Australian freight forwarder to pay heavy Toll to settle OFAC violations
The US Treasury’s Office of Foreign Assets Control (‘OFAC’) has said that a Melbourne, Australia-based freight forwarding and logistics company, Toll Holdings, has agreed to pay more than US$6m to settle potential civil liability for almost 3,000 alleged violations of US sanctions programmes.
OFAC says that the apparent violations occurred ‘when Toll originated or received payments through the U.S. financial system involving sanctioned jurisdictions and persons’ and that the payments ‘were in connection with sea, air, and rail shipments conducted by Toll, its affiliates, or suppliers to, from, or through the Democratic People’s Republic of Korea (DPRK), Iran, or Syria, or the property or interests in property of an entity on OFAC’s list of Specially Designated Nationals and Blocked Persons.’
In an enforcement release, OFAC says that Toll had ‘failed to adopt or implement policies and controls that prevented it from conducting transactions that involved designated parties or persons in sanctioned jurisdictions’, and that this had been in part because the company had rapidly grown without a requisite increase in compliance resources.
According to OFAC, ‘By or before May 2015, some Toll personnel knew or had reason to know that the subject payments were in potential violation of U.S. sanctions prohibitions. That month, one of Toll’s banks (the “Bank”) restricted a Toll subsidiary’s use of its U.S. dollar account after identifying a U.S. dollar transaction involving Syria.
‘Concerned that the inclusion of this Syrian-related payment would disrupt a separate, large impending internal transfer, a Toll employee at its headquarters’ treasury office sent an email instructing employees in Toll’s United Arab Emirates and South Korea affiliates to avoid including the names of sanctioned jurisdictions on invoices going forward. Thereafter, the Bank continued to raise concerns with Toll over its compliance with U.S. sanctions, including potentially violative payments involving U.S. banks.’
It said that in July 2015, the ‘CEO of one of Toll’s operating divisions sent an email to its employees reminding them of its international sanctions compliance obligations’ but that the Bank continued to have concerns, leading to it threatening to terminate its relationship with Toll. Toll assured the Bank that it would commit to abide by all applicable sanctions laws, and, effective June 2016, decided to cease business with US sanctioned countries. However, said OFAC, ‘Despite Toll’s compliance office repeatedly instructing three business units that Toll must not be involved with any shipments to U.S.-sanctioned countries thereafter, Toll did not implement the compliance policies and procedures necessary to prevent payments involving sanctioned persons through the U.S. financial system. Neither did Toll test whether shipments involved persons located in U.S.-sanctioned countries.’
OFAC says that the case ‘highlights that foreign companies who use the U.S. financial system to engage in commercial activity must take care to avoid transactions with OFAC-sanctioned countries and persons.’
https://home.treasury.gov/system/files/126/20220425_toll.pdf
