On 25 July, OFAC announced a penalty assessment against Epsilon Electronics Inc. (“Epsilon”), a California-based company, in the amount of $4,073,000 for violations of the Iranian Transactions and Sanctions Regulations (“ITSR”). OFAC found that Epsilon knew or had reason to know that car audio and video equipment shipped to Asra International Corporation LLC (“Asra”), a company with locations in Iran and Dubai, UAE, was intended specifically for supply, transshipment or reexportation to Iran. The penalty was assessed for Epsilon’s issuance of 39 invoices related to these shipments, five of which were issued after Epsilon had received a cautionary letter from OFAC in January 2012. In its penalty notice to Epsilon, OFAC notes that multiple facts tend to show that Epsilon knew or should have known that the goods it sent to Asra were intended for reexport to Iran: Asra’s website states that it distributes only in Iran, Epsilon had attempted to ship goods directly to Asra’s address in Iran, and Epsilon posted pictures on its website of its products in Iran. OFAC found that Epsilon did not voluntarily self-disclose the violations, that the shipments prior to Epsilon’s receipt of the cautionary letter from OFAC constituted a non-egregious case, and that the shipments after receipt of the letter constituted an egregious case.
Aggravating factors cited by OFAC included that Epsilon acted with reckless disregard for US sanctions; Epsilon appears to have attempted to hide its sales to Iran by removing a product photo gallery from its website labelled “Iran”; the alleged violations constituted or resulted in a systematic pattern of conduct; five of the shipments occurred after Epsilon received a warning letter from OFAC; the value of the transactions was $3,407,491; Epsilon did not have a sanctions compliance programme at the time of the alleged violations; and Epsilon attempted to mislead OFAC by providing false information. Mitigating these factors, OFAC noted that Epsilon had not previously received a penalty notice in the last five years, that Epsilon is a small business and that Epsilon provided some cooperation to OFAC, including agreeing to toll the statute of limitations for one year.