Toll Group Holdings, the Australian international logistics company fined earlier this week for sanctions violations, takes "compliance seriously” and has “acted to keep this from happening again," managing director Thomas Knudsen said in an April 25 email. The company's $6.13 million settlement with the Office of Foreign Assets Control covered liability for nearly 3,000 violations of several U.S. sanctions programs, including illegal payments connected to sea, air and rail shipments through multiple highly sanctioned countries, including North Korea, Iran and Syria (see 2204250015).
UserTesting, a California-based software company, said it may have violated U.S. sanctions by allowing users in Iran to access its platform, the company said in an April 4 SEC filing. The company said it conducted an internal review of its sanctions and export control compliance in “mid-2021” and discovered that Iranian “parties” signed up for a free trial of its platform but “did not make payment to us.” UserTesting also said it found a “limited number of participant accounts that represented themselves as residing in non-embargoed countries but may have accessed our platform from embargoed countries.”
A Texas U.S. district court found that Chinese telecommunications company ZTE Corp. committed visa fraud to get employees in the U.S. Making the determination during a hearing on whether to revoke ZTE's probation for violating sanctions on Iran, Judge Ed Kinkeade of the Northern District of Texas said that the court decided not to revoke it and to resentence ZTE after looking at the evidence (United States v. ZTE Corporation, N.D. Tex. #3:17-00120).
Even before new sanctions and export controls targeting Russia take full effect, many companies are deciding that compliance and due diligence costs are not worth the potential profits of continued business dealings in Russia and Belarus, former U.S. export control and sanctions officials said, speaking at a Washington International Trade Association panel on March 10.
While China may help Russia evade some export controls imposed by the U.S., the EU and others, the fear of secondary sanctions and other trade restrictions will likely deter it from providing significant help to Russia, said Emily Kilcrease, an energy, economics and security expert at the Center for a New American Security. Chinese companies could find themselves on the Entity List for aiding Russia’s export-control evasion efforts, Kilcrease said, and could also face strict trade restrictions by Europe.
Important questions still surround the implementation of a potential multilateral sanctions package against Russia, economic and security experts said, including U.S. efforts to enforce an expansion of the foreign-direct product rule. Although details may not yet be clear, a former State Department official warned that new U.S. sanctions against Russia could soon turn strict enough to mirror trade restrictions against Iran.
Saber Fakih of the United Kingdom pleaded guilty in the U.S. District Court for the District of Columbia to illegally exporting and attempting to export an industrial microwave system (IMS) and counter-drone system to Iran, the Department of Justice said. Fakih also admitted conspiring with Bader Fakih of Canada; Altaf Faquih from the United Arab Emirates; and Alireza Taghavi of Iran. Fakih's actions violated the International Emergency Economic Powers Act and Iranian Transactions and Sanctions Regulation, DOJ said Jan. 27.
The U.S. this week imposed new sanctions against Russia for its “destabilizing” activities in Ukraine and privately previewed a harsher set of potential trade restrictions, including major new export controls on chip equipment. Although it remains unclear if those specific export restrictions would be coordinated with allies, the U.S., Germany and the U.K. all said Jan. 20 that they are ready to impose “massive consequences and severe economic costs” on Russia if it continues down a path to war.
China is likely to increase its use of economic and trade restrictions, specifically export controls, to penalize U.S. and EU companies that act against its interests, two security and economics experts said. While China hasn’t “extensively” used its newly established export control or sanctions regimes, its recently issued export control white paper and other rhetoric suggest it won't hesitate to soon use those powers more broadly, the experts said.
Export Compliance Daily is providing readers with the top 20 stories published in 2021 in case they were missed. All articles can be found by searching on the titles or by clicking on the hyperlinked reference numbers.