OFAC Reaches Settlement With PACCAR Over Iran Sanctions Violations
The Treasury’s Office of Foreign Assets Control agreed on a $1.7 million settlement with PACCAR Inc., of Bellevue, Washington, for 63 violations of U.S. sanctions on Iran by PACCAR’s subsidiary, OFAC said in an Aug. 6 notice. The subsidiary, Netherlands-based DAF Trucks N.V., sold 63 trucks worth more than $5 million to European customers that DAF knew intended to sell the trucks to Iran, OFAC said.
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In 2014, a German car dealer tried to buy 51 trucks from DAF for an Iranian company, OFAC said. After a DAF manager told the dealer that it could not sell the trucks for an intended end-user in Iran, the German dealer submitted a new order for trucks that listed its ultimate destination as Russia despite having “virtually identical specifications as the earlier order intended for Iran,” the notice said. The manager had “reason to know” the trucks were intended for Iran, OFAC said, and “failed to conduct an adequate inquiry.” DAF eventually sold the trucks to the dealer.
In another instance in 2013, an employee at DAF Trucks Frankfurt, a directly owned DAF dealer, sold two trucks to a Netherlands-based dealer who sold the trucks to Iran, OFAC said. DAF Frankfurt “knew or had reason to know” that the trucks were intended for Iran because the customer sent drafts of invoices that referenced Iran buyers, the agency said.
In 2014, DAF sold 10 trucks to a DAF dealer in Bulgaria that sold the cars to an affiliated rental company that then sold the trucks to Iran, OFAC said. A DAF employee “should have known that the trucks were intended for Iran prior to” the sale, the agency said.
OFAC said PACCAR voluntarily disclosed the violations and said they constituted a non-egregious case. OFAC said aggravating factors included DAF employees failing to “exercise a minimal degree of caution or care” when faced with warning signs of possible sanctions violations, the fact that DAF employees were likely aware of the violations in each case, the fact that the sales “conferred millions of dollars in economic benefits on Iran” and the fact that PACCAR is a “large sophisticated entity that engages extensively in international business.”
OFAC said mitigating factors included the fact that neither PACCAR or DAF had committed a violation in the previous five years, the fact that DAF maintained a sanctions compliance program and the fact that DAF took “remedial action” by launching an investigation after discovering the violations, which included firing employees and canceling deliveries of 20 trucks. PACCAR and DAF also cooperated with OFAC’s investigation and confirmed that they have ended the business that led to the violations.
Both PACCAR and DAF agreed to take several compliance steps, including hiring a full-time compliance director, updating its European Union trade restrictions compliance manual, introducing a policy that allows only sales agreements to final end-users, sending a letter to their dealers reminding them of their compliance obligations, and making compliance training an annual requirement.