May 10, 2021

On March 15, 2021, OFAC announced that UniControl, Inc. (“UniControl”), a Cleveland, Ohio-based entity that manufactures process controls, airflow pressure switches, boiler controls, and other instrumentation, agreed to pay $216,464 to settle its potential civil liability for apparent violations of OFAC’s sanctions on Iran.  OFAC found that UniControl exported 19 shipments of its goods from the United States to two European companies with reason to know that the goods were intended specifically for supply to Iran by the two European companies. Additionally, UniControl had actual knowledge that an additional two shipments would be reexported to Iran.  In its web notice, OFAC noted that UniControl failed to act on the following warning signs that its goods were intended for Iran: (1) a European trade partner’s interest in supplying Iran; (2) inclusion of Iran as an authorized sales territory in a sales representative agreement prepared by a European trade partner; (3) introductions to Iranian nationals at multiple trade shows by a European sales partner; and (4) a European trade partner’s refusal to allow UniControl to ship its goods directly to a purported third-party European end-user in an effort to overcome the European trade partner’s substantial shipping delays.  With respect to the fourth warning sign, OFAC implied that it expected UniControl to question or follow up on the trade partner’s obfuscation or otherwise try to engage directly with the ostensible end-user of its goods.

This enforcement action highlights the importance of identifying and following up on multiple warning signs that indicate a foreign trade partner may be reexporting goods to a sanctioned jurisdiction. OFAC indicated that, if a foreign trade partner expresses an interest in reexporting goods to a sanctioned jurisdiction, it expects U.S. businesses to proactively communicate with the partner about relevant trade restrictions, review relevant trade documents, and conduct other risk-based due diligence to ensure that the trade partner understands the relevant prohibitions and does not engage in prohibited activity.

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