California Musical Instrument Maker Gets OFAC Fine for Indirect Sales to Iran
A California musical instrument manufacturer will pay $41,591 to settle allegations that it violated U.S. sanctions against Iran, including by shipping instruments and accessories that it knew were destined for the country, the Office of Foreign Assets Control said.
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OFAC said the violations committed by Cordoba Music Group LLC were voluntarily self-disclosed and weren’t egregious. It also said the company put in place “remedial measures” after discovering the violations, including by taking steps to improve its sanctions compliance program.
The agency said the violations began from a meeting between Cordoba and an Iranian company at a trade show in Anaheim, California. The two companies agreed that Cordoba would begin selling to the Iranian company in 2019 by first selling products to a Dubai-based general trading company, which would then ship them to the Iranian company for distribution.
After Cordoba was bought by a new U.S. company in February 2023, an employee with the parent company discovered Cordoba’s draft distribution agreement with the Iranian distributor. The new parent company ordered Cordoba to end its business with the Iranian company, OFAC said, and it began an investigation and submitted a disclosure to OFAC.
The agency said Cordoba knew the products were being sent to Iran but “apparently” didn’t know that indirect exports violate U.S. sanctions laws. “This failure to understand the regulations was due to a lack of sanctions and export compliance training, interactions with Iranian distributors at domestic and international trade conferences, competitors allegedly selling their products in Iran, and the mistaken belief that indirect musical instrument sales to Iran were not prohibited,” OFAC said.
In total, OFAC said Cordoba shipped $118,831 worth of instruments and accessories to Iran nine times from 2019 to 2022.
The agency said it could have imposed a more than $3 million penalty against Cordoba but settled on a lower fine because the company self-reported the violations, is a “small manufacturer” with no history of sanctions issues and cooperated with the agency’s investigation. OFAC also said it imposed its sanctions compliance program by training employees about sanctions rules and “instituting compliance procedures,” including a third-party screening requirements and sales order reviews.
OFAC also pointed to two aggravating factors, including that Cordoba “failed to exercise due caution or care” for its compliance responsibilities. It also said there was “a clear understanding” among its employees that the products were being shipped to Iran, and Cordoba’s CEO also was aware of the sales.
Cordoba couldn't be reached for comment.