Introducing UANI’s Iran Corporate Violations and Penalties Tracker

Back In May 2018, Secretary of State Pompeo asserted, “the U.S. will impose the toughest and most comprehensive sanctions in history, including not only primary sanctions on Iran but also secondary sanctions on anyone who continues to do business with the country.” 

He has been true to his word. 

By the end of 2019, the Trump administration added an average of 1,000 names to the Specially Designated Nationals and Blocked Persons (SDN) list each year, more than twice the annual average increase seen under either President Obama or Bush.  By far the biggest component of these additions relate to Iran.

Therefore, in order to monitor the vast mass of Iran-related breaches and accompanying punishments – ranging from nominal fines to years-long prison terms – United Against Nuclear Iran (UANI) is releasing the Iran Corporate Violations and Penalties (CVP) Tracker.  The CVP Tracker covers a period of 23 years starting in 1997 when the U.S. Commerce Department imposed the maximum civil penalty of $30,000 against AAT Communications to settle allegations that the company shipped electronic test equipment and communications components that were destined for Iran.

With more than 500 civil and criminal cases settled by the U.S. Department of Justice and federal agencies, the CVP Tracker shows the total monetary amount paid out in fines by companies exceeds $19 billion.

The largest settlement was paid by the French banking giant BNP Paribas, which paid $8.9 billion in June 2014. More recently, in April 2019, UniCredit AG (with main branches in Germany, Austria and Italy) paid $1.3 billion for illicitly processing transactions through the U.S. financial system on behalf of the Islamic Republic of Iran Shipping Lines (IRISL).

With 60 entries, the banks and financial institutions lead the pack in terms of total fines paid by industry. The Department of the Treasury and other U.S. authorities have announced financial settlements with various banks that violated U.S. regulations in transactions related to Iran. The amounts were reportedly determined, at least in part, by the value, number and duration of illicit transactions conducted.

After the banks, more than 50 manufacturing companies have also been penalized for Iran sanctions violations, with fines totaling over $13 million. For example, in 2011, U.S. manufacturing company Flowserve settled for over $3 million for engaging in unlicensed exports of pumps, valves and related component parts and supplies from the U.S. indirectly to Iran.

As well as re-imposing sanctions previously lifted under the Iran Nuclear Deal from 2015 to 2018, the Office of Foreign Assets Control (OFAC) has targeted whole new industries and entities, including in the sectors of aviation, construction, manufacturing, textiles, mining and metals, petrochemicals, and maritime services.

It is not just corporate entities included in the CVP Tracker.  Individuals have been punished with a range of penalties, including jail time. For example, in November 2019, Behzad Pourghannad was sentenced to 46 months in prison for participating in a conspiracy to export carbon fiber from the United States to Iran between 2008 and 2013.  One month earlier, Behrooz Behroozian was sentenced to 20 months in prison for exporting gas and oil pipeline parts to Iran for more than a decade in deliberate violation of U.S. embargo and trade sanctions. In 2013, Nader Modanlo was sentenced to eight years in prison, followed by three years of supervised release and ordered to forfeit $10 million after being found guilty of conspiring to illegally provide satellite related services to Iran.  In total, more than 160 individuals have been punished with a total of over $15 million in fines.

With the powerful tool of “secondary sanctions” at their disposal – which target companies anywhere in the world, even without any U.S. jurisdiction - U.S. federal agencies have not shied away from punishing companies and individuals regardless of their location.

In total fines, Europeans have been hit the hardest.

Companies based in France have been fined a total of over $9.6 billion, with BNP Paribas SA receiving the largest fine in 2014. Companies based in the United Kingdom have been fined more than $3 billion. Britain’s HSBC Holdings plc alone settled for over $1.2 billion in 2012 after it failed to appropriately block or reject a book-entry transfer of 32,000 ounces of gold bullion for the ultimate benefit of a bank-owned or controlled by the Government of Iran. 

The U.S. has also worked with other countries.  In 2010, Mahmoud Yadegari was sentenced in a Canadian court in Toronto to four years and three months in prison for attempting to export pressure transducers that he had purchased in the United States to Iran, via Canada.

What should companies do to avoid joining the long SDN list of violators? As a first step, all companies should implement enhanced due diligence (EDD), know your customer (KYC) and know your customer’s customer standards (KYCC).  And if any violations are found to have occurred, companies should come clean quickly and comprehensively. 

In July 2020,  Amazon, the world's most valuable brand and“one of the most influential economic and cultural forces in the world,”agreed to pay $134,523 to settle its potential civil liability for apparent violations of multiple sanctions programs, including Iran.  Amazon failed to interdict or flag orders shipped to Iranian embassies in Tokyo and Brussels.  Potentially, Jeff Bezos’ e-commerce titan was on the hook for $1 billion but Treasury decided to be lenient in this case. It determined that Amazon had already taken steps to fix its sanctions screening weaknesses and undertake various additional sanctions compliance commitments to minimize the risk of reoccurrence.