Amazon settled OFAC charges for violating multiple sanctions programs by providing "goods and services to persons sanctioned by OFAC." The settlement also included failures to report hundreds of transactions subject to a General License related to winding down operations involving the Crimea region of Ukraine.
OFAC alleged that, between 2011 and 2018, Amazon conducted business with persons (i) located in Crimea, Iran and Syria, (ii) in embassies and missions of sanctioned countries, and (iii) listed on the Specially Designated Nationals and Blocked Persons List (the "SDN List") in violation of numerous prohibited sanctions regulations. OFAC stated that these violations took place primarily because Amazon's screening processes failed to (i) comprehensively analyze transaction and customer data relevant to OFAC sanctions compliance, (ii) detect the specific names or common alternative spellings of sanctions jurisdictions or (iii) flag the properly spelled names and locations of persons on the SDN List. Additionally, OFAC found that Amazon failed to report 362 Crimea-related transactions in the mandated timeframe, thereby "nullifying" the authorization of General License No. 5 ("Authorizing Certain Activities Prohibited by Executive Order 13685 of December 19, 2014 Necessary to Wind Down Operations Involving the Crimea Region of Ukraine").
To settle its potential civil liability, Amazon agreed to a $134,523 civil monetary penalty, which "reflects OFAC's determination that Amazon's apparent violations were non-egregious and voluntarily self-disclosed, and further reflects the significant remedial measures implemented by Amazon upon discovery of the apparent violations."
Commentary James Treanor
Effective sanctions screening is critical for all companies that routinely engage in international commerce. But for a company with the volume of transactions handled by Amazon on a daily basis, the need for near flawless screening is paramount. During the time period of the violations alleged by OFAC, however, Amazon's screening processes fell short of perfection. The company failed to pick up on variations of the spelling of "Crimea" - one of only a handful of jurisdictions in the world subject to a comprehensive U.S. trade embargo. The company also shipped orders to Iranian embassies in third countries, and failed to flag the correctly spelled names and other identifying information of persons on the SDN List.
Yet what Amazon may have lacked in preparation, the company more than made up for in its response to the screening failures. Explaining the relatively low settlement amount - especially compared to the statutory maximum civil penalty of over $1 billion - OFAC noted that Amazon had not only voluntarily self-disclosed the conduct at issue, but that its cooperation with OFAC's investigation included "data analysis of the apparent violations" and the provision of "detailed information" presented in a "well-organized manner." The company also undertook significant remedial measures to address its screening deficiencies as part of an apparently wide-ranging overhaul and expansion of its sanctions compliance program.
Originally published 9 July 2020.
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