International Trade Enforcement Roundup | December 2022

TDOs Renewed Against Quicksilver Manufacturing, Inc., Rapid Cut LLC, and US Prototype, Inc.

On December 5, BIS renewed the TDO first issued against these three entities on June 27, 2022, for illegally exporting technical drawings to China. The TDO was renewed after new evidence was uncovered showing (1) additional U.S. companies engaged with Quicksilver Manufacturing, Inc., Rapid Cut LLC, and US Prototype, Inc., (2) the presence of additional export violations, and (3) a China-based individual may have violated the June TDO shortly after it was issued. The TDO bans the companies from participating in transactions subject to the EAR, including exports from the United States and re-exports from abroad. The TDO will remain in effect for an additional 180 days. The full TDO can be found here.

Iran, Sudan, and Syria

OFAC Settles with Danfoss A/S for $4,379,810 Related to Apparent Violations of the Iran, Sudan, and Syria Sanctions Programs (OFAC Action)

Those involved. Danfoss A/S (Danfoss), a multinational Danish manufacturer of cooling products.

Charges with penalties. 225 violations of multiple OFAC regimes. Danfoss agreed to pay over $4.3 million in penalties. The maximum applicable civil penalty was over $71.3 million.

What happened? From November 21, 2013, to August 28, 2017, Danfoss FZCO, Danfoss’s wholly-owned United Arab Emirates (UAE) subsidiary, sold products to customers in Iran, Sudan, and Syria and asked customers to send payment to three bank accounts, including one U.S. branch account located in the UAE. Danfoss FZCO also used third-party agents to make money transfers from its U.S. bank account to customers in Iran and Syria. The use of the third-party agents disguised critical information about the transactions, including where they originated and their ultimate destination, which thwarted the bank’s transactional screening mechanism.

Read the enforcement action here.

Notably. This action highlights the importance of timeliness for voluntary disclosures. While the violations were identified in May 2017, Danfoss did not notify OFAC of the violations until October 31, 2017, by which time OFAC was already aware of the violations. Danfoss thus did not receive “credit” for the voluntary disclosure. At the same time, Danfoss’s cooperation with OFAC’s investigation and commitment to implement improved compliance measures were factors in OFAC ultimately agreeing to a penalty that was a fraction of the maximum possible amount. The action also underscores the long arm of OFAC jurisdiction and enforcement. OFAC can and does reach non- U.S. entities whose commercial activity would not otherwise violate OFAC regulations when U.S. financial institutions are involved in transactions.

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