
- The size of the settlement was due to multiple aggravating factors: SCG Plastics willingly engaged in a multi-year pattern of conduct designed to circumvent the Iran sanctions program, causing significant harm to OFAC sanction policy objectives while earning substantial revenues.
- Importantly, commercial activity that may fall outside the jurisdiction of OFAC sanctions can still result in a violation when the financial transactions related to the activity are processed through or involve U.S. financial institutions.
- OFAC emphasized the risks for non-U.S. companies engaging in conduct that causes U.S. persons to violate sanctions, in this case processing the transactions, which would not have been done with adequate disclosure, highlighting the importance of compliance with U.S. sanctions and export control laws.
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