United States: No Violation Is Too Small And No Connection Is Too Attenuated To Escape US OFAC Scrutiny

Recent actions involving the economic sanctions programs administered by the Office of Foreign Assets Control ("OFAC") highlight the strict liability nature of those programs, as they involve routine low-dollar-value transactions and/or connections with sanctioned individuals that would appear attenuated to the average observer. All US businesses, even those that deal in small-dollar-value transactions or have attenuated ties to international trade, need to be aware of OFAC's expectation of a comprehensive compliance program and the lack of any sort of de minimis or inadvertence exceptions in US sanctions laws.

In February 2017, a major US retailer disclosed that it had voluntarily disclosed to OFAC that it had violated US economic sanctions with respect to Iran from 2012 until 2016. It appears that the aggregate amount of the prohibited transactions was $100,000, but what is particularly interesting was the size of individual prohibited transactions. The retailer disclosed that one prohibited transaction was a $50 order of consumer products that were sent to an Iranian embassy. Other transactions included a $1,300 order of consumer products by a person sanctioned under Executive Order 13224 and a $250 order of consumer products by a person who may have been acting for an entity sanctioned under Executive Order 13382. Each of these consumer transactions was minuscule in comparison to the retailer's overall business and none appears to have involved the retailer knowingly doing business with a prohibited person (indeed, the retailer has completely automated order processing systems). Despite these mitigating circumstances, the retailer concluded that it should self report to OFAC.

In another case, in January 2017, OFAC entered into a settlement involving violations of US sanctions with respect to Cuba. In that case, an individual and a small affiliated charity were fined $10,000 for arranging two trips to Cuba for a total of 20 people in 2010 and 2011. OFAC imposed the fine even though OFAC expressly noted both that the violations caused minimal harm to the current objectives of US sanctions law and that the size of the fine was constrained by the individual's modest financial means.

Another case demonstrates the truly strict liability of US economic sanctions. In September 2016, a US exporter was penalized for exporting seven shipments of orthodontic devices to Iran between 2008 and 2010. In the consent order, OFAC noted that it probably would have granted a special license to the exporter if the exporter had requested pre-authorization for the shipments. The fact the shipments were medical devices, had occurred six years earlier, and could have been allowed under certain compliance procedures did not dissuade OFAC from imposing a $43,000 penalty for transactions that had an aggregate value of $60,000.

Another relevant de minimis case includes two findings of violation that OFAC issued to US insurance companies in August 2016. The insurance companies had issued health insurance policies to three individuals in 1992 and then serviced the policies. The insured individuals were subsequently designated by OFAC in 2009. Between 2010 and 2011, the two insurance companies accepted a total of 34 premium payments with an aggregate value of $14,000 from the sanctioned individuals. While OFAC did not fine the companies for these violations, its findings of violation publicly named the companies and could serve as an aggravating factor in any future sanctions matters.

Lastly, in February 2016, OFAC fined a US oil services company $305,000 for allowing its Cayman Island subsidiaries to provide services to an Angolan oil and gas consortium in which a Cuban government-owned company owned only a five percent interest. In the settlement agreement, OFAC indicated that it expected the US provider would have systems in place such that its Cayman subsidiaries would have conducted due diligence on who owned the consortium and identified the presence of a five percent Cuban-government-owned investor. Under the Financial Crimes Enforcement Network's recently adopted customer due diligence rule, a bank is not necessarily expected to conduct due diligence to identify sub-25 percent owners of potential customers. OFAC, however, appears to be taking a much harder line on the issue of identifying minority investors in customers.

OFAC officials have publicly stated that they consider even a $1 violation to be important because it shows that a company's compliance systems are not sufficient to prevent all prohibited transactions. This can be a difficult standard for many businesses, especially high-volume, low-dollar-value businesses, to address. By contrast, anti-money laundering requirements incorporate risk-based compliance measures rather than impose strict liability for violations. Similarly, US criminal laws typically require a wrongful state of mind as an element of any violation.

Given OFAC's focus on violations regardless of the dollar value of the transaction at issue, it is good practice for all companies—including those engaged in a large volume of low-dollar-value transactions—to dedicate compliance resources to identify and investigate potential violations of US sanctions. Companies may wish to engage outside counsel to assist in investigating the violations, implementing appropriate remedial measures and determining whether a voluntary self-disclosure to OFAC would be prudent.

Originally published on 22 February 2017

Learn more about our International Trade practice.

Visit us at mayerbrown.com

Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2017. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions