Every now and then, the Treasury Department Office of Foreign Assets Control (OFAC) — the agency that enforces U.S. sanctions against rogue regimes, individuals, and entities — publishes an interesting enforcement action that is worth a mention.
These OFAC enforcement reports are not rich on details, but that is what makes them an interesting read because it leaves a lot to the imagination. This case involves a person in Texas in the jute (i.e., burlap) bag business. According to the notice:
“…the individual facilitated a trade-related transaction involving supplying jute bags to buyers in Sudan without an OFAC license. OFAC determined that the individual did not voluntarily disclose this matter to OFAC and that the apparent violation constituted a non-egregious case. The base penalty amount for the violation was $250,000.”
India and Bangladesh are the top jute producers in the world; however, Sudan also ranks as one of the top-ten jute producers as well. And that is too bad for Tex. They should have gone with India, Bangladesh, or even China.
Tough to tell what Tex was doing exactly. Seems like he or she may have been a middleman in a transaction involving a lot of jute bags (the $250,000 fine is fairly hefty when you consider that the average wholesale price per bag is about $2.50). Tex, wisely, settled with Uncle Sam for $112,500.
If this was a small business, and it appears that it may be, it serves as a reminder that sanctions laws apply with equal force to small and medium-sized business. Just because you do not hear about these things in the mainstream news, does not mean that the government is not looking so “Don’t Let it Happen to You.”
Facilitation and evasion some of two of the most overlooked ways U.S. small and medium sized businesses fall into the sanctions violations trap. If you know better, it jutes do not pay to do it. And with the advent of the Internet, there is just no excuse.
A quick scan of the watch lists posted on OFAC’s website may work for most companies, but, if you need more, there are new affordable applications like this one from Export Screening Services: GreenLight. Consulting a lawyer who specializes in trade security will also help.
For more information on the jutes bag case, here is the OFAC notice.