Hong Kong company pays $5m to settle ITSR breach allegations
The US Department of the Treasury’s Office of Foreign Assets Control (‘OFAC’) says it has reached a settlement with ‘Hong Kong, China-based company’ Sojitz (Hong Kong) Limited, which ‘engages in offshore trading and cross-border trade financing,’ for apparent breaches of the of the Iranian Transactions and Sanctions Regulations (ITSR), for which the company has agreed to pay $5.2m.
‘The apparent violations occurred when Sojitz HK made U.S. dollar payments through U.S. financial institutions for Iranian-origin high density polyethylene resin (HDPE) from its bank in Hong Kong to the HDPE supplier’s banks in Thailand,’ said OFAC, adding that, in doing so, ‘Sojitz HK caused the U.S. financial institutions that processed the funds to engage in and facilitate prohibited financial transactions related to goods of Iranian origin.’
OFAC said:
‘From August 2016 through May 2018, certain Sojitz HK employees acting contrary to companywide policies and procedures caused Sojitz HK to purchase approximately 64,000 tons of Iranian-origin HDPE from a supplier in Thailand for resale to buyers in China. Under the terms of the HDPE Trading arrangement, Sojitz HK paid the purchase price by wire transfer to the Thai supplier upon the supplier’s shipment of the HDPE to the Chinese buyers.
‘Throughout the course of the HDPE Trading relationship, Sojitz HK made 60 separate U.S. dollar payments from its Hong Kong bank to the Thai supplier’s banks in Thailand, transferring a total of $75,603,411. Each of these U.S. dollar payments were processed and settled through multiple U.S. financial institutions, including the U.S. correspondent banks of the Hong Kong and Thai banks. As a result of the misconduct by the noncompliant employees, who directly handled the HDPE Trading, Sojitz HK’s funds transfer instructions omitted references to Iran. Thus, the U.S. financial institutions did not identify these funds transfers as violative of sanctions prohibitions, which should have caused them to reject and report each of these U.S. dollar denominated funds transfers.’
https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions/20220111_33
