Chip Design Company Gets OFAC Warning Letter, Discloses Possible Violations to BIS
Silvaco Group, a California-based company that provides software solutions for semiconductor design, received a cautionary letter from the Office of Foreign Assets Control after disclosing possible sanctions violations involving Russia.
OFAC issued the cautionary letter in July “instead of pursuing a civil monetary penalty or taking other enforcement action,” Silvaco said in an SEC filing this month.
Silvaco, a provider of electronic design automation software, said the issue began after it established a branch office in Russia in 2017, where it used a local unnamed bank as its “primary financial institution” and hired a local agent for tax, accounting and legal consulting services. Silvaco said the bank was sanctioned by OFAC in April 2022 after Russia invaded Ukraine, and “based on the recommendation” from the local agent, the company “established replacement bank accounts at another local bank,” opening those accounts in June 2022.
After opening the new accounts at the other bank, Silvaco’s agent used those accounts to “receive injections of funds” from Silvaco’s U.S. bank accounts. The company then transferred those funds from its new bank in Russia back to the old, sanctioned bank and “paid compensation of certain of the Company’s employees and other expenses using the Company’s bank accounts at” the old bank, the filing said.
“The discovery” of these transactions led Silvaco to submit a voluntary self-disclosure to OFAC in October 2023, the company said. Although OFAC decided against imposing a penalty against Silvaco, the agency “reserved the right to take future enforcement action should additional information warrant renewed attention.”
Silvaco also said it submitted voluntary self-disclosures to the Bureau of Industry and Security for possible export control violations in August 2019 and June 2022, but it didn’t say whether those issues have been resolved or are still under review.
The disclosures involved the “export of the Company’s licenses” to entities on the Entity List and Unverified List, and exports of “certain software modules” without a license, “which was required at the time of the transaction.” The company said BIS in October 2020 “declassified” those software modules to a “lesser controlled export classification, meaning that such software generally no longer requires an export license.”
Silvaco added that it submitted other voluntary disclosures to OFAC in July and October 2022. Those disclosures involved the “download of certain Company software modules by users in U.S. embargoed countries.” It’s unclear if those disclosures have been resolved.
A spokesperson for Silvaco said Aug. 13 the company is "unable to provide any additional comments" besides what it included in its filing. A BIS spokesperson declined to comment. An OFAC spokesperson didn’t respond to a request for comment.