Colorado Medical Equipment Manufacturer Settles Alleged Iranian Transactions Regulations Violations with OFAC

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A Colorado medical equipment manufacturer has settled with the Office of Foreign Assets Control (OFAC) allegations that it violated the Iranian Transactions Regulations, commonly known as the Iran sanctions.

Sandhill Scientific, Inc. will pay $126,000 to settle the main allegations that in 2007 it exported medical equipment valued at approximately $6,700 to Dubai, UAE, knowing or having reason to know that the equipment would be transshipped and destined for Iran. OFAC alleged that Sandhill exported the goods to its exclusive distributor located in Iran, with which it had an agreement. OFAC also alleged that Sandhill failed to produce documents responsive to two administrative subpoenas issued by OFAC during its investigation.

Sandhill did not voluntarily disclose this or related reporting violations to OFAC. OFAC determined that the alleged violations were an egregious case because: the company’s management was directly involved in the transaction and acted willfully and recklessly; the company appeared to conceal that the equipment was destined for Iran; and it did not fully cooperate with the investigation. These determinations resulted in a base penalty amount of $250,000.

Additional factors considered in the case included: Sandhill not having an export compliance program in place; not taking any remedial action after the alleged violations came to its attention; the export may have been eligible for an OFAC license under Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA); and there was no prior sanctions enforcement actions against the company.

As pointed out in the settlement notice, exporters of medicines and medical devices have an opportunity to avoid an OFAC penalty action by determining whether they can export products to Iran (and Sudan) under a TSRA license. Had Sandhill the spent time, money, and effort to do so, it likely could have exported its equipment legally, making it very unlikely this penalty action and settlement would be known publicly.

For guidance on the various U.S. economic sanctions programs and OFAC licenses, please contact Jon P. Yormick, Esq., at[email protected] or by calling toll free, 1.866.967.6425 (Canada & U.S.).

 

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